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2023 (12) TMI 704 - AT - Income TaxComputation of capital gains - FMV determination - resorting to section 50C - AO considering the valuation of the DVO as the fair market value of the property instead of the value shown by the assessee which is also the circle rate - difference of Fair Market Value of the property estimated by the Valuation Officer and the actual sale consideration and circle rate shown by the appellant - HELD THAT - As in the case of PCIT Vs. Shanubhai M Patel 2016 (4) TMI 480 - GUJARAT HIGH COURT held that where the assessee sold plot of land since the value declared by the assessee exceeded value adopted by the Stamp Valuation Officer there was no question of referring valuation of plot to Valuation Officer by the AO by way of a reference u/s 50C of the Act. In the case on hand the valuation as per Stamp Value Authorities is same or equal to the sale consideration received by the assessee. Provision of Sec. 50C sub-section (1) says if the sale consideration is less than the value adopted by the Stamp Valuation Authorities the value so adopted by the Stamp Valuation Authorities shall be deemed to be the full value consideration. Here in the case on hand the assessee has reported the sale consideration which is equal to the stamp valuation adopted by the Stamp Valuation Authorities in other words the circle rate. The sale consideration reported by the assessee is equal to the circle rate and not less than the circle rate. Therefore, following the decision of the Hon ble Gujarat High Court, we hold that when the sale consideration is more than or equal to the circle rate the reference made to Valuation Officer to find out fair market value of the property is not justified. Thus, we hold that the reference to Valuation Officer in the case of the assessee is bad in law. Since reference made to Valuation Officer was held to be bad in law the addition made to long term capital gains will not survive. Accordingly, the same is directed to be deleted. Appeal of the assessee is allowed.
Issues involved:
The appeal challenges the final assessment order of the Assessing Officer regarding the computation of capital gains based on the valuation of the property by the Valuation Officer, which exceeded the value shown by the assessee, equivalent to the circle rate. Summary: Issue 1: Validity of reference to Valuation Officer under Sec. 50C The assessee contended that the reference to the Valuation Officer under Sec. 50C was unjust as the sale consideration was not less than the circle rate. Citing the decision of the Hon'ble Gujarat High Court, it was argued that such a reference is invalid when the sale consideration exceeds the circle rate. The Revenue, however, supported the orders of the authorities below. Issue 2: Application of Sec. 50C Sec. 50C dictates that if the consideration received for the transfer of a capital asset is less than the value adopted by the Stamp Valuation Authority, the latter's value shall be deemed as the full consideration for computing capital gains. In this case, the sale consideration matched the stamp valuation/circle rate, as determined by the Stamp Valuation Authorities. Judgment: The Hon'ble Gujarat High Court's ruling established that when the value declared by the assessee surpasses the value adopted by the Stamp Valuation Officer, there is no basis for referring the valuation to the Valuation Officer under Sec. 50C. As the sale consideration equaled the circle rate in this instance, in line with the Gujarat High Court's decision, the reference to the Valuation Officer was deemed legally invalid. Consequently, the addition to long-term capital gains was directed to be deleted, and the appeal of the assessee was allowed.
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