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2011 (2) TMI 937 - AT - Income TaxCapital Gains Adoption of valuation made by the Stamp duty authorities as consideration-Reference to Valuation Officer- Held that - Once the assessee claimed before the A.O. that the fair market value determined by the stamp-duty authorities are higher then the actual sale consideration and A.O. is not satisfied with the explanation of the assessee then he should rather bound to refer the matter to the DVO for valuation. See ITAT Jodhpur Bench in the case of Meghraj Baid (2008 - TMI - 68694 - ITAT Jodhpur). Further, if the fair market value declared by the assesse is more than the fair market value determined by the DVO then such reference by the AO to the DVO for valuation of fair market value of the property is invalid and estimation of fair market value made by assessee should be accepted. Decided in favor of the assessee.
Issues:
1. Applicability of provisions of section 50C regarding valuation of property for capital gain computation. 2. Validity of reference to Valuation Officer under section 55A for ascertaining the value of property as on 1/4/1981. Analysis: Issue 1: Applicability of provisions of section 50C The case involved a challenge to the action of the Assessing Officer (A.O.) in adopting the valuation made by Stamp Duty Authorities as the sale consideration for computing long-term capital gains under section 50C. The assessee contended that the A.O. should have referred the matter to the District Valuation Officer (DVO) as per sub-section (2) of section 50C. The contention was supported by references to relevant case laws. The Income Tax Appellate Tribunal (ITAT) held that the word "may" used in sub-section (2) of section 50C signifies that if the A.O. is not satisfied with the explanation of the assessee, he should refer the matter to the DVO for valuation. Following the precedent set by the ITAT in a similar case, the tribunal allowed the ground taken by the assessee and directed the A.O. to refer the matter to the DVO for determining the fair market value as per the provisions of sub-section (2) of section 50C. Issue 2: Validity of reference to Valuation Officer under section 55A The second issue pertained to the A.O.'s reference to the DVO under section 55A for ascertaining the fair market value of the property as on 1/4/1981. The assessee had submitted a valuation report by a registered valuer, but the DVO determined a lower fair market value. The tribunal, after considering relevant provisions and precedents, held that the reference by the A.O. to the DVO for valuation was not valid because the fair market value declared by the assessee was higher than the value estimated by the DVO. Citing a specific case precedent, the tribunal directed the A.O. to accept the fair market value declared by the assessee as per the valuation report. Consequently, the tribunal allowed this ground of appeal as well. In conclusion, the tribunal allowed both grounds of appeal raised by the assessee, directing the A.O. to refer the valuation matter to the DVO under section 50C and to adopt the fair market value declared by the assessee for the property as on 1/4/1981. As a result, the assessee's appeal was allowed, and the order was pronounced in favor of the assessee on 15th February 2011.
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