2019 (2) TMI 1810 - AT - Income Tax

Long term capital gain on sale of land by the assessee - FMV - dispute between the assessee and the AO is the rate at 290 per sq.mtr as FMV as on 01.04.1981 whereas DVO has estimated the same @ 162 per sq.mtr. - HELD THAT - DVO s Report that sale instances considered by the DVO are not of the same survey no. Further the DVO has himself stated in his report that impugned land was situated at more appropriate location as compared to sale instances considered by him. CIT(A) has also pointed out that the value determined by the Registrar Valuer was based on unscientific ad-hoc method and DVO has determined the rate of reduction 162 per sq.mtr cost incurred on stamp duty additional stamp duty registration charges legal charges. Therefore considering the entirety of the facts and taking a holistic view we are inclined to accept the ld.Counsel s argument that the average value as determined by Registrar Valuer of the assessee DVO and has considered by the CIT(A) would be more reasonable and appropriate for determination of the FMV of land as on 01.04.1981. Accordingly the average rate for FMV is worked out to Rs. 210 i.e. (162 290 178 630/3 210). The AO therefore accordingly directed to reworked out the index cost of acquisition by taking FMV at Rs. 210 per sq.mtr and re-compute the taxable long term gain accordingly this ground of the assessee is therefore partly allowed. Addition on account of difference in Jantri Value by applying the provisions of section 50C - HELD THAT - 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 we hereby direct the AO to adopt the value as declared by the assessee. This ground of the assessee is allowed. We direct the 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.

Summary

Issues:
1. Valuation of long term capital gain on sale of land
2. Addition based on the difference in Jantri Value under section 50C of the Act

Analysis:

Issue 1: Valuation of long term capital gain on sale of land
The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the addition of long term capital gain on the sale of land. The Assessing Officer (AO) had added a certain amount to the capital gain based on the valuation of the land. The Dispute Resolution Officer (DVO) valued the land at a different rate compared to the declared value by the assessee. The Commissioner observed discrepancies in the valuation methods used by the DVO and the Registered Valuer. After considering various factors, the Commissioner directed the AO to rework the index cost of acquisition. The Tribunal upheld the argument of the assessee, considering the average value determined by the Registered Valuer, DVO, and Commissioner as more reasonable. The Tribunal directed the AO to recompute the taxable long term gain based on this average value.

Issue 2: Addition based on the difference in Jantri Value under section 50C of the Act
The second ground of appeal related to the addition made by the AO based on the difference in Jantri Value under section 50C of the Act. The stamp valuation authorities had determined a higher value compared to the sale consideration shown in the registered sale deed. The AO added a certain amount representing the difference in these values. The assessee contended that the difference was less than 10%, and therefore, no addition should be made. The Commissioner upheld the addition based on the constitutional validity of section 50C. However, the Tribunal, considering the ratio of relevant decisions and the fact that the difference was less than 10%, directed the AO to adopt the value as declared by the assessee. Consequently, the additions made by the AO under section 50C were deleted, and the grounds raised by the assessee were allowed.

In conclusion, the Tribunal allowed the appeal of the assessee, directing the AO to rework the index cost of acquisition for the long term capital gain and to adopt the valuation of sale consideration as declared by the assessee for the Jantri Value issue.