2020 (4) TMI 577 - AT - Income Tax

Capital gain computation - determination of the full value of consideration in terms of section 50C - DVO valued the property as on the date of sale at 850/- per sq. meter. - HELD THAT - Vide order dated 06- 02-2020 the Tribunal has directed to adopt 1, 032/- as per sq. mtr as fair market value on the date of sale in that case namely 08-01-2004 against survey number 187. It therefore emerges that the stamp value of 955/- in this case is still less than the fair market value determined by the Tribunal for similar property in the case of Shri Nitin N. Shewale - agree with the view taken by the ld. CIT(A) in restricting the addition by adopting fair market value as on the date of transfer of land at 955/- p.s.m. being the stamp value. There is no scope for further reduction in such value as urged on behalf of the assessee. This ground is dismissed. Valuation as on 01-04-1981 - assessee adopted the unindexed rate of 163.50/- p.s.m. as on 01-04-1981 - on the basis of the DVO s report that the ld. CIT(A) adopted the rate of 50/- per sq.mtr as the F.M.V as on 1.4.1981 - HELD THAT - Going by the interpretation of the pre-amended provision by the Hon ble jurisdictional High Court in the case of Puja Prints 2014 (1) TMI 764 - BOMBAY HIGH COURT as applicable to the facts of the instant case it is vivid that no reference could have been made to the DVO when the value adopted by the assessee was more than the fair market value of the land in the opinion of the AO. Since valid reference could not have been made the value so determined by the DVO as on 01-04-1981 ergo becomes meaningless for the instant exercise. Going by the provision as applicable to the instant case it is held that the value of the land as declared by the assessee on 01-04-1981 which is patently more than the value so determined by the DVO/AO cannot be interfered with. Set-aside the impugned order and remit the matter to the file of the AO for determining the amount of capital gain afresh in accordance with the discussion made supra . Appeals allowed for statistical purposes.

Summary

Issues: Determination of full value of consideration under section 50C of the Act and valuation as on 01-04-1981.

Analysis:

1. Determination of full value of consideration under section 50C: The first issue pertains to the determination of the full value of consideration under section 50C of the Act. The Assessing Officer (AO) had initially valued the property at a higher rate than the fair market value determined by the District Valuation Officer (DVO). However, the ld. CIT(A) directed the AO to restrict the full value of consideration to the stamp duty valuation, which was lower than the fair market value determined by the DVO in another case. The Tribunal upheld this decision, stating that the stamp value was appropriate for determining the capital gain, dismissing the assessee's request for further reduction.

2. Valuation as on 01-04-1981: The second issue revolves around the valuation of the property as on 01-04-1981. The assessee had adopted an unindexed rate for valuation, which was contested by the AO based on the DVO's report. The ld. CIT(A) upheld the AO's valuation, citing an amendment to section 55A allowing a reference to the DVO when the value claimed by the assessee is at variance with the fair market value. However, the Tribunal held that the pre-amended provision applied to the case, as the reference was made before the amendment came into effect. Consequently, the Tribunal set aside the order and remitted the matter to the AO for fresh determination of capital gain.

3. Consolidated Decision: The Tribunal consolidated two appeals by connected assessees, setting aside the orders in both cases and remitting them to the AO for fresh assessment in line with the directions provided. The decision emphasized adherence to relevant provisions and precedents, ensuring a fair and accurate determination of capital gains. Both appeals were allowed for statistical purposes, providing the assessees with a reasonable opportunity for a fresh hearing before the AO.

In conclusion, the judgment addressed key issues related to the determination of full value of consideration and valuation as on a specific date, emphasizing compliance with legal provisions and precedents to ensure a fair assessment of capital gains for the assessees involved.