2015 (2) TMI 663 - AT - Income Tax

Adoption of the sale consideration for the purpose of computation of capital gain - transfer of reversionary rights in land - as per assessee sale consideration cannot be taken more than the actual sale consideration shown in the transfer deed, i.e., a sum of ₹ 41.51 crores - also if the sale consideration is taken as valuation done by the stamp valuation authorities then there is a mistake in calculation of sale consideration as TDR value has been taken at 100 per cent - Held that - According to the provisions of section 50C the assessee cannot obtain the benefit as provided in sub-section (2) of section 50C as neither of the conditions described in sub-section (2) has been fulfilled by the assessee. Thus neither the Assessing Officer nor the learned Commissioner of Income-tax (Appeals) could adopt sale consideration of the property any amount less than the value adopted or assessed by the stamp valuation authority as section 50C does not recognise such curtailment of the sale consideration in any manner. Therefore, we confirm the findings of the learned Commissioner of Income-tax (Appeals) that the sale value of the consideration taken by the stamp valuation authority was the right amount for the purpose of calculation of long-term capital gain.There is no force in the contention of AR regarding mistake having been committed by the stamp valuation authority in taking the value of TDR and it has been clearly described in the order of the learned Commissioner of Income-tax (Appeals) that the value of TDR also has been taken at 60 per cent. and it has not been taken at 100 per cent - Decided against assessee. Adoption of fair market value while computing the long-term capital gains - CIT(A) confirming the adoption of fair market value as on April 1, 1981 instead of ₹ 5,62,50,775 in respect of the appellant's rights in land at Juhu - Held that - This issue is squarely covered in favour of the assessee by the decision of of CIT v. Puja Prints 2014 (1) TMI 764 - BOMBAY HIGH COURT and direct the Assessing Officer to adopt fair market value of the impugned property as on April 1, 1981, at ₹ 5,62,50,775 as per valuation submitted by the assessee of the Registered Valuer - Decided in favour of assessee. Applicability of provisions of section 50C - Held that - Section 50C is a deeming provision and is applicable if the condition laid down therein are fulfilled. It has already been held that section 50C(1) is applicable and the assessee has not made out any case for applicability of sub-section (2) of section 50C. Decided against assessee.

Issues Involved:
1. Adoption of sale consideration for computing long-term capital gains.
2. Ignoring the valuation report of the Joint Director, Town Planning, and the pending appeal under section 53A of the Bombay Stamp Act.
3. Exclusion of value of TDR from total valuation.
4. Adoption of fair market value as on April 1, 1981.
5. Application of section 50C of the Income-tax Act.

Detailed Analysis:

1. Adoption of Sale Consideration for Computing Long-Term Capital Gains:
The assessee contested the adoption of sale consideration at Rs. 57,74,51,000 instead of the actual sale consideration of Rs. 41,51,00,000. The Tribunal upheld the adoption of Rs. 57,74,51,000 based on the provisions of section 50C, which mandates that the value adopted or assessed by the stamp valuation authority shall be deemed to be the full value of the consideration received. The Tribunal noted that the assessee had disputed the valuation by the stamp authority before various appellate forums, including the High Court, which precluded the application of the exception under section 50C(2).

2. Ignoring the Valuation Report and Pending Appeal:
The assessee argued that the valuation report by the Joint Director, Town Planning, valuing the property at Rs. 41,51,00,000 should be considered, and the pending appeal under section 53A of the Bombay Stamp Act should be acknowledged. The Tribunal found that the assessee's appeal and subsequent writ petition were dismissed on technical grounds, and the valuation by the stamp authority stood valid. The Tribunal confirmed that the sale consideration should be taken as Rs. 57,74,51,000 as per the stamp authority's valuation.

3. Exclusion of Value of TDR from Total Valuation:
The assessee contended that the value of TDR should not be included at 100% in the total valuation. The Tribunal noted that the Commissioner of Income-tax (Appeals) had already considered this issue and found that the TDR value was taken at 60%, not 100%. The Tribunal upheld this finding, rejecting the assessee's contention.

4. Adoption of Fair Market Value as on April 1, 1981:
The assessee argued that the fair market value as on April 1, 1981, should be Rs. 5,62,50,775 as per the valuation report by M/s. Shah and Shah, instead of Rs. 3,10,14,000 as determined by the District Valuation Officer. The Tribunal agreed with the assessee, citing the Bombay High Court's decision in CIT v. Puja Prints, which held that the reference to the Valuation Officer could only be made if the value adopted by the assessee was less than the fair market value. The Tribunal directed the Assessing Officer to adopt the fair market value of Rs. 5,62,50,775.

5. Application of Section 50C:
The assessee argued that section 50C should not apply as there was no proof or suggestion that something more was paid over and above the agreement price. The Tribunal held that section 50C is a deeming provision and does not require proof of additional payment. Since the conditions of section 50C were fulfilled, the Tribunal upheld its application.

Conclusion:
The Tribunal dismissed grounds Nos. 1 and 3 of the assessee's appeal and allowed ground No. 2, directing the adoption of the fair market value as on April 1, 1981, at Rs. 5,62,50,775. The appeal was partly allowed in the manner specified.

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