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2014 (10) TMI 608 - AT - Income TaxComputation of capital gain u/s 50C(1) – Adoption of FMV determined by the Stamp Valuation Authority for the purpose of stamp duty - Capital gains on sale of agriculture - land Held that:- Land sold is a capital asset as defined u/s 2(14) of the Act - Though, the assessee has disclosed the total consideration received on sale of property by all the coowners at ₹ 4,50,00,000/- but the Registering Authority has valued the property for stamp duty purpose at ₹ 14,76,00,000 - understatement in sale value in terms of section 50C(1) is prima-facie established - the AO in terms with section 50C(2) did refer the valuation of the property to the DVO - DVO submitted a report to the AO on 25/10/2012 by determining the value of the property at ₹ 7,93,80,483 by estimating the fair market value of the property as on the date of registration at ₹ 43.41 lakh per acre - the AO ignoring the statutory mandate as contained u/s 50C(2) and (3) completed the assessment on the very same day he referred the valuation to the DVO by adopting the value of property at ₹ 14.76 crores as determined by the SRO for stamp duty purpose - AO’s action cannot be approved - When the assessee has objected to the SRO value and the valuation of the property has been referred to the DVO, the AO is duty bound to take into account the valuation made by the DVO and thereafter compute the capital gain in terms with section 50C(3). Assessee has complied to the provisions of section 50C(2) and AO has referred the valuation to DVO - adoption of SRO value by completely ignoring the valuation made by the DVO is totally wrong and in violation of statutory mandate of section 50C - value determined by SRO cannot be considered as the fair market value of the property for computation of capital gain. Determination of value by DVO – Held that:- section 50C is a deeming provision, assessee is required to establish that sale consideration shown by him is the actual fair market value as on the date of execution of agreement of sale cum GPA on 30/10/2008 - Neither the assessee nor the department has brought any substantive evidence on record to justify the value adopted by them – thus, the matter is required to be remitted back to the AO for fresh adjudication – Decided in favour of assesse.
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