KALYANJI SHAH,MUMBAI vs. ITO 22(1)(3), MUMBAI

This appeal by the assessee is arising out of the order of CIT(A)-33, Mumbai, in Appeal No. CIT(A)-33/IT/630/11-12 dated 04.09.2013. The Assessment was framed by ITO- 22(1)-3, Mumbai for the A.Y. 2009-10 vide his order dated 27.09.2011 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’).

Under the circumstances and facts of our case, the LAO failed to refer the valuation of the land to a Government approved valuation officer so as to arrive at a true and fair valuation of the encroached land. The addition is made by the LAO adhoc and without appreciating the background as well as the nature of the plot.

Briefly stated facts are that the assessee has sold land at Kalyan, for which he is a part owner. The total consideration of sale of this land was Rs.6 lacs as per sale deed and the assessee’s consideration was Rs.3 lacs. The assessee declared the long term capital gain (LTCG). The A.O. during the course of assessment proceedings noticed that as per stamp duty valuation, the fair market value of the property is Rs.34,96,937/- and the assessee’s share for sale consideration should be adopted at Rs.17,48,468/- in term of section 50C of the Act.

The A.O. adopted the stamp duty valuation for the purpose of computation of LTCG u/s. 50C of the Act and assessed LTCG accordingly at Rs.14,81,320/-. Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who also confirmed the action of the A.O. Aggrieved, the assessee is in appeal before us.

Before us, the assessee only contended that this land is encroached land and it cannot fetch this amount of Rs.34,96,937/- as valued by stamp valuation authority. Hence, he requested that the property should be valued by DVO in term of section 50C(2)(a) of the Act. We find that the plea of the assessee is quite reasonable and for this, the ld. Sr. DR also fairly agreed. We have already taken the valuation in in the case of Kashinath Tapuriah, wherein it is observed as under: 5. Now, the only request by the assessee is that the matter should be referred to the valuation authority for determining the fair market value of (A.Y. 2009-10) Mr. Kalyanji Shah vs. ITO the property as on the date of sale as per the provisions of section 50C (2) of the Act. We find that this issue by Hon’ble Calcutta High Court in the case of Sunil Kr. Agarwal Vs. CIT in GA No.3686 of 2013 ITAT No.221 of 2013 vide judgment dated 13.03.2014, wherein it is held that to ascertain the full value of consideration in the case of transfer of capital asset, the full consideration of the capital asset is to be taken on the basis of value adopted by the Stamp Valuation authority under sub- section (1) of section 50C or the capital asset is to be referred to Valuation Officer for determining the fair market value of the property for assessing the capital gains. On query from the Bench Ld. Sr. DR fairly stated he has no objection in case the issue is set aside to the file of the AO for reference to the DVO to ascertain the full value of consideration u/s. 50C of the Act. He also stated that in case the assessee is disputing the value assessed by the Stamp Valuation Authority i.e., the rate assessed by the Sub-Registrar is challenged by the assessee, then the matter has to be referred to DVO for ascertaining the full value of consideration for assessing long term capital gain under section 50C of the Act in terms of the decision of the Hon'ble Calcutta High Court in the case of Sunil Kumar Agarwal, supra. In the case of Sunil Kumar Agarwal, Hon'ble Calcutta High Court held as under: - "We have considered the rival submissions advanced by the learned advocates appearing for the parties. The submission of Ms. Ghutghutia that the requirement of clauses a) and (b) of sub-Section 2 of Section 50C has not been met by the assessee, can hardly be accepted. The requirement of clause (b) of sub- Section 2 of Section 50C was evidently met. The only question is whether the requirement of clause (b) of sub-Section 2 of Section 50C was evidently met. The only question is whether the requirement of clause (a) of sub-Section 2 of Section 50C was met by the assessee. We have already set out hereinabove the recital appearing in the Deeds of Conveyance upon which the assessee was relying. Presumably, the case of the assessee was that price offered by the buyer was the highest prevailing price in the market. If this is his case then it is difficult to accept the proposition that the assessee had accepted that the price fixed by the District Sub Registrar was the fair market value of the property. No such inference can be made as against the assessee because he had nothing to do in the matter. Stamp duty was payable by the purchaser. It was for the purchaser to either accept it or dispute it. The assessee could not, on the basis of the price fixed by the Sub-Registrar, have claimed anything more than the agreed consideration of a sum of Rs.10 lacs which, according to the assessee, was the highest prevailing market price. It

In term of the above, we restore the matter back to the file of the A.O. and direct him to refer the matter for valuation to DVO to ascertain the fair market value as on the date of sale and, accordingly, assess the capital gains.

In the result, the assessee’s appeal is allowed for statistical purposes. प�रणामतः �नधा�रती क� अपील सां�यक�य उ�दे�य के �लए �वीकृत क� जाती है । Order pronounced in the open court on September 27th, 2017