PRASHANTH KRISHNA SINGH,CHENNAI vs. ITO, CHENNAI

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ITA 1245/CHNY/2016Status: DisposedITAT Chennai15 September 2016AY 2009-106 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the primary issue was the estimation of the land value under Section 50C of the Act for capital gains computation. Section 50C mandates that the value adopted by State Government authorities for stamp duty purposes shall be taken as the consideration for computing capital gains. If the assessee claims the stamp duty value exceeds the fair market value, the AO can refer the matter to the Valuation Officer. In this case, the assessee claimed the stamp duty value (₹1,80,20,000) exceeded the fair market value. The DVO's valuation was ₹1,53,15,300, which was lower than the stamp duty value but higher than the sale consideration. The CIT(A) rightly adopted the DVO's valuation. Since the assessee was a co-owner, 50% of this valuation was attributed to him. The Tribunal found no reason to interfere with the lower authority's order.

What were the facts?

The assessee's mother settled a residential property on him and his brother. The assessee and his brother jointly sold this property on September 19, 2008, for ₹1,25,00,000. For stamp duty purposes, the value adopted was ₹1,80,20,000. The Assessing Officer (AO) invoked Section 50C of the Income-tax Act, 1961, to compute capital gains based on the Sub-Registrar's valuation. The assessee obtained a valuation report estimating the land value at ₹1,19,00,000, while the Departmental Valuation Officer (DVO) estimated it at ₹1,53,16,000. The Commissioner of Income Tax (Appeals) - 4 (CIT(A)) upheld the DVO's valuation. The assessee's appeal is against the CIT(A)'s order for assessment year 2009-10.

What were the issues?

1. Whether the CIT(A) was justified in adopting the valuation determined by the Departmental Valuation Officer (DVO) under Section 50C of the Income-tax Act, 1961, for computing capital gains, when the assessee contended that the DVO did not consider objections and the approved valuer's report. Assessee's Contention: The assessee argued that the DVO failed to consider the objections raised and the valuation report of an approved valuer, which estimated the land value at ₹1,19,00,000. The CIT(A) erred by solely relying on the DVO's report without considering the property's location and imperfections. Revenue's Contention: The revenue contended that the DVO considered all objections, including the approved valuer's report. The CIT(A) rightly relied on the DVO's valuation of ₹1,53,16,000, and since the assessee was a co-owner with a 50% share, the sale consideration was taken as ₹76,58,000 in his hands. The other co-owner had accepted this valuation.

Which sections of the Income-tax Act were involved?

Section 50C,Section 48

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRIN.R.S. GANESAN & SHRI D.S. SUNDER SINGH

For Respondent: Shri A.V. Sreekanth, JCIT
Hearing: 25.07.2016Pronounced: 15.09.2016

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -4, dated 16.02.2016 and pertains to assessment year 2009-10.

2.

Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that the assessee’s mother Smt. Lavanya Kumari owned a residential property at Old No.6, Kasturi Estate II Street, Chennai.

On 13.07.2007, Smt. Lavanya Kumari executed a settlement deed in favour of her two sons, including the assessee before this Tribunal. According to the Ld.counsel, the assessee subsequently sold the said property on 19.09.2008 jointly, along his brother, for a total sum of `1,25,00,000/-. However, for the purpose of stamp duty, the assessee has adopted only `1,80,20,000/-. The Assessing Officer for the purpose of computing capital gain, adopted the value adopted by Sub-Registrar for registration of document under Section 50C of the Income-tax Act, 1961 (in short 'the Act').

3.

The Ld.counsel for the assessee submitted that the approved valuer, after considering the location of property and the imperfections of the plot, estimated the value of land at `1,19,00,000/- and opined that the rate of `1,20,00,000/- could be accepted. However, the Departmental Valuation Officer estimated the market value at `1,53,16,000/-. According to the Ld. counsel, the approved valuer estimated the sale consideration only at `62,50,000/-. The CIT(Appeals) without taking into consideration the location of property, simply adopted the Departmental Valuation Officer’s report. According to the Ld. counsel, the Departmental Valuation Officer has not taken into consideration the objection raised by the assessee, therefore, the CIT(Appeals) is not justified in adopting the value determined by the Departmental Valuation Officer.

4.

On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that the Departmental Valuation Officer has taken into consideration all the objections raised by the assessee, including the valuation report filed by the approved valuer. According to the Ld. D.R., the dispute is with regard to determination of sale consideration under Section 50C of the Act for the purpose of computing the capital gain. The CIT(Appeals), by placing reliance on the valuation made by the Departmental Valuation Officer, adopted the value of the property at `1,53,15,300/-. The assessee being one of the co-owners, along with his brother, the sale consideration was taken at `76,58,000/-.

According to the Ld. D.R., the other co-owner appears to have not challenged the order of the CIT(Appeals) or the Assessing Officer.

In fact, the other co-owner accepted the valuation made by the Departmental Valuation Officer. Therefore, according to the Ld. D.R., the CIT(Appeals) has rightly taken the value of the land at `1,53,15,300/- and the assessee being a co-owner having 50% share, it was taken as `76,58,000/- in the hands of the assessee, therefore, the assessee cannot have any grievance at all.

5.

We have considered the rival submissions on either side and perused the relevant material available on record. The only issue arises for consideration is estimation of value of land under Section 50C of the Act for the purpose of computing capital gain. We have carefully gone through the provisions of Section 50C of the Act.

Section 50C of the Act in categorical term says that when the assessee received consideration on transfer of capital asset, the valuation fixed by the State Government authorities under the Stamp Act for the purpose of levy of stamp duty in respect of such transfer, shall be taken as value of consideration under Section 48 of the Act for computing the capital gain. In case the assessee claims that the value adopted by the registration authorities for stamp duty exceeds fair market value of property on the date of transfer, the Assessing Officer may refer the valuation of capital asset to the Valuation Officer.

6.

In the case before us, admittedly, the claim before the Assessing Officer was that the valuation adopted by the authorities for stamp duty exceeded the fair market value. When the valuation made by the Valuation Officer exceeded the value adopted by the registration authorities for stamp duty, the value so adopted by the registration authorities for stamp duty purpose shall be taken as full consideration received or accrued to the assessee as a result of transfer. In the case before us, the assessee claims that the property was sold at `1,25,00,000/- and the Sub-Registrar estimated the market value for the purpose of stamp duty at `1,80,20,000/-. In fact, the Departmental Valuation Officer estimated the value at `1,53,15,300/-, therefore, the CIT(Appeals) has rightly adopted this value and the assessee being one of the co- owners, along with his brother, has taken 50% of valuation for the purpose of stamp duty. In those circumstances, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

7.

In the result, the appeal filed by the assessee is dismissed.

Order pronounced on 15th September, 2016 at Chennai.

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