2019 (3) TMI 213 - AT - Income Tax

Computation of LTCG - assessee objects Stamp Duty valuation u/s. 50C before AO and requested to reference to DVO - non reference of the matter to Valuation Officer u/s 50C(2)- HELD THAT - As relying on SHRI CHANDRA NARAIN CHAUDHRI 2013 (9) TMI 646 - ALLAHABAD HIGH COURT and SRI SUSHIL KUMAR NATHANY VERSUS INCOME-TAX OFFICER, WARD 4 (2) , HYDERABAD 2018 (3) TMI 428 - ITAT HYDERABAD we remand the issue to the file of Assessing Officer with a direction to refer the matter to the Departmental Valuation Officer and to re-compute the Long Term Capital Gain denovo. - Appeal of assessee is allowed for statistical purposes

Issues involved:
1. Application of Section 50C of the Income Tax Act for computing Long Term Capital Gain.
2. Assessee's objection to the valuation adopted by the Assessing Officer.
3. Requirement of referring the matter to the Departmental Valuation Officer as per Section 50C(2).
4. Dismissal of appeal by the CIT(A) and subsequent appeal before ITAT Hyderabad.
5. Interpretation and application of Section 50C(2) by various courts and tribunals.

Analysis:

1. Application of Section 50C for computing Long Term Capital Gain:
The case involved the application of Section 50C of the Income Tax Act for computing Long Term Capital Gain. The Assessing Officer applied Section 50C to determine the total sale consideration, resulting in an addition to the Long Term Capital Gain declared by the assessee.

2. Assessee's objection to the valuation adopted:
The assessee objected to the valuation adopted by the Assessing Officer and requested a reference to the Departmental Valuation Officer. However, the Assessing Officer proceeded to adopt the Stamp Valuation Authority's value without addressing the objection raised by the assessee.

3. Requirement of referring the matter to the Departmental Valuation Officer:
Section 50C(2) provides that if the assessee claims that the value adopted by the stamp valuation authority exceeds the fair market value, the Assessing Officer may refer the valuation to a Valuation Officer. The failure to refer the matter to the Departmental Valuation Officer when the assessee objects to the valuation was a key issue in the case.

4. Dismissal of appeal and subsequent appeal before ITAT Hyderabad:
The CIT(A) confirmed the Assessing Officer's order, leading the assessee to file a second appeal before the ITAT Hyderabad. The grounds of appeal raised by the assessee challenged the CIT(A)'s decision based on the interpretation of Section 50C(2) and the Assessing Officer's failure to refer the matter to the Departmental Valuation Officer.

5. Interpretation of Section 50C(2) by various courts and tribunals:
The judgment referenced decisions by the Hon'ble Allahabad High Court and Co-ordinate Benches of the Tribunal to emphasize the mandatory nature of referring the valuation to the Departmental Valuation Officer when the assessee objects to the Stamp Valuation Authority's value. The ITAT Hyderabad, following the precedents, remanded the issue back to the Assessing Officer with directions to refer the matter to the Departmental Valuation Officer for re-computation of Long Term Capital Gain.

In conclusion, the ITAT Hyderabad allowed the appeal for statistical purposes, directing the Assessing Officer to refer the matter to the Departmental Valuation Officer for re-computation of Long Term Capital Gain. The Stay Application filed by the assessee was dismissed as the appeal had been disposed of. The judgment highlighted the importance of following the provisions of Section 50C(2) and ensuring proper valuation procedures in determining capital gains.

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