URMI MANOJ DAISARIA,MUMBAI vs. ACIT, CIRCLE 27(3), MUMBAI, VASHI

Aggrieved by the order passed by the learned CIT(A), the assessee has preferred the present appeal and has raised the following grounds: On the facts and in law, 1. The Hon. CIT(A) erred in upholding the addition of Rs.60,53,524/-, as long term capital gain arising on sale of 4 plots of land at village Umbarde, Taluka Kalyan, Dist. Thane, by relying upon the provisions of section 50C of the I. T. Act, 1961, not appreciating that such addition was factually incorrect, as the appellant did not have 50% share in each of the 4 plots of land sold and therefore making addition of 50% of difference between value determined by the DVO and the actual sale consideration as long term capital gain as per section 50C, in the hands of the appellant was factually incorrect, warranting deletion of the addition as made in the hands of the appellant. 2. The Hon. CIT(A) erred in upholding the addition of Rs.60,53,524/-, as long term capital gain arising on sale of 4 plots of land at village Umbarde, Taluka Kalyan, Dist. Thane, by relying upon the provisions of section 50C of the I. T. Act, 1961, ignoring that the appellant had incurred loss of Rs. 63,52,251/- on sale of the 4 plots of land and therefore any addition by substituting the sale consideration as per section 50C, would only go to reduce the declared loss and will not result in separate addition of Rs. 60,53,524/- as made by the ld AO. 3. The Hon. CIT(A) erred in upholding the addition of Rs.60,53,524/-, as long term capital gain arising on sale of 4 plots of land at village Umbarde, Taluka Kalyan, Dist. Thane, by relying upon the provisions of section 50C of the I. T. Act, 1961, by adopting the valuation as per

In response to the notice under section 142(1) dated 12.01.2023, the assessee furnished a detailed reply dated 20.01.2023 explaining the transactions relating to four parcels of land situated at Village Umbarde, Taluka Kalyan, District Thane.

As regards the fourth parcel admeasuring 3,070 sq. mtrs., comprising Survey No.67, Hissa No.13C and Survey No.74, Hissa Nos.6B and 17, the assessee submitted that the land had originally been purchased from Shri Prakash P. Karbhari and three others during the year 2007. Certain children of Shri Prakash Karbhari, who were minors in the year 2007, had attained majority when the rights were subsequently conveyed to M/s Umbarde Realty Pvt. Ltd. Their respective shares were accordingly considered while executing the confirmation deed in the year 2016. The sale consideration recorded in the relevant instrument dated 30.11.2016 was Rs.48,29,501/-. The narrative portion of the assessment order records that the assessee was paid Rs.14,80,022/- through cheque No.509424 dated 25.11.2016 and that the said amount was reflected in her return. The computation table in the assessment order, however, records a sale value of Rs.18,28,720/- for this parcel.

On the basis of the aforesaid computation, the assessee claimed that the four transactions had collectively resulted in a long-term capital loss of Rs.63,52,251/-, comprising losses of

The Assessing Officer did not accept the explanation of the assessee regarding the disputes among the original landowners and the consequent role of M/s Umbarde Realty Pvt. Ltd. According to the Assessing Officer, these circumstances were not relevant to the issue under examination, namely, the difference between the sale consideration disclosed in the instruments and the value determined for the purposes of section 50C of the Act.

The Assessing Officer further observed that, on the one hand, the assessee claimed that the properties were jointly held by her with Shri Jatin V. Daisaria with a 50 per cent share, while, on the other hand, she furnished particulars of several original landowners. According to the Assessing Officer, the particulars of the original landowners did not explain the difference between the stated consideration and the value adopted for stamp duty purposes. The Assessing Officer consequently proceeded on the basis that the assessee had a 50 per cent share in each of the four properties.

After adopting the aggregate value of Rs.5,06,23,000/- determined by the Valuation Officer, as against the aggregate stated consideration of Rs.3,85,15,952/-, the Assessing Officer determined the difference at Rs.1,21,07,048/-. Considering the assessee’s alleged share at 50 per cent in all the properties, the Assessing Officer proposed an addition of Rs.60,53,524/-.

The assessment order records that, in her response to the show-cause notice, the assessee accepted the aggregate value of Rs.5,06,23,000/- determined by the Valuation Officer but objected to the proposed addition of Rs.60,53,524/- on the ground that the indexed cost of acquisition of Rs.1,37,55,513/- claimed in the return had not been allowed. The Assessing Officer noticed that the indexed cost furnished in the assessee’s reply dated 20.01.2023 aggregated only to Rs.1,11,18,179/-, whereas the return was stated to contain a claim of Rs.1,37,55,513/-. The assessee was, therefore, called upon to reconcile the difference, furnish documentary evidence in support of the indexed cost,

The assessee carried the matter in appeal before the learned CIT(A). On the valuation of the properties, the assessee submitted that the subject lands fell within CRZ, NDZ or buffer zones and were situated adjoining a municipal garbage depot. It was contended that a deduction of 15 per cent on account of these physical disadvantages had been granted in the valuation of two plots, but a similar deduction had not been extended to the remaining two plots. Since all the plots were stated to be contiguous and affected by the same disadvantages, the assessee prayed that a similar deduction of 15 per cent be allowed in respect of the balance plots.

