2022 (1) TMI 175 - AT - Income Tax

Capital gain - value determined by the DVO - entitled for the benefit of proviso to section 50C(1) - Addition on account of difference between the sales consideration and the valuation done by the DVO - HELD THAT - Assessee furnished a chart showing the details of difference in % of value declared by the assessee and value accepted. With regard to properties shown at Sl.No.1 and 2 there is no difference of 5.7% between the value declared by assessee and the value determined by the DVO. Therefore, we find convincing force in the submission of ld.AR of the assessee that the assessee is eligible of benefit of amendment made in section 50C(1) by inserting 3rd Proviso for enhancing tolerance bend for variation between declared value vis- -vis stamp valuation from 5% to 10% was held to be retrospective from the date when section 50C was inserted w.e.f 01.04.2003. See Maria Fernandes Cheryl 2021 (1) TMI 620 - ITAT MUMBAI . Similar view was reiterated by Delhi Tribunal in Amrapali Cinema 2021 (4) TMI 1160 - ITAT DELHI therefore, respectfully following the decision of Co-ordinate Benches as referred above and considering the fact that the difference between the declared value and the value determined by the DVO is only 5.77%. Thus, we direct the AO to delete the addition qua property mentioned at Sl.No.1 and 2. So far as the Property mentioned Sl.No.3 and 4 are concerned, we find that there is a difference of 14.77% and 14.58% between the value declared by assessee and the fair market value determined by DVO which is beyond the maximum tolerance band of 10% as per the proviso to section 50C(1) of the Act. Therefore, the benefit of said proviso cannot be extended to the assessee - we find that these case laws are not applicable on the facts of the present case as all those case laws relates to addition in different chapter of Income Tax Act and facts of all those cases are altogether different and the ratio of all those cases are not applicable on the facts of the present case - assessee is not entitled for the benefit of proviso to section 50C(1) qua property shown at S No 3 4 and accordingly, the addition with regard to property mentioned at Sl.No.3 and 4 are upheld. Appeal of the assessee is partly allowed

Summary

Issues:
1. Retaining addition on account of difference between sales consideration and valuation by DVO.
2. Deletion of addition for properties with less than 15% difference between DVO and registered sales deed.
3. Benefit of Proviso to section 50C(1) for variation in valuation.

Issue 1: Retaining addition on account of difference between sales consideration and valuation by DVO:
The Assessing Officer (AO) noted a difference between the total consideration of land purchased by the assessee and the Jantri Rate Value determined by the Stamp Valuation Authority. The AO issued a show cause notice for adding the difference to the assessee's income under section 56(vii)(b) of the Act. The assessee contended that the properties were purchased at market value, and if unsatisfied, the matter could be referred to the District Valuation Officer (DVO). The AO, due to time constraints, decided the case based on the DVO's valuation of one property and Jantri Rate for the rest, resulting in an addition of ?1.64 crore to the assessee's income.

Issue 2: Deletion of addition for properties with less than 15% difference between DVO and registered sales deed:
The assessee appealed the additions before the ld. CIT(A), providing detailed submissions. The CIT(A) accepted that certain properties had less than 15% difference in value between the DVO and registered sales deed. The CIT(A) directed the AO to treat the valuation of these properties accordingly, granting partial relief to the assessee.

Issue 3: Benefit of Proviso to section 50C(1) for variation in valuation:
During the Tribunal hearing, the assessee argued that the variation in valuation for certain properties was within the tolerance range mentioned in the Proviso to section 50C(1). Citing relevant case laws, the assessee sought relief based on the percentage difference in values. The Tribunal considered the submissions and ruled in favor of the assessee for properties with a 5.77% difference, granting the benefit of the amendment to section 50C(1). However, for properties with differences exceeding 10%, the Tribunal upheld the additions.

In conclusion, the Tribunal partly allowed the assessee's appeal, directing the deletion of additions for properties with a 5.77% difference in valuation while upholding additions for properties with differences exceeding 10%. The decision was announced on 13 December 2021.