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TMI Blog2013 (11) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the stamp valuation authority at Rs.141660j- by applying the circle rate @6000 per sq. mtr. duly mentioned in the sale deed ought to have been taken while computing the capital gain on sale of property. 4. Because applying the provisions of section 50C(3) on the facts of the case, the authorities below erred in valuing and assessing the value of land part more than the value assessed by the Stamp Valuation Authority. 5. Because the appellant had paid brokerage on the sale of impugned property to the broker through account payee cheque duly cleared from the bank account of the appellant, the CIT(A) erred in disbelieving the payment of Rs.7700/-which is incidental and bonafide expenses." 2. In this case, assessment proceedings have been reopened u/s. 147 after receiving information that the assessee has sold a shop for which, while computing the capital gain, he has not taken the sale consideration as per the provision of section 50C. While selling the shop, total sale consideration was shown at Rs.3,90,000/-, but the value of the property assessed for stamp duty purpose was determined at Rs.5,23,000/- by Stamp Valuation Authority and hence, the AO after recording reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee on going through the report of the valuation officer filed a letter before the ld. CIT(A) on perusal of the valuation report and stated that the assessee has been advised to take additional grounds of appeal stating therein that since difference in the valuation is less than 15%, therefore, no addition should be made and further when the value determined by the Valuation Officer is less than the value adopted by the Stamp Valuation Authority u/s. 50C, the sale consideration shown by the assessee on Rs.3,90,000/- declared in the return should be accepted. It was also pleaded that the assessee has paid brokerage amounting to Rs.7,700/- to the broker, therefore, such claim should not have been denied. The assessee also filed written submission which is incorporated in the appellate order. The ld. CIT(A) considered the issue in the light of submissions of the assessee and the material on record held that since the value of sale consideration determined by the AVO at Rs.4,14,870/- is the fair market value. Therefore, it should be adopted as against the Stamp Valuation Authority, therefore, the addition was restricted to Rs.29,122/-. Further, since no supporting evidence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the valuation as adopted or assessed or assessable by the stamp valuation authority referred to in sub section (1), the value so adopted or assessed or assessable by the stamp valuation authority is to be taken as the full value of the receipts or accruing as a result of a transfer. 5.7 In view of the above provision of section 50C, it is clear that the value determined by the stamp valuation authority is the bench mark for the determination of the full value of sale consideration accruing to assessee on sale of some property but this value can be altered under the provision of sub section (2) of section 50C by referring the said property to a Valuation Officer, if the assessee claims that the value determined by the stamp valuation authority exceeds fair market value. Considering the claim of the appellant that the value determined by the stamp Valuation authority at Rs. 5,23,000/- has exceed the fair market value of the property as determined by the Regd. Valuer at Rs.3,12,395/-, as per the valuation report, submitted by her, the AO has been directed to refer this property for valuation to AVO and on the basis of the report of the AVO, the valuation has been determined at Rs.4, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he clause (b) of section 55A can be invoked only in any other case, namely when the value of the asset claimed by the assessee is not supported by the estimate made by the Regd. Valuer and in the case when a report of the Regd. Valuer is filed, clause (b) of section 55A cannot be invoked. In view of this interpretation of clause (b) of section 55A by the Hon'ble Gujarat High Court, I find that criterion given in the rule 111A read with section 55A(b)(i) cited by the Ld. AR that no adverse inference should be drawn where the difference is less than 15% and Rs.25,000/- between estimated value determined by the Valuation Officer and the actual sale consideration, would not at all apply, firstly because this rule is not applicable for determination of the fair market value u/s 50C (2) and secondly because in case of the appellant, valuation report of a Regd. Valuer has been filed and hence, provision of section 55A(b)(i) would not apply as held by the Hon'ble Gujrat* High Court. Therefore: the Addl. Ground no. 8 taken in this respect is dismissed. 