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2015 (5) TMI 898 - ITAT DELHI

2015 (5) TMI 898 - ITAT DELHI - TMI - Capital gains computation - adopting the circle rate u/s 50C or documented price in sale deed - Held that:- In the instant case, the assessee had raised a plea that the fair market value of the impugned property is below the circle rate. Moreover, we find that the assessee had taken up a specific ground before the CIT (A) that the impugned property sold ought to have been referred for valuation since the fair market value was less than the circle rate. In th .....

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after proceed to determine the capital gains on the property in question - Decided in favour of assesse for statistical purposes. - ITA No.2278/Del./2013 - Dated:- 20-4-2015 - Shri George George K And Shri T.S. Kapoor JJ. For the Appellant : Shri Salil Aggarwal, Advocate and Shri Shailesh Gupta, CA For the Respondent : Shri K.K. Jaiswal, Senior DR ORDER Per George George K., JM : This appeal, at the instance of the assessee, is directed against the order of the CIT (A)-V, New Delhi dated 13.08.2 .....

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tion in the sale deed was ₹ 23,00,000/-. In the return of income filed, while computing the capital gains the cost of land was declared at ₹ 22,35,087/-, which included the cost of improvement of ₹ 1,29,805/-. The short term capital gains of ₹ 64,913/- was declared. However, the stamp valuation authority adopted the value of the land at ₹ 57,58,750/- for the purposes of payment of stamp duty. In the course of assessment proceedings, the Assessing Officer confronted .....

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; 22,00,000/- per acre. The Assessing Officer completed the assessment rejecting the objections raised by the assessee and adopted the value of land at ₹ 57,58,750/-. Thus, the short term capital gains was computed at ₹ 35,53,663/-, 4. Aggrieved, the assessee preferred an appeal before the first appellate authority. Before first appellate authority, the assessee filed an application under Rule 46A of the Income-tax Rules, 1962 requesting for admission of additional evidence for the r .....

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nal evidences. The reasoning of the CIT (A) was that the undated valuation report was made on 31.03.2007 i.e. much prior to passing of the assessment order (assessment order was passed on 30.11.2010) and there was no reason for the assessee, not producing the valuation report, during the course of assessment. The CIT (A) rejected the contentions of the assessee and dismissed the appeal. The relevant finding of the CIT (A) reads as follows:- The appellant's case does not falls under any of th .....

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the action of the AO in working out the short term capital gain at ₹ 35,53,663/- is confirmed and the appeal is dismissed. 5. Aggrieved, the assessee is in appeal before us. 6. Ld. Counsel for the assessee reiterated the submissions made before the income-tax authorities. It was further submitted that u/s 50C(2) of the Act, if the assessee claims that the fair market value or the sale deed price is below the circle rate, then it is mandatory for the Assessing Officer to refer the impugned .....

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It was submitted that the assessee has filed a false affidavit and has concocted the valuation report sought to be filed as additional evidence before the first appellate authority. 8. We have heard rival submissions and perused the material on record. The Tribunal in the case of Sarwan Kumar vs. ITO (supra) have held where an assessee had claimed before the Assessing Officer that the value of land and building assessed by the stamp duty valuation authority exceeds the fair market value of the p .....

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AO that value of land and building assessed by stamp valuation authority exceeded fair market value of property , then in terms of section 50C(2) (a) the AO ought to have referred matter to valuation officer instead of straightaway deeming the value adopted by the stamp valuation authority as full ITA Nos. 4379/Del/09 & 2373/Del/2012 5 value of consideration. Similar are the facts in the cited case of Pune bench in the matter of K.K. Nag Ltd. vs. ACIT (supra) wherein the AO applying provisi .....

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for adoption of full value of consideration in certain cases. It is provided that where the consideration received or accrued as a result of the transfer of a capital asset being land or building or both is less than the value adopted by an authority of the State Government for the purposes of payment of stamp duty in respect of such transfer, then the value so adopted by the State Government authority shall be deemed to be the full value of consideration received or accruing as a result of suc .....

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luation Officer. In instant case, factually it is evident that the assessee had claimed in the return of income itself that the value adopted by the stamp valuation authority exceeded the fair market value as on the date of transfer as provided in section 50C(2)(a). Under these circumstances, the Assessing Officer ought to have referred the matter to the Valuation Officer instead of straightaway deeming the value adopted by the stamp valuation authority as the full value of consideration. The po .....

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in this case ought to have referred the matter to the Valuation Officer for ascertaining the value of the capital asset in question. Therefore, the order of the Commissioner (Appeals) is to be set aside and the Assessing Officer is to be directed to adopt the course mentioned in section 50C(2)(a) and thereafter, proceed to determine capital gain on sale of land and building. 7. The Delhi Bench of the Tribunal in the above cited case of ITO vs. Smt. Manju Rani Jain (supra) has expressed a similar .....

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e had claimed that value of land and building assessed by stamp valuation authority exceeded fair market value of property but the AO had denied the reference u/s 50C to the Valuation Officer with this finding also, it is held there is no need to refer the matter to departmental valuation officer as stipulated in section 50C(2). The section 50C(s) uses the word May and not shall refer the matter to the valuation officer defined u/s 2® of the W.T. Act 1957. Sufficient evidence has not been pr .....

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ons laid down u/s 50C of the Act has held that the discretion granted in such a situation is required to use in a judicious manner. Section 50C is a deeming provision and ostensibly involve creation of an additional tax liability on the assessee and, therefore, notwithstanding the presence of the expression may in section 50C(2)(a), the AO in this case ought to have referred the matter to the valuation officer for ascertaining the value of the capital asset in question. The order of the Commissi .....

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