2018 (11) TMI 1788 - AT - Income Tax

Addition on account of difference in Long Term Capital Gain declared by the assessee - AO after considering the DVO s valuation report - difference between actual sale consideration declared by the assessee and the fair market value determined by the DVO is approximately 9.43% - HELD THAT - In the present case, since difference between the value declared by the assessee and the value determined by the DVO is less than 10%, no addition in respect of Long Term Capital Gains is warranted. The findings of Commissioner of Income Tax (Appeals) on this issue are accordingly, set aside and the appeal of assessee is allowed.

Summary

Issues:
Assessment of long-term capital gain based on property valuation discrepancy.

Analysis:
The case involved an appeal by the assessee against the Commissioner of Income Tax (Appeals) order for the assessment year 2011-12. The dispute arose when the Assessing Officer, during scrutiny assessment proceedings, valued the land sold by the assessee at a higher amount compared to the sale consideration declared by the assessee. The difference led to an addition of a specific amount to the capital gains declared by the assessee.

The assessee contended that the valuation by the Department Valuation Officer (DVO) exceeded the actual market value, and cited precedents where a difference of less than 10% between DVO valuation and sale consideration led to no addition being made. The assessee highlighted relevant case laws, including decisions by the Pune Bench of the Tribunal and the Patna High Court, to support their argument.

On the other hand, the Department defended the Assessing Officer's order and sought dismissal of the assessee's appeal. The Tribunal analyzed the facts, noting that the difference between the declared sale consideration and DVO valuation was approximately 9.43%. Citing previous judgments, including the one by the Co-ordinate Bench, the Tribunal emphasized that a difference of less than 10% warranted no addition to the capital gains.

Considering the arguments and legal precedents, the Tribunal found merit in the assessee's submissions. It held that since the difference between the declared sale consideration and DVO valuation was less than 10%, no addition to the Long Term Capital Gains was justified. Consequently, the Tribunal set aside the Commissioner of Income Tax (Appeals) findings and allowed the assessee's appeal.

In conclusion, the Tribunal ruled in favor of the assessee, directing the Assessing Officer to adopt the actual sale consideration mentioned in the Sale Deed as the fair market value for determining the long-term capital gain. The appeal of the assessee was allowed, and the findings of the Commissioner of Income Tax (Appeals) were set aside.