TMI Blog2020 (8) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... is not satisfied with the explanation of the assessee, he 'should' refer the matter to the DVO for the valuation purpose. Thus as per provisions of this section if the assessee raise any sort of objection regarding the value adopted by the registrar authority and if the AO is not satisfied on that then the AO should refer the matter to DVO. This is a legal requirement which must be complied with by the AO. It is undisputed fact that assessee had declared sale consideration more than DLC, accordingly there is no justification for making any addition u/s 50C - Appeal of the assessee is allowed - ITA No. 1393/JP/2019 - - - Dated:- 3-8-2020 - Shri Ramesh. C. Sharma, AM And Shri Vijay Pal Rao, JM For the Assessee : Shri Vijay Goyal, CA For the Revenue : Smt. Runi Paul, DCIT ORDER PER: R.C. Sharma, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-2, Jaipur dated 18.11.2019 for the A.Y. 2015-2016, in the matter of order passed by the A.O. u/s 143(3) of the Income Tax Act, 1961 (in short, the Act). The assessee has raised following grounds of appeal. 1. On the facts and in the circumstances of the case and in law th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty authority levied the stamp duty by assessing the value @ 150% of sale value declared in the sale deed valued by stamp duty authority at ₹ 7,38,00,000/-. On the basis of declared sale consideration, the assessee offered the gain earned on sales of this land as long term capital gain and part of the same claimed exempted u/s 54B of the Act. The assessment of the assessee was completed u/s 143(3) at the total income of ₹ 86,55,578/- as against the returned income of ₹ 25,05,580/ by making addition of ₹ 61,50,000/- by applying the deeming provisions of Section 50C of the Act being the difference of sales consideration and value assessed by stamp duty authority for levy of stamp duty (₹ 7,38,00,000 minus ₹ 4,92,00,000) 1/4th of ₹ 2,46,00,000/-. 2.2 By impugned order, the ld. CIT(A) confirmed the addition of ₹ 61.50 lacs made u/s 50C of the Act, 2.3 Now the assessee is in appeal before us. It was argued by the ld. AR of the assessee that as per the provisions of section 2(14)(iii) of the Act the agricultural land so sold by the assessee was not capital asset. However, while filing of the return as well as at the time of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twari regarding outside municipal limit (Page 4 of enclosure) (iv) Certified copy of revenue record of the agriculture land. (Page 5 of enclosure) 2.5 The ld. AR of the assessee further clarified that from the verification of the above mentioned records, its reveals that: - (i) the land sold was rural agricultural land situate in Chimanpura, Urf DhabKa Na, Tehsil Amber, District. This village is administered by Panchayat and not by any municipality, Municipal Council, Municipal Corporation, notified area committee, town area committee, town committee etc. (ii) the population of village (i.e. Area in which land is situated) as per last census was only 1068 i.e. below to 10,000. (iii) the village (i.e. Area in which land is situated) is about 1 KM far from last municipal limits of Kunda Check Post. Thus as per provisions of section 2(14)(iii) (a) or (b) of the Income Tax Act, 1961, the land so sold by the assessee is not the capital assets. The land is an agricultural land and this is proved from Jamabandi report. Further the land does not situate in municipal jurisdiction and population of the area where the land is situated is less than 10000. Thus the land doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t value which is a DLC Rate as per Sub-Registrar, if actual sale consideration is lower than the DLC Rate. As per the ld.AR of the assessee, in the instant case, the AO was not justified in ignoring DLC Rate and compute the capital gain by taking DLC rate at 1.5 time which was on the basis of the letter issued by the State Govt. dated 14-04-2014 for charging stamp duty in case of sale to any company, firm or institution. As per the ld. AR of the assessee, the letter issued by the State Govt. does not override the provision of Section 50C, according to which market value as per DLC is to be taken whether sale is to an individual or a company. 2.8 On the other hand, the ld. DR vehemently argued that the ground with regard to land being agricultural land was not taken before the AO, accordingly, the ld. CIT(A) was justified in rejecting the ground taken before him for the first time. With regard to the provisions of Section 50C, he contended that the AO has correctly taken the value as per DLC rate determined by the Sub-Registrar while registering the sale deed. 2.9 We have considered the rival contentions and carefully gone through the orders of the authorities below. We had al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there remains no doubt that the land was not sold below to prevailing market rate. The higher rate applied by the stamp duty authority only because of the fact that the land was sold to company. The DLC rates are indicative of market rate of the property sold. The market rate depends on market condition and not depends whether the buyer is a company or individual. The 1.5 times of the normal rate of the property was assessed just to levy stamp duty but the deemed sale consideration for the purpose of section 50C can be taken as DLC rate and in the case of the assessee sale value declared in the sale deed is much more than DLC rates. As per our considered view, the deeming provision of Section 50C cannot be extended beyond the four corner of the law for which it is meant. Under Section 50C, the Fair Market Value which is in the form of DLC is to be adopted if the sale consideration is lower than DLC Rate. The letter issued by the Director General, Registration Stamps for levying stamp duty at 1.5 time of DLC Rate in case the sale is affected to a company does not override the provisions of Section 50C. This letter is only meant for collecting higher stamp duty in case of sale to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of levy of more stamp duty from Company/Firms/or Institution who buys the land. This Circular is no way going to affect the fair market value of land i.e. DLC The DLC rate prescribed for the land was ₹ 44,35,410/- per bigha accordingly the normal value of the land as per the DLC rate comes to ₹ 3,66,36,487/-. The sale value declared by the assessee was ₹ 4,92,00,000/- which comes to ₹ 59,56,416/- per bigha. The sale value declared by the assessee was more than the DLC rate which is indicative of fair market value prevailing in that area. The fair market value cannot vary according to the status of the buyer person. If buyer is an individual then the fair market value would be ₹ 3,66,36,487/- and if the buyer is a company or firm or institution then the fair market value of the property would be 1.5 time of the normal value, this cannot be intention of Section 50C which require substitution of fair market value i.e. DLC in place of sale consideration mentioned in the sale deed, if it is found to be lower than DLC. Furthermore, the stamp duty authority levied the stamp duty arbitrary by assessing the value @ 1.5 time of value declared in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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