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
This appeal by the assessee is directed against order dated 30/08/2016 passed by the Learned Commissioner of Income Tax (Appeals)-10, New Delhi [in short the CIT(A)] for Assessment Year 2011-12 raising following grounds:
1. “That on facts and circumstances of the case, the order passed by the Ld. CIT(Appeal ) is bad both in the eyes of law and on facts.
2. That the Ld CIT(A) has erred in law and on facts in upholding the invoking of the provisions of section 50C, when the same are not applicable on the facts of the case.
3. That the Ld CIT(A) has erred in law and on facts in confirming the addition of Rs.86,50,710/- made by the AO, by invoking the provisions of section 50C.
4. That the Ld CIT(A) has erred in law and on facts in confirming the addition of Rs.86,50,710/- made by the AO, by invoking the provisions of section 50C ignoring the fact that the properties sold were occupied by large number of tenants and the transaction of sale has taken place at prevailing market price as per the Valuation Report of the Registered Valuear.
5. That the Ld CIT(A) has erred in law and on facts in confirming the addition of Rs.86,50,710/- made by the AO, by invoking the provisions of section 50C without making a reference to DVO in spite of the specific request by the appellant.
6. That the Ld CIT(A) has erred in law and on facts in not allowing exemption u/s 54 for amounts invested in new residential house property.
7. That the impugned appellant order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.
8. That the appellant craves leave to add/alter and/all grounds of appeal before or at the time of hearing of the Appeal.”
2. Briefly stated facts of the case are that the assessee filed return of income on 13/12/2011 declaring total income of ₹ 1,21,830/-. The case was selected for scrutiny and notice under section 143(2) of the Income Tax Act, 1961 (in short ‘the Act’) was issued and complied with. The assessment under section 143(3) of the Act has been completed on 13/03/2014 after making addition of ₹ 86,50,710/- under section 50C of the Act for long-term capital gain on sale of the property. The assessee could not succeed before the Ld. CIT(A). Aggrieved, the assessee is before the Tribunal raising the grounds as reproduced above.
3. The Ground No. 1 of the appeal is general in nature. The Ground Nos. 2 to 5 of the appeal relates to addition of ₹ 86,50,710/- made by the Assessing Officer towards long-term capital gain on sale of the properties. The ground No. 6 relates to claim of deduction under section 54 of the Act by the assessee, which has not been admitted by the lower authorities.
4. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record.
5. In the case, the assessee has sold 4 properties (1/4th share in each property) in the previous year corresponding to the assessment year under consideration, however no income from capital gain was declared in the return of income. The Assessing Officer from database of the Income-tax department, noticed that assessee has entered into immovable asset transactions amounting to ₹ 6,04,51,100/-. On the basis of sale deeds filed by the assessee, the Learned Assessing Officer has summarised sale transactions in a table, which is extracted as under:
