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2017 (1) TMI 505 - ITAT HYDERABAD

2017 (1) TMI 505 - ITAT HYDERABAD - TMI - Determining value of the property - Addition made adopting the guide line value of the property for stamp duty purpose - Addition u/s 50C - adoption the value adopted by the stamp valuation authority for the purpose of computation of capital gains - AO chose to brush aside the submissions, by not referring the matter to the DVO - whether the AO can be given a second opportunity to make good his deficiencies at the cost of expenditure to be incurred by th .....

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ite making request to refer the matter to the DVO, the AO purposely did not refer the matter to the DVO on the ground that he is duty bound to go by the valuation adopted by the stamp valuation authority. - Litigation in the Bombay, particularly, under the Maharashtra Rent Control Act, is well known and needs to be taken judicial notice. A property which is in the occupation of tenants for more than 60 years one cannot fetch full market value and in fact the party who purchased the property .....

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. - Recently, the Hon’ble Supreme Court in the case of Manish Mahaeswari Vs. ACIT and another, and Indore Construction P. Ltd. Vs. CIT, [2007 (2) TMI 148 - SUPREME COURT OF INDIA] vis-à-vis the provisions of section 153C of the Act, observed that if the AO has not recorded his satisfaction for issue of notice u/s 153C of the Act, the proceedings deserve to be quashed rather than giving the AO another chance to record proper reasons. The same principle holds good even in this case; when the A .....

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rama Rao For The Assessee : None ORDER PER S. RIFAUR RAHMAN, A.M.: This appeal filed by the Revenue is directed against the order of CIT(A)-4, Hyderabad, dated 08/06/2015 for AY 2011-12. 2. Briefly the facts of the case are that the assessee has filed her return of income for the AY 2011-12 on 18/10/2011 declaring income of ₹ 31,90,770/- including long term capital gains of ₹ 14,23,805/- on sale of property. The return of income was processed u/s 143(1) of the Income-tax Act. The cas .....

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ing the indexed cost and consideration paid to one Sri P.C. Srimal, the assessee had arrived at a net long term capital gain of ₹ 14,23,800/-. On perusal of the sale deed and other documents submitted by the assessee s counsel, the AO found that the stamp valuation authority has taken the market value of the property at ₹ 1,35,57,500/- for the purpose of levying of stamp duty. Accordingly, the AO was of the view that the case of the assessee attracts provisions of section 50C of the .....

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submitted that the consideration received by her may be adopted as fair value of the property as the entire property was occupied by the tenants for over 60 years and litigation was pending over the same. She, therefore, objected for adoption of stamp duty valuation and requested that the same may be referred to the Departmental Valuation Officer (DVO) as per section 50C of the Act, for which, she relied on the decision of the Mumbai Tribunal in the case of Ms. Nandita Kosla [2011] 11 344 (Mumba .....

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nce to the adoption of valuation while applying the said section. He, further observed that the assessee s request for reference of the case to the DVO for valuation also cannot be accepted as the facts of the case laws cited by the assessee are not similar to the facts of this case as what is contested by the assessee in her case have no relevance to the facts stated in the case laws. In view of the above observations, the AO computed the long term capital gains in respect of the sale of proper .....

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ion holding that they are extraneous reasons. He observed that the reasons cited by the assessee for consideration being less than the value taken for registration purposes are valid and relevant and the action of the AO is not having the same into account while deciding the issue, does not appear to be correct. In view of the above observations, the CIT(A) held that the AO has not referred the matter to Valuation Officer as mandated u/s 50C and did not consider valid reasons put forward by the .....

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on made by the AO by adopting the guide line value of the property for stamp duty purpose in place of stated consideration in the sale deed for the purpose of computing long term capital gains on the ground that the Assessing Officer has not referred the matter to departmental valuation officer. 2. Whether the Ld. CIT(A) has erred on facts and circumstances holding that reference to departmental valuation officer u/s 50C(2)(a) is mandatory for Assessing Officer while determining value of the pro .....

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merits of the case. 6. Ld. DR submitted that the CIT(A) ought to have remanded the issue to the file of the AO with a direction to refer valuation of the property to the Departmental Valuation Officer and decide the matter accordingly. He, therefore, pleaded that the matter may be remanded to the file of the AO. 7. We have carefully considered the submissions of the ld. DR and perused the material on record. We have also gone through the case law on this aspect. Before going into the facts of th .....

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IT Act. The assessee sold the tenanted property wherein she has 50% share; as per the assessee, net long term capital gain works out to ₹ 14,23,805/-; 50% of the property was stated to have been sold for only ₹ 19,50,000/-. It is the case of the assessee that it is tenanted property, which does not fetch higher value and, therefore, while arriving at the Fair Market Value (FMV), that aspect has to be taken into consideration. It was brought to the notice of the AO that the property .....

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s, the FMV of the property was not at all taken into consideration though a statutory duty is imposed upon the AO to obtain the value by referring the matter to DVO. In other words, he chose to brush aside the submissions, by not referring the matter to the DVO. 7.1 The issue that comes up for our consideration is as to whether the AO can be given a second opportunity to make good his deficiencies at the cost of expenditure to be incurred by the assessee by continuing the litigation for a furthe .....

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the task of calculating and realizing that price should familiarize themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that .....

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is justified in cancelling the addition made by the AO, in the peculiar circumstances of the case. 7.2 The Hon ble Delhi High court in the case of ACC Ltd. Vs. DVO and others, [2013] 357 ITR 160 (Delhi) observed that in the event of not referring the matter to the DVO, the AO cannot said to be justified in proceeding with the valuation of the Sub-registrar. However, in the said case, the AO having made genuine attempt of referring the matter to the DVO and on account of the fact that the DVO ha .....

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eclared by her. It is not known as to whether any similar addition was made in the hands of co-owner. At any rate, no material was placed before us on this aspect. When deeming provision was to be invoked, the same has to be construed strictly and it has to be taken to its logical conclusion i.e. upon not following the proper procedure prescribed therein, particularly, in the backdrop of the fact that the assessee has prima-facie shown that it was a tenanted property and, therefore, subjected to .....

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ion. Literally, there were no purchasers for this litigated property and, hence, the property was sold at a rate lesser than the market value with a clause in the sale deed that the purchaser would deal with the tenants regarding their vacation etc. it was also stated that the property was fully occupied by seven tenants, who are in possession of their respective premises. Their names and the fact that they are paying a rent of only ₹ 450/- per month as on the date of sale have also been a .....

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ch forced her to sell the same in as is where is condition for a price whatever she could get. In spite of advertisement in the news papers, nobody came forward to purchase the property because of litigation. As there was a threat of property going away from her hands, she was forced to sell the same for whatever price she could get. By explaining in detail, it was stated that the property was occupied by tenants for over 60 years that litigation was pending and, thus, whatever she could obtain .....

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nfer any discretion and he is bound to adopt the value adopted by the stamp valuation authority for the purpose of computation of capital gains. 7.5 There are catena of decisions on this point and, on other hand, referring to the speech of the Finance Minister as well as circular issued by the CBDT bringing the intention of the legislature whereby it was held that the AO is duty bound to refer the matter to the Valuation officer when the reasons were thoroughly mentioned by the assessee for the .....

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