2016 (4) TMI 480 - HC - Income Tax

Addition on account of capital gain on the basis of valuation of asset by DVO - ITAT deleted the addition - Held that - Section 50C of the Act is a special provision for full value of consideration in some cases. What the section provides is that if any land or building or both are transferred at a value less than the value adopted or assessed or assessable by the stamp valuation authority the value adopted or assessed or assessable by the stamp valuation authority shall be considered to be the full value of the consideration received or accruing as a result of such transfer. Thus the condition precedent for resorting to the provisions of sub-section (1) of section 50C of the Act is that the land or building should have been transferred for a lesser consideration than that adopted or assessed or assessable by the stamp valuation authority. Adverting to the facts of the present case undisputedly the valuation made by the assessee exceeds the value adopted by the stamp valuation authority. The condition precedent for invoking sub-section (1) of section 50C of the Act is therefore clearly not satisfied. Consequently there was no question of referring the valuation of the plots in question to the Valuation Officer. The impugned order passed by the Tribunal being in consonance with the provisions of sub-section (1) of section 50C of the Act does not suffer from any legal infirmity so as to give rise to any question of law much less a substantial question of law. - Decided against revenue

Summary

Issues:
Challenge to deletion of addition of capital gain based on valuation of asset by DVO under section 260A of the Income Tax Act, 1961.

Analysis:
1. The appellant revenue challenged the order of the Income Tax Appellate Tribunal regarding the deletion of an addition of capital gain amounting to ?2,44,83,495 based on the valuation of assets by the Departmental Valuation Officer (DVO). The substantial question of law raised was whether the Tribunal erred in deleting the said addition.

2. The assessment year in question was 2008-2009, with the assessee being an individual who declared a total income of ?7,27,25,205. The Assessing Officer framed the assessment under section 143(3) of the Act, determining the total income at ?9,72,08,700. The dispute arose from the valuation of two plots of land, where the Valuation Cell determined the fair market value of one plot higher than the value declared by the assessee. The Commissioner (Appeals) held that as the assessee's declared value was higher than the stamp duty valuation, there was no need to refer the matter to the DVO, leading to the deletion of the addition. The Tribunal upheld this decision.

3. The senior advocate for the appellant contested the order, arguing that the appeal needed consideration based on the grounds stated by the Assessing Officer. However, the facts were undisputed, with the assessee's valuation exceeding the value adopted by the stamp valuation authority. Section 50C of the Act was invoked, which deems the stamp valuation authority's value as the full consideration in cases where the transfer value is lower. Since the condition for invoking section 50C was not met, there was no requirement to refer the valuation to the DVO. The Tribunal's decision was found to be in line with the Act, devoid of any legal flaws.

4. As the condition for invoking section 50C was not satisfied due to the assessee's valuation exceeding the stamp valuation authority's value, the appeal was dismissed, upholding the Tribunal's decision to delete the addition of capital gain.