Baby Vs ITO (ITAT Bangalore)
Stamp Value Is Not Gospel: DVO’s Valuation of the Same Property in Co-owner’s Case Must Govern Section 50C Addition
Summary: The Bangalore Bench of the ITAT has held that where the assessee disputes the adoption of the stamp duty value u/s 50C by producing a registered valuer’s report, and the Department itself has subsequently obtained a DVO’s valuation of the very same property in the case of another co-owner, the capital gain cannot be computed by mechanically adopting the higher stamp duty value. The valuation determined by the Departmental Valuation Officer in respect of the same property constitutes the more appropriate basis for computing the assessee’s proportionate sale consideration.
Facts of the Case
The assessee was a senior citizen who was not carrying on any business. During the relevant previous year, she, along with eleven other co-owners, sold an ancestral property for a total consideration of ₹1.90 crore. The assessee’s share in the property was 6.25%, and accordingly she received sale consideration of ₹11,87,500.
The assessee disclosed the resulting capital gain in her return of income. However, the stamp valuation authority had apparently adopted a substantially higher value for the property. Based on the assessee’s proportionate share in such stamp duty valuation, the AO adopted ₹18,90,000 as the deemed sale consideration u/s 50C, as against the actual consideration of ₹11,87,500.
After allowing indexed cost of acquisition of ₹8,16,000 and commission expenditure of ₹30,000, the AO computed the taxable capital gain at ₹10,44,000. Since the assessee had declared capital gain of ₹2,49,380, the AO made an addition of ₹7,94,620 in the reassessment completed u/s 147 r.w.s. 144B.
The principal reason given by the AO for invoking section 50C was that the assessee had not challenged the valuation adopted by the Sub-Registrar. However, the assessee had produced a valuation report dated 20.04.2017 prepared by a registered valuer, Shri S.N. Bhat. According to that report, the entire property was valued at ₹1.95 crore, which was quite close to the actual sale consideration of ₹1.90 crore.
The NFAC nevertheless confirmed the addition, compelling the assessee to approach the Tribunal.
DVO’s Valuation in Co-owner’s Case Becomes Crucial
Before the Tribunal, the assessee pointed out an important subsequent development. In the case of Mrs. Revathi, one of the co-sellers of the very same property, the Department had obtained a valuation report from the District Valuation Officer. The DVO had valued the entire property at ₹2,15,03,000.
Thus, three different values were available:
- Actual sale consideration — ₹1.90 crore
- Registered valuer’s valuation — ₹1.95 crore
- Departmental Valuation Officer’s valuation — ₹2.1503 crore
The much higher value adopted by the stamp valuation authority, on the basis of which the assessee’s share had been taken at ₹18.90 lakh, therefore stood contradicted by the Department’s own valuation of the same property.
The assessee contended that once the Department’s valuer had determined the fair market value of the identical property in the case of another co-owner, such valuation could not be ignored while computing the capital gain in her case.
ITAT’s Findings
The Tribunal noted that the property had been jointly sold by twelve persons for ₹1.90 crore and that the assessee’s share in the sale consideration was 6.25%. It also took note of the registered valuer’s report valuing the property at ₹1.95 crore.
More importantly, the Tribunal observed that the DVO, in the case of another joint seller, had valued the same property at ₹2,15,03,000. Consequently, the Tribunal held that the value to be adopted in the assessee’s case should also be based on the DVO’s valuation and not on the higher stamp duty valuation mechanically adopted by the AO.
Applying the assessee’s 6.25% share to the DVO’s valuation, the Tribunal directed that her deemed sale consideration be taken at ₹13,43,937, instead of ₹18,90,000 adopted by the AO.
The Tribunal further noticed that the assessee had incurred expenditure of ₹25,000 towards construction of a compound wall and ₹30,000 towards khata registration. It specifically directed the AO to grant deduction for the assessee’s proportionate share of the construction cost of the compound wall at its indexed value.
Accordingly, the AO was directed to recompute the capital gain, and the assessee’s appeal was partly allowed.
Legal Principle Emerging from the Decision
When the assessee objects to the stamp duty valuation and supports the declared consideration through a registered valuer’s report, the AO cannot brush aside the objection merely because the assessee did not separately challenge the valuation before the stamp authorities.
Further, where the Department has obtained a DVO’s report in the case of a co-owner concerning the same property and the same transaction, consistency demands that such valuation be applied to all co-owners. Different values cannot ordinarily be adopted for different sellers of the very same property.
Author’s Comments
The decision reinforces that section 50C creates only a deeming fiction; it does not make the stamp duty value unquestionable or conclusive. Once the assessee raises a genuine valuation objection supported by material, the valuation machinery contemplated under section 50C(2) must be meaningfully applied.
The most significant aspect is the Tribunal’s reliance upon the DVO’s valuation obtained in another co-owner’s case. The Revenue cannot conveniently rely upon stamp value in one co-owner’s case while relying upon a lower DVO valuation in another co-owner’s case involving the identical property.
