2017 (1) TMI 1682 - AT - Income Tax

Addition u/s. 50C - AO adopted the stamp duty valuation in respect of one of the properties where an actual declared sale consideration is lower than the stamp duty valuation - HELD THAT - The sale consideration of these two plots sold on the same day though be separated agreements, is more than the stamp duty valuation by ₹ 3,00,00,000/-. Even assuming for a moment that the sale consideration in respect of Plot in survey No. 22 and 42 is less than the stamp valuation it is ₹ 33,48,284/- which is less than 10% of the stamp duty valuation of the said plot. Therefore assessee should succeeded in its appeal. Referring to Smt. Sita Bai Ketan 2016 (11) TMI 955 - ITAT JAIPUR we direct to AO to adopt the valuation of sale consideration as declared by the assessee. The additions made by the AO u/s. 50C is deleted and as grounds raised by the assessee are allowed.

Summary

Issues:
- Addition of ?33,51,812 under section 50C of the Income Tax Act for Assessment Year 2010-11.

Analysis:
1. The appellant contested the addition made under section 50C by the Assessing Officer for undervaluing a property in Bangalore. The Assessing Officer relied on stamp duty valuation, resulting in the addition of ?33,51,812 to the capital gains. The CIT(A) upheld this addition, stating it was in accordance with the provisions of Section 50C.

2. The appellant argued that the delay in property sale was due to title disputes and conversion issues. The properties were eventually sold to a buyer nominated by the Consenting Party. The appellant treated the sale of both properties as one transaction for capital gains calculation. The total consideration was ?113,54,01,823, higher than the stamp value of ?110,42,42,400, hence, the appellant believed section 50C should not apply.

3. The appellant further contended that the difference between stamp duty valuation and sale consideration was less than 15%, citing precedents from the Jaipur and Pune Benches of ITAT. The appellant emphasized that the difference being less than 10% warranted no addition. The Tribunal agreed with the appellant, citing similar cases where a difference of less than 10% led to deletion of additions under section 50C.

4. Relying on the decisions of the Jaipur and Pune Benches, the Tribunal directed the Assessing Officer to adopt the sale consideration value declared by the assessee. Consequently, the additions made under section 50C were deleted, and the appellant's appeal was allowed.