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TMI Blog2020 (9) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... ure land as placed on record, this fact is also clear that the land use was got converted by the buyer of the land only after sale deed got registered by the assessee. Therefore, at the point of sale, the status of land was agriculture land. Whether the sale of agriculture land attracts provisions of Section 50C ? - We observe that the land held by the assessee was agricultural land which is not capital asset as clearly defined U/s 2(14) of the Act, which excludes agricultural land out of definition of capital asset. It is also not in dispute that the assessee had sold the agricultural land at a consideration which was more than DLC. However, as per Rajasthan Government notification since the sale was to a firm or company, the DLC rate was to be taken at 1.5 times. We found that in the case of joint owner of this agricultural land namely Shri O.P. Agarwal, the Tribunal have decided similar issue [ 2020 (8) TMI 150 - ITAT JAIPUR ] wherein it was held that the assessee had declared sale consideration more than DLC, accordingly, there is no justification for making any addition U/s 50C - No merit in the order passed by the ld. CIT(A) U/s 263 of the Act. - Decided in favour of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the additional ground so raised by the assessee is purely legal in nature and all the relevant material facts are available on record. Accordingly, we admit the addition ground so raised by the assessee. 6. Rival contentions have been heard and record perused. Facts in brief are that the assessee is an Individual and during the year under consideration, he derived income from House Property, income from business of Precious semi-precious stones and capital gain. The return of the year under consideration was filed on 30.09.2015 declaring total income of ₹ 20,04,170/-. The case of the assessee was selected for limited scrutiny by issuing the notice u/s 143(2) of the Act dated 19.09.2016. In the scrutiny the following issues were identified for examination: - i) Sales Turnover Mismatch. ii) Increase in Capital iii) Deduction claimed under the Head Capital Gains. 7. The assessee was jointly owner of an agricultural land 2.09 Hectare wherein the assessee has 1/4 share. During the year under consideration the assessee and his co-owners sold 2.09 Hectare (8.26 Bigha) agriculture land on 02/12/2014. The DLC rate of the land was 44,35,410/- per bigha, accordingly the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld AR that the case of the assessee was selected for Limited Scrutiny wherein apart from the other issue, which were not relevant to capital gain, the issue regarding deduction claimed under the head capital gain was to be examined by the AO. The copy of notice issued u/s 143(2) of the Act was placed on record. Since as per the power vested to the AO in the cases selected for Limited scrutiny, the AO could only examine the deduction claimed out of the capital gain earned by the assessee. The AO was not empowered to examine the computation of capital gain of the assessee. The applicability of provisions of section 50C of the Act is part of computation of capital gain thus the same was beyond the scope of limited scrutiny. Therefore, there is no error in the Assessment order of the AO. 12. The ld AR has further contended that the issue regarding applicability of provisions of Section 50C of the Act was examined by the A.O. during the assessment proceedings. Our attention was invited to the query raised by the AO and reply filed by the assessee with regard to applicability of provisions of Section 50C of the Act and the AO had mentioned these facts at para 3.2 of the assessment. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is one of the co-owner of the same land, wherein it was held that the provisions of Section 50C of the Act cannot be applied on the ground of higher value assessed by the Stamp Duty Authority more than normal DLC rate. 17. The ld AR has further contended that against the order of the AO the assessee filed an appeal before CIT (A) on 26.01.2018 and the same is still pending for disposal. In the appeal the assessee has challenged the additions so made and will argue the case on same footings. As per the ld AR, the ld.CIT(A) has power of enhancement. Therefore, when the appeal is pending before the ld CIT(A), ld Pr CIT was not justified to initiate the multiple proceedings and the matter could have been referred to CIT (A) to consider the same while disposing off the appeal filed by the assessee. 18. On the other hand, the ld. CIT-DR has contended that the DLC rate of the land sold was ₹ 7,38,00,000/-, the AO was required to invoke Section 50C of the IT Act, in accordance with the existing provisions of law. Under the provisions of Section 48 the sum of ₹ 7,38,00,000/- was to be deemed to be the full value of the consideration received or accruing as a result of the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute that the assessee had sold the agricultural land at a consideration which was more than DLC. However, as per Rajasthan Government notification since the sale was to a firm or company, the DLC rate was to be taken at 1.5 times. 20. We found that in the case of joint owner of this agricultural land namely Shri O.P. Agarwal, the Tribunal have decided similar issue in ITA No. 1393/JP/2019 vide order dated 03/08/2020 wherein it was held that the assessee had declared sale consideration more than DLC, accordingly, there is no justification for making any addition U/s 50C of the Act. The precise observation of the Tribunal was as under: 2.9 We have considered the rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements and the relevant provisions of law more precisely to the deeming provisions of Section 50C of the Act. From the record, we found that the assessee was joint owner of an agricultural land 2.09 Hectare situated in Village Chimanpura, Urf Dhab Ka Nala, Tehsil Amer, District Jaipur wherein the assessee has 1/4 share. During the year under consideration, the assessee and his co-owners sold 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mp duty but the deemed sale consideration for the purpose of section 50C can be taken as DLC rate and in the case of the assessee sale value declared in the sale deed is much more than DLC rates. As per our considered view, the deeming provision of Section 50C cannot be extended beyond the four corner of the law for which it is meant. Under Section 50C, the Fair Market Value which is in the form of DLC is to be adopted if the sale consideration is lower than DLC Rate. The letter issued by the Director General, Registration Stamps for levying stamp duty at 1.5 time of DLC Rate in case the sale is affected to a company does not override the provisions of Section 50C. This letter is only meant for collecting higher stamp duty in case of sale to a company, firm or institution. In the instant case, the sale consideration declared by the assessee was more than DLC rate, therefore, the AO was not justified in substituting the DLC rate by taking 1.5 of the sale consideration of the land so sold by the assessee. Section 50C was introduced in the Income-tax Act, 1961 by the Finance Act, 2002 with effect from 1-4-2003 for substituting valuation done for Stamp Valuation purposes as full value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue declared by the assessee was more than the DLC rate which is indicative of fair market value prevailing in that area. The fair market value cannot vary according to the status of the buyer person. If buyer is an individual then the fair market value would be ₹ 3,66,36,487/- and if the buyer is a company or firm or institution then the fair market value of the property would be 1.5 time of the normal value, this cannot be intention of Section 50C which require substitution of fair market value i.e. DLC in place of sale consideration mentioned in the sale deed, if it is found to be lower than DLC. Furthermore, the stamp duty authority levied the stamp duty arbitrary by assessing the value @ 1.5 time of value declared in the sale deed valued for stamp duty purpose at ₹ 7,38,00,000/- for stamp duty purpose as against 1.5 time of normal DLC. Furthermore as per provisions of Income Tax Act if the AO does not agree with the explanation of the assessee with regard to consideration disclosed by him then he should refer the matter to DVO for getting its market rate estimated as on date of the sale. In case AO is not satisfied with the explanation of the assessee, he 'sho ..... 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