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2019 (1) TMI 296 - AT - Income TaxLong Term Capital Gain on sale of shops - FMV determination - request for reference to DVO - addition of ₹ 16,69,167/- by replacing the actual sale consideration of shops of ₹ 35,25,000/- which was the fair market value as on the date of sale by the circle rate of ₹ 55,20,000/- for the purpose of calculation of capital gain - Held that - AO referred to the provisions u/s. 50C(1) and held that the value adopted for stamp duty purposes shall be deemed to be the full value of the consideration received as a result of such transfer. AO assessed full value of the consideration as per the circle rates and added ₹ 16,69,167/- to the total income of the assessee and similarly, Ld. CIT(A) has held that AO was fully justified in taking the full value of the consideration as per the value adopted for stamp duty purposes, as the assessee failed to substantiate the claim of distressing circumstances and also held on the issue of reference that it is not mandatory for the A.O. to refer the matter to DVO mandatorily, which in my opinion, is not sustainable in the eyes of law and against the law laid down in Home Finders Housing Ltd. vs. ITO, Corporate Ward 2(3) 2018 (7) TMI 199 - SUPREME COURT OF INDIA . Set aside the issue in dispute to the AO with the directions to refer the matter to the DVO for valuation and DVO should allow full opportunity of hearing to the assessee, as per law and submit the Report to the AO. Thereafter, the AO shall decide the matter in dispute afresh - Appeal filed by the assessee stands allowed for statistical purposes.
Issues:
1. Addition of Long Term Capital Gain on sale of shops. 2. Replacement of actual sales consideration with circle rate for capital gain calculation. 3. Failure to refer to the valuation officer under section 50C(2). 4. Discretionary application of procedure for valuation officer reference. Analysis: Issue 1: Addition of Long Term Capital Gain on sale of shops The appellant contested the addition of ?16,69,167 made by the Assessing Officer (AO) in calculating the Long Term Capital Gain on the sale of shops. The AO based the assessment on the value adopted for stamp duty purposes, which exceeded the sale consideration declared by the assessee. The appellant argued that the matter should have been referred to the Valuation Officer under section 50C(2)(a), as per their specific claim. The AO's decision was upheld by the CIT(A), leading to the appeal before the Tribunal. Issue 2: Replacement of actual sales consideration with circle rate The dispute arose from the AO replacing the actual sales consideration of ?32,50,000 with the circle rate of ?55,20,000 for calculating capital gain. The appellant argued that the AO should have referred the matter to the Valuation Officer to determine the fair market value, as requested under section 50C(2)(a). The AO's decision was based on the provisions of section 50C(1), deeming the value adopted for stamp duty as the full consideration. The CIT(A) upheld this decision, leading to the appeal. Issue 3: Failure to refer to the valuation officer The appellant contended that the AO failed to refer the matter to the Valuation Officer despite the specific claim under section 50C(2)(a). The failure to refer led to the assessment being completed based on circle rates, resulting in the addition of ?16,69,167 to the total income. The appellant argued that the reference to the Valuation Officer was necessary as per the law. Issue 4: Discretionary application of procedure for valuation officer reference The Tribunal noted that the AO's decision not to refer the matter to the Valuation Officer was against the law laid down by the Hon'ble Supreme Court in a previous case. Citing the legal precedent, the Tribunal directed the AO to refer the matter to the Valuation Officer for valuation. The Tribunal emphasized that the AO should allow full opportunity for the assessee to present their case and consider the Valuation Officer's report before deciding the matter afresh. In conclusion, the Tribunal allowed the appeal for statistical purposes and directed the AO to refer the matter to the Valuation Officer for valuation, following the legal precedent and ensuring justice in the assessment process.
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