2020 (2) TMI 324 - AT - Income Tax

Capital gain computation - determination of the full value of consideration in terms of section 50C - HELD THAT - There is hardly a month s difference between the two sale dates of 08-01-2004 and 06-12-2003. It can further be seen that the DVO in the case of Shri Hemant Sudam Tupe considered the sale instances for land at Sy.No.187 in December, 2003 at ₹ 820/-. However, the DVO in the case of assessee has considered a sale instance of Sy.No.189 at ₹ 1,245/- per sq. mtr with date of sale at 16-09-2004. If we average the two rates, namely, ₹ 820/- per sq. mtr and ₹ 1,245/- per sq.mtr, the rate comes at ₹ 1,032/- per sq.mtr. This, is a more balanced and representative rate of the fair market value of the land as on the date of sale. Therefore, order to adopt ₹ 1,032/- as per sq.mtr value on the date of sale by the assessee, namely, 08-01-2004 against Sy.Nos. 187 and 243. In so far as the Sy. No. 198 is concerned, find that there are sale instances noted in the assessee s valuation report at ₹ 1,801/- p.s.m. against land at Sy.No.211 and in the report of Shri Hemant Sudam Tupe at ₹ 1,369/- against Sy.No.197 and ₹ 818/- against Sy.No.197. These surveys are admittedly close to the survey no. 198 sold by the assessee. Average of these three figures comes to ₹ 1,330/-. Therefore, direct to apply ₹ 1,330/- as per sq.mtr rate in respect of land at Sy.No.198 sold by the assessee as on 08-01-2004. Valuation as on 01-04-1981 - It is seen that amendment to section 55A in the above terms has been carried out and made effective from 01-07-2012. The assessment year under consideration is 2004-05 and the AO made reference to the DVO for determining the fair market value on 20-10-2011. Thus, it is apparent that, by no standard, the amended provision is attracted in the instant case. Going by the interpretation of the pre-amended provision by the Hon ble jurisdictional High Court in the case of Puja Prints (supra), as applicable to the facts of the instant case, it is vivid that no reference could have been made to the DVO when the value adopted by the assessee was more than the fair market value of the land in the opinion of the AO. Notwithstanding the above, it is seen that the assessee did file a Registered valuer s report along with computation of income, relevant part of which has also been placed in the paper book. Since valid reference could not have been made to the DVO, the value so determined by him as on 01-04-1981, ergo, becomes meaningless for the instant exercise. Going by the provision as applicable to the instant case, it is held that the value of the land as declared by the assessee on 01-04-1981, which is patently more than the value so determined by the DVO/AO, cannot be interfered with. Set-aside the impugned order and remit the matter to the file of the AO for determining the amount of capital gain afresh in accordance with the discussion supra . Needless to say, the assessee will be allowed a reasonable opportunity of hearing.

Summary

Issues Involved:
1. Determination of full value of consideration under section 50C of the Act.
2. Valuation of property as on 01-04-1981.

Analysis:

Issue 1: Determination of full value of consideration under section 50C of the Act:
The case involved the computation of capital gain arising from the transfer of land by the assessee. The Assessing Officer (AO) adjusted the components of the capital gain computation based on discrepancies in the sale price and fair market value. The AO referred the matter to the Departmental Valuation Officer (DVO) for valuation. The DVO valued the property at different rates for different survey numbers. The appellant challenged the valuation before the first appellate authority, who confirmed the AO's decision based on the DVO's report. However, the ITAT found discrepancies in the DVO's valuation and adopted a more balanced approach. The ITAT ordered to adopt a specific value per sq.mtr rate for each survey number, considering sale instances and averaging the rates. The ITAT set aside the previous orders and directed a fresh determination of capital gain.

Issue 2: Valuation of property as on 01-04-1981:
The second issue revolved around the valuation of the property as on 01-04-1981. The AO and the CIT(A) adopted different rates for the unindexed cost of acquisition, leading to a discrepancy. The appellant contended that no reference to the DVO should have been made as the fair market value claimed by the AO was higher than the value adopted by the appellant. The CIT(A) relied on an amendment to section 55A, allowing a reference to the DVO when the claimed value is at variance with the fair market value. However, the ITAT found that the amendment was not applicable to the assessment year in question. The ITAT held that since the appellant had filed a Registered valuer's report, no valid reference could have been made to the DVO. Therefore, the value declared by the appellant for 01-04-1981 was upheld, and the matter was remitted to the AO for fresh determination of capital gain.

In conclusion, the ITAT allowed all three appeals for statistical purposes, setting aside the previous orders and remitting the matters to the AO for fresh assessment in accordance with the directions provided in the judgment.