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May 2015

Capital gains – Computation – Section 50C – Valuation by DVO – Sale of land – Stamp duty assigning higher value to the land – Matter should be referred to DVO –

By K. B. Bhujle Advocate
Reading Time 2 mins
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Sunil Kumar Agarwal vs.CIT; 372 ITR 83 (Cal):

The assessee sold piece of land for Rs. 10,00,000/-. The stamp duty value of the same was Rs. 35,00,000/-. The Assessing Officer adopted the stamp duty value u/s. 50C of the Income-tax Act, 1961 and computed the capital gain on that basis. The Tribunal upheld the same.

On appeal by the assessee, the Calcutta High Court reversed the decision of the Tribunal and held as under:

“i) T he case of the assessee was that the price offered by the buyer was the highest prevailing price in the market. If this were his case then it is difficult to accept the proposition that the assessee had accepted that the price fixed for stamp duty was the fair market value of the property. No such inference could be made as against the assessee because he had nothing to do in the matter.

ii) Stamp duty was payable by the purchaser. It was for the purchaser to either accept it or dispute it. The assessee could not have done anything. In the case of this nature the Assessing Officer should, in fairness, have given an option to the assessee to have the valuation made by the DVO contemplated u/s. 50C.”

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