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Income Tax Appellate Tribunal, “SMC-C” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV
Per Sunil Kumar Yadav, Judicial Member
This appeal is preferred by the assessee against the order of the CIT(A), interalia, on following grounds:
1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the appellant's case.
2. The learned CIT[A] is not justified in sustaining the addition of a sum of Rs.14,12,378/- as income from Long term capital gains under the facts and in the circumstances of the appellant's case.
3. The learned CIT[A] is not justified in sustaining the assessment of capital gains by adopting the guidance value uls.50C of the Act, without noticing that the learned A.0. ought to have referred the matter of valuation of the property to a Valuation Officer and thus, the computation of capital gains transgressed the provisions of section 50C[2] of the Act, consequently, the addition made requires to be deleted.
The learned CIT[A] is not justified in upholding the disallowance of Rs.3,00,567/- and Rs.81,362/- being the interest claimed while computing the capital gains as part of the cost of acquisition under the facts and in the circumstances of the appellant's case.
5. The learned CIT[A] is not justified in upholding the disallowance of Rs.3,46,353/- being the interest paid to Citi Financial Consumer Finance India Ltd., and claimed while computing the capital gains under the facts and in the circumstances of the appellant's case.
6. The learned CIT[A] is not justified in adding a sum of Rs.1,26,500/- as income from “business" under the facts and in the circumstances of the appellant's case out appreciating the existing old stock had to be sold for distress sale below the cost to facilitate the sale of the property.
Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies himself liable to be charged to interest u/s. 234A, 234B and 234D of Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled.
For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.
Though the assessee has raised various grounds but they all relate to the computation of capital gain. During the course of assessment proceedings, the AO has noted that the assessee has sold the property for a sale consideration of Rs.36,00,000/-. For the purpose of stamp duty, the value of the property was shown as Rs.49,73,000/-. The AO invoked the provisions of section 50C of the IT Act (hereafter called as an Act) and adopted the value of the property shown for the purpose of stamp duty as sale consideration and computed capital gain at Rs.14,12,378/- in the assessee’s hands. The assessee assailed the order of the CIT(A) with the submission that it was distress sale and there are various factors on account of which the property was sold at Rs.36,00,000/-. But he did not find favour with the CIT(A).
Now the assessee is before us and during the course of hearing, the learned counsel for the assessee has invited our attention to the fact that the assessee has given a note below the computation of capital gain in annexure attached with the return of income. In the note, the location and other factors were disclosed on account of which the property was sold for Rs.36,00,000/- lesser than the notified rates. The learned counsel for the assessee further contended that since the assessee has disputed the market rate to be adopted for the computation of capital gain, the AO should have made a reference to the Departmental Valuation Officer for estimation of the valuation of the market value of the property for the purpose of computation of capital gain but he did not do so and the AO adopted the value of property shown for the purpose of stamp duty as shown in the sale deed as a sale consideration and computed the capital gain.
Page 4 of 5 4. The learned DR placed reliance upon the order of the CIT(A).
Having carefully examined the order of the lower authority, in the light of the rival submission, I find that as per provision of section 50C[2] of the Act, wherever the assessee disputes the fair market value of the property, the AO should have made the reference to DVO. But in the instant case though the assessee has furnished his reasons for the valuation of the property lesser than the market value for the purpose of determining the stamp duty, but the AO has not made a reference to the DVO. The AO himself is not an expert in this field. Therefore, he cannot take a correct view with regard to the reasons assigned by the assessee for lesser sale consideration. I am therefore of the view that this matter should go back to the file of the AO for readjudication of the issue after obtaining the valuation report from the DVO in this regard. Accordingly, I set aside the order of the CIT(A) and restore the matter to the file of the AO with the direction to make a reference to DVO to determine the fair market value of the property and thereafter adjudicate the issue afresh after affording opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on 26th May, 2017.