2017 (10) TMI 1390 - AT - Income Tax

Addition under the head capital gain - transfer u/s 2(47) - Held that - This was a transfer of a plot, which was allotted to the assessee by a cooperative society, therefore, there is no substance in the pleadings of the assessee. The facts and circumstances of the case are clearly shows that the provisions of Section 50C of the Act are applicable and it was a transfer of a capital asset being plot of land. Capital gain - reference to DVO to estimate the fair market value - section 50C applicability - Held that - As stated by the Assessing Officer that the assessee has objected the value adopted by the Stamp Valuation Authority and requested to refer the matter to the valuation officer. The Assessing Officer referred the matter to the departmental valuation officer on 05/02/2016 for determination of fair market value of the property. DVO returned back the proposal by stating that the statutory references normally requires 120 days and number of cases are to be disposed off by his office prior to 31/3/2016 being time barring cases, therefore, it would not be possible to take the case at that stage and the reference was returned. After hearing both the sides and in the interest of justice and equity, find it appropriate to restore the matter to the file of the Assessing Officer to be decided de novo after obtaining valuation report from the DVO.

Issues Involved:
1. Addition of ?41,80,805/- under the head capital gain.
2. Addition of ?1,00,000/- under the head income from other sources.
3. Applicability of Section 50C of the Income Tax Act, 1961.
4. Assessment proceedings and the valuation of the property.

Issue-wise Detailed Analysis:

1. Addition of ?41,80,805/- under the head capital gain:
The assessee sold an immovable property for ?11,70,000/-, but the Sub Registrar IV, Jaipur adopted the value at ?53,11,367/-. The Assessing Officer (A.O.) treated this transaction as a transfer of immovable property and applied Section 50C of the Income Tax Act, 1961, resulting in an addition of ?41,80,805/- as long-term capital gain. The assessee contended that only the right in the property was sold, not the property itself, and thus Section 50C was not applicable. However, the A.O. and the Commissioner of Income Tax (Appeals) [CIT(A)] held that the transaction was a transfer of immovable property, and Section 50C was applicable, confirming the addition.

2. Addition of ?1,00,000/- under the head income from other sources:
The CIT(A) upheld the addition of ?1,00,000/- under the head income from other sources. The assessee did not provide substantial evidence or arguments to counter this addition, leading to its confirmation.

3. Applicability of Section 50C of the Income Tax Act, 1961:
The primary contention revolved around whether Section 50C was applicable. The assessee argued that the property was under dispute and only rights were transferred. The A.O. and CIT(A) disagreed, stating that the sale deed was registered, and the transaction was a transfer of immovable property. The Tribunal upheld this view, emphasizing that the registered sale deed indicated a transfer of the property, and the value adopted by the stamp valuation authority was to be considered.

4. Assessment proceedings and the valuation of the property:
The assessee did not file a return of income for A.Y. 2008-09 initially and only submitted an unsigned computation later. The A.O. issued a show cause notice under Section 144(1) and proposed to consider the sale consideration at ?53,11,367/- as adopted by the stamp authorities. The assessee objected to this value and requested a reference to the Valuation Officer. However, due to time constraints, the Departmental Valuation Officer (DVO) could not take up the case, and the A.O. proceeded with the assessment based on the stamp authority's value.

The Tribunal, considering the interest of justice and equity, found it appropriate to restore the matter to the file of the A.O. for a de novo decision after obtaining a valuation report from the DVO. The appeal of the assessee was allowed for statistical purposes, and the A.O. was directed to reassess the value after obtaining the DVO's report.

Conclusion:
The Tribunal upheld the applicability of Section 50C, confirming the addition of ?41,80,805/- under the head capital gain. The addition of ?1,00,000/- under the head income from other sources was also confirmed. However, the matter was restored to the A.O. for reassessment after obtaining a valuation report from the DVO, allowing the appeal for statistical purposes.

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