SMT. KRISHNA YADAV,GURGAON vs. ITO, GURGAON

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘D’ NEW DELHI

BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER

ITA No.2496/Del/2017 Assessment Year: 2005-06

Smt. Krishna Yadav, Vs. Income-tax Officer, W/o- Sat Narayana Yadav, Ward-2(3), B-552/A, Phase-1, Gurgaon Shushant Lok, Gurgaon PAN :AAUPY8765G (Appellant) (Respondent)

Appellant by None Respondent by Shri Sanjay Kumar, Sr.DR

Date of hearing 10.02.2022 Date of pronouncement 22.02.2022 ORDER PER SAKTIJIT DEY, JM:

This is an appeal by the assessee against the order dated

13.02.2017 of learned Commissioner of Income Tax (Appeals)-1,

Gurgaon, for the assessment year 2005-06 (wrongly mentioned as

assessment year 2012-13 in the cause title of first appellate

order).

2 ITA No. 2496/Del/2017 AY: 2005-06

Rs. 2,37,400/- as short term capital gain by invoking the

provisions of section 50C of the Income-tax Act, 1961 (hereinafter

referred to as ‘the Act’).

the assessment year under dispute, the assessee filed her return

of income on 10.10.2005 declaring total income of Rs.46,18,500/-

. While verifying the return of income filed by the assessee in

course of assessment proceeding, the Assessing Officer noticed

that during the year under consideration, the assessee has sold

immovable property consisting of land and constructed portion

for a sale consideration of Rs.90 lakhs. The Stamp Valuation

Authority has determined the value of property at

Rs.1,02,36,200/-. Thus, the Assessing Officer issued a show-

cause-notice to the assessee to explain, why the value determined

by the Stamp Valuation Authority should not be considered as

deemed sale consideration. Though, the assessee objected to the

proposed action of the Assessing Officer, however, rejecting

assessee’s submission, the Assessing Officer proceeded to

substitute the declared sale consideration with the value

determined by the Stamp Valuation Authority in terms of section

3 ITA No. 2496/Del/2017 AY: 2005-06

50C of the Act and proceeded to compute short term capital gain

at Rs.15,45,172/-. The assessee having already offered short term

capital gain of Rs. 3,08,972/-, the Assessing Officer made a net

addition of Rs.12,36,200/-. Contesting the aforesaid addition, the

assessee preferred an appeal before learned Commissioner

(Appeals).

of the assessee was, though, she had objected to the value

determined by the Stamp Valuation Authority, however, the

Assessing Officer without referring the valuation to the

Departmental Valuation Officer (DVO), has adopted the value

determined by the Stamp Valuation Authority. On the direction of

learned Commissioner (Appeals), the Assessing Officer made a

reference to the DVO to determine the value of the property.

Consequently, the DVO determined the value of the property at

Rs. 92,37,400/- as on the date of sale. Thus, based on the value

determined by the DVO, learned Commissioner (Appeals)

restricted the addition on the ground of short term capital gain to

Rs. 2,37,500/-, being the difference between the declared sale

consideration and the value determined by the DVO.

4 ITA No. 2496/Del/2017 AY: 2005-06

behalf of the assessee. Accordingly, we proceed to dispose of the

appeal ex parte qua the assessee after hearing learned

Departmental Representative and based on the materials on

record.

perused materials on record. Facts on record clearly reveal that

as against the declared sale consideration of Rs.90 lakhs, the

Stamp Valuation Authority has determined the value of the

property, giving rise to short term capital gain, at

Rs.1,02,36,200/-. It is also a fact that the Assessing Officer has

proceeded to compute short term capital gain by adopting the

value determined by the Stamp Valuation Authority as deemed

sale consideration by invoking the provision of section 50C(1) of

the Act. However, on the direction of learned first appellate

authority, the DVO has determined the market value of the

property as on the date of sale at Rs.92,37,400/-. Thus, the

difference between the declared sale consideration and the value

determined by the DVO has narrowed down to Rs.2,37,400/-. It

is a fairly accepted position that valuation of asset involves some

amount of guess work and estimation. Thus, keeping this fact in

5 ITA No. 2496/Del/2017 AY: 2005-06

view and for removing hardship caused to the assessees because

of adoption of stamp duty value as deemed sale consideration in

terms of section 50C(1) of the Act where the difference is

marginal, the legislature thought it appropriate to introduce third

proviso to section 50C(1) of the Act, providing that, where the

value determined by the Stamp Valuation Authority does not

exceed 5% (at present 10%) of the declared sale consideration, in

that eventuality, the declared sale consideration should be

accepted. There are various judicial precedents, wherein, it has

been held that the third proviso to section 50C(1) of the Act

introduced by Finance Act, 2018, w.e.f., 01.04.2019, will apply

retrospectively. In this context, we may refer to the decision of

Tribunal in the case of Maria Fernandes Cheryl Vs. ITO, [2021]

123 taxmann.com 252 (Mum.).

determination of market value of asset as on the date of sale by

the DVO, the difference between the declared sale consideration

and the market value is within the range of 5%, as referred to, in

third proviso to section 50C(1) of the Act. This, being a beneficial

provision, in our considered opinion, the benefit provided under

the third proviso to section 50C(1) of the Act, should be extended

6 ITA No. 2496/Del/2017 AY: 2005-06

to the assessee, as, ultimately the value determined by the Stamp

Valuation Authority has been substituted by DVO’s valuation in

terms of sub-section (3) of section 50C of the Act. Thus, in our

considered opinion, the addition of Rs.2,37,400/- towards short

term capital gain needs to be deleted. Accordingly, we delete the

same. In view of our aforesaid decision on merits, ground nos. 1

and 3 have become academic, hence, do not require adjudication.

Order pronounced in the open court on 22nd February, 2022

Sd/- Sd- (PRADIP KUMAR KEDIA) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 22nd February, 2022. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi