2020 (3) TMI 446 - AT - Income Tax

Long-term capital gain on sale of land - accepting valuation report of DVO who is not qualified Valuer of agricultural land and not accepting the valuation report of Government Approved Valuer, who is qualified Valuer for agricultural land - HELD THAT - AO is directed to re worked out index cost of acquisition by taken FMV at ₹ 210 per sq. meter and re-compute taxable long-term capital gain , accordingly, That Ground No. 1 and 2 are partly allowed. See Smt. Hemaben Bharatbhai Desai 2019 (2) TMI 1810 - ITAT SURAT Addition on account of difference in Jantri Value by applying the provisions of section 50C - HELD THAT - As difference between the valuation as per stamp duty and the sale consideration issue by the assessee is less than 10% and in such circumstances no addition can be made.

Summary

Issues:
1. Valuation dispute regarding long-term capital gain on sale of land
2. Addition made on account of difference in Jantri Value applying section 50C of the Act

Issue 1: Valuation dispute regarding long-term capital gain on sale of land:

The appeal pertains to the acceptance of the valuation report of the District Valuation Officer (DVO) over the Government Approved Valuer's report in determining the long-term capital gain on the sale of land. The Assessee contested the addition of ?24,21,602, arguing that the DVO's valuation was not based on comparable sale instances and was lower than the value claimed by the assessee. The CIT(A) upheld the addition, but the Tribunal referred to a similar case involving co-owners of land, where the fair market value (FMV) was determined by taking an average of valuations. The Tribunal directed the AO to rework the index cost of acquisition by considering the average value, resulting in the partial allowance of the Assessee's appeal.

Issue 2: Addition made on account of difference in Jantri Value applying section 50C of the Act:

The second issue concerns the addition of ?12,25,000 due to the variance between the sale consideration declared by the Assessee and the Jantri Value, invoking section 50C of the Act. The Assessee argued that the difference was less than 10%, citing precedents where such variances were not considered for additions. The Tribunal, following the precedent, directed the AO to adopt the value declared by the Assessee, thereby deleting the additions made under section 50C. The Tribunal's decision was based on the principle that minor differences in valuations should not lead to additions under section 50C, leading to the partial allowance of the Assessee's appeal.

In conclusion, the Tribunal partially allowed the Assessee's appeal in both issues, directing the AO to rework the index cost of acquisition based on average valuations in the first issue and adopting the value declared by the Assessee in the second issue. The decisions were influenced by precedents emphasizing that minor differences in valuations should not result in substantial additions under the relevant sections of the Income Tax Act.