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2022 (11) TMI 14 - AT - Income TaxLTCG - addition made u/s 50C - difference between fair market value as determined by the DVO and sale consideration as reflected in the sale deed - HELD THAT - As following the ratio in the case of Bimla Singh 2008 (10) TMI 62 - PATNA HIGH COURT which has been followed by this Tribunal in the case of M/s. Radhika Sales Corporation 2018 (11) TMI 1788 - ITAT PUNE hold that the addition made by the Assessing Officer being the share of the assessee on account of long term capital gains being the difference between fair market value as determined by the DVO and sale consideration as reflected in the sale deed is less than 7%. Therefore, the addition as confirmed by the CIT(A) on account of long term capital gains in the hands of the assessee is not justified. Thus, the order of the CIT(A) fails and it is set-aside. Grounds of appeal no.1 to 5 are allowed.
Issues:
1. Whether the CIT(A) was justified in confirming the addition made under section 50C of the Income Tax Act. Analysis: The appeal before the Appellate Tribunal ITAT Nagpur was against the order passed by the National Faceless Appeal Centre for the assessment year 2014-15. The primary issue raised by the assessee was regarding the addition made under section 50C of the Act. The Assessing Officer had determined the capital gain based on the fair market value of the property as determined by the District Valuation Officer (DVO), which was contested by the assessee. The assessee argued that the difference between the value declared by them and the value determined by the DVO was less than 7%, hence no addition was justified. The CIT(A) upheld the Assessing Officer's decision, stating that the fair market value as determined by the DVO should be considered, and a 7% difference does not automatically authorize a lower value to be taken. The assessee then approached the Tribunal, presenting a decision from a previous case to support their argument that no addition should be made if the difference is less than 10%. The Departmental Representative (DR) argued that the Assessing Officer must follow the procedure under section 50C and consider the value determined by the DVO. After hearing both parties, the Tribunal noted the details of the property transaction, the valuation process by the DVO, and the objections raised by the assessee. The Tribunal referred to previous decisions and held that if the difference between the fair market value determined by the DVO and the actual sale consideration is less than 10%, no addition is warranted. In this case, the difference was less than 7%, leading the Tribunal to conclude that the addition made by the Assessing Officer for long-term capital gains was not justified. Consequently, the Tribunal set aside the CIT(A)'s order and allowed the appeal filed by the assessee. In conclusion, the Tribunal ruled in favor of the assessee, emphasizing the importance of considering the fair market value determined by the DVO and the significance of the percentage difference in determining the validity of additions under section 50C of the Income Tax Act.
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