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Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
PER PRABHASH SHANKAR [A.M.] :- The present appeal arising is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeal), CIT(A) 48, Mumbai [hereinafter referred to as “CIT(A)"] pertaining to assessment order passed u/s.143(3)r.w.s.147 of the Income-tax Act, 1961 [hereinafter referred to as “Act"] dated 29.12.2017 for the Assessment Year [A.Y.] 2012-13. Page 2 Α.Υ. 2012-13 Indusind Information Technology Ltd. (Now, succeeded on amalgamation by Hinduja Group Ltd.)
The grounds of appeal are as under:-
On facts & circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the assessed income at Rs.9,13,50,833/- as against returned income of Rs.4,84,67,830/-.
On facts & circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the Valuation Report dtd.20.12.2017 as made by the Divisional Valuation Officer (DVO), valuing the immovable property situated at Sholinganallur, Tamil Nadu as at 22.06.2011 at Rs.22.28 Crores as against Rs.18 Crores valued by the Appellant's Registered Valuer. In doing so, the Ld. CIT(A) has erred in not considering the objection raised by the appellant (refer to letter dtd. 18.12.2017) the valuation arrived at by the DVO per his report dtd.20.12.2017 in the right perspective. The value of the property at the time of sale by the appellant was already depressed, whereas the rate as per Ready Reckoner were notional and much higher than the prevailing rates in the market. This aspect was demonstrated by the appellant's valuer CBRE, in the Valuation Report dtd.09.08.2017 and the letter dtd. 18.12.2017 addressed by the appellant to the DVO objecting to Valuation Report dtd.20.12.2017. If these factors are considered, the land in question was sold at the correct consideration of Rs.18 Crores by the appellant. These crucial aspects which have been ignored were not only pointed out at the valuation stage but also in the statement of facts of the appeal filed with the CIT(A). These salient features, which the CIT(A) has totally ignored to consider are as under: a) The reckoner rates (guideline values) set by the Tamil Nadu authorities are higher than market rates and traditionally so for many years. b) The reckoner rate is common on area basis and does not recognize the reduction in market value due to plot defects & title documents, and therefore variation in market value from plot to plot. c) As per ready reckoner rate in F.Y. 2017-18 (i.e. year of reopening), the valuation of plot is Rs.12.85 crores, which is far lower than the Sale value of the property by the Appellant, and Ready Recknor Valuation at the time of sale on 22.06.2011, relevant to F.Y. 2011-12, due to correction in Circle rates in Chennai. d) The DVO in its report (para 4.1.3) admits limited buyers for such plot (leading to less bargain power of seller/Appellant to fetch reasonable price), poor irregular shape & kinks on land, ear marking of 10% open space index leading to lower saleable area by buyer developer, besides (para 4.2.7 of DVO report) absence of 'relevant' & 'comparable' instances in and around the property as on valuation date, all these
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factors should have been given reasonable and due weightage while considering discount factor and mere 5%-15% discount was given by DVO which is subjective and far from practical point of view of seller who wanted to sell the property.
On facts & circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the deemed sale consideration u/s.50C of the Income Tax Act in respect of the immovable property situated at Sholinganallur, Tamil Nadu at Rs.22.28 Crores, as against Rs.18 Crores, which was as per the agreement for sale dtd.22.06.2011 entered into by the Appellant. In doing so, the CIT(A) has further erred in upholding the assessment of LTCG arising on sale of immovable property situated at Sholinganallur, Tamil Nadu at Rs.8,24,68,332/- as against Rs.3,95,85,332/- determined by the appellant in the returned of income filed by it.
Brief facts of the case are that the assessee filed return of income for the year declaring Rs.4,84,67,830/- under normal provisions and Rs.9,13,67,074/- under Section 115JB of the Act. The case was reopened under Section 148 after it was found that it had sold a property for Rs.18,00,00,000/-, but the stamp valuation was Rs. 25,23,07,375/-. In response to the notice the appellant filed return. Subsequently, notices u/s.143(2) and 142(1) of the Act were issued. The assessee objected the adoption of stamp duty value for computation of Fair Market Value of the asset for the purpose of computation of capital and requested that matter should be referred to DVO. The AO referred the matter to DVO, Chennai who submitted his report and valued the property at Rs.22,28,83,000/-. Therefore, after considering the assessee's reply, the AO valued the property as per value adopted by Page 4 Α.Υ. 2012-13 Indusind Information Technology Ltd. (Now, succeeded on amalgamation by Hinduja Group Ltd.)
DVO at Rs.22,28,83,000/- and Long Term Capital Gains was calculated at Rs.8,24,68,332/-and the resultant difference of Rs.4,28,83,000/- was added to the income.
Being aggrieved, the assessee filed appeal before the ld.CIT(A). Before him, it objected to the DVO report which are summarized by him as under:
Objection has been raised against addition of 1 per cent per annum for value increase for 47 months as the circle rates were reduced from June 27thby 400o Rs. per sq. ft.
