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2013 (2) TMI 456 - HC - Income TaxValuation - valuation done by the Stamp Valuation Authorities would be taken as sale consideration or - valuation done by the D.V.O. should be taken - Assessee entered into an agreement for sale for a consideration of Rs.51,75,000 - Stamp Authorities levied the stamp duty on a value of Rs.1,38,00,000/- as per the circle rate - A.O. invoked the provisions of section 50C i.e. sale consideration Rs.1,38,00,000 Held that - Section 50C provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both is less than the value adopted or assessed by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration - Further where the assessee claims that the value adopted or assessed for stamp duty purposes exceeds the fair market value of the property as on the date of transfer, the Assessing Officer may refer the valuation of the relevant asset to a Valuation Officer in accordance with section 55A of the Income Tax Act - This preposition of law has been upheld in the case of C.W.T. vs. Dr. H.Rahman 1991 (2) TMI 97 - ALLAHABAD HIGH COURT - It is crystal clear that generally, when the A.O. has obtained the D.V.O. Report then the same is binding Against the revenue.
Issues:
1. Interpretation of section 50C of the Income Tax Act regarding valuation of property for capital gains calculation. Analysis: The case involved an appeal by the Department-appellant under section 260-A of the Income Tax Act against the judgment of the Income Tax Appellate Tribunal regarding the valuation of a property for the assessment year 2003-04. The dispute centered around whether the valuation done by the Stamp Valuation Authorities or the Departmental Valuer Officer (D.V.O.) should be adopted as the sale consideration for the property in question. The respondent-assessee argued that the Stamp Duty Authorities' valuation exceeded the fair market value, presenting a report from their registered valuer valuing the property lower than the Stamp Authorities. The Assessing Officer (A.O.) rejected the assessee's valuer report and referred the matter to the D.V.O., who valued the property differently. The First Appellate Authority directed the A.O. to adopt the value estimated by the D.V.O. The Tribunal upheld this decision, leading to the Department's appeal. The key legal provision in question was section 50C of the Income Tax Act, inserted by the Finance Act 2002 to address understatements of consideration in property transactions. This section deems the value assessed by the Stamp Valuation Authorities as the full value of consideration for capital gains calculation if it exceeds the consideration declared by the assessee. However, if the assessee claims the stamp valuation exceeds the fair market value, the A.O. may refer the valuation to a Valuation Officer. The C.B.D.T. Circular No.8/2002 further clarifies the application of section 50C in determining the full value of consideration in property transfers. The Court referred to the case law of C.W.T. vs. Dr. H.Rahman, which emphasized the mandatory nature of following the Valuation Officer's assessment when referred by the A.O. This principle was also supported by a Division Bench decision in M.C.Khunnah vs. Union of India. Considering these legal precedents and the facts of the case, the Court upheld the Tribunal's decision to adopt the valuation by the D.V.O. as the sale consideration, dismissing the Department's appeal. The judgment favored the assessee, concluding that the A.O.'s reliance on the D.V.O. report was justified, and there was no reason to interfere with the Tribunal's decision.
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