2018 (8) TMI 969 - AT - Income Tax

Capital Gains - Valuation of sale of property - As the assessment was getting time barred the ld AO passed assessment order without waiting for the report of DVO taking the circle rate for stamp duty purposes as deemed sales consideration. - There is no specific manner provided by the act for making a claim before the Ld. assessing officer under section 50 C of the income tax act. Such claim can also be made in the return of income as well as in various communications before the assessing officer. As the assessee has submitted the report of the registered government approved valuer, Therefore, it cannot be said that the assessee has not claimed before the Ld. assessing officer that valuation adopted by the Stamp duty authorities is not the correct valuation of the property sold. The provisions of section 50 C are amended w.e.f. 1/4/2019 only for ignoring the stamp valuation authority valuation if it does not exceed 105% of the consideration received. However, that applies only when comparing the stamp duty valuation with the actual sale consideration of the property. In view of above facts we direct the Ld. assessing officer to work out the capital gain by considering the deemed sale consideration of the property at ₹ 21.78 Lacs and then work out the capital gain chargeable to income tax act. Decided in favor of assessee.

Summary

Issues Involved:
1. Computation of capital gains under Section 50C of the Income Tax Act.
2. Rejection of valuation report by Assistant Valuation Officer.
3. Discrepancy between actual sale consideration and valuation by District Valuation Officer.
4. Claim made by the assessee before the assessing officer regarding valuation.

Analysis:

Issue 1: Computation of capital gains under Section 50C of the Income Tax Act
The assessee filed an appeal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2009-10, challenging the computation of capital gains under Section 50C of the Act. The Assessing Officer determined the long-term capital gain by considering the stamp duty value of the property as the deemed sale consideration. The appellant argued that the valuation by the Assistant Valuation Officer should be accepted as the sale price. The Tribunal noted that Section 50C deems the value adopted for stamp duty as the full value of consideration unless the assessee claims otherwise before the assessing officer. The Tribunal directed the Assessing Officer to work out the capital gain based on the valuation by the Assistant Valuation Officer, reversing the lower authorities' orders.

Issue 2: Rejection of valuation report by Assistant Valuation Officer
The Assistant Valuation Officer valued the property at a certain amount, which differed from the valuation by the Registered Valuer submitted by the assessee. The Tribunal observed that the assessing officer referred the matter to the Assistant Valuation Officer after the assessee objected to the stamp duty valuation. The Tribunal held that the assessee had made a proper claim before the assessing officer by submitting the Registered Valuer's report, leading to the referral to the Assistant Valuation Officer. The rejection of the valuation report by the Commissioner of Income Tax (Appeals) was deemed erroneous.

Issue 3: Discrepancy between actual sale consideration and valuation by District Valuation Officer
The District Valuation Officer determined the fair market value of the property, which was different from the actual sale consideration. The Tribunal acknowledged the nominal difference between the two values but emphasized that Section 50C does not provide for ignoring such differences. The Tribunal directed the Assessing Officer to consider the valuation by the District Valuation Officer as the deemed sale consideration for calculating the capital gain.

Issue 4: Claim made by the assessee before the assessing officer regarding valuation
The Tribunal analyzed the requirement for the assessee to claim before the assessing officer if the stamp duty valuation exceeds the fair market value. It concluded that the assessee had indeed made a proper claim by submitting the Registered Valuer's report, leading to the referral to the District Valuation Officer. The Tribunal held that the claim made by the assessee was valid and directed the Assessing Officer to consider the valuation by the Assistant Valuation Officer for computing the capital gain.

In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes, reversing the orders of the lower authorities and directing the Assessing Officer to recompute the capital gains based on the valuation by the Assistant Valuation Officer.