The discount of 20 per cent is sought by appellant as frontage of land was spoiled due to foot over bridge. 3. 10 per cent discount was sought as the location was on service road.
Appellant has appointed consultant CBRE for valuation of subject land and they valued per acre price between Rs.11 Cr to 11.5 Cr. thus valuing the property between 17.93 Cr to 18.75 Cr.
1 The ld.CIT(A) observed that such objections against the DVO report were raised before the AO as well who noted that objections raised by appellant were sent to the DVO also who gave factual finding w.r.t. points important for valuation of property for its fair market value. It was noted that property is a corner plot having express highway at its west side and a street named Thiruvalluvar Salai on East. The opposite side was a bus stop leading to Chennai. It was also seen that Page 5 Α.Υ. 2012-13 Indusind Information Technology Ltd. (Now, succeeded on amalgamation by Hinduja Group Ltd.)
property is in the vicinity of other major commercial and business establishments like DLF Garden City, TCS, Infosys, Viviera Mall, etc. One of the important points was that the buyer of the plot had completed the construction for high end residential flats and selling the same at a base price of Rs.3.76 Cr. i.e. Rs.11,760/- per sq. ft.
2 The ld.CIT(A) further noted that section 50C is a deeming provision of the Act which has been introduced by Finance Act of 2002 and its introduction was explained as under:
Computation of capital gains in real estate transactions-37.1 The Finance Act, 2002 (20 of 2002), has inserted a new section 50C in the Income-tax Act to make a special provision for determining the full value of consideration in cases of transfer of immovable property.
2 It provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration, and capital gains shall be computed accordingly under section 48 of the Income-tax Act
3 It is further provided that where the assessee claims that the value adopted or assessed for stamp duty purposes exceeds the fair market value of the property as on the date of transfer, and he has not disputed the value so adopted or assessed in any appeal or revision or reference before any authority or Court, the Assessing Officer may refer the valuation of the relevant asset to a Valuation Officer in accordance with section 55A of the Income-tax Act. If the fair market value determined by the Valuation Officer is less than the value adopted for stamp duty purposes, the Assessing Officer
Page 6 Α.Υ. 2012-13 Navjibhai Thesia 388 ITR 358 Hon'ble Gujarat High Court held that as per provision of Section 50C(2), it is the valuation report which is required to be taken into consideration for the purpose of taxation. Therefore, as per hon'ble Court, valuation report is binding on AO. In the instant case, all the technical objections w.r.t valuation of property raised by the appellant were responded by DVO with his technical observations and appreciation of field data. In such circumstances, the valuation given by DVO could not be disturbed in absence of any fresh data or evidence. The addition made was therefore, upheld.
Before us, the ld.AR has argued that the addition was not justified based on the DVO report which itself was based on incorrect
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facts and without taking into account its objections in proper perspective. The DVO did not take into account its own valuer's report submitted by it, comparable cases pertaining the area and other factors which had a bearing on the value of the impugned property. It was further submitted that even though DVO report is binding on the AO, it could be reviewed by the appellate authorities. The ld.CIT(A) could have independently applied his mind to the objections of the assessee made before him. In this regard, he has placed on various case laws i.e. Suresh Mehta,35 taxmann.com 230 ITAT,Mumbai and case of Lovy Ranka, 106 taxmann.com 193 (ITAT,Ahmedabad). It has been requested that the case may be remanded back to the lower authorities for allowing the assessee opportunity to raise its specific objections.
The ld.DR on the other hand, has relied on the appellate order stating that the DVO's report was correctly adopted by the AO as it was based on ground realities and the DVO had duly rebutted all the objections raised by the assessee which is evident from his report. The ld.CIT(A) has duly taken into consideration all these facts before upholding the addition. The ld. DR further submitted that once the assessee had raised objection in terms of adoption of the stamp duty authority and thereafter the matter was referred by the AO to Page 8 Α.Υ. 2012-13 Indusind Information Technology Ltd. (Now, succeeded on amalgamation by Hinduja Group Ltd.)
the DVO u/s 50C(2) of the Act, the AO is bound to follow the report so submitted by the DVO. Further, reference was drawn to the assessment order wherein AO has given the finding that the various objections raised by the assessee have been duly addressed by the DVO and there is nothing further which is left to the discretion of the AO in terms of examining the contentions so raised by the assessee. He accordingly supported the findings of the AO and requested for affirming the order of the ld.CIT(A). He also placed reliance on the decisions in the cases of Anil Murlidhar Deshmukh 101 Taxmann.com 93(Pune-ITAT) and PCIT vs Ravijibhai N.Thesis 76 ataxmann.com 76(Guj).
