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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI ANIL CHATURVEDI
आदेश / ORDER PER ANIL CHATURVEDI, AM :
This appeal filed by assessee is emanating out of the order of 1. Commissioner of Income Tax (Appeals) – 8, Pune dated 10.05.2019 for A.Y. 2012-13.
The relevant facts as culled out from the material on record are as under :-
Assessee is an individual, who is engaged in the business of trading in mobile phones and recharge vouchers under the name and style of P.R. Communication. Assessee electronically filed his return of
income for A.Y. 2012-13 on 23.09.2012 declaring total income at
Rs.9,76,614/-. The case was selected for scrutiny and thereafter
assessment was framed u/s 143(3) of the Act vide order dated
31.03.2015 and the total income was determined at Rs.21,23,614/-.
Aggrieved by the order of AO, assessee carried the matter before
Ld.CIT(A), who vide order dated 10.05.2019 (in appeal No.PN/CIT(A)-
8/ITO, Wd.7(3)/474/18-19) granted partial relief to the assessee.
Aggrieved by the order of Ld.CIT(A), assessee is now in appeal and has
raised the following effective ground :
“The learned CIT (Appeals) erred in confirming the addition of Rs.8,21,300/- by reducing the addition on account of STCG to Rs.3,25,700/- from Rs.11,47,000/- made by the AO on account of difference between the stamp duty value and sale value of the property as per Index II by applying the provisions of Sec. 50C of the Income Tax Act, 1961 on the ground that the ld CIT(A) failed to appreciate the contention of the appellant that where the difference between the value adopted by the appellant and the value adopted by the DVO is less than 10 per cent a liberal approach in favor of the appellant be taken and the difference is liable to be ignored.”
During the course of assessment proceedings AO noticed that
assessee had sold on 07.06.2011 a property for Rs.30 lakhs whose
value for the purpose of stamp duty was Rs.41,47,000/-. She also
noticed that the land was purchased on 23.06.2010 for Rs.20,00,000/-
and its value for stamp duty purpose was Rs.36,15,840/-. During the
course of assessment proceedings, AO asked the assessee to show cause
as to why the value determined for stamp duty purpose at the time of
sale not be adopted for the purpose of working out the capital gains.
Assessee objected for adopting the value determined by Stamp Valuation
Authority as against the sale consideration adopted by the assessee and
requested that the matter be referred to the District Valuation Officer
(DVO) for determining the Fair Market Value (F.M.V). Thereafter, the
matter was referred to the DVO for determining the FMV but since the
valuation report was not received till the time of passing of assessment
order, AO adopted the value determined by the stamp duty authorities
as per provisions of Sec.50Cof the Act for working out the capital gains
and accordingly worked out the gains at Rs.19,35,412/-. Aggrieved by
the order of AO, assessee carried the matter before Ld.CIT(A). During
the course of appellate proceedings, the report of the Valuation Officer
was received who had valued the property at Rs.33,25,700/-. Before
Ld.CIT(A), it was submitted that if the difference between the value
worked out by the DVO and the sale consideration was less than 10%,
the same be ignored. Ld.CIT(A) did not accept the contention of ignoring
the valuation report but however directed the AO to reduce the addition
based on the value determined by the DVO and thus directed the
addition of Rs.3,25,700/- as against Rs.11,47,000/- made by the AO.
Aggrieved by the order of Ld.CIT(A), assessee is now in appeal.
Before me, Ld.A.R. reiterated the submissions made before AO
and Ld.CIT(A) and further submitted that the value of property as
considered by the assessee is Rs.30 lacs which is as per the registered
document and the valuation as per DVO is Rs.33,25,700/- and the
difference in value of land is 10.86% of the valuation adopted by
assessee and 9.79% of the value adopted as per the report of DVO. He
submitted that the Courts and Tribunals have held that liberal
approach be adopted when the difference is marginal. In support of his
contentions, he relied on the decision in the case of Rahul Constructions
Vs. DCIT reported in (2010) 38 DTR 19 (Pune). He also placed reliance
on the decision in the case of M/s. Radhika Sales Corporation Vs. ACIT
in ITA No.1474/PUN/2016 order dated 16.11.2018. He also relied on
the decision of Hon’ble Patna High Court in the case of Bimla Singh Vs.
CIT reported in 308 ITR 71 and the decision of Hon’ble Delhi High Court
in the case of CIT Vs. Sadhna Gupta reported in 352 ITA 595. He
therefore submitted that the addition be set aside. Ld. D.R. on the other
hand, supported the order of Ld.CIT(A).
I have heard the rival submissions and perused the material on
record. It is an undisputed fact that the value of the property
considered by the assessee is Rs.30 lakhs as against which the FMV of
the property determined by the valuer at Rs.33,25,700/-. The
difference in value thus being of Rs.3,25,700/- which is 9.79% of the
valuation adopted by DVO. It is an undisputed fact that the valuation
is not a mathematical precission and there is bound to be difference
between one valuer and another valuer as since it is a matter of opinion
it differs from valuer to valuer. I find that the Co-ordinate Bench of the
Tribunal in the case of Dattatraya Kerba Lonkar Vs. DCIT in ITA
No.181/PUN/2014 order dated 30.01.2017 after considering various
decisions including the decision in the case of Rahul Constructions Vs.
