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2019 (6) TMI 1085 - AT - Income TaxCapital gain computation - deduction u/s 50C - assessee argued that the order of the District Registrar was faulty and the guideline value of the vacant site in the area subsequent to the registration of the document also was lesser than the value adopted by the District Registrar - HELD THAT - Transactions of agreement and possession was handed over on 16.11.2010 and the part payment was also received by the assessee on 16.11.2010. Therefore respectfully following the view taken by this tribunal in the case of Appana Hari Naga Venkat Rao 2019 (2) TMI 1650 - ITAT VISAKHAPATNAM we hold that market value determined by the SRO for registering the document as on 16.11.2010 has to be considered as the full value of consideration but not the value determined in the sale deed. Even otherwise from careful verification of the proceedings of the District Registrar, the market rate as on the date of execution or the sale deed was ₹ 26,000/- i.e. on 28.02.2011, but not as on16.11.2010 Since there was substantial time gap between the sale agreement and the sale deed, there is a possibility of increase in the market rate. The assessee had obtained the market value certificate as on 16.11.2010 from the Joint Sub Registrar vide certificate dated 27.05.2015 for the same door No.2-4-34 and it was ₹ 16,000/- per sq.yard as on 16.11.2010. Subsequent to the execution of the sale document also the assessee has obtained the guideline value for the same municipal number of 2-4-34 and the market value as on 18.04.2011 was at ₹ 12,000/- per sq.yard. The District Registrar fixed the market rate at ₹ 26,000/- as against the guide line value of ₹ 12,000/- or ₹ 16,000/- as per their own records without giving reason for deviating the SRO value or the market value fixed as on 16.11.2010 as agreed by both the parties. On 08.06.2017 also, the assessee has obtained the market value certificate from Joint Sub Registrar, Registration and Stamps Department of Govt. of Andhra Pradesh which was certified that the value of the vacant land at Door No.2-4-34 was ₹ 12,000/- as on 28.02.2011. AO brushed aside the evidence produced by the assessee for irrelevant differences in the certificate such as change of locality etc. AO ought to have considered that even though there may be multiple names for the same locality or street, Door No is unique and remains the same for each house in a town or municipality. Subsequent to the sale of the land also, the Joint Sub Registrar has given the market value of the property at ₹ 12,000/- per sq.yd as discussed above. The purpose of capital gains, the full value of consideration has to be taken as determined by Stamps and Registration Authority as on 16.11.2010, the date of sale agreement. Since, we have already taken view that the market value as on sale agreement has to be considered for the purpose of capital gains we are not inclined to comment on the issue of market value determined by the District Registrar, since the same is pending in the court. CIT(A) and delete the addition made by the AO and direct the AO to compute the capital gains as per the stamp value assessed in the sale agreement cum possession dated 16.11.2010. - Appeal of the assessee is allowed
Issues Involved:
1. Request for stay of demand 2. Deduction under Section 50C of the Income Tax Act 3. Determination of full value of consideration for computing capital gains Issue-wise Detailed Analysis: 1. Request for Stay of Demand: The assessee filed a stay petition requesting for the stay of demand amounting to ?1,75,28,235/-. During the appeal hearing, the assessee's representative did not press the stay petition as the main appeal was taken up for hearing simultaneously. Consequently, the stay application filed by the assessee was dismissed. 2. Deduction under Section 50C of the Income Tax Act: The appeal was filed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], Rajahmahendravaram, concerning the assessment year 2011-12. The primary issue was related to the deduction under Section 50C of the Income Tax Act. The assessee filed the return of income declaring a total income of ?9,84,14,290/-. During the assessment proceedings, the Assessing Officer (AO) found that the assessee had sold a vacant site for ?10,56,32,000/- as per a sale deed dated 28.02.2011. However, the District Registrar revised the market value to ?17,17,78,000/- under Section 47(A) of the Indian Stamps Act. The AO adopted this revised value for computing capital gains, which the assessee contested, arguing that the original sale consideration should be considered. 3. Determination of Full Value of Consideration for Computing Capital Gains: The AO issued a show cause notice to the assessee, who objected to the revised valuation and provided evidence supporting the original sale consideration. The AO, however, did not accept the assessee's explanation, citing the following reasons: - The market value determined by the District Registrar was undisputed. - The difference in stamp duty was paid by the purchaser. - The market value certificates provided by the assessee had discrepancies in property details. - Under Section 50C, the value adopted by the Stamp Valuation Authority should be deemed the full value of consideration. The CIT(A) upheld the AO's decision, endorsing the view that the sale consideration should be adopted as per the sale deed, not the sale agreement. Tribunal's Findings: The Tribunal considered the arguments from both sides. The assessee argued that the transfer was completed on 16.11.2010, as per the sale agreement, and the possession of the land was handed over to the vendee. The assessee received part of the sale consideration through a demand draft on the same date. The Tribunal noted that the market value as on the date of the sale agreement was ?10,56,32,000/-, and there was no evidence that this value was disputed by the registration authorities at that time. The Tribunal referred to the decision in the case of Appana Hari Naga Venkat Rao vs. ITO, where it was held that the sale consideration as on the date of the agreement should be considered for computing capital gains. The Tribunal also noted that the District Registrar's report did not provide comparable cases or reasons for fixing the value at ?26,000/- per sq. yard. Conclusion: The Tribunal held that the full value of consideration for computing capital gains should be based on the market value as determined on 16.11.2010, the date of the sale agreement. The Tribunal set aside the order of the CIT(A) and directed the AO to compute the capital gains based on the stamp value assessed in the sale agreement cum possession dated 16.11.2010. The appeal of the assessee was allowed, and the stay application was dismissed.
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