HEMANT SUDAM TUPE,,PUNE vs. INCOME TAX OFFICE, WARD - 1 (3),, PUNE

Briefly stated, the facts in the case of Shri Hemant Sudam Tupe are that the assessee sold a land admeasuring 60.66R at survey numbers 187/8A and 188/1A at Sadesatranali, Hadapsar, Pune -28 along with other co-owners to M/s. City Corporation Ltd. The assessee computed capital gain by taking sale price as the full value of consideration and the fair market value of the property as on 01-04-1981 at Rs.163.50/- per sq. meter as the unindexed cost of acquisition.

The Assessing Officer (AO) tweaked both the components in the computation of capital gain. He observed that the stamp value of the land in question was more than the amount of actual sale consideration and also the fair market value as on 1.4.1981 was less. The assessee was called upon to explain as to why the stamp value of the transferred land be not considered against the actual value declared in terms of section 50C of the Act. On an objection from the side of the assessee, the AO made a reference to the DVO for determining the fair market value of the property as on 01-04-1981 and also on the date of sale, namely, 06-12-2003. Since the assessment was getting time barred and the report of DVO was awaited, the AO finalised the assessment by espousing cost of acquisition as on 01-04-1981 at Rs.161.40/- per sq. meter and full value of consideration as per the stamp value at Rs.955/- per sq. meter.

I have heard both the sides and perused the relevant material on record. The first issue in this appeal is determination of the full value of consideration in terms of section 50C of the Act. It is seen that the DVO valued the property as on the date of sale at Rs.850/- per sq. meter. On the contrary, the ld. CIT(A) observed that there was another sale instance by Shri Nitin N. Shewale in which the DVO had determined the fair market value of land at survey number 187 at Rs.1,240/- per sq.mtr. This value was held to be correctly applicable to the facts of the instant case. Since such a value was more than the stamp value, he, therefore, directed the AO to restrict the full value of consideration to the stamp duty valuation for the purposes of determining the capital gain. It is seen that the appeal in the case of Shri Nitin N. Shewale came up for consideration before the Tribunal. Vide order dated 06- 02-2020, the Tribunal has directed to adopt Rs.1,032/- as per sq. mtr as fair market value on the date of sale in that case, namely, 08-01-2004 against survey number 187. It, therefore, emerges that the stamp value of Rs.955/- in this case is still less than the fair market value determined by the Tribunal for similar property in the case of Shri Nitin N. Shewale. Under such circumstances, I agree with the view taken by the ld. CIT(A) in restricting the addition by adopting fair market value as on the date of transfer of land at Rs.955/- p.s.m., being the stamp value. There is no scope for further reduction in such value as urged on behalf of the assessee. This ground is dismissed.

The second issue is the valuation as on 01-04-1981. The assessee adopted the unindexed rate of Rs.163.50/- p.s.m. as on 01-04-1981. The AO in the assessment order adopted rate of Rs.161.40 per sq.mtr. It was on the basis of the DVO’s report that the ld. CIT(A) adopted the rate of Rs.50/- per sq.mtr as the F.M.V as on 1.4.1981. The assessee contended before the ld. CIT(A) that no reference could have been made by the AO to the DVO in as much as the fair market value of the property was claimed by the Officer to be lower than the value adopted by the assessee. In support of such an argument, the assessee relied on the judgment of the Hon’ble jurisdictional High Court in CIT Vs. Puja Prints (2014) 360 ITR 697 (Bom.) holding that reference u/s.55A can be made to DVO only when the value adopted by the assessee is less than the fair market value. The ld. CIT(A) agreed with such a proposition, in principle. He, however, did not find applicability of such a ratio to the facts of the instant case in the light of amendment carried out to section 55A under clause (a) providing for making a reference of valuation to a capital asset. This provision provides that a reference can be made by the AO if he is of the opinion that the value so claimed is at variance with its fair market value, which expression got substituted w.e.f. 01-07-2012 for the earlier words is less than its fair market value. The ld. CIT(A) held that ratio in the case of Puja Prints (supra) would be applicable only where the assessee furnishes a report of some Registered valuer, which was not extantly done. He, therefore, did not accept this contention of the assessee.

Having heard both the sides and gone through the relevant material on record, it is seen that amendment to section 55A in the above terms has been carried out and made effective from 01-07-2012. The assessment year under consideration is 2004-05 and the AO made reference to the DVO for determining the fair market value before completion of assessment in December, 2011. Thus, it is apparent that, by no standard, the amended provision is attracted to the instant case. Going by the interpretation of the pre-amended provision by the Hon’ble jurisdictional High Court in the case of Puja Prints (supra), as applicable to the facts of the instant case, it is vivid that no reference could have been made to the DVO when the value adopted by the assessee was more than the fair market value of the land in the opinion of the AO. Since valid reference could not have been made, the value so determined by the DVO as on 01-04-1981, ergo, becomes meaningless for the instant exercise. Going by the provision as applicable to the instant case, it is held that the value of the land as declared by the assessee on 01-04-1981, which is patently more than the value so determined by the DVO/AO, cannot be interfered with.

In view of the foregoing discussion, I set-aside the impugned order and remit the matter to the file of the AO for determining the amount of capital gain afresh in accordance with the discussion made supra. Needless to say, the assessee will be allowed a reasonable opportunity of hearing.

The other appeal in the case of Shri Uttam S. Tupe is admittedly based on similar facts and identical grounds as this assessee was a co-owner of the property transferred by the above assessee. In view of the foregoing decision in the case of Shri. Hemant S. Tupe, I set-aside the impugned order in this case as well and remit the matter to the file of the AO for deciding the issue afresh in conformity with directions given above.

In the result, both the appeals are allowed for statistical purposes.