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2012 (3) TMI 153 - AT - Income TaxApplication of provisions of Section 50C - effective date - Immovable property sold - Amount received as Co-owners - Property transferred on 4.10.06 registered under Property Act 8.01.07 - Held That - This amendment was brought w.e.f. 01.10.2009 for the reason there was a leakage in the provision because certain persons who transferred the land on the basis of sale agreement and want to save themselves from the valuation to be adopted by the Stamp Valuation Authority. Accordingly, from 01.10.2009 even if the land is transferred through the agreement, provision of section 50C is still applicable. However, these provisions are not applicable on the facts of the present case because the transfer, was already made much before the date of amendment, made to section 50C. So taking into consideration this aspect that the sale agreement was much before the date of sale deed execution and the possession was already given on 4.10.2006 before the sale deed execution, which was executed on 08.01.2007. Therefore, we hold that the provision of section 50C(1) are not applicable on the facts of the present case. Determination of value for the purpose of section 50C - Stamp value authority versus Registered Valuer - Value determined by Stamp Valuation Officer at Rs.33,76,391 - by registered value 13,88,000 - Held That - After going through these reasons, we are of the view that if the valuation of this property is taken to Rs.20 lakhs instead of Rs.33,76,391/- or shown by Registered Valuer that will meet ends of justice. Though the valuation of Registered Valuation Officer is on some authentic method but there can be some shortcomings also. The AO has not referred the matter to DVO whereas he should have referred the matter to the DVO for taking valuation from him so that both the valuation can be compared. It is a matter of small addition. Therefore, we are not inclined to send the matter to the file of the AO for referring the matter to the DVO for the purpose of ascertaining actual market value. Accordingly, we direct the AO to adopt valuation of this property at Rs.20 lacs for the purpose of capital gains. We order accordingly.
Issues Involved:
1. Addition under Section 50C(1) of the Income Tax Act, 1961 for Property No. 1. 2. Addition under Section 50C(1) of the Income Tax Act, 1961 for Property No. 2. Issue-Wise Detailed Analysis: 1. Addition under Section 50C(1) for Property No. 1: Facts and Contentions: - The assessee sold Property No. 1 located at Christian Ganj, Anasagar Circular Road, Ajmer, for Rs. 13,81,00,000/- as per the agreement dated 07.09.2006. - The Sub-Registrar valued the property at Rs. 18,30,80,376/- on the date of registration of the sale deed (08.01.2007). - The AO invoked Section 50C(1) and made an addition of Rs. 1,49,93,459/-. - The assessee contended that the property was transferred on 04.10.2006 when possession was handed over, and the sale deed was executed later. Therefore, the provisions of Section 50C should not apply. Tribunal's Findings: - The Tribunal noted that the possession of the property was handed over on 04.10.2006, and the buyer started construction work. - The Tribunal considered various documents, including the agreement to sell, letters, and bills, which proved the transfer of possession. - The Tribunal referred to Section 2(47)(v) of the Act, which includes transactions involving the allowing of possession in part performance of a contract. - The Tribunal cited the Gujarat High Court's decision in CIT v. Hormasji Mancharji Vaid, which held that transfer is complete when possession is handed over, even if the sale deed is registered later. - The Tribunal concluded that the transfer took place on 04.10.2006, and the provisions of Section 50C(1) were not applicable as the sale consideration matched the DLC rates prevalent at that time. Decision: - The Tribunal directed the AO to recompute the capital gains by taking the sale consideration as per the agreement dated 07.09.2006, thereby deleting the addition of Rs. 1,49,93,459/-. 2. Addition under Section 50C(1) for Property No. 2: Facts and Contentions: - The assessee sold Property No. 2 located at AMC No. 8/278 = 6283, Karakka Chowk, Ajmer, for Rs. 13,00,000/-. - The Stamp Valuation Authority valued the property at Rs. 33,76,391/-. - The AO adopted the value assessed by the Stamp Valuation Authority and made an addition under Section 50C(1). - The assessee contended that the property was rented out for over 50 years and was in possession of old tenants, affecting its market value. The assessee also obtained valuation reports from registered valuers. Tribunal's Findings: - The Tribunal noted that the property was rented out for more than 50 years and was in possession of old tenants, which would affect its market value. - The Tribunal observed that the AO did not refer the matter to the DVO as required under Section 50C(2) when the assessee disputed the valuation by the Stamp Valuation Authority. - The Tribunal concluded that the AO should have referred the matter to the DVO for a proper valuation. - Considering the circumstances and the valuation reports, the Tribunal decided to adopt a reasonable valuation of Rs. 20,00,000/- instead of Rs. 33,76,391/-. Decision: - The Tribunal directed the AO to adopt the valuation of Rs. 20,00,000/- for the purpose of capital gains computation, thereby partially allowing the assessee's appeal. Conclusion: - The appeal of the assessee was allowed, with directions to the AO to recompute the capital gains for both properties based on the Tribunal's findings and decisions.
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