2015 (7) TMI 973 - AT - Income Tax

Capital gain - Valuation of property - stamp valuation u/s 50C - Rectification of an order u/s 154 r.w.s. 155(15) - Held that - D.R. has given detailed findings on page No. 5 and 6 of her order and concluded that even subsequent second sale was taken by the Stamp Authority @ 1650 per sq.mtr. whereas DLC rate revalued by the Stamp Authority in assessee s case @ 2160 per sq.mtr., which has been challenged before the Additional Collector (Stamp), Jaipur and matter is pending before him. As per Section 50C(2), the DVO had estimated value of the concerned property at ₹ 8,10,000/-. Therefore, there is no justification in applying sale consideration at ₹ 33,35,000/. If the learned CIT(A) s observation is that if any variation in valuation came on account of final decision of Additional Collector (Stamp), can be rectified U/s 155(15) within four years from the end of the previous year, in which the order revising the value was passed in appeal or revision or reference. - Decided against Revenue.

Summary

Issues:
- Appeal against deletion of short term capital gain on property sale.

Analysis:
1. The Revenue filed an appeal against the deletion of a short term capital gain of Rs. 25,10,000 on the sale of a property. The Assessing Officer had assessed the capital gain based on the value determined by the Stamp Authority at Rs. 33,35,000, despite the assessee's claim that the property was sold for Rs. 8,25,000 with a DLC value of Rs. 6,07,500. The Assessing Officer applied Section 50C(1) of the Income Tax Act, 1961, to calculate the short term capital gain at Rs. 27,41,010.

2. The assessee appealed to the CIT(A), who allowed the appeal fully. The CIT(A) noted that the appellant had not filed any additional evidence and requested the matter to be referred to the Departmental Valuation Officer. The DVO determined the value of the land at Rs. 8,10,000. The CIT(A) disagreed with the Assessing Officer's decision to keep the matter pending until the finalization of the land value by the Additional Collector (Stamps), Jaipur. The CIT(A) held that the value of the land sold by the assessee should be taken at Rs. 8,25,000 under Section 50C(3), and thus, deleted the addition of Rs. 25,10,000.

3. The Revenue appealed to the ITAT Jaipur. The ITAT considered the arguments of both parties and found that the CIT(A)'s findings were not contested by the Revenue. The ITAT noted that the Stamp Authority had revalued the DLC rate in the assessee's case differently from subsequent sales. The DVO had estimated the property value at Rs. 8,10,000. The ITAT upheld the CIT(A)'s decision, stating that there was no justification for applying the sale consideration at Rs. 33,35,000. The ITAT confirmed the CIT(A)'s order, and the Revenue's appeal was dismissed.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the addition of the short term capital gain on the property sale, based on the valuation provided by the DVO and the inconsistency in the Stamp Authority's revaluation.