Sec.50C of the Income Tax Act, 1961 — Capital Gain — When the assessee disputed the value adopted by the stamp duty authority, it become the subject matter of dispute until it is finally decided, the same value as adopted by the sub-registrar cannot be adopted by the A.O. —
Full value of consideration — During the course of assessment u/s 143(3) the assessee has brought to the notice of AO that the value adopted by the stamp valuation authority for property No. 2 has been disputed and challenged that provision of section 50C (1) were not applicable for this property. Further the assessee has made his claim before the AO that the value adopted or assessed (or assessable) by the stamp valuation authority u/s 50C(1) exceed the fair market value of the property as on the date of transfer. The AO has not considered the objection of assessee and has recomputed the long term capital gain by invoking provision of section 50C(1) without referring the matter to the DVO as requested by the assessee, rejecting the claim of assessee even though the assessee has provided evidences related to disputes on account of value adopted by the registrar. ITAT, Jodhpur while dismissing the petition of the department held that:- The value adopted by stamp duty authority does not ipso facto become the real consideration or deemed consideration in the absence of any other cogent reason. When the assessee disputed the value adopted by the stamp duty authority, it become the subject matter of dispute until it is finally decided same value as adopted by the sub-registrar cannot be adopted by the A.O. No law permits the A.O. to estimate the fair market value in contravention of provisions of the Act. While coming to the date of completion of the construction, the A.O. has adopted the date of permission granted as per sale deed. However, the assessee has mentioned that in the enclosed site map attached along with the sale deed, it is clearly mentioned that the completion of first floor took place in the year 1988. It was brought to the notice of the CIT that the construction was got done by assessee's father and not by him. So, we can safely conclude that the construction was completed earlier but official permission was granted in that area was granted later on by clearance of the issue related to permission of construction in the area situated nearby lakes in Udaipur. The above vehement reasons stated above compels us to accept the finding of the ld. CIT(A) and find the deletion of Rs. 15,60,080/- in order. Accordingly, we cannot allow the appeal of the revenue.
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HARI OM MARATHA -
This appeal filed by the department is directed against the order of the CIT(A), Udaipur, dated 01.03.2013 for A.Y 2008-09.
2. At the time of hearing, despite having been duly served, nobody came to represent the case of the assessee-respondent nor any adjournment petition was filed. Therefore, we proceed to decide this appeal after hearing the ld. D.R. ex parte qua the assessee.
3. Briefly stated, the facts of the sole issue raised in this appeal are that the assessee sold a house property situated at A-02, Krishna Complex, Haridas Ji Ki Magri, Udaipur in which his share was 1/3rd only. There were two registries of face value of 20,00,000/- each on 27/03/2008. The registrar has adopted market value of one portion at Rs. 36,52,760/- in all in which assessee's share was 1/3rd. Similarly, the second property was valued for stamp duty purposes by the registrar at Rs. 80,94,606/-. The assessee's share was 1/3rd here too. As both the portions are situated at same place and included in one house the value adopted for stamp duty purposes by the registrar for property No. 2 has been challenged by the assessee. At the time of filing of return the assessee has voluntarily calculated long term capital gain on sale of property No.1 on the basis of value adopted by the registrar considering the provisions of section 50C(1) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act', for short]. The assessee had adopted the same value for computation of long term capital gain for property No. 2 which was considered by the registrar for property No 1, treating that value as proper and fair market value as on the date of transfer considering the provisions of section 50C(2). During the course of assessment u/s 143(3) the assessee has brought to the notice of AO that the value adopted by the stamp valuation authority for property No. 2 has been disputed and challenged so provision of section 50C (1) were not applicable for this property. Further the assessee has made his claim before the AO that the value adopted or assessed (or assessable) by the stamp valuation authority u/s (1) exceed the fair market value of the property as on the date of transfer. The AO has not considered the objection of assessee and has recomputed the long term capital gain by invoking provision of section 50C(1) without referring the matter to the DVO as requested by the assessee, rejecting the claim of assessee even though the assessee has provided evidences related to disputes on account of value adopted by the registrar. Accordingly the AO has made addition in the declared long term capital gain on this account. The ld. AO has further treated the cost of construction and year of construction as 01/04/1993 as against the years mentioned and stated by the assessee and accordingly indexed cost of acquisition has been adopted for calculation of capital gains by him. Aggrieved by the order the assessee preferred appeal and the ld. CIT(A) has deleted the entire addition on the premise that the provisions of section 50C(1) of the Act would not apply for the purposes of computing long term capital gain because the A.O. has failed to refer the matter to the DVO and has ignore the provision of section 50C(2) of the Act. Now the revenue is aggrieved and has filed this appeal challenging the above deletion.
4. We have heard the submissions of the ld. D.R. and have carefully perused the entire material on record. From the records, it is found for a fact that the assessee had challenged the adoption of a particular amount as valuation of the second property before the Sub-registrar. The assessee has claimed that it is not a market value of this property as has been adopted by the sub-registrar and only the valuation adopted by the sub-registrar in respect of property No. 1 has to be treated as fair market value of the property No. 2. When the assessee disputed the adoption of a particular value of the property adopted u/s 50C(1) of the Act, provisions of section 50C(2) come into play and acts as a buffer between the two. It seems that the A.O. has not considered and appreciated the provisions of section 50C of the Act in its correct perspective. As per section 50C of the Act, the value adopted or assessed by any authority of a state government for the purpose of payment of stamp in respect of land or building or both, shall for the purpose of section 48 be deemed to be the full value of the consideration received or accruing as a result of transfer. The value adopted by stamp duty authority does not ipso facto become the real consideration or deemed consideration in the absence of any other cogent reason. When the assessee disputed the value adopted by the stamp duty authority, it become the subject matter of dispute until it is finally decided same value as adopted by the sub-registrar cannot be adopted by the A.O. No law permits the A.O. to estimate the fair market value in contravention of provisions of the Act. In the present case, it is an undeniable fact that the assessee had disputed the value adopted by the stamp duty authority, therefore, provisions of section 50C(1) are not applicable at the time of filing of return deduction or at the time assessment of income by the A.O. Further, he has not made reference to the DVO and this fact is also fatal to his action. The dispute regarding stamp duty was stated to be still pending and subject matter of litigation before the Jurisdictional High Court. While coming to the date of completion of the construction, the A.O. has adopted the date of permission granted as per sale deed. However, the assessee has mentioned that in the enclosed site map attached along with the sale deed, it is clearly mentioned that the completion of first floor took place in the year 1988. It was brought to the notice of the CIT that the construction was got done by assessee's father and not by him. So, we can safely conclude that the construction was completed earlier but official permission was granted in that area was granted later on by clearance of the issue related to permission of construction in the area situated nearby lakes in Udaipur. The above vehement reasons stated above compels us to accept the finding of the ld. CIT(A) and find the deletion of Rs. 15,60,080/- in order. Accordingly, we cannot allow the appeal of the revenue.
5. In the result, the appeal of the Revenue is dismissed. |