2012 (10) TMI 1180 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT (A) regarding deletion of addition for renovation expenses and direction to refer valuation of property to Valuation Cell.

Issue 1: Renovation Expenses

The assessee, a salaried employee, sold a flat for Rs. 20.50 lakhs, while Stamp Duty Authorities valued it at Rs. 30,75,744/-. The Assessing Officer (AO) computed Short Term Capital Gains at Rs. 11,44,044/- under section 50C of the Act. The AO disallowed the claim of Rs. 4,05,975/- for renovation and repair charges due to lack of proof. The CIT (A) allowed the grievance, citing the need for the AO to refer the matter to the Valuation Cell before adopting the Fair Market Value. The CIT (A) held that the AO should not have disallowed the claim for renovation and repairs when genuine expenditure was not doubted and relevant bills were submitted. The Revenue appealed against this decision.

Issue 2: Valuation of Property

The CIT (A) directed the AO to refer the valuation of the property to the Valuation Cell, as per section 50C(2) of the Act. The CIT (A) relied on the decision of ITAT in a similar case and held that the AO should have referred the matter to the Valuation Cell before adopting the Stamp Duty Authorities' value. The Revenue challenged this decision before the ITAT.

The ITAT found that the issue of valuation was covered in favor of the assessee by a previous Tribunal order. The ITAT upheld the CIT (A)'s decision, stating that the AO should have referred the matter to the Valuation Cell. Regarding the renovation expenses, the ITAT noted that the assessee had submitted proper bills and there was no incriminating material to doubt the claim. The ITAT found the AO's rejection of the renovation expenses claim unjustified, as the bills were in order and the AO did not conduct further verification. The ITAT dismissed the Revenue's appeal, upholding the CIT (A)'s decision on both issues.

In conclusion, the ITAT dismissed the Revenue's appeal, affirming the CIT (A)'s decision to delete the addition for renovation expenses and direct the valuation of the property to the Valuation Cell.