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2017 (9) TMI 1686 - HC - Income TaxAddition on account of capital gains computed u/s 48 by adopting the full value of consideration as adopted by the Stamp valuation Authority in pursuance of provisions of section 50C(1) - Held that - It is well settled that the parties if they admitted even after by a MOU and in view thereof possession was already handed over on 4th October 2006 no person is ready to give revised rates. Though the valuation of Registered Valuation Officer is on some authentic method but there can be some shortcomings also. The AO has not referred the matter to DVO whereas he should have referred the matter to the DVO for taking valuation from him so that both the valuation can be compared. It is a matter of small addition. Therefore we are not inclined to send the matter to the file of the AO for referring the matter to the DVO for the purpose of ascertaining actual market value. Accordingly we direct the AO to adopt valuation of this property at Rs. 20 lacs for the purpose of capital gains. We order accordingly. - Appeal decided in favour of the assessee and against the Department.
Issues Involved:
1. Legality of Tribunal's reversal of CIT(A)'s findings and deletion of addition made on account of capital gains under Section 48 by adopting the full value of consideration as per Stamp Valuation Authority under Section 50C(1). 2. Tribunal's justification in adopting a different full value of consideration for computing capital gains under Section 48 instead of the value assessed by the Stamp Valuation Authority. Issue-wise Detailed Analysis: 1. Legality of Tribunal's Reversal of CIT(A)'s Findings: The appellant challenged the Tribunal's decision that reversed the CIT(A)'s findings and deleted the addition of Rs. 1,49,93,459/- made on account of capital gains computed under Section 48 by adopting the full value of consideration as per the Stamp Valuation Authority under Section 50C(1). The Tribunal found that the agreement to sell was executed on 07.09.2006 for a total consideration of Rs. 13,81,00,000/-. The possession of the land was handed over on 04.10.2006, and substantial development work was initiated before the revision of circle rates on 20.11.2006. The Tribunal relied on the provisions of Section 2(47)(v) of the Act, which considers the transfer of property effective upon handing over possession in part performance of a contract. The Tribunal also referenced various case laws, including CIT vs. Hormasji Mancharji Vaid, which emphasized that the transfer under the Income Tax Act does not require registration for tax purposes if possession and enjoyment of the property have been transferred. Thus, the Tribunal concluded that the provisions of Section 50C(1) were not applicable as the transfer was effectively completed before the revision of circle rates. 2. Tribunal's Justification in Adopting a Different Value for Capital Gains: The Tribunal adopted a full value of consideration of Rs. 20.00 lakhs for computing capital gains under Section 48, instead of the value assessed by the Stamp Valuation Authority. The Tribunal observed that the property was rented out for more than 50 years and was in possession of old tenants at the time of the sale, which would reasonably lower its market value. The Tribunal noted that the AO did not refer the matter to the DVO (District Valuation Officer) for an independent valuation, which should have been done to ascertain the actual market value. The Tribunal, considering the limitations and the specific circumstances of the property, decided to adopt a value of Rs. 20 lakhs, which was deemed reasonable and just. The Tribunal's decision was supported by the case law and principles that the legal fiction under Section 50C should not extend beyond its purpose and should be confined to cases where the property has been assessed for stamp duty purposes. Conclusion: The High Court upheld the Tribunal's decision, agreeing that the Tribunal was justified in reversing the CIT(A)'s findings and adopting a different value for the computation of capital gains. The Court emphasized that the Tribunal's approach was consistent with the legal provisions and supported by relevant case laws. Both issues were decided in favor of the assessee, and the appeal was dismissed.
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