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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV
The Assessee is in appeal before the Tribunal against the order of the learned Commissioner of Income-tax (Appeals)-9, Ahmedabad dated 08.07.2016 passed for Assessment Year 2012-13.
The solitary grievance of the assessee is that Ld. CIT(A) has erred in confirming the addition of Rs.19,19,440/- as capital gain.
ITA No.2217/Ahd/2016 Mahesh A. Vora vs. ITO A.Y. 2012-13
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The brief facts of the case are that assessee is an individual, he has filed his return of income on 31.07.2012 declaring total income of Rs.19,05,293/-. The case of the assessee was selected for scrutiny assessment and a notice u/s 143(2) of the Income Tax Act was issued and served upon the assessee. The learned Assessing Officer had received information from AIR wing exhibiting the fact that assessee has sold immovable property of Rs.7,50,000/- whose value for the purpose of payment of stamp duty was determined by the stamp duty valuation authorities at Rs.19,19,440/-. The stamp duty was paid at Rs.95,000/-. The Assessing Officer has confronted the assessee as to why for the purpose of computing the capital gain, sale consideration of the immovable property be not deemed equal to the value on which stamp duty was paid as contemplated in Section 50C of the Income Tax Act. In response to the quarry of Assessing Officer, it was contended by the assessee that since 19.02.1983 he is partner with share of profit/loss of 51% in a partnership firm “Shakti Paints Manufacturing Company”. Smt Jashodaben D Dani was having profit of share at 49%. She expired and there is no knowledge of where about of legal representative of Smt. Jashodaben D. Dani. The erstwhile partners of the firm formed it on 01.04.1962. The erstwhile partners acquired the property under consideration on 98 years lease period. Through agreement dtd. 20.09.1975, the property was given on rent by the firm and the possessions of the said property were with the lessee. Since, it was a rented property therefore, there was no independent buyer and assessee
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has sold it to the lessee. On account of this encumbrance, the value of the property was for less and that is why assessee has sold it for Rs.7,50,000/-. The assessee made a prayer that valuation of the property be done from DVO and thereafter, capital gain be computed. Ld. Assessing Officer did not make a reference to the DVO and adopted the value of the property equivalent to the one determined for the purpose of payment of stamp duty. In other words, he took the value at Rs.19,19,440/- and on this value, he computed the Long Term Capital Gain assessable in the hands of the assessee.
On appeal, Ld. CIT(A) concur with the Assessing Officer. However, learned first appellant authority has admitted in Paragraph No.4.3 that assessee requested the Assessing Officer to get the valuation of property done before adopting stamp duty valuation as the sale consideration of the property. Ld. CIT(A) has observed that there is no choice with the Assessing Officer except to adopt the valuation on which stamp duty was paid.
With the assistance of learned Representatives, we have gone through the record carefully. Section 50C provides that where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed
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shall for the purposes of section 48, be deemed to be the full value of the consideration. In other words, full consideration mentioned in section 48 is to be replaced by the consideration on which value of the property was adopted for the purpose of payment of stamp duty. However, sub- section (2) of section 50C provides that where (a) the assessee claims before AO that value adopted or assessed or assessable by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; or such value has not been disputed in any appeal or revision before any authority or court, the AO may refer the valuation of the capital assets to a Valuation Officer. It is pertinent to observe that the ld.AO ought to have given an opportunity to the assessee for making an application for the purpose of section 50C(2) of the Act. When the assessee has disputed adoption of value equivalent to the amount on which stamp duty was paid, then the ld.CIT(A) itself ought to have called for a report under section 50C(2) of the Act. The failure of the ld. Revenue authorities for not providing assessee an opportunity for getting the value of the capital asset determined by the DVO is an irregularity which deserves to be rectified. Therefore, we allow the appeal of the assessee; set aside both the orders and restore this issue to the file of the AO for re-adjudication. The ld.AO shall make reference under section 50C(2) to the DVO and obtain report of the DVO for deciding the value required to be deemed as full sale consideration for the purpose of computation of capital gain. The appeal of the assessee is allowed for statistical purpose.
ITA No.2217/Ahd/2016 Mahesh A. Vora vs. ITO A.Y. 2012-13
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In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the Court on 16th May 2018 at Ahmedabad.
Sd/- (RAJPAL YADAV) JUDICIAL MEMBER Ahmedabad; Dated, 16/05/2018 Priti Yadav, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, / DR, ITAT, Ahmedabad. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, / ITAT, Ahmedabad TRUE COPY 1. Date of dictation- 15/05/2018 (dictation-pad 2 pages attached at the end of this File) 2. Date on which the typed draft is placed before the Dictating Member 15/05/2018 3. Other Member …… 4. Date on which the approved draft comes to the Sr.P.S./P.S.-. 16/05/2018 5. Date on which the fair order is placed before the Dictating Member for Pronouncement 16/05/2018 6. Date on which the file goes to the Bench Clerk……..………… 7. Date on which the file goes to the Head Clerk……………………………. 8. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 9. Date of Despatch of the Order………………