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TMI Blog2013 (9) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... l is partly allowed. Value adopted or assessed or assessabe by the Stamp Valuation Authority under sub-section (1) of Section 50-C exceeds the fair market value of the property on the date of transfer, the AO has to apply his mind on the validity of the objection of the assessee – A.O. may either accept the valuation of the property on the basis of the report of the approved valuer filed by the assessee, or invite objection from the department and refer the question of valuation of the capital asset to DVO in accordance with Section 55-A of the Act. In all these events, the AO has to record valid reasons, which are justifiable in law. He is not required to adopt an evasive approach of applying deeming provision without deciding the objection or to refer the matter to the DVO under Section 55-A of the Act as a matter of course, without considering the report of approved valuer submitted by the assessee – Decided in favor of Revenue. - ITA No.287 of 2011 - - - Dated:- 29-8-2013 - Sunil Ambwani And Surya Prakash Kedarwani, JJ. For the Appellant : A N Mahajan, SC For the Respondent : None JUDGEMENT:- We have heard Sri Bharat Ji Agrawal, Senior Advocate, assisted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- for which he also filed a report of the approved valuer. The revenue asserted that the purchaser had paid stamp duty on the valuation of the property fixed by the stamp valuation authority appointed by the State Government, according to which, the valuation of the property was Rs.78,48,000/-. The capital gain was accordingly worked out on the basis of valuation fixed by the stamp valuation authority under Section 50 C (2) of the Act. 5. The AO referred to the objections filed by the assessee in his reply dated 16.12.2009 and 18.12.2009, and the request of the assessee to accept the valuation shown by him in his reply dated 8.12.2009, on the basis of indexation of the value of property, on the ground that the building was under the tenancy of Sri Om Prakash Jaiswal - the father of the purchaser since 1967. The assessee filed two valuation report one for valuation as on 1.4.1981 at Rs.3,90,280/-, and the other for valuation as in October 2004 at Rs.33,77,186/-. The AO did not accept the report of the approved valuer submitted by the assessee as fair market value and found that the value adopted by the stamp duty authority has to be taken as fair market value as on October ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the value of sale consideration had to be taken at a value as per the sale deed of Sub-Registrar but the matter was not referred to the DVO, it was held that the matter should have been referred to the DVO for getting its market rate established as on date of sale to arrive at a correct sale consideration. [2008] 23 SOT 25 (Jodh.) (URO) Meghraj Baid V. ITO/114 TTJ 841 (Jodh). 5.1.4. If an assessee objects to stamp duty valuation, the assessing officer is duty bound to refer the matter to the Valuation Officer [2009] 34 SOT 57 (Mum)- Ajmal Fragrances Fashions (P) Ltd. V. C.I.T. 5.2 Considering the judgments above and also considering the judgment in the case of CIT Vs. Chandani Bhochar [2010] 323 ITR 510 (P H) as well as the judgment of the Hon'ble Allahabad High Court in the case of CIT vs. Smt. Raj Kumar Vimla Devi [2005]279 ITR360 (Alld.), I am of the firm view that the stand taken by the AO that the value adopted by the Stamp Duty Authority alone is taken to be the fair market value as on October, 2004 is not correct since he should have referred the matter in assessment to the DVO as in the present case, both the ingredients of provisions of section 50C(2) are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,77186/- has to be taken as the sale consideration and similarly the value taken by the approved valuer as at 1.4.1981 has to be taken into consideration for the purposes of arriving at indexed cost of acquisition. The ITAT did not find any infirmity in the order of CIT (A) and dismissed the appeal filed by the revenue. 8. In order to appreciate the question raised in this appeal, it is necessary to quote the provisions of Section 50-C of the Act. 50C. Special provision for full value of consideration in certain cases.- (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) Without prejudice to the provisions of sub-section (1), where- (a) the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amp duty cannot form the foundation to determine the market value mentioned thereunder in instruments brought for registration. Equally it would not be a basis to determine the market value under Section 23 of the Land Acquisition Act, of the lands acquired in that area or town or the locality or the taluk, etc. This Court in the case of Dinesh Kumar Mittal v. ITO [1992] 193 ITR 770 ; [1991] UPTC 1209 has held that we cannot recognise any rule of law to the effect that the value determined for the purpose of stamp duty is the actual consideration passing between the parties to a sale. The actual consideration may be more or may be less. What is the actual consideration that passed between the parties is a question of fact to be determined in each case, having regard to the facts and circumstances of that case. It may be mentioned here that to overcome this difficulty for the purposes of bringing to tax on capital gain, Parliament has inserted Section 50-C of the Income-tax Act, 1961, by the Finance Act, 2002, with effect from April 1, 2003, wherein it has been provided that the value adopted or assessed by any authority of a State Government for the purpose of payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is not of any relevance in this case, as the AO himself observed that the assessee did not dispute the stamp valuation before the Stamp Valuation Authority. There may be several reasons for the purchaser not to file such objection. A purchaser may not go into litigation, and pay stamp duty, as fixed by the Stamp Valuation Authority, which may be over and above the fair market value of the property, as on the date of transfer, though the amount so determined has not been actually received by owner of the property. Whenever the assessee claims before the Assessing Officer that the value adopted or assessed or assessable by the Stamp Valuation Authority under sub section (1) of Section 50-C exceeds the fair market value of the property as on the date of transfer, the Assessing Officer may refer the valuation of the capital asset to a Departmental Valuation Officer (DVO) and for that purpose, the procedure prescribed under the Wealth Tax Act are to be applied. In case of any such claim, the AO may rely on the report of registered valuer under Section 55-A of the Act and in such case it will not be necessary for him to refer the matter to the DVO. However, in any event, the AO has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or assessabe by the Stamp Valuation Authority under sub-section (1) of Section 50-C exceeds the fair market value of the property on the date of transfer, the AO has to apply his mind on the validity of the objection of he assessee. He may either accept the valuation of the property on the basis of the report of the approved valuer filed by the assessee, or invite objection from the department and refer the question of valuation of the capital asset to DVO in accordance with Section 55-A of the Act. In all these events, the AO has to record valid reasons, which are justifiable in law. He is not required to adopt an evasive approach of applying deeming provision without deciding the objection or to refer the matter to the DVO under Section 55-A of the Act as a matter of course, without considering the report of approved valuer submitted by the assessee. In all such cases, the reasons recorded by the AO may be questioned by the assessee or the department as the case may be. 15. The questions of law, as framed in the memo of appeal, are decided in favour of the revenue and against the assessee. The order of ITAT dated 10.05.2011, is set aside. The matter is remanded to AO, to decide ..... 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