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2016 (4) TMI 77 - ITAT BANGALORE

2016 (4) TMI 77 - ITAT BANGALORE - TMI - Deduction u/s 50C computation - whether the rate prevailing in the year 2005 when the assessee claimed to have entered into agreement for sale or the rate prevailing in the year 2007 when the assessee has finally executed the sale deed and registered are to be adopted as full value consideration u/s 50C - Held that:- Once the parties have agreed upon the sale consideration of the property in the year 2005, then it will be immaterial if the final sale deed .....

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the sale deed was executed.

Even if stamp duty valuation of the property at the time of registration of sale deed is adopted as full consideration, the same has to be subject to the verification whether the market value of the property at the time of sale consideration agreed upon by the parties is less than the valuation adopted by the stamp valuation authority then as per provisions of sec.50C(2) market value of the property is required to be taken after consideration of relevant f .....

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of sec.50C(2) of the Act. - Decided in favour of assessee for statistical purposes. - ITA No.882/Bang/2014 - Dated:- 12-2-2016 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER and SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant : Shri H.N.Khincha, CA For The Respondent : Shri Sunil Kumar Agarwala, JCIT(DR) ORDER Per VIJAY PAL RAO, JM : This appeal by the assessee is directed against the order dated 23/12/2013 of the CIT(A)-V, Bangalore, for the assessment year 2008-09. 2. The assessee has raised .....

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to the income, by invoking the provisions of sec. 50C of the Act and the learned CIT(A) has erred in confirming the same. On the facts and circumstances of the case and the law applicable, the provisions of sec. 50C are not applicable to the case of the appellant. The action of authorities below being contrary to available facts and law are to be disregarded and addition as made / sustained is to be deleted in entirety. 3.2 In any case, the addition as made / sustained is erroneous and excessive .....

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filed is to be admitted in the interest of justice. 5. In any case and without further prejudice, the Learned Assessing Officer had erred in adopting the Fair Market value as on the date of sale deed without referring the matter to the valuation officer, and the learned CIT(A) has erred in confirming the same. The action of authorities below being not in accordance with law is to be rejected in toto. 6. The appellant denies the liability to pay interest. The interest having been debited erroneo .....

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essee had sold a property at Peenya, Bangalore, for a consideration of ₹ 30,12,000/- and offered income under the head capital gains . The AO proposed to invoke the provisions of sec.50C for taking the full value of consideration as assessed by the stamp duty authority. The assessee objected to the action of the AO by explaining that the assessee had entered into an agreement for sale of the property in the year 2005 and also received part consideration on 11/5/2005 onwards up to the date .....

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CIT(A) has further noted that the assessee has not made any claim for referring to the DVO. 5. Before us, learned AR of the assessee has submitted that there is no dispute that the assessee received payment right from 11/5/2005 till 21/7/2007 when the sale deed was executed. He has further submitted that entire payment has been received by the assessee through cheques and therefore, when the assessee received payment in the year 2005 and also had entered into an agreement for sale, then the rate .....

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ed upon between the parties in the year 2005 itself and therefore, the rate prevailing in the year 2005 shall be applied for the purpose of sec.50C. In support of his contention, he has relied upon the decision of the Delhi Tribunal in the case of Anil Kumar Jain vs. ITO (143 ITD 659). He has further contended that the assessee filed additional evidence before the CIT(A) but the CIT(A) has declined to admit the additional evidence on the ground that the assessee has not filed a specific applicat .....

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er prevailing rate in the year 2005. He has also relied upon the following decisions: i. ITO vs. Mumtaz Begum (ITA No.877/Hyd/2015 dt.04/11/2015) ii. ITO vs. Modipon Ltd. (ITA No.2049/Del/2009 dt.9/1/2015) iii. M/s.Lahiri Promoters vs. ACIT (ITA No.12/Vizag/2009 dt.22/6/2010 6. On the other hand, learned Departmental Representative has submitted that the assessee never produced the agreement before the AO. The agreement was not registered and therefore, it is an after-thought creation of documen .....

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record. The dispute before us is limited only on the point whether the rate prevailing in the year 2005 when the assessee claimed to have entered into agreement for sale or the rate prevailing in the year 2007 when the assessee has finally executed the sale deed and registered are to be adopted as full value consideration u/s 50C of the Act. There is no dispute that the assessee received payment from purchaser of the property since 11/5/2005 onwards. The details of payment are reproduced by the .....

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5/2005 onwards, then there exists an agreement between the parties so far as the sale consideration of the property in question. Once the parties have agreed upon the sale consideration of the property in the year 2005, then it will be immaterial if the final sale deed was executed in the year 2007 when final payment was made to the assessee by the purchaser. It is not the case of the AO that the payment received by the assessee prior to sale deed was not part of the sale consideration. Therefor .....

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In the case of Anil Kumar Jain (supra) Delhi bench of the Tribunal has held in paras.7 to 10 as under: 7. We have heard both the parties and carefully gone through the orders of the authorities below. The first and foremost point that arises for consideration is as to whether the Assessing Officer should have referred the matter to the Valuation Officer u/s 50C(2) of the Act to determine the fair market value before invoking provisions of section 50C(1) of the Act. From careful perusal of the as .....

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last operative part of the assessment order, the Assessing Officer held that the assessee has not given any explanation in respect of applicability of provisions of section 50C(1) of the Act, therefore, for calculating short term capital gain, the value of half share of the property is taken at ₹ 39,05,000 as per value adopted by stamp valuation authority while registering the sale deed. 8. From this finding recorded by the Assessing Officer, it is clear that the assessee made a claim befo .....

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isputed in any appeal or revision or any reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and in that event, relevant and corresponding provisions of the Wealth Tax Act shall, with necessary modifications, will apply. 9. In the present case, it is not in dispute that the assessee has made a claim before the Assessing Officer that the value adopted or assessed by the stamp valuati .....

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e basis of foregoing discussion and factual matrix of the present case, we hold that the view taken by the Assessing Officer as well as confirmed by the Commissioner of Income Tax (A) is not correct. Since the Assessing Officer failed to refer the matter to the valuation officer u/s 50C(2) of the Act, we find it fit and proper to restore the matter back to the file of the Assessing Officer for a fresh adjudication after referring the matter to the Valuation Officer u/s 50C(2) of the Act. The Ass .....

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d evidence placed before him and decide the issue de novo by passing a speaking and well-reasoned order. 9. Therefore, even if stamp duty valuation of the property at the time of registration of sale deed is adopted as full consideration, the same has to be subject to the verification whether the market value of the property at the time of sale consideration agreed upon by the parties is less than the valuation adopted by the stamp valuation authority then as per provisions of sec.50C(2) market .....

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he date of agreement of sale or as on the date of registration. We find that similar issue came up for consideration before the ITAT, Vizag Bench in the case of M/s Lahiri Promoters (supra) and the coordinate bench has extensively dealt with the issue and after considering the ratio laid down by the Hon'ble Supreme Court in the case of K.P.Varghese Vs Income tax Officer and another (131 ITR 597) and also considering the decision of Hon'ble Madras High Court in the case of K.R. Palani Swa .....

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