Section 50C Cannot be Invoked if No Reference Made to Valuation Officer

Razia Abu Khatri V. ITO (ITAT Delhi)

The issue under consideration is whether AO is correct in invoking section 50C where no reference to valuation officer despite being request made by assessee?

ITAT states that, sale value for the purpose of the stamp duty i.e. circle rate being higher than the sale consideration recorded in the sale deed, provisions of the section 50C of the Act are applicable in the case of the assessee and the long-term capital gain was to be computed accordingly. The assessee contended that the Circle Rate is for vacant building whereas in the case of the assessee buildings were occupied by the tenants. This contention of the assessee was rejected by the Assessing Officer. The assessee requested by letter dated 11/03/2014 to refer the valuation of the properties to the District Pollution Officer, but this contention was also rejected by the Assessing Officer on the ground that it was not maintainable because, the Sub-Registrar of Mumbai, Maharashtra being a government authority, no need arise for valuation from the District Valuation Officer. when the assessee in the present case had claimed before 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, the Assessing Officer should have referred the valuation of the capital asset to a valuation officer instead of adopting the value taken by the state authority for the purpose of stamp duty. The very purpose of the Legislature behind the provisions laid down under sub section (2) to section 50C of the Act is that a valuation officer is an expert of the subject for such valuation and is certainly in a better position than the Assessing Officer to determine the valuation. Thus, non­compliance of the provisions laid down under sub section (2) by the Assessing Officer cannot be held valid and justified. Hence, the Assessing Officer is barred from invoking provision of section 50C of the Act for computation of the long-term capital gain on the sale transactions carried out by the assessee.

Accordingly, the appeal is allowed.

FULL TEXT OF THE ITAT JUDGEMENT

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