The reference in the order to the DVO’s valuation having been made u/s 55A, rather than u/s 50C(2), does not dilute its evidentiary importance. A valuation of the same property by the Department’s own technical officer remains highly relevant evidence of its fair market value.
The ruling is particularly useful in cases involving jointly owned ancestral properties, where assessment proceedings of different co-owners may be handled by different officers. Tax administration may be faceless, but the property, transaction & valuation cannot acquire a different face for each co-owner.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, BANGALORE
1. ITA No. 868/Bang/2025 for assessment year 2018-19 is filed by Baby Mangalore against the appellate order passed by the National Faceless Appeals Centre Delhi dated 29th January 2025 wherein the appeal filed by the assessee against the reassessment order passed by the National Faceless Assessment Centre Delhi under Section 147 read with Section 144B of the Income Tax Act 1961 (the Act) dated 14th February 2023 was dismissed. Therefore assessee is in appeal before us. The facts clearly shows that assessee is a senior citizen who does not carry on any business transferred in ancestral property during the year and received the consideration of Rs. 11,87,500/- as his share.
During the course of assessment proceedings it was found that the assessee has disclosed capital gain however the stamp duty valuation authorities have considered the relevant stamp duty value of the property at Rs. 18,90,000/- against the sale consideration shown by the assessee of Rs. 11,87,500/-. Therefore invoking the provisions of Section 50C of the Act the learned Assessing Officer considered the deemed sale consideration of Rs. 18,90,000/-, granted deduction of the indexed cost of property at Rs. 8,16,000/- deducted commission pay of Rs. 30,000/- and computed balance capital gain of Rs. 10,44,000/-. Against this the assessee has declared a capital gain of Rs. 2,49,380/- thus an addition of Rs. 7,94,620/- was made to the total income of the assessee. The learned Assessing Officer passed the reassessment order which was challenged before the learned CIT-A. The sole reason for making the addition based on provisions of Section 50C of the Act was that the assessee did not challenge the valuation adopted by the Registrar however the assessee submitted the valuation report of the registered valuer Mr. S.N.Bhat dated 20th April 2017 wherein the valuation of the property by registered valuer was stated to be consideration received by the assessee only. Thus the assessee objected the same by submitting the registered valuer’s report. The learned CIT Appeal by the appellate order confirmed the action of the learned AO.
2. In appeal before us the learned Authorized Representative furnished a paper book containing 53 pages wherein he has submitted that assessee has objected to the adoption of stamp duty value under Section 50C of the Act by submitting the valuation report of the authorized valuer dated 20th April 2017. He further submitted that on 19th August 2025 the Departmental Valuer in case of Mrs. Revathi, another seller of the same another party who sold the property was valued at the total property at Rs. 2,15,3000/-. He therefore submitted that in case of the another party who was the joint seller of the same the departmental valuation has already shown it to be at Rs. 2,15,00,000/-. Thus his submission was that assessee has substantiated the sale consideration by furnishing the report of the registered valuer, the department valuation has also been obtained in case of other party which does not support the market value adopted by the learned Assessing Officer for computation of capital gain by invoking the provisions of Section 50C of the Act.
3. The learned Departmental Representative vehemently supported the orders of the learned lower authorities.
4. We have carefully considered the rival contention and perused the orders of the learned lower authorities. The same facts shows that assessee has sold a property along with Mrs. Revathi and Jaya Shivappa and others comprising of 12 sellers for a sale consideration of Rs. 1,90,00,000/- out of that the share of the assessee was Rs. 11,87,500/-. The assessee substantiated the sale consideration by obtaining the valuation report dated 20th April 2017 of Shri. S.N. Bhat wherein the valuation of the property was made at Rs. 1,95,00,000/- against the sale deed of Rs. 1,90,00,000/-. The assessee has stated that it has paid a commission of Rs. 30,000/- for sale which is not in dispute. Assessee has further incurred the expenditure of Rs. 25,000/- for compound wall and further Rs. 30,000/- for khata registration also. It so happened that in case of Mrs. Revathi, who is also one of the seller along with the assessee, in her case the valuation report was obtained of fair market value from the District Valuation Officer who valued the same property under Section 55A of the Income Tax Act at Rs. 2,15,03,000/-. Thus, the value to be adopted for computation in case of the assessee is only Rs. 2,15,03,000/- instead of value adopted for the purposes of stamp duty. As out of the total sale consideration of Rs. 1,90,00,000/- the assessee has received 6.25% the sale consideration is required to be taken at Rs. 13,43,937/- against Rs. 18,90,000/- computed by the learned AO. Further the assessee is also required to be granted deduction of share of construction cost of compound wall at its indexed value. Thus, based on the above findings, the learned Assessing Officer is directed to re-compute the capital gain as directed above.
5. The appeal of the assessee is partly allowed.
Order pronounced in the open court on 18th May, 2026.