DCIT (supra) and the judgment of Hon’ble Patna High Court in the case
of Bimla Singh Vs. CIT (supra) directed the AO to adopt the actual
consideration as mentioned in the sale deed to be the Fair Market Value
for determining the capital gains. The relevant observations of the
Tribunal reads as under :
“8. We find merit in the submission of Ld. A.R. The difference between the fair market value determined by the DVO and actual sale consideration is Rs.7,14,530/- i.e slightly more than 2 per cent of the sale consideration. The co-ordinate Bench of the Tribunal in the case of Rahul Construction V/s. DCIT (supra) has held that where difference between the sale consideration declared by the assessee and fair market value as determined by the DVO u/s 50C is less than 10 percent, the Assessing Officer was not justified in substituting the value determined for sale consideration disclosed by the assessee. The Co-ordinate Bench after
considering the provisions of Section 50C of the Act and the provision of section 23A and 24(5) of the Wealth Tax Act held as under :-
“13. A combined reading of the above provisions shows that the valuation adopted by the DVO is subject to appeal and the same is not final. In the instant case we find that as Aagainst the value of Rs. 28,73,000/- adopted by the stamp valuation authorities, the DVO has determined the FMV on the date of transfer at Rs. 20,55,000/- . This itself shows that there is wide variation between the two values. Further, the value adopted by the DVO is also based on some estimate. We find that the difference between sale consideration shown by the assessee at Rs.19,00,000/- and the FMV determined by the DVO at Rs. 20,55,000/- is only Rs. 1,55,000 which is less than 10 per cent. The Courts and Tribunals are consistently taking a liberal approach in favour of the assessee where the difference between the value adopted by the assessee and the value adopted by the DVO is less than 10 per cent.
We find that the Pune Bench of the Tribunal in the case of Asstt. CIT V/s. Harpreet Hotels (p) Ltd. vide ITA Nos. 1156- 1160/pn/2000 and relied on by the learned counsel for the assessee had dismissed the appeal filed by the Revenue where the CIT(A) had deleted the unexplained investment in house construction on the ground that the difference between the figure shown by the assessee and the figure of the DVO is hardly 10 percent.
Similarly, we find that the Pune Bench of the Tribunal in the case of ITO V/s. Kaaddu Jayghosh Appasaheb, vide ITA No.441/PN/2004 for the asst. yr 1992-1993 and relied on by the learned counsel for the assessee following the decision of the J&K High Court in the case of Honest Group of Hotels (P) Ltd. V/s CIT (2002) 177 CTR (J&K) 232 had held that when the margin between the value as given by the assessee and the Departmental valuer was less than 10 per cent , the different is liable to be ignored and the addition made by the A.O cannot be sustained.
Since in the instant case such difference is less than 10 per cent and considering the fact that valuation is always a matter of estimation where some degree of difference bound to occur, we are of the considered opinion that the A.O. in the instant case is not justified in substituting the sale consideration at Rs. 20,55,000 as Aagainst the actual sale consideration of Rs. 19,00,000/- disclosed by the assessee. We, therefore, set aside the order of the CIT(A) and direct the A.O. to take Rs.19,00,000/- only as the sale consideration of the property. The grounds raised by the assessee are accordingly allowed.”
The ld. A.R of the assessee has further placed reliance on the decision of Hon’ble Patna High Court in the case of Bimla Singh V/s. CIT (supra) wherein Hon’ble High Court has held that difference between the cost of construction shown by the assessee and as determined by the Assessing Officer being less than 15 per cent, the same is to be ignored for the purposes of addition. The Hon’ble Delhi High Court in the case of CIT V/s. Sadna Gupta 352 ITA 595 held that unless and until there was some other evidence to indicate that extra consideration had flowed in transaction for purchase of property, report of DVO could not form basis of
any addition on part of revenue. In absence of any evidence no reliance could be placed on the report of DVO for making addition.
Thus, in view of the fact that the difference between sale consideration and the market value determined by the DVO is not substantial and is approximately little over 2 per cent of the actual sale consideration, we find no reason for rejecting actual sale consideration mentioned in the Sale Deed for determining long term capital gain. Accordingly, the ground No.1 raised in appeal by the assessee is allowed. The Assessing Officer is directed to adopt actual sale consideration as mentioned in the Sale Deed as a fair market value for determining the long term capital gain.”
Before me, no contrary decision in support of Revenue has been
cited by Ld.D.R nor has pointed any distinguishing facts between the
assessee’s case and that of Dattatraya Kerba Lonkar Vs. DCIT (supra).
Further Ld.D.R. has also not placed any material to demonstrate that
the decision of the Tribunal in the case of Dattatraya Kerba Lonkar Vs.
DCIT (supra), has been set aside or over ruled by higher Judicial
Forum. In view of the aforesaid facts, I following the decision of Co-
ordinate Bench of the Tribunal in the case of Dattatraya Kerba Lonkar
Vs. DCIT (supra) and for similar reasons, direct the AO to adopt actual
sale consideration as mentioned in the Sale Deed as a Fair Market Value
for determining the long term capital gains. Thus, the grounds of
the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced on 17th day of October, 2019.
Sd/- (ANIL CHATURVEDI) लेखा सद�य / ACCOUNTANT MEMBER
पुणे Pune; �दनांक Dated : 17th October, 2019. Yamini
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-8, Pune. 4. Pr. CIT-4, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक सद�य” / DR, ITAT, “SMC” Pune; गाड� फाईल / Guard file. 6.
आदेशानुसार/ BY ORDER
// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.