TMI Blog2009 (8) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that interest would also constitute cost of acquisition and therefore, we find nothing wrong in the order of the CIT(A) directing the AO to recompute the capital gains after capitalizing interest paid on delayed payment of instalments. The appeals filed by the revenue fail. Difference between the valuation declared by the assessee and the valuation u/s 50C - HELD THAT:- Since in respect of Noida properties, objections were raised even before AO showing that Noida Authorities itself has sold the plots in Phase II at Rs. 1,250 per square metre whereas the assessee has sold the plots at Rs. 1,425 per sq. mtr. There may be some logic in the argument of the learned DR that other plots may not be in the developed area but this can be determined only by the Valuation Officer. In case of flat at Mira Road also the assessee had raised objection, copy of which was filed before us. It was claimed in paragraph 1( b ) that the flat was located on the outskirts of Mira Road and on the border of Bhayander and civic amenities like provision of water, etc. was very poor. We are of the view that once the assessee is raising objection no harm would be caused to the revenue if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed to allow the claim of the appellant at Rs. 19,05,400 as principal being embedded in the instalments of lease premium as additional cost of land to compute the LTCG. 9. The calculation sheet as prepared by the Noida dated 6-4-2002 confirms the payment of interest at Rs. 23,64,236 which was part of equated instalments. The amounts were paid against the cost of the land and, therefore, the same has to be included in the total cost of the land. The Assessing Officer is directed to include it in the cost of land for computation of LTCG. 10. Since the allotment order for six plots was issued by the Noida on 28-10-1994 and as the appellant defaulted in the payment of instalments, registration of the plots was automatically cancelled due to non-compliance of the conditions laid down by Noida Land Development Authority. As per rules, in order to save the earlier paid money and plot of land, the allottees are required to get the extension of time for the payment of entire money and for that the appellant paid Rs. 1,80,060. Similarly, the default results in the cancellation of the allotted land as per Noida rules and to restore back the registration, the allottees are to deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gree with the submissions put forth by the learned counsel for the assessee. It is clear that interest had to be paid on two counts, viz. ( i ) the interest which was embedded in the instalments itself; and ( ii ) the interest paid on the delayed payment of instalments. The Hon ble Madras High Court in the case of K. Raja Gopala Rao ( supra ) had, on a similar set of facts and circumstances, held as follows : "The assessee purchased immovable property for Rs. 5,45,349 on December 6, 1970. On the same day he mortgaged the property to secure a loan of Rs. 4 lakhs and this loan was raised solely for the purpose of paying his vendor and for meeting the cost of the stamp duty on the sale deed. He sold the property partly in the assessment year 1973-74 and partly in the assessment year 1974-75. He claimed that for computing the capital gains the cost of execution of the mortgage and the amount of interest paid to the mortgagee till the date of sale of the property would require to be added to the purchase price for arriving at the cost of acquisition. This claim was disallowed by the Appellate Tribunal. On a reference : Held, that the cost of acquisition to the assessee was not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A). 9. Before us, the learned counsel for the assessee referred to section 50C and submitted that there is a clear-cut mandate that once assessee objects to the valuation to be adopted by the Assessing Officer, he was then duty bound to refer the matter to the Valuation Officer. He further argued that it has been held in case of Meghraj Baid v. ITO [2008] 23 SOT 25 (Jodh.) (URO) that the word "may" in sub-section (2) of section 59C should be construed as "should". He submitted that similar view has been taken in case of Rumans Industrial Chemical Corpn. v. Asstt. CIT [IT Appeal No. 3428 (Mum.) of 2007, dated 20-3-2009] and the Delhi Bench of the Tribunal in the case of ITO v. Smt. Manju Rani Jain [2008] 24 SOT 24 . 10. The learned Departmental Representative, on the other hand, submitted that the Assessing Officer was not required to make reference to the Valuation Officer unless he was satisfied that there was really a valid reason for assessee to raise a dispute regarding the valuation of the property. He submitted that merely because the Tribunal has decided that the word "may" should be read as "should" it does not mean that the reference is automatic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has been adopted for the stamp duty purposes. However, sub-section (2) makes it very clear that whenever assessee claims before the Assessing Officer that he has not challenged the stamp duty valuation and sale consideration is different because of valid reason, then the Assessing Officer is required to refer the matter to Valuation Officer. Without going into the interpretation of the word "may" whether it should be taken only as mandatory or not the plain logic seems to be that Assessing Officer is not expert on valuation and that is why the Legislature has mandated that if there is strong objection from the assessee s side without challenging the stamp duty valuation, then valuation should be referred to Valuation Officer, who is an expert and who can do the correct valuation. Since in respect of Noida properties, objections were raised even before Assessing Officer showing that Noida Authorities itself has sold the plots in Phase II at Rs. 1,250 per square metre whereas the assessee has sold the plots at Rs. 1,425 per sq. mtr. There may be some logic in the argument of the learned departmental representative that other plots may not be in the developed area but this can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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