With regard to the valuation report, the learned CIT(A) held that the Valuation Officer was an expert authority and that the Assessing Officer had provided the valuation findings to the assessee during the assessment proceedings. The learned CIT(A) observed that the assertion that no notice was served by the Valuation Officer did not override the technical merits of the valuation. It was further observed that the fair market value determined by the specialised Valuation Cell was more reflective of the value of the properties than the generalised stamp duty valuation. Since the DVO’s valuation was lower than the original stamp duty value, the learned CIT(A) held that the valuation had already resulted in reduction of the proposed addition. The action of the Assessing Officer in adopting the DVO’s valuation was accordingly upheld.

The learned CIT(A) ultimately concluded that the addition of Rs.60,53,524/- was based on the application of section 50C and the valuation furnished by the DVO. It was held that the assessee had failed to discharge the primary onus of establishing that the stated sale consideration represented the correct value despite the physical and technical disadvantages alleged. The assessment order was held to be logical and well reasoned. Consequently, by order dated 29.12.2025 passed under section 250 of the Act, the learned CIT(A) rejected the appeal and upheld the addition of Rs.60,53,524/-.

Adverting to ground No.1, the learned AR submitted that during the year 2007, the assessee and her brother-in-law had acquired certain rights, title and interest in four contiguous parcels of land situated at Village Umbarde, Taluka Kalyan, District Thane, through four separate agreements for sale-cum-development. The conveyance of the lands in their favour had, however, remained pending. During the year under consideration, the four parcels were transferred to M/s Umbarde Realty Pvt. Ltd. through four registered conveyances. The respective conveyances were executed by the original landowners, described therein as the “Owners”; the assessee and her brother-in-law, described as the “Confirming Parties”; and M/s Umbarde Realty Pvt. Ltd., described as the purchaser. The aggregate consideration recorded in each conveyance was distributed among the original landowners and

The learned AR emphasised that the assessee and her brother-in-law had not conveyed the entirety of the four parcels. The original landowners continued to possess valuable rights in the properties and were themselves parties to the registered conveyances. The consideration stated in each conveyance was, therefore, not payable exclusively to the assessee and her brother- in-law. It was submitted that the purchaser made payments directly to the several titleholders and confirming parties in the proportions specified in Schedule II forming part of each registered conveyance. The assessee had a one-half share only in the portion of the consideration payable to the confirming parties. She did not possess a 50 per cent share in the aggregate consideration payable to all the owners and confirming parties under the respective conveyances.

The learned AR invited our attention to the registered conveyances placed at pages 31 to 108 of the paper book and, in particular, to the payment particulars appearing in Schedule II thereto. The assessee’s actual entitlement in the consideration was stated to be as follows:

On the basis of the aforesaid registered instruments, the learned AR submitted that the assessee’s share in the aggregate consideration was 34.63 per cent, 30.75 per cent, 12.23 per cent and 30.65 per cent, respectively. The Assessing Officer had, therefore, erred in presuming that the assessee had a uniform 50 per cent share in each of the four parcels and in the total consideration specified in the conveyances.

The learned AR submitted that even if the values determined by the DVO were to be substituted under section 50C, the value of each parcel could be attributed to the assessee only in the proportion in which she was entitled to the actual consideration under the corresponding conveyance. He furnished the following computation:

The learned AR contended that the aggregate value attributable to the assessee, even on the basis of the DVO’s reports, worked out to Rs.1,04,82,418/-, as against the actual consideration of Rs.75,04,164/- received by her. The enhancement of the sale consideration attributable to the assessee could, therefore, not exceed Rs.29,78,254/-.

In contrast, the Assessing Officer deducted the aggregate consideration of Rs.3,85,15,952/- from the aggregate DVO valuation of Rs.5,06,23,000/-, determined the difference at Rs.1,21,07,048/- and attributed 50 per cent thereof, amounting to Rs.60,53,524/-, to the assessee. According to the learned AR, this computation was founded upon an assumption directly contrary to the payment schedules contained in the registered conveyances.

The learned AR submitted that even if the Assessing Officer’s computation of the difference at Rs.60,53,524/- were assumed to be correct, the effect of substituting the consideration under section 50C would only be to reduce the long-term capital loss from Rs.63,52,251/- to Rs.2,98,727/-. No positive long-term capital gain would arise and, consequently, no separate addition could be made to the total income.

Without prejudice, it was submitted that if the enhancement were restricted to Rs.29,78,254/-, having regard to the assessee’s actual proportionate entitlement under the conveyances, the long- term capital loss available for carry forward would stand reduced to Rs.33,73,997/-. The learned AR furnished the following comparative working:

The learned AR accordingly submitted that the application of section 50C, whether on the Assessing Officer’s computation or on the assessee’s proportionate computation, would not result in any enhancement of the total income for the year under consideration.

