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TMI Blog2015 (1) TMI 1479X X X X Extracts X X X X X X X X Extracts X X X X ..... se of computation of LTCG. 4. The Ld. CIT(A) failed to do justice with Section 50C(2) r.w.s 50C(3) of the Income-tax Act while rejecting the valuation made by the DVO and the relief given by the Ld. CIT(A) is contrary to words and spirit of section 50C(1) of the Income- tax Act. 1961. 2. Though various grounds are raised by the Revenue, but they all relate to the determination of the fair market value of the land sold in the light of provisions of section 50C of the Income-tax Act, 1961 (hereinafter called in short "the Act"). 3. The facts in brief borne from the record are that during the course of assessment proceedings, the Assessing Officer noticed that the assessee has sold land at Shahmina Road, Lucknow for a sale consideration of Rs.1.40 crores. The cost of acquisition of the same was found to be Rs.21,96,098/-. The market value of the land for the purpose of stamp duty was adopted at Rs.2,01,14,377/-. Having invoked the provisions of section 50C of the Act, the Assessing Officer adopted the market value of the land at Rs.2,01,14,377/- and made addition of Rs.61,14,377/- to the income of the assessee. 4. Assessee preferred an appeal before the ld. CIT(A) with the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has taken a specific plea before the Assessing Officer that the fair market value is less than the valuation adopted for the purpose of stamp duty, the Assessing Officer was under obligation, as per provisions of section 50C(2) of the Act, to make reference to the DVO to determine the fair market value, but he did not do so. Moreover, when the ld. CIT(A) has appreciated the legal proposition and directed the Assessing Officer to make reference and when the reference was made, the DVO has estimated the fair market value of the property at Rs.1,58,90,358/-, which is certainly less than the valuation adopted for the purpose of stamp duty. The ld. CIT(A) has rightly noticed that the difference in sale consideration declared and adopted by the DVO is nominal, therefore, the same can be ignored and the sale consideration declared by the assessee should be adopted. 8. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that undisputedly the assessee has raised an objection with regard to the adoption of the value of the property taken for the purpose of stamp duty as sale consideration. The Assessing Officer has record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of stamp duty was Rs. 2,01,14,377/-. Thus there is a difference in value property as shown for stamp duty purposes and as per actual sale consideration. The AO chose not to refer the matter to the DVO. The first issue is therefore whether if the appellant claims that the fair market value is lower that the value adopted for stamp duty purposes, the reference to the DVO is optional or mandatory. 4(8)(i) A reference may therefore be made to provisions of section 50C of the Act, which provides as under- (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 assessee claims be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, in that, he can either file appeal against stamp value or seek reference to Valuation Cell. Adoption of the value by the Valuation Cell is again subject to regular appeals available against the order of the AO. The issue therefore in the impugned appeal is whether the word "may" really provides discretion to the AO even when the assessee has protested the valuation for stamp duty purpose. 4(8)(iii) Hon'ble ITAT, Mumbai in the case of Nandita Khosla 11 Taxrnann.com 344 laid down that where assessee has pointed out strong reasons that sale consideration was less than the value determined for stamp duty purposes, then such cases have to be referred to the DVO. Hon'ble ITAT, Chennai also examined the issue is the case of Shaik Mohideen Vs ITO (2009) 123 TTJ (Chennai) 411: (2009) 24 DTR 63 and laid down as under- It has to be appreciated as to what is it that the assessee is asking for-- merely a chance to be able say that the value adopted by the stamp valuation authority, exceeded the fair market value of the property. Giving a chance to the assessee to make such a plea, as per law, is not the same thing as accepting the claim itself. We see no good ground fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y right available to protect his interest against arbitrariness which may creep in while fixing the value of capital gain and it is the safeguard given to the assessee. The said right is more effective in cases where the parties to the document have not taken any steps to defend or to initiate proceedings under Stamp law. [Jitendra Mohan Saxena 117 TTJ 974 (Trib. Luck.)] 4(8)(v)The appellant claims that the property sold had inherent draw backs for which it could not have been sold at the circle rate adopted for stamp duty purpose. In other words the appellant claims that the drawback in the property meant that the market rate at which the property could be sold was lower than the value adopted for the stamp duty purposes. Some of the drawbacks as mentioned by the appellant are as under - a) the land used is restricted for medical purposes only. b) 10 meter wide road has to be left as per master Plan for widening of road and almost 13% of the total land will be wasted in the same, and c) the valuation report of the approver valuer has been filed by the appellant to support the sale consideration of the property. 4(8)(vi) The above drawbacks clearly reveal that the fair ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is also no justification for increasing the rate by 15% for corner plot as the site plan attached with the sale deed does not show the manner in which there could be any benefit being derived for the corner plot. In view of the above factors I find that the value of land is bound to be lower than the value estimated by the DVO. In any case, I find that the difference in the sale consideration and the fair market value estimated by the DVO is Rs.18,90,358/- (Rs. 1,58,90,358/- less Rs.1,40,00,000/-). The difference of Rs.18,90,358/- is approximately 11.9% of the value estimated by the DVO, I find that there is only a minor variance between the value ascertained by the DVO and the actual sale consideration, which could be ignored. The AO is therefore directed to adopt the actual sale consideration for the purpose of computing the capital gains. In view of the discussion above, the addition of Rs.61,14,377/- made by the AO is deleted giving relief to the appellant." 11. During the course of appellate proceedings, the ld. CIT(A) has noticed the irregularities committed by the Assessing Officer by not making reference to the DVO on the objections raised by the assessee with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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