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TMI Blog2007 (7) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... full value of consideration, for the purposes of s. 48, cannot be taken at a figure higher than Rs. 11,42,100. The scheme of s. 50C(2) clearly mandates so. The action of the authorities below in ignoring the DVO's report cannot be justified at all. We are, therefore, of the considered view that in no case, the full value of consideration on transfer of the property, for the purposes of computing the capital gains u/s 48, can be taken at a figure higher than Rs. 11,42,100. The DVO has simply adopted the average circle rate of residential and commercial area, on the ground that interior area of the locality, where the assessee's property is situated, is mixed developed area i.e. shops and offices on the ground floor and residence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejudice to the aforesaid grievance, the CIT(A) ought to have adopted the sale consideration of property at Rs. 11,42,000 as per the valuation done by the Departmental Valuation Officer (DVO). 3. The factual matrix in which these grievances arise is like this. In the relevant previous year, the assessee had sold a house property for a consideration of Rs. 6,50,000. It was in respect of this transaction that the assessee, in his IT return, had disclosed capital gain, and the capital gains so disclosed by the assessee were computed by taking into account Rs 6,50,000 as sales consideration, even though admittedly the valuation of the house property, for stamp duty purposes, was Rs. 15,50,000. In the course of scrutiny assessment proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar or even lower rates, but all this is not relevant in view of specific provisions of s. 50C of the Act which requires the stamp duty valuation to be adopted for the purpose of computing capital gains. The addition made by the AO was thus confirmed. The assessee is not satisfied by the order of the CIT(A) and is in further appeal before us. 4. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 5. Let us look at the scheme of the Act first. Sec. 50C of the IT Act, which was introduced by the Finance Act 2002 w.e.f. 1st April, 2003, contains for special provisions for valuation of consideration in certain cases. Sec. 50C(1) provides tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion authority, the computation of capital gains is to be done with reference to the valuation or assessment as per the stamp valuation authority. In other words, valuation of property by the DVO cannot act to the detriment to the assessee; the assessee cannot be put to any disadvantage in case the matter is referred to the DVO. 7. The scheme of s. 50C can be summarised as follows. The normal rule thus is that where stamp duty valuation is higher than the stated consideration on transfer, the same is to be adopted for the purposes of computing capital gains. The exception is that in case the assessee can demonstrate that the fair market valuation is less than the stamp duty valuation, the fair market value is to be adopted. The safeguard i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality, which inherently disregards peculiar features of a particular property. Even in a particular area, on account of location factors and possibilities of commercial use, there can be wide variations in the prices of land. However, circle rates disregard all these factors and adopt a uniform rate for all properties in that particular area. If the circle rate fixed by the stamp valuation authorities was to be adopted in all situations, there was no need of reference to the DVO under s. 50C(2). The sweeping generalizations inherent in the circle rates cannot hold good in all situations. It is, therefore, not uncommon that while fixing the circle rates, authorities do err on the side of excessive caution by adopting higher rates of the land ..... X X X X Extracts X X X X X X X X Extracts X X X X
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