In support of ground No.3, the learned AR submitted that the valuation reports dated 20.10.2023 issued by DVO-I and placed at pages 109 to 124 of the paper book suffered from both factual and procedural infirmities. On the factual aspect, the learned AR submitted that all four parcels were contiguous and possessed substantially similar physical characteristics. The lands were stated to fall within CRZ, NDZ or buffer zones, to suffer from defects in title and illegal encroachments, and to be situated adjoining a municipal garbage depot. These disadvantages materially affected the fair market value of the properties.

The learned AR pointed out that while valuing the parcels admeasuring 4,300 sq. mtrs. and 3,070 sq. mtrs., a deduction of 15 per cent was allowed on account of the aforesaid disadvantages. However, no similar deduction was allowed while valuing the contiguous parcels admeasuring 2,400 sq. mtrs. and 12,590 sq. mtrs. Referring to pages 121 to 124 of the paper book, it was submitted that the 15 per cent deduction was reflected only in the valuations appearing at pages 122 and 124.

According to the learned AR, no material distinction existed between the physical characteristics of the four parcels which could justify the selective allowance of the deduction. He, therefore, prayed that a corresponding deduction of 15 per cent be granted

On the procedural aspect, the learned AR submitted that the valuation was undertaken pursuant to a reference under section 142A of the Act read with section 16A(5) of the Wealth-tax Act, 1957. He contended that section 16A(4) of the Wealth-tax Act required the Valuation Officer to serve a notice upon the assessee calling for her objections to the proposed estimated valuation before the valuation was finalised.

It was submitted that the DVO had neither issued any such notice nor communicated the proposed valuation to the assessee for her objections. No opportunity of hearing was afforded before the final reports dated 20.10.2023 were issued in respect of the four parcels. The learned AR submitted that this omission was apparent from the valuation reports placed at pages 109 to 124 of the paper book. 39. The learned AR, therefore, prayed that the addition of Rs.60,53,524/- sustained by the learned CIT(A) be deleted and the appeal of the assessee be allowed. In the alternative, he submitted that the assessee’s proportionate entitlement under the respective registered conveyances, the long-term capital loss already disclosed and the objections to the DVO’s valuation should be given proper effect.

We have considered the rival submissions and perused the material placed on record. The addition of Rs.60,53,524/- has been computed by treating the assessee as having a uniform 50 per cent share in the aggregate consideration relating to each of the four parcels. The assessee, however, contends that the original landowners retained valuable rights in the respective properties and that the assessee and her brother-in-law were merely described as confirming parties in the registered conveyances. According to the assessee, the consideration was apportioned among the several owners and confirming parties in the proportions specified in Schedule II to each conveyance. The tabulated particulars furnished before us prima facie indicate that the assessee’s proportionate entitlement varied from parcel to parcel and was stated to be 34.63 per cent, 30.75 per cent, 12.23 per cent and 30.65 per cent, respectively. These particulars have a direct bearing on the amount of consideration and the corresponding DVO value attributable to the assessee. However, neither the Assessing Officer nor the learned CIT(A) has examined the payment schedules contained in the registered conveyances while determining the assessee’s actual share. Since the correctness of the assessee’s alternative computation of Rs.29,78,254/- depends upon verification of the registered conveyances, Schedule II thereto and the payments actually

The alternative plea concerning the long-term capital loss also deserves examination. Section 50C operates by substituting the value determined thereunder as the full value of consideration for the purpose of computing capital gain or loss under section 48. The difference between the actual consideration and the value adopted under section 50C cannot, by itself, be added as an independent item of income without completing the statutory computation of capital gain or loss. The assessee claims to have disclosed a long-term capital loss of Rs.63,52,251/- from the four transactions. If this loss is found to be correct, even the enhancement of Rs.60,53,524/- adopted by the Assessing Officer would only reduce the loss to Rs.2,98,727/- and would not result in a positive long-term capital gain. Similarly, if the assessee’s proportionate enhancement of Rs.29,78,254/- is accepted, the remaining loss would be Rs.33,73,997/-. At the same time, the assessment order records discrepancies between the indexed cost of acquisition claimed in the return and the particulars subsequently furnished by the assessee. The quantum of the disclosed loss, the indexed cost of acquisition and the other deductions claimed, therefore, require verification from the return, computation of income, acquisition documents and supporting evidence. For this limited factual verification and consequential recomputation under sections 48 and 50C, restoration of the matter to the Assessing Officer is warranted.

The Assessing Officer shall not presume that the assessee held a 50 per cent share in the aggregate consideration merely because she had a one-half share in the amount payable to the confirming parties. He shall determine the assessee’s actual entitlement from the registered conveyances and recompute the capital gain or loss accordingly. A separate addition of the difference under section 50C shall not be made without giving effect to the computation prescribed under section 48. The assessee shall furnish the relevant conveyances, payment schedules and supporting documents and shall be afforded a reasonable opportunity of hearing.

In the result, the appeal of the assessee is allowed for statistical purposes.