2016 (4) TMI 505 - AT - Income Tax

Determination of short term capital gain - Held that - We find the CIT(A) has observed that the assessee has not submitted anything on the issue of short term capital loss and accordingly confirmed the order of the AO on the said issue. It is the submission of the Ld. Counsel for the assessee that although the balance sheet for the year ending 31-03-2005 and 31-03- 2006 were produced before the CIT(A) and arguments had taken place on different dates, however, the CIT(A) has brushed aside all those details. Considering the totality of the facts of the case and in the interest of justice, we restore the issue of short term capital gain to the file of the AO for fresh adjudication. The AO shall decide the issue as per fact and law after giving due opportunity to the assessee.- Decided in favour of assessee for statistical purposes. Long term capital gain on sale of land - Held that - As it is the case of the assessee that the land in question was a forest land on the appointed date and therefore the provisions of section 50C are not applicable to the facts of the present case since the assessee is not the owner of the land and it has only a right to claim compensation. Although the assessee had filed various documents to demonstrate that the land of the assessee is a forest land, however, we find the CIT(A) is silent on this issue. The AO in his remand report has also not dwelt upon this issue. It is also a fact that the above claim was not made before the AO although this claim was made before CIT(A) for the first time. Considering the totality of the facts of the case, we are of the considered opinion that the matter requires a re-visit to the file of the AO for proper appreciation of the facts. We therefore deem it proper to restore the issue to the file of the AO with a direction to examine the contention of the assessee that the land in question is a forest land and the assessee is not the owner of the land and it is only entitled to claim compensation. The AO shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

Issues Involved:
1. Adoption of Stamp Duty Valuation as "Full Value of Consideration" under Section 50C.
2. Refusal to refer the matter to the Valuation Officer under Section 50C(2).
3. Computation of Short Term Capital Gain on sale of shed.
4. Charging of interest under Section 234B.

Detailed Analysis:

1. Adoption of Stamp Duty Valuation as "Full Value of Consideration" under Section 50C:
The main issue revolves around whether the provisions of Section 50C of the Income Tax Act, 1961, apply to the assessee's case. The AO noted that the assessee declared a long-term capital gain based on a sale consideration of Rs. 1,07,00,000, while the stamp valuation authority assessed the value at Rs. 1,19,30,500. The AO applied Section 50C, which led to a higher capital gain calculation. The CIT(A) upheld this, stating that adjudication by the Collector of Stamps is considered a reference to an authority, thus negating the need for further valuation under Section 50C(2). The Tribunal, however, found that the CIT(A) did not address the assessee's claim that the land was forest land and thus not subject to Section 50C. The matter was remanded to the AO for re-examination, considering the assessee's contention and relevant legal precedents.

2. Refusal to Refer the Matter to the Valuation Officer under Section 50C(2):
The assessee argued that the AO should have referred the valuation of the property to the Valuation Officer as per Section 50C(2). The AO rejected this, citing that the Collector of Stamps had already adjudicated the value. The Tribunal noted that the CIT(A) did not address the assessee's request for a reference to the Valuation Officer. Given the procedural lapse and the need for a thorough examination, the Tribunal remanded the issue back to the AO to consider the request for a valuation reference afresh.

3. Computation of Short Term Capital Gain on Sale of Shed:
The AO computed a short-term capital gain of Rs. 2,03,700 on the sale of a shed, whereas the assessee claimed a short-term capital loss of Rs. 1,82,677. The CIT(A) upheld the AO's computation, noting the absence of any submission from the assessee. The Tribunal found that the assessee did submit relevant documents and explanations to the CIT(A), which were not considered. Therefore, the Tribunal restored the issue to the AO for fresh adjudication, with instructions to consider the evidence provided by the assessee.

4. Charging of Interest under Section 234B:
The assessee contested the charging of interest under Section 234B. The Tribunal did not provide a detailed analysis on this issue, as the primary focus was on the capital gain and valuation issues. However, it implied that the resolution of the primary issues might impact the interest computation, and thus, it would be reconsidered in the remand proceedings.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, remanding the issues back to the AO for fresh adjudication. The AO was directed to re-examine the applicability of Section 50C, consider the assessee's request for a valuation reference, and reassess the short-term capital gain computation, providing the assessee with due opportunity to present evidence. The Tribunal emphasized the need for a thorough and fair examination of all facts and legal arguments presented by the assessee.

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