2017 (12) TMI 742 - AT - Income Tax

Determination of long term capital gain - applicability of provisions of 50C - Held that - Provisions of Section 50C(2)(a) provides an option for the assessee of fair market value instead of valuation adopted for stamp purposes where stamp valuation exceeds the fair market value. On a bare reading of the provisions of the said section, it is evident that the alternative left with the Assessing Officer to refer the matter at the most to the valuation officer which has not been done and the property was in dispute and was the subject matter of litigation and therefore, the property has been sold at market value. Accordingly, we find no defect in the submissions of the counsel for the assessee Reliance placed on the decision of the ITAT in the case of Aditya Narain Verma 2017 (6) TMI 542 - ITAT DELHI , all the grounds raised by the assessee are allowed and the remaining grounds of the assessee for the purpose of capital gain are also decided in favour of the assessee.

Summary

Issues:
Determining long term capital gain under section 50C of the Income Tax Act 1961.

Analysis:
The appeal arose from the order of the ld. CIT(A) concerning the determination of long term capital gain for A.Y. 2008-09. The Assessing Officer found discrepancies in stamp duty paid by the assessee for two properties sold during the year. The AO believed an amount deserved to be added to the total income as per section 50C. The assessee argued for fair market value instead of stamp valuation due to ongoing litigation, but the AO computed the income based on stamp valuation. The CIT(A) upheld this decision, leading to the appeal.

The assessee contended that the properties were sold at market rate due to ongoing litigation, and the Assessing Officer should have referred the valuation to a valuation officer as per section 50C(2)(a). The ITAT 'A' Bench decision in a similar case supported the assessee's argument, emphasizing the need for the Assessing Officer to refer valuation to an expert valuation officer in case of discrepancies between stamp valuation and fair market value. The ITAT upheld the CIT(A)'s order in favor of the assessee, rejecting the grounds raised by the revenue.

Therefore, considering the facts, circumstances, and the precedent set by the ITAT 'A' Bench, all the grounds raised by the assessee were allowed, and the remaining grounds concerning capital gain were decided in favor of the assessee. Consequently, the appeal of the assessee was partly allowed by the ITAT DELHI, with the order pronounced on 29.11.2017.