2021 (6) TMI 1174 - AT - Income Tax

Capital gain computation - determination rate of the land for working out the sale consideration for the purpose of capital gain - CIT-A directing the AO to adopt the rate of ₹ 618 per square meter with respect to the sale of property against the rate adopted by the AO at Rs. 1,670 per square meter - HELD THAT - The issue on hand does not require any further consideration for the simple reason that the ITAT in the own case of the assessee in the appeal preferred by the assessee ASHOK VADILAL PATEL VERSUS ITO, WARD-3 (3) (1) AHMEDABAD. 2021 (1) TMI 1085 - ITAT AHMEDABAD has directed the AO to adopt the rate for the sale of land at Rs. 200 per square meter. Admittedly, the decision rendered by the ITAT in the own case of the assessee as discussed above is binding on us. Therefore we have no other alternate except to follow the order as discussed aforesaid. - Decided against revenue.

Summary

Issues:
1. Discrepancy in the valuation of property for capital gain calculation between the Assessing Officer and the Commissioner of Income Tax (Appeals).

Analysis:

Issue 1: Discrepancy in property valuation for capital gain calculation

The case involved a dispute regarding the valuation of a property for calculating capital gains. The assessee had sold land at a rate of Rs. 200 per square meter, totaling Rs. 46,54,000. However, the Assessing Officer valued the land at Rs. 1,670 per square meter, resulting in a sale consideration of Rs. 3,88,60,900. The Commissioner of Income Tax (Appeals) reduced the valuation to Rs. 618 per square meter, partially allowing relief to the assessee. Both the Revenue and the assessee appealed to the ITAT, with the Revenue contesting the CIT(A)'s direction to adopt the lower rate of Rs. 618 per square meter. The ITAT noted that in a separate order related to the assessee's appeal, it had directed the AO to adopt the rate of Rs. 200 per square meter for the sale of land. This direction was based on the agreement between the parties and the stamp duty valuation at the time of agreement, emphasizing the importance of the date of agreement in determining the valuation for capital gains. The ITAT held that the decision in the assessee's case was binding, leading to the dismissal of the Revenue's appeal.

The ITAT's decision highlighted the significance of the agreement date and the stamp duty valuation at that time in determining the property valuation for capital gain calculation. The ITAT emphasized that the rate agreed upon between the parties in the agreement should be considered for valuation, especially when supported by stamp duty valuation. The ITAT's ruling underscored the importance of specific performance rights and encumbrances created by the agreement in determining the appropriate valuation for capital gains. The retrospective application of the second proviso to section 50C was also noted, allowing consideration of the date of agreement for valuation purposes. Ultimately, the ITAT's decision in the assessee's case, directing the adoption of the lower rate of Rs. 200 per square meter, was deemed binding, leading to the dismissal of the Revenue's appeal.