2021 (12) TMI 809 - AT - Income Tax

Capital gain computation - adoption the value determined by the DVO as sale consideration - HELD THAT - The provisions of section 50C of the Act requires to adopt the value determined for the purpose of Stamp duty as the sale consideration on the transfer of capital asset being land and building if the consideration on the transfer of the capital asset is less than the value adopted or assessed or assessable for the purpose of stamp duty - the stamp value is deemed as the sale consideration under the provisions of section 50C - if the assessee disputes such stamp value than the matter can be referred to the DVO to determine the fair market value which shall be treated as sale consideration in pursuance to the provisions of subsection 2 of section 50C - in the present case the reference to the DVO has been made who determined the value at ₹70,54,000.00 in which the share of the assessee stands at ₹35,27,000.00 only - Accordingly, the learned CIT (A) has directed to the AO to adopt the sale consideration at ₹35,27,000.00 only for the purpose of computing the short-term capital gain. The provisions of section 50C of the Act was introduced in the Income tax Act, 1961 by the Finance Act, 2002 with effect from 1-4-2003 for substituting valuation done for Stamp Valuation purposes as full value of consideration in place of apparent consideration shown by the transferor of capital asset, being land or building and, accordingly, calculating capital gains under section 48 of the Act. On perusal of the above provisions, we note that there is no scope for making any adjustment for the gift while determining the full value of consideration under the deeming provisions of section 50C of the Act. Accordingly, we are not satisfied with the contention of the learned AR for the assessee. Thus, we have no alternative except to confirm the order of the authorities below. Hence the ground of appeal of the assessee is dismissed.

Summary

Issues:
1. Confirmation of addition made by AO for ?5,77,000 instead of deletion in entirety.

Analysis:
The judgment involves appeals by different Assessees against orders of the Commissioner of Income Tax(Appeals) related to assessment under section 143 of the Income Tax Act, 1961 for Assessment Year 2012-13. The primary issue in ITA No. 992/AHD/2019 was the addition of ?5,77,000 by the AO, which the assessee contested, claiming it should be deleted entirely. The assessee sold a property jointly with his wife for ?59 lakhs, showing his share at ?29,50,000. The AO, however, valued the property at ?89,27,000 for stamp duty purposes, resulting in an addition of ?15,13,500 as short-term capital gain under section 50C of the Act.

The assessee argued that the excess stamp duty value should be considered a gift to a relative, not part of the sale consideration. The CIT (A) directed the AO to adopt the value determined by the DVO at ?70,54,000 as the sale consideration. Despite the assessee's claim that the excess value represented a gift, the CIT (A) upheld the AO's decision. The ITAT noted that under section 50C, the stamp duty value is deemed as the sale consideration unless disputed. The DVO valued the property at ?70,54,000, leading to the CIT (A) instructing the AO to consider ?35,27,000 as the sale consideration for short-term capital gain calculation.

The ITAT highlighted that section 50C aims to substitute stamp valuation for the full value of consideration in land or building transfers. It clarified that no adjustment for gift is allowed under section 50C. Consequently, the ITAT dismissed the appeal, affirming the authorities' decision. In a similar case, ITA No. 993/Ahd/2019 for AY 2012-13, the issues were identical to ITA No. 992/AHD/2019. The ITAT applied the findings of the former case to the latter, leading to the dismissal of the Assessee's appeal in both instances.

In conclusion, the ITAT upheld the decisions of the lower authorities regarding the addition made by the AO, emphasizing the application of section 50C and the absence of provisions for gift adjustment in determining the full value of consideration. Both appeals by the Assessees were dismissed by the ITAT.