ITO, VELLORE vs. P.ANSAR AHMED, AMBUR

आदेश / O R D E R

PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:

In this appeal filed by the Revenue, its grievance is that ld.

ITA No.528/Mds/2017. :- 3 -: consideration as �1,00,29,971/- fixed by the stamp duty authorities and recomputing the long term capital gains.

Shingvi Paper Products Pvt Ltd was correctly shown by it, based on the consideration stated in the sale deed. As per the assessee, adoption of the value fixed by the stamp /registration authorities could not be done automatically. Based on a request of the assessee, ld. Commissioner of Income Tax (Appeals) directed the ld. Assessing Officer to refer the valuation of 1.46 acres of land in question to the District Valuation Officer. District Valuation Officer passed an order u/s.16A(5) of the Wealth tax Act, 1957 r.w.s. 50C of the Income Tax Act, on 28.11.2016, whereby the fair market value of the property was fixed at �31,48,000/-. Ld. Commissioner of Income Tax (Appeals) based on the valuation made by the District Valuation Officer directed ld. Assessing Officer to consider the sale consideration as �31,48,000/- and recompute long term capital gains.

Now before us, ld. Departmental Representative relying on 4.

Sub Section (2) to Sec. 50C of the Act submitted that when a value

ITA No.528/Mds/2017. :- 4 -: lower than the value fixed by the stamp authorities was fixed by the DVO, the latter value alone had to be adopted and not the former.

Per contra, ld. Authorised Representative strongly supporting 5.

the order of the ld. Commissioner of Income Tax (Appeals) submitted that once the reference was made to a Valuation Officer u/s. 50C of the Act, ld. Assessing Officer was bound to follow the value fixed by such authority and could not say that the value as fixed by the stamp valuation authorities was still be adopted.

We have considered the rival contentions and perused the 6. orders of the authorities below. In this case, there is no dispute that valuation of the property which was sold by the assessee on which long term capital gains was computed was referred to the ld. DVO. It may be true that such reference was made by the ld. Assessing Officer on the directions of the ld. Commissioner of Income Tax (Appeals). But it is not disputed by the Revenue that Valuation Officer had given a report fixing the value of the property sold by the assessee at �31,48,000/-. The valuation shown by the assessee in the sale deed was �25,00,000/-. It may be true that the value fixed by the stamp duty authorities for the property was �1,00,29,971/-. In our opinion once a reference was made to ld. DVO, invoking section 50C(2) of the Act, then the value fixed by the DVO alone has to be considered

ITA No.528/Mds/2017. :- 5 -: if it is lower than the value fixed by the stamp authorities. A reference under section 50C(2) to the valuation is always made on the behest of the assessee and an assessee will make a request for such a reference, only when he feels that value fixed by the stamp valuation authorities was on the higher side. If after such reference, the value fixed by the stamp valuation authorities is still to adopted, ignoring the lower value fixed by the DVO then the purpose of reference to the DVO itself is lost. In such circumstances, no circular of the CBDT can come to the aid of the Revenue. Once a valuation is given by the Valuation Officer in accordance with Sec. 50C of the Act, then such value alone can be adopted where it is lower than the value assessed by the stamp valuation authorities as held by Hon’ble Gujarat High Court in the case of Principal Commissioner of Income Tax vs. Ravjibhai Nagjibhai Thesia, 388 ITR 358. Para 8 of the above judgment which is on this issue is reproduced hereunder:-

‘’8. Thus, sub-section (1) of section 50C of the Act envisages a situation 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 that the value adopted or assessed by any authority of the State Government (hereafter referred to as the 'stamp valuation authority') for the purpose of payment of stamp duty in respect of such transfer. In such a situation, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. Sub-section (2) of section 50C of the Act, however, without prejudice to the provisions of sub-section (1) provides for a situation where

ITA No.528/Mds/2017. :- 6 -: the assessee claims before the Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of the transfer ; and where the value so adopted or assessed has not been disputed in any appeal or revision or no reference has been made before any other authority, court or High Court, then in such a situation the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer. Sub-section (2) of section 50C of the Act further provides that where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957, shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. At this juncture it may be apposite to refer to the provisions of section 16A of the Wealth-tax Act, 1957 to the extent they are relevant for the present purpose. Sub-section (1) of section 16A of the Wealth-tax Act provides for making reference to the Valuation Officer. Sub-sections (2) to (5) of section 16A provide for the mode and manner in which the value of an asset is to be estimated. Sub-section (6) of section 16A of the Wealth-tax Act provides that on receipt of an order under sub-section (3) or sub-section (5) from the Valuation Officer, the Assessing Officer shall, so far as valuation of the asset in question is concerned, proceed to complete the assessment in conformity with the estimate of the Valuation Officer. Accordingly, once a reference is made under section 50C of the Act to the Valuation Officer for valuation of the capital asset, the Assessing Officer is obliged to complete the assessment in conformity with the estimate made by the Valuation Officer pursuant to such reference made by him. In the facts of the present case, the Valuation Officer has estimated the value of the capital asset at a lower amount than the value adopted or assessed by the stamp valuation authority. In terms of sub- section (2) of section 50C of the Act, it is such valuation which is required to be taken into consideration for the purposes of assessment. In the light of the above discussion, while not agreeing fully with the reasoning adopted by the Commissioner (Appeals), in the facts and circumstances of this case, this court is in agreement with ITA No.528/Mds/2017. :- 7 -: the final conclusion arrived at by the Commissioner (Appeals) as well as by the Tribunal’’.

The same view has ben adopted by this Tribunal in the case of B.N. Properties Holdings (P) Ltd vs. ACIT (2011) 9 taxmann.com 180. Accordingly, we do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals).

Order pronounced on Wednesday, the 3rd day of May, 2017, at Chennai.