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Facts
The assessee sold a residential flat and offered short-term capital gains. The AO, invoking Section 50C, made an addition based on the stamp duty value which was higher than the sale consideration. The CIT(A) directed the DVO to value the property.
Held
The Tribunal held that once the DVO determines the Fair Market Value (FMV) of the property, it must be relied upon for calculating short-term capital gains, especially when the DVO's valuation is made on a reference by the Department.
Key Issues
Whether the DVO's valuation of the property should be considered for calculating short-term capital gains under Section 50C, overriding the stamp duty value used by the AO.
Sections Cited
143(3), 50C(1), 50C(2), 50C(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “H (SMC
ORDER PER RENU JAUHRI, AM: “ The appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals)-55, Mumbai (in short “CIT(A)”) passed u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”). The assessee has raised the following grounds of appeal: The Hon'ble Commissioner of Income Tax (Appeals) 55, Mumbai seriously erred in law and on the facts and in the circumstances of the case, in confirming the Impugned Farhana Mushtaz begum , Mumbai Assessment Order passed by the Learned Income Tax Officer, Ward 30(1)(3), Mumbai, dated: passed U/s 143(3) of the Income Tax Act, 1961, dated 30/03/2016, Assessing Alleged Income at Rs. 28,08,777/-, being Alleged Addition of Rs. 18,33,820/- on account of Short Term Capital Gains and treated as Alleged Income U/s 50C(1) of the Income Tax Act, 1961 without appreciating that the Valuation of the Capital Asset by the DVO (Valuation Officer) on reference by the Ld Assessing Officer resulting in the Valuation Report dated 14/09/2023 vide No. VO-1/MUM/CGT/2023-24/576 determining the Fair Market Value of the Property to be Rs. 49,28,000/- stands to be the Stamp Duty Value of the said Capital Asset.
2. The brief facts are return for A.Y 2013-14 was filed declaring income of Rs. 9,74,957/- on 26.09.2013. Assessement was completed u/s 143(3) of the Act on 30.03.2016 at an income of Rs. 28,08,777/- after making addition of Rs. 18,33,820/- u/s 50C of the Act. The assessee had sold the residential flat located at Borivalli, Mumbai for a consideration of Rs. 41,00,000/- vide sale deed dated 0403.2013. Short term capital gain of Rs. 3,00,000/- was offered for taxation after reducing the cost of acquisition of Rs. 38,00,000/-. As the stamp duty was charged on the value of flat at Rs. 59,33,820/-, the AO added the difference of Rs. 18,33,820/- u/s 50C of the Act. During the Appellate proceedings, the Ld. CIT(A) directed the AO to refer the valuation of flat to the District Valuation Officer (in short “DVO”) for determining fair market value (in short “FMV”) in terms of Sec. 50C(2) of the Act. The valuation by the DVO was done at Rs. 49,28,000/- and disregarded the valuation. However, the Ld. CIT(A) confirmed the addition made by the AO by