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TMI Blog2020 (10) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... by Ld CIT(A) works out to less than 10% of the actual consideration paid by the assessee. Accordingly, we modify the order passed by Ld. CIT(A) and direct the A.O. to ignore the difference between fair market value determined by CIT(A) and the actual consideration as the same is less than 10% of the actual consideration. - Decided in favour of assessee. - ITA No.924/Bang/2019 - - - Dated:- 9-9-2020 - Shri N.V. Vasudevan, Vice President And Shri B.R. Baskaran, Accoutant Member For the Appellant : Shri V. Srinivasan, A.R. For the Respondent : Shri Priyadarshi Mishra, D.R. ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER: The assessee has filed this appeal challenging the order dated 27.03.2019 passed by Ld. CIT(A)-1, Bengaluru and it relates to the assessment year 2016-17. The assessee is aggrieved by the decision of Ld. CIT(A) in partially confirming the addition made by the A.O. U/s 56 (2)(vii)(b) of the Income Tax Act, 1961 (in short the Act ) relating to difference in purchase consideration between subregistrar value and purchase price. 2. The facts relating to the issue are stated in brief. During the year under consideration, the assessee has purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 2,33,00,000/- under the sale deed dated 25.01.2016. This sale deed came to be registered for the guidance value of ₹ 3,11,16,000/- and the A.O. proceeded to make an addition of ₹ 78,16, 000/- in the order u/s.143(3) dated 21/12/2018 in terms of section 56[2][viib] of the Act. However, since the appellant had raised objections to treat the guidance value as the Fair Market Value (FMV) of the property purchased, the A.O. had made a reference to the District Valuation Officer (DVO) on 07.12.2018 and observed that suitable rectification would be made on receipt of the valuation report. Thereafter, the DVO rendered the final valuation report dated 02.01.2019 determining the FMV of the property at ₹ 2,68,86,400/- as against the guidance value of ₹ 3,11,16,000/-. Upon receipt of the valuation report, the A.O. has passed the impugned order u/s.154 rws 155(15) dated 18.01.2019 reducing the addition to ₹ 35,86,400/-. 5.1 It is the appellant's case before me that the FMV of the property estimated by the DVO in terms of the final valuation report dated 02.01.2019 is excessive for the reason that the DVO has not considered the negative factors explaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egative factors like loss of title deeds, leasehold property, mortgage, etc., cannot be accepted. 5.3 However, there is some merit in the contentions of the appellant that the FMV of the property should be taken at ₹ 2,48,92,800/- since the special amenities and two covered car parks as per the valuation report would be covered in the FMV of the flat based on the guidance value taken as the basis of valuation. On this basis, it is seen that the difference between the FMV of the property purchased by the appellant and the actual consideration paid comes to ₹ 15,92,800/-. This difference between the FMV of the property and the actual consideration works out to 6.83% and the same is not properly explained by the appellant. 4. The assessee also argued before Ld. CIT(A) that no addition should be made u/s 56(2)(vii)(b) of the Act, if the difference between fair market value of the property and actual consideration is less than 10% of the actual consideration. The Ld. CIT(A), however, did not accept the said contentions of the assessee and accordingly rejected the same. Aggrieved on this aspect, the assessee has filed t 5. The Ld. A.R. placed his reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted that the addition sustained by Ld. CIT(A) should be upheld. 8. We heard the rival contentions and perused the record, A specific query was put to Ld. A.R. as to whether the third proviso to section 50C(1) of the Act can be applied to section 56(2)(vii)(b) of the Act in the absence of such proviso in that section. The Ld. A.R. submitted that the provisions of section 50C of the Act are applicable in the hands of the seller and provisions of section 56(2)(vii)(b) are applicable in the hands of buyer in respect of very same transaction of transfer of land or building. Hence, there could not be two different fair market value in respect of the very same property, i.e. one in the hands of the seller and another in the hands of the buyer. Accordingly, he submitted that the principles applied to determine the fair market value of the property in the hands of the seller should equally be applied in the hands of buyer also. 9. We find merit in the explanations given by Ld. A.R. We notice that the Mumbai bench of Tribunal has examined an identical issue in the hands of John Fowler India Pvt. Ltd. (supra) and, by following the decision rendered by Jaipur Bench in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation is always a matter of estimation where some degree of difference is hound to occur, we are of the considered opinion that the AO in the instant case is not justified in substituting the sale consideration at ₹ 20,55,000/- as against the actual sale consideration of ₹ 149,00,000 disclosed by the assessee. We, therefore, set aside the order of the CIT(A) and direct the AO to take Rs. I9,00,000/- only as the sale consideration of the property. The grounds raised by the assessee are accordingly allowed In the instant case, the difference between the valuation adopted by the Stamp Valuation Authority and declared by the assessee is less than 10%. Therefore, respectfully following the decision of the Hon 'file Coordinate Bench, we hereby direct the AO to adopt the value as declared by the assessee. This ground of the assessed i s allowed . 8. Therefore, respectfully following the said decision we direct to AO to adopt the valuation of sale consideration as declared by the assessee. The additions made by the Assessing Officer u/s. 50C is deleted and as grounds raised by the assessee are allowed. 10. We also notice that the Parliament has introduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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