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Income Tax Appellate Tribunal, BENCH ‘B’ KOLKATA
Before: Hon’ble Shri Mahavir Singh, JM & Shri Waseem Ahmed, AM ]
ORDER
Per Shri Waseem Ahmed, AM
This appeal of the revenue arises out of the order of ld.CIT(A)-XVI, Kolkata in Appeal No.62/CIT(A)-XVI/Wd-29(3)/2011-12 dated 21.11.2012 for A.Y.2009-10. Assessment was framed u/s 143(3) of the Income tax Act, 1961 (hereinafter referred to as the ‘Act ‘) vide order dated 16.11.2011.
The only issue raised by the revenue is that the ld. CIT(A) has erred in law as well as on fact in directing the AO to accept the valuation of the DVO in toto ignoring the relevant provisions of Section 50C of the Act.
Briefly stated facts are that the assessee is an individual and has income from capital gain. The assessee is 50% owner in the land and building situated at 77/1, Hazra Road. The assessee acquired this land and building prior to the year 1981. The assessee has sold this property during the relevant previous year and declared the income under the head capital gain after investing a sum of Rs.4000000.00 in capital gain bond and claimed deduction under section 54 EC. During the stage of scrutiny assessment, the AO referred the matter to the DVO for the valuation purpose. As per
Dilip Kumar Addy A..Y.2009-10 the DVO the value of the property on the date of transfer was Rs.26882444.00 and the value adopted by the stamp duty authorities was Rs.27677138.00. However, the ld. AO has worked out the tax liability under the head ‘capital gain’ by taking the sale consideration as stamp valuation of the property in terms of section 50C of the Act and raised the demand to the assessee accordingly.
Aggrieved, the assesee preferred appeal before the ld. CIT(A), who disallowed the addition made by the ld. AO by directing the AO to take the valuation of the Departmental Valuation Officer in Toto and calculate the capital gain accordingly.
Aggrieved, the revenue is in appeal before us on the following grounds :- “
1. That on the facts and in the circumstances of the case the Ld.CIT(A) erred in law as well as on facts in directing the AO to accept the valuation of the D VO in toto ignoring the relevant provisions of Section 50C of the Income Tax Act, 1961.
2. That on the facts and in the circumstances of the case the Ld. CIT(Appeal) erred in law as well as on facts in directing the AO to accept the valuation of the DVO in toto ignoring the fact that the assessee himself had accepted the valuation made by the Stamp Valuation Authority and declared the same in his return of income filed. “
Shri M.K.Biswas, JCIT, Sr.DR, the ld. DR appeared on behalf of the revenue and Shri Manoj Kataruka, Advocate appeared on behalf of the assessee.
The ld. DR relied on the order of the ld. AO.
The ld. AR submitted that the AO should have adopted the valuation ascertained by the DVO for the purpose of computing long term capital gain under sub section (2) of section 50C, despite the fact that the valuation made by the DVO is lower than the value adopted by stamp duty authorities. In support of his claim the assessee has cited the case of ITO V Gita Roy decided by ITAT Kolkata C Bench reported in (2012) (146 TTJ(KOL) 762) and Hon’ble Calcutta High Court in the case of Sunil Kumar Agarwal vs CIT 372 ITR 83 (Cal).
Dilip Kumar Addy A..Y.2009-10 7. We have heard the rival submissions and perused the materials available on record. The AO has taken the sale proceeds as recorded by the registrar of property for the purpose of stamp duty without appreciating the valuation done by the DVO. Section 50C reads as under :- “50C (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 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 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 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 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 (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section 91) 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 – 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). (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.”
In the case of Sunil Kumar Agarwal Vs. CIT ITA 221 of 2013 & GA No.3686 of 2013 – High Court of Calcutta, it has been held 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 the stamp duty. The legislature has taken care to provide adequate machinery to give fair treatment to the citizen/Tax payer. There is no reason why the machinery provided by the legislature should not be used and benefit thereof should be refused. Even in a case where no such prayer is made by the Ld. Advocate representing the Dilip Kumar Addy A..Y.2009-10 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 and to give a fair treatment by giving him an option to follow the course provided by law. The assessee has not disputed the valuation of the stamp authority. It is very unfortunate that the AO has worked out the capital gain tax liability including the DVO report which is binding to the assessee. We allow the appeal in favour of the assessee.
From the above fact and legal provision laid down by Hon’ble Jurisdictional High Court in the case of Sunil Kumar Agarwal, supra, we are of the view that the value of the property estimated by DVO as on the date of sale is to be taken as final sale consideration for the purpose of computation of capital gain under section 50C of the Act. Accordingly the AO is directed to take the DVO value for the working of capital gain and adjudicate the matter afresh as per the provisions of section 50C.
In the result the appeal of the assessee is allowed. Order pronounced in the court on 16.09.2015.