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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
O R D E R Per Amarjit Singh (AM): The present appeal filed by the assesse is directed against the order passed by NFAC, Delhi dated 07.12.2022 for A.Y. 2017-18. The assesse has raised the following grounds before us: “Ground No. 1: Addition of Rs.14,01,000/- u/s. 50C
1. The learned CIT(A) erred in confirming the addition of Rs.14,01,000/- being the difference between the agreed consideration as per the agreement (i.e Rs. 3,24,00,000/-) and the valuation determined by the Departmental
2. Valuation Officer (DVO) (i.e. Rs. 3,38,01,000/-)
2. The learned CIT(A) failed to take into consideration that the valuation assessed by the DVO is less than 10% of actual sale consideration and hence the difference should be ignored.
3. The learned CIT(A) erred in holding that the amendment to section 50C is prospective from Finance Act, 2019, whereas it has been held by various courts that the amendment made is curative/clarificatory in nature and P a g e | Prince Multiplast Private Limited Vs.ACIT, Circle 7(3)(2) accordingly held that the proviso shall apply since the date of insertion of sec, 50C of the Act.
4. The learned CIT(A) erred in holding that while computing the difference in the valuations, it is only the stamp duty valuation and not the DVO Valuation which should be taken into consideration. The Appellant craves leave to amend and alter grounds of appeal.”
Fact in brief is that return of income declaring total income of Rs.3,96,97,800/- was filed on 28.03.2018. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 09.08.2018.
During the course of assessment proceedings the A.O noticed that the assessee company has sold a flat of land on 05.11.2016 for a total consideration of Rs.3,24,00,000/-. However, the market price of the property as per the stamp duty value was Rs.4,30,43,000/-. The A.O found that assessee has not taken into account the stamp duty value of Rs.4,30,43,000/- for computing the long term capital gain arise on the sale of the property. The assessee revised the return of income after issue of notice u/s 143(2) and shown long term capital gain at Rs.3,01,35,372/-. 4. Further during the course of assessment the assessee has objected the value adopted by stamp duty authority and requested the assessing officer to refer the matter to the valuation officer of the department for valuing the sold property. Therefore, A.O has referred the matter of valuation of property to the department valuation officer as valued the property at Rs.3,38,01,000/-. Accordingly, the A.O has added the difference amount of Rs.14,01,000/- as per the sale value determined in the valuation report. 5. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.
P a g e | Prince Multiplast Private Limited Vs.ACIT, Circle 7(3)(2) 6. During the course of appellate proceedings before us the ld. Counsel contended that difference between the fair market value as per DVO and value as per agreement was around 4.32% only, therefore, as per third proviso of Sec. 50C(1) no any addition is required to be made in the case of the assesse. The ld. Counsel has placed reliance on the decision of ITAT, Mumbai in the case of DCIT-1(2)(2) Vs. M/s Mahalaxmi Rope Works Ltd. vide dated 14.03.2019 in the case of Shri Sandeep Patil Vs. ITO vide ITA No. 924/Bang/2019 dated 09.09.2020 of ITAT Banglore and Shri B.S. Sanjay (HUF) vs. ITO vide ITA No. 114/Bang/2018 dated 01.05.2018. On the other hand, the ld. D.R supported the order of lower authorities.
Heard both the sides and perused the material on record. Without reiterating the facts as elaborated above the fair market value as per DVO was Rs.3,38,01,000/- and the fair market value a per agreement was Rs.3,24,00,000/-. As per third proviso of Section 50C(1) of the Act, difference in stamp duty valuation and the actual sale consideration should be ignored if it is less than 5/10% . The relevant part of the decision in the case of M/s Mahalaxmi Rope Works Ltd. as referred supra is reproduced as under: “5. After hearing both the parties and perusing the material on record including the impugned order of Ld. CIT(A), we observe that in this case the assessee has disputed the fair market value of Rs.7,21,41,500/- as per AIR information and requested before Ld. CIT(A) to refer the valuation of the property to DVO to ascertain the FMV. The ld. CIT(A), accordingly, referred the matter to AO on 16.02.2016 and a final valuation report was received by the office of Ld. CIT(A) on 23.06.2016 dated 13.06.2016 according to which the FMV was Rs.5,15,29,600/-. The Ld. CIT(A) deleted the addition on the ground that difference between the fair market value as per DVO report and agreement value comes to around Rs.25,83,278/- which is 5.8% approximately and Ld. CIT(A) by relying on the decision of Hon’ble Supreme Court in the case of C.B. Gautam 65 taxmann 440 SC and decision of the Bombay Tribunal in the case of Krishna Enterprises vs. ACIT in ITA No.5402/M/2014 (supra) decided the issue in favour of the assessee by holding that the difference between the fair market value as per DVO and the value as per agreement is around 5.8% which