2015 (12) TMI 1068 - HC - Income Tax

Computation of capital gains - adoption of FMV - Held that - The CIT(Appeals) had applied the value determined by the stamp Valuation authorities as to be fair market value of the property on the date of transfer, against which revenue is not in appeal. Hence the value assessed in the hands of the assessee is ₹ 1.25 crores as against the value assessed by the DVO at ₹ 2.97 crores. The perusal of the grievances raised by the assessee reflects that all the grievances were against the valuation framed by the Valuation Officer and even if the value is reduced as per the said grievances, there is no substance in the grievance of the assessee where reduced value has been adopted by the CIT(Appeals) as fair market value of the property. In the entirety of the facts and circumstances, we find no merit in the stand of the assessee and the objections raised against the valuation report have no meaning including the stand of DVO to have adopted commercial rates for valuing the said property as the assessment in the hands of the assessee has not been made on such valuation report but on a much lesser value of ₹ 1.25 crores and even if credit is given on account of all the objections raised by the assessee, the value of property adopted in the hands of the assessee is much lower than the value determined by the DVO. Hence we uphold the order the CIT (Appeals) in adopting the value assessed by the Stamp Valuation authorities as the fair market value of the property on the date of transfer in computing the income of the assessee also confirmed by ITAT. - Decided against assessee

Summary

Issues:
Delay in filing appeal condoned, delay in refiling appeal condoned, computation of capital gains, valuation of property under Section 50C of the Income Tax Act, 1961.

Delay in filing appeal condoned:
The High Court condoned the delay in filing the appeal and disposed of the related application. Subsequently, another delay of 75 days in refiling the appeal was also condoned by the Court after considering the reasons provided in the application and hearing the counsels for both parties.

Computation of Capital Gains:
The appeal was filed by the assessee-appellant under section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal. The primary issue revolved around the computation of capital gains, specifically questioning the correctness of the value considered for the purpose of computation. The Tribunal had held the full value of consideration to be Rs. 1.25 crores, while the sale deed showed Rs. 73,60,000. The appellant contested that the property, being in possession of a tenant and close to a cremation ground, should be valued at Rs. 73,60,000, not Rs. 1.25 crores.

Valuation of Property under Section 50C:
The case involved a discrepancy in the valuation of a property under Section 50C of the Income Tax Act. The Assessing Officer considered the sale consideration based on the circle rate at Rs. 1.25 crores, leading to an addition of Rs. 51,72,000 to the assessee's income. The Valuation Officer valued the property at Rs. 2,97,98,550, differing from the stamp duty valuation of Rs. 1.25 crores. The Tribunal upheld the value assessed by the Stamp Valuation authorities as the fair market value, rejecting the objections raised by the assessee against the valuation report.

Detailed Analysis:
The Court analyzed Section 50C of the Act, emphasizing that the value adopted by the stamp valuation authorities should be deemed the full value of consideration for the transfer of a capital asset. If the value exceeds the fair market value, the Assessing Officer may refer the valuation to a Valuation Officer. In this case, the Valuation Officer's valuation of Rs. 2,97,98,550 conflicted with the stamp duty valuation of Rs. 1.25 crores. The Tribunal upheld the stamp valuation authorities' value, considering it the fair market value and dismissing the appellant's objections.

The Tribunal found no merit in the appellant's stand against the valuation report, stating that even if the objections were considered, the value assessed in the appellant's hands was significantly lower than the DVO's valuation. The Court upheld the Tribunal's order, noting that the appellant failed to demonstrate any illegality or perversity in the Tribunal's findings, leading to the dismissal of the appeal without any substantial question of law arising for consideration.