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2017 (10) TMI 1522 - AT - Income TaxReference of matter to DVO - valuation of the Property to valuation officer as provided in section 50C(2) - adopting the value of the property as adopted by the Stamp Valuation Authorities - HELD THAT - AO is required to refer the issue of valuation of property to the DVO if the assessee claims that the value adopted or assessed by the Stamp Valuation Authorities exceeds the fair market value of the property as on the date of transfer. In the light of the above provision and respectfully following the judgment of SUNIL KUMAR AGARWAL VERSUS COMMISSIONER OF INCOME TAX, SILIGURI 2014 (6) TMI 13 - CALCUTTA HIGH COURT we hereby set aside the orders of the authorities below and restore the assessment to be framed denovo to the file of the AO. The AO is directed to refer the issue of Fair Market Value of the property to the DVO. The AO shall make enquiry from the Stamp Valuation Authorities as to what was the basis for adopting the impugned valuation. Thus the ground of the assessee is allowed for statistical purposes.
Issues Involved:
1. Application of Section 50C of the Income Tax Act. 2. Requirement for the Assessing Officer (AO) to refer the valuation of the property to the Departmental Valuation Officer (DVO). 3. Nature of the plot sold (residential vs. commercial). Detailed Analysis: 1. Application of Section 50C of the Income Tax Act: The primary issue revolves around the application of Section 50C, which deals with the valuation of property for the purpose of computing capital gains. The AO adopted the value of ?1,19,71,700 as determined by the Stamp Valuation Authorities instead of the sale consideration of ?80,40,000 declared by the assessee. This resulted in the AO computing the long-term capital gain at ?48,84,149. The assessee contended that Section 50C is a deeming provision that should be strictly construed and should not be extended beyond its specific context. The assessee argued that Section 50C should only apply to the computation of capital gains under Section 48 and not to other tax-saving sections like 54, 54EC, and 54F. The Tribunal, after considering the arguments, directed the AO to refer the valuation of the property to the DVO to ensure a fair assessment of the property's market value. 2. Requirement for the AO to Refer the Valuation of the Property to the DVO: The assessee argued that the AO should have referred the matter to the DVO as per Section 50C(2) since the assessee had disputed the valuation adopted by the Stamp Valuation Authorities. The assessee supported this argument with a letter dated 18.03.2016, where the valuation was disputed. The assessee also cited several judicial pronouncements, including the Calcutta High Court's decision in the case of Sunil Kumar Agarwal, which emphasized the need for the AO to refer the valuation to the DVO to avoid miscarriage of justice. The Tribunal agreed with the assessee, noting that the AO is required to refer the issue of valuation to the DVO if the assessee claims that the value adopted by the Stamp Valuation Authorities exceeds the fair market value. The Tribunal set aside the orders of the lower authorities and directed the AO to refer the valuation issue to the DVO. 3. Nature of the Plot Sold (Residential vs. Commercial): The assessee claimed that the plot sold was residential, as evidenced by the purchase from New Light Housing Co-operative Society and the photographs submitted. The AO, however, considered the plot to be commercial based on the endorsement by the Stamp Valuation Authority. The Tribunal found that the assessee had provided sufficient evidence to support the claim that the plot was residential. The Tribunal directed the AO to make further inquiries from the Stamp Valuation Authorities regarding the basis for the valuation and to consider the nature of the plot accordingly. Conclusion: The Tribunal allowed the appeal for statistical purposes, directing the AO to refer the valuation of the property to the DVO and to make further inquiries regarding the nature of the plot. The Tribunal emphasized the need for a fair assessment and the proper application of Section 50C, ensuring that the valuation reflects the fair market value of the property.
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