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Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI
PER J.SUDHAKAR REDDY, A.M. This is an appeal filed by the Assessee directed against the order of the Ld.Commissioner of Income Tax (Appeals)-XXVII, New Delhi dated 15.02.2012 pertaining to the Assessment Year (A.Y.) 2008-09.
Facts in brief:- Facts of the case pertaining to the issue before us are brought out at paras 5,6,7 and 8 of the order of the Ld.CIT(A), which is extracted for ready reference. “Various grounds raised
in this appeal are discussed and decided as under - Ground No. I - Long Term Capital Gains
5. In the Return of Income, the appellant had shown Long TennCapital Gains amounting to Rs. 35,98,717/- on sale of the following four properties: i. Plot No. 73, Khasra No. 2017, Village Behta Hazipur, Loni Tehsil, Ghaziabad (UP) (herein after be called as P-I). ii. Plot No. 67, Khasra No. 2022, Village Behta Hazipur, Loni Tehsil, Ghaziabad (UP) (herein after be called P-2). iii. Plot No. 1 A, Khasra No. 10/S, Mandoli Extension, Shahdara, Delhi-93 (herein after be called as P-3). iv. Plot No. 1, Khasra No. 10/5, Mandoli Extension, Shahdara, Delhi-93 (herein after be called as P-4) .
6. The total sale consideration of the above four properties was shown at Rs.86.00 Lacs as per the sale deeds of the properties. The A.O. noticed that the circle rate of the properties as determined by the Stamp Valuation Authority was higher than the full value of consideration shown by the appellant. The A.O. asked the appellant to explain Why the circle rate should not be adopted in his case for the purposes of working out the amount of the Long Term Capital Gains in terms of the provisions of section 50C of the Act. The appellant submitted before the A.O. that his properties were situated far away from the approach road and that the nearest accessible point was Mandoli Chungi. Moreover the . approach road had potholes and was uneven. Therefore, the appellant requested the A.O. to accept full value of consideration as per the sale deeds. The A.O. did not accept the appellant's explanation and referred all the four properties to the jurisdictional Valuation Officer for determining the fair market value of the properties. As per the report of the valuation officer the fair market value of the four properties were determined at Rs. 1,22,10,0911-. The A.O. adopted this figure as the deemed sale consideration of the properties in terms of section SOC of the Act and worked out the LTCGs from the sale of the properties.
7. During the course of the appellate proceedings, the appellant has contested the addition of Rs.24,30,000/- (out of the total addition of Rs. 36,10,091/- under the head LTCGs). in respect of two properties. In respect of Property No. 1 Le. Plot No. 73, Khasra No. 2017, M R Vatika, Vill, Behta Hazipur Paragna, Loni Teh. & Distt. Ghaziabad, the following chart was filed to show the value of the property as per sale deed, as assessed by the Stamp Valuation Authority for Stamp Duty purposes and as determined by the DVO.
As per Sale Deed/ As per Stamp Valuation As per DVO Submissions Authority Land 12,95,320 27,72,924 9,33,240 Bldg. 17,04,680 17,83,740 34,68,852 Total 30,00,000 45,56,664 44,02,092
Similarly, in respect of property no. 2 Plot No. 67, Khasra No. 2022, M R Vatika, Vill. Behta Hazipur Paragna, Loni Teh. & Distt. Ghaziabad, the following chart was filed to show the value of the property as per sale deed, as assessed by the Stamp Valuation Authority for Stamp Duty purposes and as determined by the DVO.
As per Sale Deed/ As per Stamp Valuation As per DVO Submissions Authority Land 11,20,000 27,72,924 9,33,240 Bldg. 18,80,000 20,27,890 30,95,060 Total 30,00,000 48,00,814 40,28,300”.
On appeal the First Appellate Authority dismissed the appeal. The contention of the assessee was that the land and building should not be treated as a single asset for calculating the capital gains u/s 50C of the Income Tax Act 1961 (the Act). It is pleaded that the valuation has to be done separately for land and building. The Ld.CIT dismissed this contention. Aggrieved the assessee is before us.
We have heard Shri Raj Kumar Gupta, the Ld.Counsel for the assessee and Ms.Rishpal Bedi, Ld.Sr.D.R. on behalf of the Revenue. 5. We find that the valuation of two properties are in dispute before us. Before we go into the valuation on each of the properties, we examine the legal position. As per S.50C of the Act, the sale consideration should be lower of (a) the stamp duty valuation and (b) departmental Valuation Officer’s valuation. 5.1. In any event, it cannot be below the declared sale consideration. S.50C(1) of the Act also mentions land and building separately. The assessee has rightly relied on the following case laws in support of his contention that land and building should be valued separately and that the capital gain on each of these assets should be computed separately. (i) CIT vs. Dr.D.L.Ramchandra Rao reported in 236 ITR 51 (Madras) (ii) CIT vs. Vimal Chand Golecha reported in 201 ITR 442 (Raj.) (iii) CIT vs. Citi Bank N.A. reported in 261 ITR 570 (Bom.)
Thus, we direct the AO to consider the valuation of land separately from the value adopted for the building, by following the proposition laid down in these case laws. 5.2. We have already extracted from the Ld.CIT(A)’s order on the values of both the properties. For ready reference we once again do the same. Property No.73 As per Stamp As per DVO Lower of stamp Valuation valuation Authority authority & DVO Land 27,72,924 9,33,240 9,33,240 Building 17,83,740 34,68,852 17,83,740 Total 45,56,664 44,02,092 27,16,980 In this case the land has been valued by the DVO at Rs.9,33,240/-. This should be adopted for the purpose of S.50C. As far as the valuation of building is concerned, stamp valuation authority has valued the same at Rs.73,83,740/-. As it is lower than the DVO’s valuation, the same should be adopted. The total value is Rs.20,60,790/- and whereas the declared consolidated sale consideration is Rs.30 lakhs. Hence in our view no deemed addition can be made to the sale consideration by invoking S.50C of the Act.
5.3. Similarly in the case of property no.67 the table reads as follows. Property No.73 As per Stamp As per DVO Lower of stamp Valuation valuation Authority authority & DVO Land 27,72,924 9,33,240 9,33,240 Building 20,27,890 30,95,060 20,27,890 Total 48,00,814 4028300 2961130 In this case the land value as per DVO is Rs.9,33,240/- and it being lower than the value of stamp valuation authority, the same should be adopted as in the previous case, as far as building value is concerned, the stamp authority has valued it at Rs.20,27,890/- Whereas the DVO has valued the same at a higher figure i.e. Rs.30,95,060/-. Hence value as fixed by stamp authority has to be taken. The total of these values of land and building put together i.e. Rs.29,61,130/- is lower than the declared consolidated sale consideration of Rs.30 lakhs. Thus no addition is called for u/s 50C of the Act as deemed consideration. Deeming provisions have to be strictly construed. The valuation made by the DVO, is for the benefit of the assessee, wherever the assessee claims that the value fixed by the stamp valuation authority is higher due to certain valid reasons. Higher valuation done by the DVO can not in any circumstances be added to the sale consideration u/s 50C of the Act. Thus we delete the addition in question and allow the appeal of the assessee.
In the result assessee’s appeal is allowed. Order pronounced in the Open Court on 27th January, 2016.