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Income Tax Appellate Tribunal, DELHI BENCH “SMC-2”, NEW DELHI
Before: SHRI H.S. SIDHU
ORDER PER H.S. SIDHU, JM Assessee has filed the Appeal against the Order dated 28.8.2015 passed by the Ld. Commissioner of Income Tax (Appeals)—V, New Delhi pertaining to assessment year 2009-10
The grounds raised by the assessee read as under:-
That the Ld. CIT(A) was not justified in adopting the fair market value (FMV) value of the property Rs. 88,50,000/- instead of Rs. 80,00,000/- as per sale deed of the property sold.
2. That Ld. CIT(A) have erred in accepting the calculation of FMV calculated based on the “average of three comparable actual sale instances” which includes 2 instances of Adjacent Shakti Khand II instead of based on the I sale instance” since all important parameters match with that of property sold out by appellant.
3. The Ld. CIT(A) was not justified in accepting the parameters given in sale instance I of DVBO’s valuation report which mostly matched with the property sold out by the appellant.
Any other ground before or at the time of hearing of appeal.
The brief facts of the case are that assessee filed return of income on 24.9.2009 declaring total income of Rs. 9,98,234/-. This return was revised subsequently during the course of assessment proceedings on 23.6.2010 to declare total income of Rs. 20,28,330/-. The revised return was filed to include the Short Term Capital Gain of Rs. 10,30,000/- on sale of property representing plot No. 384, Niti Khand, Phase-I, Indrapuram, Distt. Ghazaibad. The sale consideration for purposes of computation of capital gains was declared as Rs. 80,00,000/- as shown in the sale deed. There is no dispute regarding the purchase consideration. Since the stamp duty had been paid on the sale consideration of Rs. 1,05,95,028/-, the assessee was show caused as to why the full value of consideration may not be taken as per stamp duty valuation as against Rs. 80,00,000/- shown in the sale deed. To this query the assessee pointed out that the stamp duty had been paid corresponding to the stamp duty valuation of Rs. 1,02,86,000/- whereas in the AIR, it had been incorrectly shown at Rs. 1,05,95,028/-. As per the Valuation Report of the Registered Valuer the Fair Market Value on 24.6.2008 was arrived at Rs. 78,71,850/-. The assessee’s contention was that since sale consideration had been shown at Rs. 80,00,000/- in his revised return, the same may be accepted. The final contention of the assessee was that, in accordance with certain judicial rulings, it is incumbent on the part of the AO, to refer the matter to the Valuation Officer whenever the valuation as per Stamp Valuation Authority is not accepted by the transferor of the property. The AO proceeded, however, to apply the deeming provisions of Section 50C and computed the Short Term Capital Gains based on the assessment of the Stamp 2 Valuation Authority. The AO assessed the income at Rs. 43,14,230/- u/s. 143(3) of the I.T. Act, 1961 on 21.11.2011 by making addition on account of Short Term Capital Gain.
4. Against the assessment order dated 21.11.2011, assessee appealed before the Ld. CIT(A), who vide impugned order dated 28.8.2015 has partly allowed the appeal of the assessee.
Aggrieved with the aforesaid order of the Ld. CIT(A), assessee is in appeal before the Tribunal.
Ld. Counsel of the assessee during the hearing, has stated that the issue in dispute is squarely covered by the decision of the Hon’ble Supreme Court of India in the case of CN Gautam vs. Union of India (1993) 199 ITR 0530 which has been followed by the various Benches of the Tribunal. Therefore, he requested that the Appeal of the Assessee may be allowed by following the precedents. In order to support his contention he filed the photocopies of orders of the Tribunal and the Hon’ble Supreme Court of India.
On the contrary, Ld. DR opposed the request of the Ld. Counsel of the assessee and relied upon the orders of the authorities below.
I have heard both the parties and perused the relevant records available with me, especially the orders passed by the revenue authorities alongwith case laws referred by the ld. Counsel of the assessee. I note that the Assessee has established the difference between the value adopted by the Stamp Valuation Authority and declared by the assessee is less than 10% and therefore, the issue is squarely covered by the decision of the Hon’ble Supreme Court of India in the case of CB Gutam vs. UOI & Ors. (1993) 199 ITR 0530.
8.1 I further find that the aforesaid decision of the Hon’ble Supreme Court of India has been followed by the various Benches of the Tribunal including the Jaipur Bench in the case of Smt. Sita Bai Khetan vs. ITO passed in (AY 2010-11) on 27.7.2016. The relevant para of the Tribunal’s order is reproduced below for the sake of clarity as under:-
“4. Ground No. 2 is with regard to adopting the sale consideration at Rs. 6,12,70,120/- against the sale consideration of Rs. 6,00,000/- adopted by the assessee.
The Ld. Counsel for the assessee submitted that the difference between the sale consideration of the property as per registered Sale Deed as against the value adopted by the Stamp Valuation Authority was Rs. 12,70,120/- i.e. 2.11 %. Since the difference was within the tolerabie limits, which is 15% of variation, as recognized by the Hon'ble Supreme Court in the case of C.B. Gautam vs. Union of India & Ors. (1993) 199 ITR 530, no addition should be made. This decision has been followed by the Coordinate Bench in the case of Rahul construction vs. DCIT in (2010) 38 DTR (Pune Trib.).
4.1. On the contrary, the Id. D/R opposed the submissions of the assessee on this issue.
4.2. We have heard rival contentions and perused the material available on record. We find that the Hon'ble Coordinate Bench in in the case of Rahul Construction vs. DCIT (supra) has held as under :-
" We find that the Pune Bench of the Tribunal in the case of Asstt. CIT vs. Harpreet Hotels (P) Ltd. vide and relied on by the learned counsel for the assessee had dismissed the appeal filed by the Revenue where the CIT (A) had deleted the unexplained investment in house construction on the ground that the difference between the figure shown by the assessee and the figure of the DVO is hardly 10 per cent. Similarly, we find that the Pune Bench of the Tribunal in the case of ITO vs. Kaaddu Jayghosh Appasaheb, vide ITA No. 441/Pn/2004 for the asst. yr. 1992-93 and relied on by the learned counsel for the assessee following the decision of the J&K High Court in the case of Honest Group of Hotels (P) Ltd. vs. CIT (2002) 177 CTR (J&K) 232 had held that when the margin between the value as given by the assessee and the Departmental valuer was less than 10 per cent, the 5 difference is liable to be ignored and the addition made by the AO cannot be sustained.
Since in the instant case such difference is less than 10 per cent and considering the fact that valuation is always a matter of estimation where some degree of difference is bound to occur, we are of the considered opinion that the AO in the instant case is not justified in substituting the sale consideration at Rs. 20,55,000/- as against the actual sale consideration of Rs. 19,00,000/- disclosed by the assessee. We, therefore, set aside the order of the CIT(A) and direct the AO to take Rs. 1,90,000/- only as the sale consideration of the property. The grounds raised by the assessee are accordingly allowed.”
In the instant case, the difference between the valuation adopted by the Stamp Valuation Authority and declared by the assessee is less than 100%. Therefore, respectfully following the decision of the Hon’ble Coordinate Bench, we hereby direct the AO to adopt the value as declared by the assessee. The gorund of the assessee is allowed.”
8.2. In the background of the aforesaid discussions and respectfully following the precedents, as aforesaid, I decide the issues in dispute in favour of the assessee and against the Revenue.
In the result, the Appeal filed by the Assessee stands allowed.
Order pronounced in the Open Court on 17/10/2016.