Stamp duty value shall be deemed as full value of consideration if consideration for transfer lesser than stamp duty value

Brief of the case :

The Hon’ble Punjab & Haryana High Court in case of B.M.J Real Estate P. Limited held that where the consideration received or accrued as a result of transfer of capital asset being the land or building  is less than the value adopted or assessed by the stamp valuation authorities, then as per Sec 50C(1) the value so adopted for the purpose of stamp duty value shall be deemed to be full value of  consideration arising as a result of transfer for the purpose of computation of capital gains.

Facts of the case:

• Assessee company for AY 2006-07 filed its return of income of Rs. 25,26,880/- on 27.11.2006 which was picked up for scrutiny. AO made an addition of Rs 51,72,000/- to the income of assessee by taking the stamp duty value of Rs. 1.25 crores as full value of consideration instead of transactional value Rs. 1.25 crores. CIT(A) upheld the order of the Assessing Officer and dismissed the appeal.
• Tribunal also dismissed the appeal by holding that AO was right in adopting the stamp duty value as sale consideration because the consideration declared was lesser than that. The perusal of the grievances raised by the assessee reflected that all the grievances were against the valuation framed by the Valuation Officer and even if the value is reduced as per the said grievances, there is no substance in the grievance of the assessee where reduced value has been adopted by the CIT(Appeals) as fair market value of the property.
• Aggrieved by the order of tribunal, the assessee is in appeal before the High Court.

Contention of the Assessee:

• It was submitted that as per agreement of sale the property was shown to be residential, however, the Valuation Officer made valuation treating the same as commercial one. It was simply contended that the sale consideration of Rs. 73,60,000/- was the correct value whereas the sale value adopted by the CIT(A) and the Tribunal at Rs. 1,25,32,000/- was unsustainable.

Contention of the Revenue:

• The learned counsel for the revenue submitted that the assessee had never challenged the stamp duty value as assessed for the purpose of stamp duty. on a prayer made by the assessee, under sub section 2 of Section 50C of the Act, the matter was referred to the Valuation Officer and the value was determined at Rs. 2,97,98,550/-. In such circumstances, the value of Rs 1.25 crores was justified to be adopted as full value of consideration as per Sec 50C(1).
  

Held by the Hon’ble High Court:

The court considered the legal provisions to dispose off the case as under:

• Sec 50C(1) of the Act provides that where the consideration received or accrued as a result of transfer of capital asset being the land or building or both is less than the value adopted or assessed by the stamp valuation authorities then the value so adopted or assessed for the payment of stamp duty in respect of such transfer shall be deemed to be the full value of consideration received or accruing as a result of such transfer and should be adopted for the purposes of section 48 of the Act.
• Section 50C (2) of the Act provides that where the assessee claimed before any Assessing Officer that the value adopted or assessed by the stamp Valuation authorities exceeds the fair market value of the property as on the date of transfer and the said value had not been disputed in any appeal or revision , the Assessing Officer may refer the valuation of the capital asset to the Valuation officer who in turn shall value the property.
• Further, Sec 50C(3) provides that where the value ascertained under sub section (2) of section 50C of the Act exceeds the value adopted or assesse d by the stamp valuation authorities then the value so adopted or assessed by such stamp valuation authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.
• In the instant case , the AO adopted the stamp value duty of the property as full value of consideration as the sale consideration declared was lesser than the stamp duty value . Further, the valuation made by Valuation officer was Rs. Rs. 2,97,98,550/- which was much more than the stamp duty value. Valuation officer ,however, valued the property as commercial one rather than valuing as residential. But even then the valuation as per Valuation officer would be much higher than the stamp duty value.
• As such the tribunal rightly order to treat the stamp duty value as full value of consideration. In result the appeal filed by the assessee was dismissed.