Capital gain- Section 50C- A. Y 2009-10- Full value of consideration- Guideline value-Objection- Computation of capital gain by AO on basis of guideline value without referring to DVO u/s. 50C(2)- AO directed to work out capital gain invoking section 50C(2)

In the A. Y. 2009-10, the assessee had sold a immovable property for a consideration of Rs. 25,60,000/- as distress sale. For computing the capital gain the Assessing Officer applied section 50C and treated the guideline value of Rs. 39,63,900/- as the full value of consideration. In the objection letter, the assessee specifically pointed out that the sale was more in the nature of a distress sale and requested to take the actual sale consideration for working out capital gain. The Assessing Officer rejected the claim u/s. 50C of the Act. The Tribunal confirmed the order of the Assessing Officer holding that there was nothing on record to show that the assessee had disputed the sale consideration of Rs. 39,63,900/- adopted for the purpose of stamp duty taken as basis under the Act and that the Assessing Officer had not rightly invoked section 50C.

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

“i) The Assessing Officer’s order showed that having found such an objection, he committed a serious error in not invoking section 50C(2), that the error continued through out before every appellate forum and that there was no justification in the order of the Tribunal for taking the view that there was nothing on record to show that the assessee had disputed the sale consideration of Rs. 39,63,900/- adopted for the purpose of stamp duty for the purpose of working out capital gains.

ii) Hence the matter was restored to the files of the Assessing Officer to work out long-term capital gains by invoking section 50C(2).”

Note: Also see Appadurai Vijayaraghavan vs. JCIT; 369 ITR 486 (Mad)