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2023 (6) TMI 42 - ITAT PUNEAddition u/s 56(2)(vii)(b) - difference between the stamp value and declared consideration in sale (Sathekhat) executed through registered deed - assessee submitted that the purchase was not complete - AO observed that after the purchase of land, the assessee entered into an agreement to sell the same and hence the assessee’s claim that the purchase was not complete, was wrong - HELD THAT:- The third proviso to section 56(2)(vii)(b) provides that where the stamp value of the immovable property is disputed by the assessee on the ground mentioned in section 50C(2), AO may refer the valuation of such property to the Valuation Officer. The word `may’ in such provision has been interpreted as `shall’ in many cases, making it mandatory on the part of the AO to make a reference to the DVO, where the assessee asserts that the stamp value is excessive. Additional ground raised before the ld. CIT(A) in this regard has remained undisposed off, which in our considered opinion, is not correct. Going with the mandate of the third proviso to section 56(2)(vii)(b), we are of the considered opinion that it would be in the fitness of things if the impugned order on this score is set aside and the matter is remitted to the file of the AO for making a reference to the DVO for determining the value of the property afresh - Computation of capital gain will be done by the AO after allowing a reasonable opportunity of hearing to the assessee. Additional alternative ground of assessee contending that deduction of cost of acquisition should be given in the computation of the capital gain - As seen that the AO computed capital gain at the gross value of stamp value without allowing any deduction towards cost of acquisition and cost of improvement etc. It is axiomatic that capital gain does not refer to taxing the gross receipt. Section 48 of the Act clearly provides the mechanism for computation of capital gain by stating that cost of acquisition of the asset and cost of any improvement should be reduced from the full value of consideration, in addition to the expenditure incurred wholly and exclusively in relation to the transfer. It is, therefore, directed that while computing the capital gain in the hue of the above observations, the AO shall also grant deduction towards cost of acquisition etc. of the asset. Appeal is allowed for statistical purposes.
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