We have considered the relevant facts of the case, perused the record and taken into consideration rival submissions. Reading of the provisions of section 50C shows that as per the provision of sub section (1) of section 50C where the consideration received or accruing as a result of transfer by the assessee of a capital asset being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer for the purpose of section 48 of the Act, such value as fixed by the authority of the State Government is to be deemed to be the full value of the consideration as Page 9 Α.Υ. 2012-13 Indusind Information Technology Ltd. (Now, succeeded on amalgamation by Hinduja Group Ltd.)
a result of such transfer. Sub- section (2) of section 50C carves out the exemption to sub- section (1). In sub-section (2), the conditions are prescribed, under clause (a), if the assessee claims before the Assessing Officer that the value adopted or assessed by the stamp valuation authority referred to in sub-section (1) exceeds the fair market value of the property as on the date of transfer and under clause(b), if the assessee is able to show that the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the assessing authority may refer the valuation of the capital asset to a Valuation Officer and the provisions of the Act in respect of the valuation would apply. As per subsection (3) of section 50C, if the value as arrived at by the ova on the reference from the Assessing Officer under section 50C(2) is found to exceed the valuation as adopted or assessed or assessable by the stamp valuation authority referred to in sub- section (1), then the value so adopted or assessed or assessable by the stamp valuation authority is to be taken as the full value of the receipt or accruing as a result of the transfer. Thus, as per section 50C(1), the valuation as fixed by the stamp valuation authority is taken as a bench
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mark, as per sub-section (2) of section 50C the bench mark can be reviewed by the reference to the valuation officer if the assessee claims that such value exceeds the fair market value. As per sub-section (3), if the valuation as arrived at by the OVO as a consequence of the reference made to him by the Assessing Officer on account of the assessee's claim and such valuation is found to be higher than the value as fixed by the stamp valuation authority then the value as fixed by the stamp valuation authority being the lower of the two is to be applied.
1 In the light of above provisions, if we see the facts of the assessee's case, it is noticed that in the course of assessment proceedings itself, the assessee has invoked the right under section 50C(2) of the Act, wherein, it was specifically claimed that the value as fixed by the stamp valuation authority was on the higher side. The AO had consequently referred the valuation of the property to the DVO. Report of the DVO is binding on the AO in terms of sub-section sub (3) of section 50C of the Act, which mandates that : 'Subject to the provisions contained in sub- section sub (2), where the value ascertained section (2) exceeds the value adopted or assessed or under sub-section assessable by the stamp valuation authority referred to in sub- sub section (1), the value so adopted or assessed or assessable by such authority shall be taken as the Page 11 Α.Υ. 2012-13 Indusind Information Technology Ltd. (Now, succeeded on amalgamation by Hinduja Group Ltd.)
full value of the consideration received or accruing as a result of the transfer'. In the judgment of the Hon'ble Allahabad High Court in CIT v. Dr. Indra Swaroop Bhatnagar [2012] 349 ITR 210/[2013] 213 Taxman 52/30 taxmann.com 293 similar proposition has been reiterated by holding that :'it is crystal clear that generally, when the A.O. has obtained the D.V.O. Report then the same is binding'. It is thus clear that the report of the DVO is binding on the AO, unless the assessee shows some glaring mistakes in such valuation.
2 We have also examined the DVO report and find that he has taken into consideration the objections raised before him by the assessee during the valuation exercise done by him. He has given exhaustive reasons for rejecting the objections. Moreover, the AO has obtained the said report in terms of the provisions of section 50C of the Act and fully relied thereon. There is absolutely no basis for the assessee to contest the said report or any lack of opportunity accorded by the AO during assessment proceedings or by the DVO. Perusal of para 4 of the assessment order on pages-2 and 3 reveals that the AO objections of the assessee to the DVO report were duly forwarded to him. The assesse has submitted a paper book containing 78 pages which inter alia incorporates DVO report, its objections, copy of its own valuation report
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etc. On perusal of the DVO report pages 25-33, it is quite evident that the report dated 20.12.2017 has duly taken into account the objections of the assessee raised vide letter dated 18.12.2017 wherein as many as four separate objections were made, all of which have been exhaustively dealt with and ultimately rejected by the DVO. There is no other subsequent communication to the DVO brought on record by the assessee implying thereby that it had no further objections once the objections dated 18.12.2017 were properly dealt with by the DVO.
3 Besides, we also notice that the ld.CIT(A) has also dealt with the entire matter in a judicious and fair manner which cannot be faulted from any perspective. We do not find any reason for remanding the issue back to the lower authorities as the assessee during the entire proceedings has been accorded fair and reasonable opportunity of hearing. The case laws relied upon by the assessee are distinguishable on facts as in the instant case, the DVO, being highly qualified technical person has submitted a detailed report taking into account all possible and relevant factors in valuing the said property. Accordingly, we do not find any reason for interference in the matter and affirm the appellate order dismissing the grounds of appeal of the assessee.
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In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 22.07.2025. SANDEEP GOSAIN (न्यायिक सदस्य / JUDICIAL MEMBER)
Place: मुंबई/Mumbai दिनांक / Date 22.07.2025 Lubhna Shaikh / Steno PRABHASH SHANKAR (लेखाकार सदस्य/ACCOUNTANT MEMBER)
आदेश की प्रतिलिपि अग्रेषित/