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Income Tax Appellate Tribunal, “SMC” BENCH : KOLKATA
Before: Hon’ble Sri N.V.Vasudevan, JM ]
This is an appeal by the Assessee against the order dated 3.1.2014 of CIT(A)- XII, Kolkata, relating to AY 2009-10.
The grounds of appeal
raised by the Assessee reads as follow: “1. For that in the facts and circumstances of the case, the determination of full value of consideration for sale of land at Rs. 36,05,000 instead of actual consideration received of Rs. 12,50,000 is wrong, erroneous , arbitrary, excessive beyond jurisdiction and deserves to be cancelled/reduced,
2. For that in the facts and circumstances of the case, reference to DVO should have been made for proper valuation of impugned properly tor the sake of natural justice and transparency.
3. For that the assessee craves leave to amend, alter, rescind, substitute and/or submit additional ground/grounds of Revision at the time of hearing of Revision.”
3. The Assessee is an individual. The Assessee owned land measuring about 35 Satak situate at Mouza-Kalinagar, J.L.No.10, R.S.No.815, Khatian No.3182, hereinafter referred to as “the property”. During the previous year relevant to AY 2009-10, he sold 20 Satak of the property to Shri Sukumar Roy and 15 Cents to Shri Sunil Roy, for a total sale consideration of Rs.12,50,000/-. The valuation of the Shankar Paul A.Y.2009-10 1 property for the purpose of stamp duty and registration was adopted by the Registrar of Assurances at a sum of Rs.36,05,000/-. (value of land sold to Sukumar Roy and Sunil Roy was valued for stamp duty and registration at Rs.20,60,000 and Rs.15,45,000 respectively, thus totalling Rs.36,05,000).
In the return of income filed by the Assessee, the Assessee computed Long Term Capital Gain (LTCG) on sale of the property at Rs.11,27,922, adopting the full value of consideration received on transfer at a sum of Rs.12,50,000/- which is the actual sale consideration received by the Assessee. The AO however adopted the full value of consideration received on transfer at Rs.36,05,000 and computed LTCG at Rs.34,82,922 and added the difference of Rs.23,55,000/- (Rs.34,82,922 – Rs.11,27,922) to the total income of the Assessee. The AO adopted full value of consideration received by the Assessee on transfer at Rs.36,05,000/- because of the provisions of Sec.50C of the Income Tax Act, 1961 (Act), which provides as follows:
“Sec. 50C of the Act reads as under: Special provision for full value of consideration in certain cases.-(1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable 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. (2) Without prejudice to the provisions of sub-section (1), where– (a) the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, Court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections Shankar Paul A.Y.2009-10 2 (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 (27 of 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. Explanation. : 1 For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2 : For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed or assessable by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.”
As can be seen from the above provisions of Sec.50C of the Act, Sub-section (1) of s. 50C of the Act seeks to provides that where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration received or accruing as a result of such transfer. As can also be seen from the provisions of Sec.50C(2) of the Act, the AO can make a reference regarding valuation of the property by the Departmental Valuation Officer(DVO).
Aggrieved by the order of the AO, the Assessee filed appeal before CIT(A). In the grounds of appeal filed before CIT(A), the Assessee specifically sought a reference to the DVO. The CIT(A) however upheld the order of the AO observing that the Assessee has challenged before the AO the valuation adopted for the purpose of stamp duty and registration by the Registrar of Assurances and had not sought reference to Shankar Paul A.Y.2009-10 3 the DVO before the AO and therefore at the stage of appeal, such a reference cannot be made.
7. Aggrieved by the order of the CIT(A), the Assessee is in appeal before the Tribunal. I have heard the submission of the learned counsel for the Assessee and the learned DR. My attention was drawn to the decision of the Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal Vs. CIT 372 ITR 83 (Cal) wherein the Hon’ble Calcutta High Court on identical facts found that Assessee had claimed that price offered by the purchaser was the highest prevailing price in the market and valuation made by the District Sub Registrar was for the purpose of stamp duty, therefore, was not the prevailing price of the land in question. Assessee had also claimed that valuation made by the District Sub Registrar for the purpose of stamp duty was far in excess than the market value of the property. The Revenue authorities as well as the Tribunal rejected the stand taken by the Assessee and did not prefer to refer the question of valuation to DVO. The Hon’ble Calcutta High Court held that Valuation by departmental valuation officer, contemplated u/s. 50C, was required to avoid miscarriage of justice. Legislature did not intend that capital gain should be fixed merely on basis of valuation to be made by District Sub Registrar for purpose of stamp duty. Legislature had taken care to provide adequate machinery to give fair treatment to citizen/taxpayer. No inference could be made as against the Assessee that he had accepted that the price fixed by the District Sub Registrar was the fair market value of the property. Option ought to be given to Assessee to have valuation made by departmental valuation officer contemplated u/s. 50C. It was further held that the A.O, discharging a quasi judicial function, had the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law. The orders of the revenue authorities and Tribunal was and the matter was remanded to AO. The AO was directed to refer matter to departmental valuation officer in accordance with law and after such valuation was made, assessment was to be made de novo in accordance with law Shankar Paul A.Y.2009-10 4
8. In view of the decision of the Hon’ble Calcutta High court, I am of the view that the Impugned order of the CIT(A) and the assessing officer are set aside. The matter is remanded to the assessing officer. He shall refer the matter to the departmental valuation officer in accordance with law. After such valuation is made, the assessment shall be made de novo in accordance with law, after due opportunity of being heard to the Assessee including the right of the Assessee to also challenge the value adopted by the DVO.
For statistical purpose the appeal of the Assessee is treated as allowed.