September 2018
19. [2018] 193 TTJ (Jd) 751 ITO vs. Estate of Maharaja Karni Singh of Bikaner ITA NO.: 241/Jodh/2017 A. Y.: 2011-12 : 20th February, 2018 Section 50C- Capital gains – Assessee having contested the enhanced valuation of the property made by the stamp valuation authority and the AO having denied the request of the assesse to refer the matter to the DVO u/s. 50C(2), CIT(A) was justified in deleting the addition on account of capital gain on the sale of land.
By JAGDISH T. PUNJABI I DEVENDRA JAIN I TEJASWINI GHAG
Chartered Accountants
Reading Time 3 mins
FACTS
- The assesse had sold two
pieces of land for Rs.45,00,000 and Rs.30,00,000 respectively, the DLC value of
which was Rs.1,12,04,236 and Rs.1,20,00,566 aggregating to Rs.2,32,04,802.
After deduction of cost of acquisition of Rs.95,07,478 the resultant taxable
long term capital gain was Rs.1,36,97,324.
- The AO stated that the
reference to DVO could not be made in view of the provisions of section 50C(2)
of the Income-tax Act, 1961, as the litigation for the charging of stamp duty
was pending before KAR board, Ajmer.
- Therefore, the AO
computed the Income of the assessee invoking of the provisions of section 50C,
as the assessment was getting barred by limitation on 31st March,
2014.
- Aggrieved by the
assessment order, the assessee preferred an appeal to the CIT(A).
- The CIT(A) deleted the
additions, holding that, before adoption of valuation of property sold by the
valuation authority, the AO should have considered the objection raised by the
assessee and should have referred the matter to the DVO u/s. 50C (2).
HELD
- The Tribunal held that as
per section 50C, the value taken for stamp duty by the State registration
authority would be considered as deemed sale consideration. There was solace
for assessee u/s. 50C(2), which provided that if the assessee objected to the
valuation of the property for stamp duty purposes, the AO might refer the
valuation to the DVO.
- Thus, section 50C
provided two remedies at the option of the assessee, in that, he could either
file appeal against the stamp value or seek reference to the valuation cell.
Adoption of the value by the valuation cell was again subject to regular
appeals available against the order of the AO.
- The Tribunal further
stated that it was well settled that the principles of natural justice would be
presumed to be necessary, unless there existed a statutory interdict, and also
when substantial justice and technical consideration were pitted against each
other, the cause of substantial justice deserved to be preferred.
- Therefore, denial of
request or objections of the assessee against the value adopted by the stamp
valuation authority by the AO was against the spirit of section 50C. It was not
optional for the AO to make reference to DVO, the right of the assessee u/s.
50C was a statutory right.
- In the result, the
Tribunal held that there was no infirmity in the order of CIT(A) that the AO
should have considered the objections raised by the assessee against the same
and should have referred the matter to the DVO u/s. 50C(2).
