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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
O R D E R
PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of the CIT (Appeals)-33, Mumbai in appeal No.CIT(A)-33/IT/561/11-12 dated 24-12-2012. Assessment was framed by the ITO, Ward -22(2)(1), Mumbai for the assessment year 2009-10 vide his order dated 16-12-2010 u/s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The two interconnected issues in this appeal of the assessee are that the CIT (A) erred in not referring the matter for valuation u/s 50C (2) of the Act and thereby erred in taking sale consideration at Rs.68.17 lacs as against the agreement value of Rs.40.00 lacs, consequently failed to allow the claim of deduction u/s 54/54F of the Act.
We have heard the learned Sr. DR and gone through the facts and circumstances of the case. Briefly stated facts are that the assessee sold land at Kurla as per agreement for an amount of Rs.40.00 lacs. But, the AO during the course of assessment proceedings noticed that the fair market value as per stamp duty valuation as per the sale agreement is at Rs.68.17 lacs. The assessee computed long term capital gain by taking sale consideration at Rs.40.00 lacs and thereby computed for long term capital gain of Rs.36,49,308/-. The assessee
54F (1) of the Act by declaring investment in two flats i.e. Flat Nos. 201 and 202 at Panvel amounting to Rs.26.00 lacs. The AO, first of all determined the fair market value as per the stamp duty valuation at Rs.68.17 lacs and also denied the claim of deduction u/s 54(1) of the Act and assessed long term capital gain at Rs.64,66,308/-. Aggrieved, the assessee preferred appeal before the CIT (A) who also confirmed the action of the AO on both the counts. Aggrieved, now the assessee is in second appeal before the Tribunal.
We find that the preliminary objection of the assessee is as regards to non- referring the matter for valuation of the property to the Valuation Cell for determining the fair market value in terms of the provisions of Section 50C of the Act. We find that this issue is covered by the decision of the 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 lakhs which, according to the assessee, was the highest prevailing market price. It would follow automatically that his case was that the fair market value of the property could not be Rs.35 lakhs as assessed by the District Sub Registrar. In a case of this nature the assessing officer should, in fairness, have given an option to the assessee to have the valuation made by the departmental valuation officer contemplated under Section 50C. As a matter of course, in all such cases the assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer. For the aforesaid reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly S.P.Nos.103&104/Kol/2014 & IITA Nos.1643 & 1644/Kol/2014 Shri Nirmal Chand Soni & Shri Sushil Chand Soni Assessment Year: 2007-08 and to give a fair treatment by giving him an option to follow the course provided by law."
From the above facts and legal proposition laid down by Hon'ble jurisdictional High Court in the case of Sunil Kumar Agarwal, supra, we are of the view that the value so adopted or assessed or assessable by the Stamp Valuation Authority based on circle rates is deemed to be the full value of consideration received or accruing as a result of transfer of capital asset, being land or building or both, for the purposes of section 48 of the Act. But if the assessee disputes the value so adopted or assessed or assessable u/s. 50C(2) of the Act, the AO should refer the capital asset to valuation Officer to determine the full value of the consideration received or accruing as a result of transfer of capital asset. Hence, in the present case, we set aside the orders of the lower authorities and remit the issue back to the file of the AO for fresh adjudication of the issue of long term capital gain arising out of sale of above the asset after ascertaining the full value of consideration of these two assets as determined by Valuation Officer concerned. The AO will take the full value of consideration of the capital asset in terms of section 50C (3) of the Act for ascertaining the long term capital gain arising out of this asset. In term of the above, appeal of assessee on this issue is restored back to the file of the AO for fresh adjudication and allowed for statistical purposes.
As regards to the claim of deduction u/s 54 or 54F of the Act, we are of the view that the AO has to examine this claim whether the assessee is eligible for deduction u/s 54 or 54F of the Act as the case may be. This issue also needs re-examination at the level of the A O. Hence, both the issues are set aside to the file of the AO for fresh adjudication in terms of the above.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 19-10-2016.