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2017 (7) TMI 530 - AT - Income TaxApplicability of provisions of section 50C - valuation as determined by the Valuation Officer - computation of capital gains - Held that - Before us ld.A.R. has submitted that certain material developments had taken place like bequeathing assessee s share in land in favour of Dilip Sopal, City Survey Officer passing the order by replacing the name of assessee with that of Dilip Sopal, assessee obtaining stay against the inclusion of name of Dilip Sopal in place of assessee and Dilip Sopal subsequently selling the portion of land to another developer. We are of the view that the aforesaid developments are material developments which goes to the root of the matter and the entire issue needs to be re-looked into in the light of the aforesaid developments. Assessee has also placed on record the copy of the aforesaid orders, documents as additional evidences. Thus we are of the view that the issue needs to be re- examined. Appeal of the assessee is allowed for statistical purpose.
Issues Involved:
1. Adoption of the value of net consideration. 2. Fair market value determination by the Departmental Valuation Officer (DVO). 3. Applicability of Section 50C of the Income Tax Act, 1961. 4. Subsequent events affecting the transaction and their impact on capital gains computation. Detailed Analysis: Issue 1: Adoption of the Value of Net Consideration The assessee contested the adoption of the net consideration value at ?2,52,70,000/- against the actual sale consideration as per the agreement. The lower authorities had summarily disregarded the appellant's contention in this regard. Issue 2: Fair Market Value Determination by the DVO The DVO's determination of the fair market value of the property was challenged by the assessee, who claimed that sufficient opportunity of hearing was not provided and that various limitations under which the property was sold were not considered. The DVO had determined the fair market value of the land at ?2,52,70,000/- as on the date of sale and ?5,98,500/- as on 01.04.1981. The AO adopted this valuation for computing the taxable capital gains. Issue 3: Applicability of Section 50C of the Income Tax Act, 1961 The assessee argued that the provisions of Section 50C were not applicable because what was sold was the right in the land, not the land or building itself. The CIT(A) upheld the AO's action, noting that Section 50C creates an exception where the consideration declared is less than the value adopted for stamp duty purposes. The CIT(A) also referred to several judicial precedents, including the Madras High Court and Bombay High Court, which upheld the constitutional validity of Section 50C. Issue 4: Subsequent Events Affecting the Transaction The assessee highlighted subsequent events that occurred after the sale deed, which impacted the transaction and the computation of capital gains. These events included: - An application by another legal heir claiming the bequeath of the assessee's share. - The City Survey Officer's order adding the legal heir's name in place of the assessee. - The assessee obtaining a stay against this order. - The legal heir subsequently selling the portion of land to another developer. These events were not considered by the AO during the assessment proceedings. The assessee argued that these developments go to the root of the matter and affect the applicability of Section 50C and the computation of capital gains. Tribunal's Decision: The Tribunal considered the submissions and the material developments presented by the assessee. It noted that these developments were material and went to the root of the matter. The Tribunal decided to remand the case back to the AO for fresh examination in light of these developments. The AO was directed to decide the issue afresh after considering the submissions of the assessee and in accordance with the law, ensuring adequate opportunity of hearing to the assessee. Conclusion: The appeal was allowed for statistical purposes, and the matter was remanded to the AO for fresh examination considering the subsequent developments affecting the transaction. The Tribunal did not express any views on the merits of the case but emphasized the need for a re-examination in light of the new evidence presented.
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