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2019 (12) TMI 1200 - ITAT AMRITSARAddition on account of long-term capital gain on sale of properties - value of property as per Rent Capitalization Method - as contended that the properties sold were tenanted properties for last 30 years and same were sold to them only as is where basis and were subject to Rent Control Act - revenue contended section 50C reference is applicable for made is for valuation of income-tax purpose and it is not applicable to and provisions of section 16A of Wealth Tax Act are not applicable - HELD THAT:- We find that the provision of section 50C (2) which specifically provides that where reference is made by the AO to Valuation Officer the provisions of section 16A (2), (3), (4) (5) of Wealth Tax Act would apply in the same manner as they apply to valuation referred under Wealth Tax Act. The Rule 3 of Schedule III of Wealth Tax Rules specifically provide for method of valuation of rented building as Rent Capitalization Method. The VO has only stated that it has been valued as per guidelines of Board. When there is specific provisions in the Act and Which provides valuation as per Rent Capitalization Method. In the case of tenanted properties. Hon`ble Rajasthan High Court in the case of CIT v. Pramod Chand Soni [2017 (9) TMI 1686 - RAJASTHAN HIGH COURT] held that where properties are rented for more than 50 years and was in possession of tenants at the time of execution of sale deed hence, it could be reasonably inferred that such property could not fetch prevalent market rate as compared to other properties. Similarly in the case of Ramendra Vikram Singh v. ITO [2009 (2) TMI 895 - ITAT, LUCKNOW] it was held that DVO report under section 50C (2) is binding on the AO and it was also held that Section 16A of Wealth Tax Act read with Rule and Schedule III of Wealth Tax Act are applicable to the valuation made under section 50C of the Act. Similar findings were given by the Hon`ble Punjab & Haryana High Court in the case of CIT v. Prem Nath Anand [1976 (11) TMI 61 - PUNJAB AND HARYANA HIGH COURT] . On careful consideration of facts and circumstances and taking into consideration the cumulative effect of all the circumstances, we are of the considered view that the VO should have determined the valuation of properties by taking Rent Capitalization Method. We further, note that the VO had applied CPWD rate whereas he should have applied PWD rates and should have allowed depreciation @95% of cost taking the life of properties at 60 years. The AO is therefore, directed to consider value of property as per Rent Capitalization Method and compute capital gains accordingly.
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