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Case Law Details

Case Name : Aruna Kommuri Vs ACIT (ITAT Hyderabad)
Appeal Number : ITA No. 2030/Hyd/2017
Date of Judgement/Order : 23/07/2020
Related Assessment Year : 2006-07
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Aruna Kommuri Vs ACIT (ITAT Hyderabad)

The issue under consideration is whether the provisions of section 50C of the Act can be applied in cases where the market value of the property is reduced due to the defect in the title of the property?

ITAT states that, from the submissions made by the Ld. AR it is quite evident that there was some litigation with respect to the property sold by the assessee. This fact is also not disputed by the Ld. Revenue Authorities. It is quite obvious that if the title of the immovable property is defective then the market value of the immovable property will be considerably reduced. In this situation, it would have been appropriate on the part of the Ld. AO to obtain a valuation report from the Ld. DVO in accordance with the provisions of section 50C of the Act as the assessee has challenged the same before him and thereafter adopted the value determined by the Ld. DVO for the purpose of computing the capital gains in the hands of the assessee. However, the Ld. AO has failed to do so. In the present circumstances, I also do not find it appropriate to remit the matter back to the Ld. AO in order to obtain the valuation report from the Ld. DVO as it will cause great inconvenience to the assessee. Further, from the facts of the case it is apparent that the sale value declared by the assessee is only 46% of the SRO value. Since the property sold by the assessee is a litigated property, I am of the considered view that the market value of the property cannot exceed the actual sale consideration received by the assessee. Hence, I do not find it appropriate to adopt the SRO value for the purpose of computation of the capital gains in the hands of the assessee, rather it would be appropriate to adopt the actual market value of the property taking into consideration of the litigation involved in the property, which is nothing but the actual sale consideration received by the assessee. Therefore, I hereby direct the Ld. AO to compute the capital gains in the hands of the assessee based on the actual sale consideration received by the assessee.

Therefore, The appeal filed by the assessee is accepted.

FULL TEXT OF THE ITAT JUDGEMENT

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