TMI Blog2014 (10) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of computation of long term capital gain or the property is to be referred to DVO for determining the fair market value in term of section 50C of the Act – Held that:- Following the decision in Sunil Kumar Agarwal Versus Commissioner of Income Tax, Siliguri [2014 (6) TMI 13 - CALCUTTA HIGH COURT] - the value of the property estimated by DVO as on the date of sale is to be taken as the final consideration for the purpose of computation of Long Term Capital Gains u/s. 50C of the Act - The assessee sold the property for a total consideration of ₹ 25 lacs during the relevant financial year relevant to this assessment year - The AO as well as CIT(A) has taken the value as adopted by Sub-registrar based on circle rate for assessing the long term capital gain arising out of sale of the above property - the value of the property estimated by DVO as on the date of sale is to be taken as the final consideration for the purpose of computation of Long Term Capital Gains u/s. 50C(2) of the Act – the AO is directed to refer the matter to DVO u/s 50C(2) of the Act and also allow opportunity of being heard to the assessee – Decided in favour of assessee. - I.T.A No. 1065/Kol/2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the same was raised before CIT(A), who has adjudicated the issue against the assessee, which requires now adjudication as the main issue is under challenge. In term of the above, the delay is condoned. 4. Briefly stated facts are that the assessee Trust has undivided 1/6th share in the property No. 6, Russel Street, Kolkata. This property is occupied by tenants and also a partition suit is pending in the High Court in respect to this property. The assessee trust is entered into agreement for sale of its undivided 1/6th share for a sum of ₹ 25 lakhs vide dated 24.03.2005. The assessee received part considerations vide cheques of ₹ 15 lakhs and ₹ 5 lakhs against agreement for sale of this property on 24.03.2005. Actually and factually the property was sold by a registered conveyance deed dated 22.07.2005 and as per circle rates the value for the purpose of stamp duty for assessee's 1/6th share of this property was determined at ₹ 1,16,58,995/-. The assessment year involved in this appeal is AY 2006-07 but the origin of dispute lies in AY 2005-06 also. The assessee filed its return for AY 2005-06 on 31.03.2007 declaring Long Term Capital Gains of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is completed at Rs. 'nil' income ignoring the long term capital loss claimed by the assessee in his return of income. 6. Simultaneously, in view of the above observation of the AO in the assessment order for AY 2005-06, he issued notice u/s. 148 of the Act dated 24.12.2009 for the reason that the property in question was actually transferred on 22.07.2005 relevant to AY 2006-07 and, as such the taxable gain on sale of such property has escaped assessment within the meaning of section 147 of the Act. The AO in the meantime referred the matter to DVO for valuation of the property as on 01.04.1981, who vide letter dated 16.12.2009 estimated the fair market value of the property as on 01.04.1981 at ₹ 11,92,295 qua 1/6th share of assessee. According to AO, the deemed sale consideration as per circle rates of stamp valuation authority, the property was valued at ₹ 1,16,58,995/- as against the sale consideration declared by the assessee at ₹ 25 lacs. The AO computed the Long Term Capital Gains after taking the fair market value assessed by DVO as on 01.04.1981 at ₹ 11,19,295/- and deemed sale consideration assessed by stamp valuation authority base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at such a reference could not be made unless and until the Assessing Officer formed an opinion that value shown by the assessee was less than fair market value. Paras 4 to 8 of the judgment is reproduced hereunder:- 4. The assessee on the basis of registered valuer's report worked out indexed cost as on 1s t April, 2002 at ₹ 3,06,37,281/-. It was taken opening stock of land in the assessment year under consideration. With the returns the aforesaid valuation report was submitted. However, the AO did not accept valuation and referred the matter to the Departmental Valuer under section 55A of the said Act to determine the fair market value as on 1s t April, 1981 and it was done by the Departmental Valuer at ₹ 18,73,800. The AO did not accept valuation report submitted by the assessee on the ground that the same was not prepared on the basis of any sale instance. Naturally the AO proceeded on the basis of the valuation of the Departmental Valuer which made a lot of difference in assessing tax liability. Basing Departmental valuation report the AO came to conclusion that the assessee had overstated the value of the opening stock at ₹ 2,26,54,893/- and instead o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half, or (ii) that having regard to the nature of the asset and other relevant circumstances, so to do . 8. Thus it is clear based on the aforesaid concurrent fact findings that the formation of opinion of the AO that the value claimed by the assessee less than its fair market value is sine qua non Reasons recorded after order of reference for valuation of the registered Valuer is not the substitute of pre-decisional formation of opinion. 8. As the issue is covered by Hon'ble jurisdictional High Court in the case of Umedbhai International (P) Ltd., supra and once the assessee has filed approved valuer's report, which is in the case of the assessee is dated 18.10.2006 valuing the property as on 01.04.1981 at ₹ 24,03,838/-, is final. No further reference u/s. 55A can be made for estimating the fair market value of the property for determining the value as on 01.04.1981 unless and until the AO forms an opinion that value shown by the assessee was less than fair market value. 9. The second issue raised by assessee is as regards to the value adopted by the AO based on deemed value determined on the basis of circle rates by stamp valuation authority at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in all such cases the assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer. For the aforesaid reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law. From the above facts and legal proposition laid down by Hon'ble jurisdictional High Court in the case of Sunil ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
