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2016 (4) TMI 77 - AT - Income TaxDeduction u/s 50C computation - whether the rate prevailing in the year 2005 when the assessee claimed to have entered into agreement for sale or the rate prevailing in the year 2007 when the assessee has finally executed the sale deed and registered are to be adopted as full value consideration u/s 50C - Held that - Once the parties have agreed upon the sale consideration of the property in the year 2005, then it will be immaterial if the final sale deed was executed in the year 2007 when final payment was made to the assessee by the purchaser. It is not the case of the AO that the payment received by the assessee prior to sale deed was not part of the sale consideration. Therefore, when the assessee has received part sale consideration since 11/5/2005, then for the purpose of sec.50C of the Act, the Fair Market Value has to be applied in the year in which the parties have decided and agreed upon the sale consideration and not in the year when the sale deed was executed. Even if stamp duty valuation of the property at the time of registration of sale deed is adopted as full consideration, the same has to be subject to the verification whether the market value of the property at the time of sale consideration agreed upon by the parties is less than the valuation adopted by the stamp valuation authority then as per provisions of sec.50C(2) market value of the property is required to be taken after consideration of relevant facts including prevailing rate at the time of sale consideration agreed upon between the parties. In view of the above facts and circumstances of the case, we are of the considered opinion that the fair market value of the property has to be determined by the AO/DVO after considering all the relevant facts including the prevailing rate in the year 2005. Accordingly, the matter is set aside to the record of the AO for determining the fair market value of the property as per provisions of sec.50C(2) of the Act. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Validity of the orders passed by the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)]. 2. Applicability of Section 50C of the Income Tax Act, 1961. 3. Admission of additional evidence by CIT(A). 4. Fair Market Value (FMV) determination without referring to the Valuation Officer. 5. Liability to pay interest. Issue-wise Detailed Analysis: 1. Validity of the Orders Passed by AO and CIT(A): The assessee contended that the orders passed by the AO and CIT(A) were erroneous and against the principles of natural justice and equity. The assessee argued that the orders should be quashed as they were "bad in law." 2. Applicability of Section 50C of the Income Tax Act, 1961: The primary issue was whether the provisions of Section 50C, which mandate adopting the value assessed by the stamp duty authority as the full value of consideration for the purpose of calculating capital gains, were applicable. The AO invoked Section 50C, taking the stamp duty authority's assessment value as the full consideration. The assessee argued that the sale consideration should be based on the agreement executed in 2005, not the stamp duty value in 2007 when the sale deed was registered. The Tribunal noted that the assessee received part payment from 2005 onwards, and thus, the rate prevailing in 2005 should be considered. The Tribunal referred to the decision in Anil Kumar Jain vs. ITO, which supported the assessee's contention. 3. Admission of Additional Evidence by CIT(A): The assessee produced an agreement to sell dated 20/5/2005 as additional evidence, which was not admitted by the CIT(A) on the grounds of not filing a specific application. The Tribunal found that the additional evidence was accompanied by an application dated 30/8/2013 and should have been admitted. The Tribunal emphasized that the sale consideration agreed upon in 2005 should be considered, irrespective of the final sale deed execution in 2007. 4. Fair Market Value (FMV) Determination Without Referring to the Valuation Officer: The assessee argued that the AO erred by not referring the matter to the Valuation Officer to determine the FMV. The Tribunal agreed, citing Section 50C(2) and previous cases, that the AO should have referred the valuation to a Valuation Officer when the assessee claimed that the stamp duty valuation exceeded the FMV. The Tribunal directed the AO to determine the FMV after considering the prevailing rate in 2005 and all relevant facts. 5. Liability to Pay Interest: The assessee denied the liability to pay interest, arguing that it was debited erroneously. The Tribunal did not specifically address this issue in the judgment, implying that it was not the primary focus of the appeal. Conclusion: The Tribunal set aside the matter to the AO to determine the FMV of the property as per the provisions of Section 50C(2), considering the prevailing rate in 2005. The appeal was allowed for statistical purposes, emphasizing the need for a fair determination of the property's value based on the initial agreement and payments received. Pronouncement: The judgment was pronounced in the open court on 12th February 2016.
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