5.9 For adopting the sale consideration shown by the appellant in the return of income, the appellant has placed reliance on the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als)-I, Coimbatore in Appeal No. 246/07-08 dated May 6, 2009 for the assessment year 2005-06 in the case of Kum. Rajini Venugopal. Shri Tapas Kumar Duffa, the learned Departmental representative represented on behalf* of the Revenue and Shri V. Jagadisan, chartered accountant represented on behalf of the assessees. It was submitted by the learned Departmental representative that the assessee had sold certain agricultural land in Coimbatore. The assessee invested the sale proceeds in NHB and NABARO bonds and claimed exemption under section 54EC. In the course of assessment, it was noticed that the provision of section 50C applied to the assessee's case and as per the direction of the Additional Commissioner of Income-tax, Range II, Coimbatore under section 144A of the Act, the valuation of the property as per the guideline value of the stamp valuation authority had been applied as the same was found to be higher than the sale consideration disclosed by the assessees. It was the submission that the learned Commissioner of Income-tax (Appeals) had deleted the addition made by the Assessing Officer and directed the Assessing Officer to adopt the sale consideration as per the valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 500 shows that as per the provision of sub section (1) of section 50C where the consideration received or accruing as a result of transfer by the 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 for the purpose of payment of stamp duty in respect of such transfer for the purpose of section 48, such value as fixed by the authority of the State Government is to be deemed to be the full value of the consideration as a result of such transfer. Subsection (2) of section 50C carves out the exemption to subsection (1). In sub-section (2), the conditions are prescribed, under clause (a), if the assessee claims before the Assessing Officer that the value adopted or assessed by the stamp valuation authority referred to in sub-section (1) exceeds the fair market value of the property as on the date of transfer and under clause (b), if the assessee is able to show that the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income-tax and had applied the provisions of section 50C(1) of the Act. During the appeal proceedings before the learned Commissioner of Income tax (Appeals), the valuation report of the DVO had come and the learned Commissioner of Income-tax (Appeals) had considered the DVO's report while passing the appellate order. Thus what is noticed here is that the assessee has made claim under section 50C(2) and the Assessing Officer did find* merit in the claim of the assessee and as per the requirements of the Act, the Assessing Officer had rightly referred the valuation of the property to the OVO and the DVO had valued the property at a figure much lower than the value as fixed by the stamp valuation authority which also shows that the provisions of section 50C(3) have no application to the present case. Obviously, the valuation as done by the DVO is not a Subject-matte of the appeal before us. The fact that the DVO has valued the properly much lower than the value fixed by the stamp valuation authority, shows that the claim of the assessee is true and correct and the provisions Of section 50C(1) would have to be read with section 50C(2) and the value a arrived at as per the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Rs.3,85,748/- The value of LTCG Rs. 29,122/- In view of the above computation, the AO is directed to take long term capital gain at Rs.29,122/- to be added to the income of the appellant, instead of Rs.1,37,252/- as added in the assessment order. Therefore, Ground no. 1 to 3 are partly allowed. 5.11. As regards to Additional Ground No. 11, the Ld. AR could not produce any supporting document showing that the amount of Rs.7,700/- was paid to any brokerage on sale of the property. Therefore, no deduction of Rs.7,700/- would be allowable from the sale consideration and hence, ground No. 11 is dismissed." 3. The ld. Counsel for the assessee referred to page 17 of the paper book to show circle rate of the property in the area of Lohamandi is Rs.6000/- per Sq. Meter, which is also mentioned in the sale deed (PB-1), therefore, AVO should not have taken the rates at Rs.6000/- + 50% (Rs.9000/-). He has, however, admitted that the assessee did not challenge the report of AVO before the ld. CIT(A). Further no objections have been raised before the Stamp Valuation Authorities with regard to the valuation of the property. The ld. Counsel for the assessee also admitted that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it would have been proper for the assessee to raise objection on the basis of some material or evidence before the DVO, before the AO at the remand proceedings or at least before the ld. CIT(A). The assessee did not choose to do anything in the matter and merely raised the objection that since valuation was less than 15% in difference, therefore, no addition should be made. Such a plea was alien to the provisions of section 50C of the IT Act. Further section 50C is a special provision for full value of consideration in certain cases and deals with the transfer of capital asset by the assessee in land or building or both. Therefore, whatever is now claimed in the grounds of appeal, cannot be subjected to favourable consideration to the assessee. The impugned order reproduced above would clearly reveal that the ld. CIT(A) on proper appreciation of provisions of section 50C and the facts of the case rightly concluded that the valuation of sale consideration is to be taken at Rs.4,14,870/- as per valuation report and since cost of acquisition is admitted by the assessee at Rs.3,85,748/-, therefore, the addition was rightly restricted to Rs.29,122/-. It is also admitted fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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