2018 (10) TMI 1786 - AT - Income Tax

Capital gain computation - adopting full sale consideration equivalent to the amount determined by the DVO in the case of co-owner - reference to DVO - HELD THAT - Section (2) of section 50C contemplates that in case assessee raises an objection of the value on which stamp duty was paid, then in order to find fair market value of the asset, reference would be made to the DVO , since in the case of co-owner such reference was made on the same piece of land. The same value determined by the AO in the case of co-owner ought to be adopted in the case of the assessee. We allow the appeal of the assessee and remit the issue to the file of the AO with direction to the ld.AO to compute the capital gain assessable in the hands of the assessee on transfer of the above land by adopting full sale consideration equivalent to the amount determined by the DVO in the case of co-owner. With this direction, we allow this ground of appeal of the Assessee.

Summary

Issues:
1. Dispute over the deemed value of sale consideration received on the sale of immovable property.
2. Application of stamp valuation authority's value over the value determined by the Departmental Valuation Officer (DVO).
3. Interpretation of Section 50C and Section 55A of the Income Tax Act.

Analysis:
1. The appeal was filed against the order of the ld.CIT(A)-5, Ahmedabad regarding the substitution of the value of the property determined by the stamp valuation authority as the deemed value of sale consideration received on the sale of immovable property. The AO had substituted the value based on the stamp valuation authority's assessment, leading to a dispute with the assessee.

2. The main contention was that the AO erred in adopting the stamp duty value as the full value of the sale consideration, disregarding the value determined by the DVO. The assessee, having a 25% share in the land, argued that the DVO had previously determined the fair market value of the property in a similar case involving a co-owner. The assessee requested the same value be applied in their case as well, as per the provisions of Section 50C(2) of the Act.

3. The Tribunal found merit in the assessee's argument, emphasizing that when an objection is raised regarding the value on which stamp duty was paid, Section 50C(2) mandates a reference to the DVO to ascertain the fair market value. Since the DVO had already determined the value in a related case, the same value should be adopted for consistency. Therefore, the Tribunal allowed the appeal, directing the AO to compute the capital gain by adopting the value determined by the DVO in the co-owner's case for the assessee's case as well.

Conclusion:
The Tribunal ruled in favor of the assessee, highlighting the importance of consistency in valuation methods and the relevance of DVO's assessment in determining fair market value. The decision underscored the procedural requirements outlined in Section 50C and upheld the assessee's plea for uniformity in valuation standards across related cases involving co-owners.