2017 (12) TMI 1167 - AT - Income Tax

Capital gain - applicability of section 50C and the valuation by DVO/FMV - Held that - We are of the considered opinion that in order to calculate exact capital gain, applicability of section 50C and the valuation by DVO/FMV, the matter needs further application of mind at the level of assessing officer on all counts and position of law with regard to the computation of capital gain as per the provisions of section 45 to 55A of the Act. We find that the FAA has directed the First Assessing Authority to take the sale consideration at ₹ 1,89,98,000/- as determined by DVO which is wrong and also contrary to the provisions of section 50C of the Act, as the provisions of this section provides for taking the value equal to stamp valuation in the event to sale consideration being lower to the value as per the stamp valuation authority. This matter requires fresh application of mind at the level of AO. Accordingly we set aside the order of the FAA and restore this matter to the file of AO with a direction to consider all the evidences as may be filed by the assessee in the set aside proceedings and compute the capital gain after considering the cost of acquisition as per law in terms our discussion above and taking sale consideration equal to the value of stamp valuation authority for the purpose of capital gain. Accordingly, we restore the matter back to the file of the AO to assess the capital gain denovo as per facts and law. Resultantly, the issue is allowed for statistical purposes.

Summary

Issues Involved:
Appeals by two different assesses against CIT(A) orders for assessment year 2009-10; Admissibility of additional grounds raised by assessee; Computation of capital gains as per sections 45 to 55A of the Income Tax Act; Applicability of section 50C in determining sale consideration; Consideration of evidences and cost of acquisition by CIT(A); Request to send the matter back to AO for fresh assessment.

Detailed Analysis:

1. Admissibility of Additional Grounds:
The additional grounds raised by the assessee focused on the violation of natural justice principles and the correct computation of capital gains as per the Income Tax Act. The Tribunal admitted these additional grounds for adjudication based on the precedent set by the Supreme Court, allowing the issues raised by the assessee to be considered.

2. Computation of Capital Gains and Section 50C:
The case involved the sale of a property by the assessee, where the Stamp Duty Valuation was significantly higher than the sale consideration declared. The AO applied section 50C to determine the capital gains based on the higher valuation. The FAA upheld this decision, leading to an appeal. The Tribunal found discrepancies in the valuation and directed the AO to recalculate the capital gains considering the correct valuation as per stamp duty authority.

3. Consideration of Evidences and Cost of Acquisition:
The assessee argued that the CIT(A) did not adequately consider the evidences provided and the cost of acquisition, especially regarding the value of tenancy rights. The Tribunal agreed that a more thorough assessment was necessary, directing the matter back to the AO for a fresh evaluation based on all relevant facts and legal provisions.

4. Decision and Outcome:
The Tribunal decided in favor of the assessee, allowing the appeals for statistical purposes. The matter was remanded back to the AO for a fresh assessment considering all aspects of the case, including the correct valuation for determining capital gains. The decision was pronounced on 22nd December 2017.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the Tribunal's decision and the rationale behind it.