Section 50C of the Act prescribes for adoption of full value of consideration in certain cases. It is provided that where the consideration received or accruing as a result of the transfer of a capital asset being land or building or both is less than the value adopted by an authority of the State Government for the purposes of payment of Stamp duty in respect of such transfer, then the value so adopted by the State Government authority shall be deemed to be the full value of consideration received or accruing as a result of such transfer.
The said provisions of sub-section (1) of section 50C are further circumscribed by sub-section (2) of section 50C. In terms of clause (a) of sub-section (2) of section 50C, it is provided that where an assessee claims before the 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, then the Assessing Officer may refer valuation of the capital asset to the Valuation Officer. In this case, factually it is evident that the assessee had claimed in the return of income itself that the value adopted by the Stamp valuation authority exceeded the fair market value as on the date of transfer as provided in section 50C(2)(a) of the Act. In our view, under these circumstances the Assessing Officer ought to have referred the matter to the Valuation Officer instead of straightaway deeming the value adopted by the Stamp valuation authority as the full value of consideration. The point made out by the Revenue that it is only discretionary on the part of the Assessing Officer to refer the matter to the Valuation Officer, in our view, is quite untenable. The discretion vested in the Assessing Officer, in our considered opinion, in such a situation is required to be used in a judicious manner. Section 50C of the Act is a deeming provision and ostensibly involve creation of an additional tax liability on the assessee and, therefore, notwithstanding the presence of the expression “may” in section 50C(2)(a), in our view, the Assessing Officer in this case ought to have referred the matter to the Valuation Officer for ascertaining the value of the capital asset in question. Therefore, in this view of the matter without going into further merits of the dispute, we set aside the order of the Commissioner of Income-tax (Appeals) and direct the Assessing Officer to adopt the course mentioned in section 50C(2)(a) of the Act and thereafter proceed to determine capital gain on sale of land and building. Needless to mention, the Assessing Officer shall give a reasonable opportunity of being heard to the assessee in this regard and adjudicate the issue afresh. Thus, on this Ground the assessee succeeds for statistical purposes.
IN THE ITAT PUNE BENCH ‘A’
K.K. Nag Ltd.
v.
Additional Commissioner of Income-tax
IT Appeal Nos. 1304 & 1305 (PuNe) of 2010
[assessment years 2005-06 & 2006-07]
May 25, 2012
ORDER
2. We shall first take up cross-appeals of the assessee and Revenue pertaining to assessment year 2005-06. Both these appeals, i.e. ITA No 1304/PN/10 by assessee and cross-appeal No 1298/PN/10 of Revenue arise out of the order of the Commissioner of Income-tax (Appeals)-V, Pune dated 7.7.2010, which in turn, have arisen from the order under section 143(3) of the Income-tax Act, 1961 (in short “the Act”) passed by the Assessing Officer for the assessment year 2005-06.
