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2017 (5) TMI 831 - AT - Income TaxComputation of capital gain - CIT-A directed for adoption of the valuation as per the report of the District Valuation Officer which was lower than the value fixed by the stamp/registration authorities - Held that - Once a reference was made to ld. DVO, invoking section 50C(2) of the Act, then the value fixed by the DVO alone has to be considered if it is lower than the value fixed by the stamp authorities. A reference under section 50C(2) to the valuation is always made on the behest of the assessee and an assessee will make a request for such a reference, only when he feels that value fixed by the stamp valuation authorities was on the higher side. If after such reference, the value fixed by the stamp valuation authorities is still to adopted, ignoring the lower value fixed by the DVO then the purpose of reference to the DVO itself is lost. In such circumstances, no circular of the CBDT can come to the aid of the Revenue. Once a valuation is given by the Valuation Officer in accordance with Sec. 50C of the Act, then such value alone can be adopted where it is lower than the value assessed by the stamp valuation authorities as held by Hon ble Gujarat High Court in the case of Principal Commissioner of Income Tax vs. Ravjibhai Nagjibhai Thesia 2016 (9) TMI 645 - GUJARAT HIGH COURT . - Decided against revenue
Issues involved:
1. Discrepancy between valuation by District Valuation Officer and stamp/registration authorities for computing capital gains. 2. Interpretation of Section 50C of the Income Tax Act regarding valuation of property. 3. Authority to be followed when valuation by different authorities varies. Analysis: Issue 1: Discrepancy in valuation The appeal filed by the Revenue concerns the valuation adopted for computing capital gains on the sale of a property. The ld. Commissioner of Income Tax (Appeals) directed the adoption of the valuation as per the District Valuation Officer's report, which was lower than the value fixed by the stamp/registration authorities. The Revenue contended that the Board Circular No.8/2002 should have been considered in this regard. Issue 2: Interpretation of Section 50C The core issue revolves around the interpretation of Section 50C of the Income Tax Act. The ld. Commissioner of Income Tax (Appeals) found the Assessing Officer's valuation to be erroneous and directed a reference to the District Valuation Officer. The District Valuation Officer valued the property at a lower amount than the stamp duty authorities, leading to a dispute on which valuation to consider for computing capital gains. Issue 3: Authority to be followed for valuation The crux of the matter lies in determining which valuation authority should prevail when there is a variance in valuations. The Tribunal emphasized that once a reference is made to the District Valuation Officer under Section 50C, the value fixed by the DVO must be considered if it is lower than that of the stamp authorities. The Tribunal cited the Hon'ble Gujarat High Court's judgment to support this interpretation, highlighting the obligation of the Assessing Officer to follow the DVO's valuation in such cases. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the order of the ld. Commissioner of Income Tax (Appeals) to consider the valuation determined by the District Valuation Officer for computing long term capital gains. The judgment underscores the significance of adhering to the valuation determined by the appropriate authority as per the provisions of the Income Tax Act, particularly Section 50C, in cases of valuation disputes.
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