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Hon’ble ITAT Ahemdabad in the case of Nikunjkumar H.Jariwala v/s ITO in I.T.A. No. 2404/Ahd/2011 vide order dated 19/03/2015 has held that as per the mandate provisions of section 50C(2) of the Act, the AO was not justified in adopting the value of the property as adopted by the stamp valuation authority without referring to the DVO for ascertaining the fair market value of the property.
Tribunal has held that in case the income is to be computed as per sub-section (1A) of section 11 of the Act, if the net consideration for transfer of capital asset of a charitable trust is utilized for acquiring new capital asset, then the whole of the capital gain is exempt.
Assessee sold the land vide registered agreement dated 27th May 2004, for consideration of Rs.2,62,08,000/- and on the said date the circle rate was Rs.13,000/- per sq meter. However, on the date of registration of sale-deed, i.e. 16th September 2004, the circle-rate enhanced to Rs.20,000/- per sq meter.
The fact of actual sale consideration received by the assessee has not been disputed by the Assessing Officer but the addition was made simply by applying the deeming provisions of section 50C. Therefore, in view of the various decisions as relied upon by the Ld. Authorized Representative as well as by the CIT(A), we do not find any error in the impugned order of CIT(A) in deleting the penalty levied u/s 271(1)(c).
(A) Concept of Stamp Duty Value- It should be noted that the Stamp Duty Basis Valuation is applicable only in the transactions pertaining to Immoveable Property in the Income Tax Act 1961. It is similar to the concept of Fair Market Value (FMV).
No addition can be sustained in this case, as, neither there is any investigation whatsoever made by the Assessing Officer nor was any evidence gathered by him. Merely because the market value as per the stamp valuation authorities and the sale price are at variance, no addition can be made to the business income.
First contention of the assessee is that the sale consideration cannot be taken more than the actual sale consideration shown in the transfer deed i.e. a sum of Rs.4 1.51 crores. The alternative contention is that if the sale consideration is taken as valuation done by the Stamp Valuation Authorities then there is a mistake
Assessee is a charitable society and is registered under section 12A of the Act. The question of applicability of provisions of section 50C of the Act on transfer of capital asset in the case of a charitable society was examined by the Tribunal in the case of ACIT vs. Shri. Dwarikadhish Temple Trust, Kanpur in I.T.A. No. 256 & 257/LKW/2011, in which the Tribunal has held that where the entire sale consideration was invested in other capital asset, provisions of section 50C of the Act should not be invoked.
According to decision of Hon’ble Calcutta High Court in the case where addition is made on account of application of section 50C and Revenue failed to produce any evidence to the effect that assessee has actually received more amount than that shown by it on the sale of property then penalty under section 271(1)(c) cannot be levied.
Presumably, the case of the assessee was that price offered by the buyer was the highest prevailing price in the market. If this is his case then it is difficult to accept the proposition that the assessee had accepted that the price fixed by the District Sub Registrar was the fair market value
