2010 (5) TMI 863 - AT - Income Tax

ITAT directs reevaluation of property value, emphasizes compliance with Section 50C(2)

Sri Arijit Chakraborty Versus Income-tax Officer, Wd-46 (1), Kolkata

Sri Arijit Chakraborty Versus Income-tax Officer, Wd-46 (1), Kolkata - TMI Issues involved: Assessment of property value as on 1.4.1981, compliance with u/s 50C(2) of the I. T. Act.Assessment of Property Value as on 1.4.1981:The appellant contested the Ld. CIT(A)'s confirmation of the property value on 1.4.1981 at Rs. 1,49,525 instead of the Rs. 11,30,525 claimed by the assessee. The AO valued the property at Rs. 30,525 for land and Rs. 1,19,000 for the building, rejecting the assessee's claims for higher values. The AO also disputed the assessee's legal expenses claim of Rs. 10,00,000 due to lack of evidence. The AO calculated the indexed cost based on the asset holding year and determined the sale consideration at Rs. 91,57,930, adopting the value provided by the registering authority.Compliance with u/s 50C(2) of the I. T. Act:The appellant argued that the AO did not follow u/s 50C(2) by not referring the valuation to the Valuation Cell. The Ld. CIT(A) dismissed the appeal, stating that the appellant did not object to the proposed computation under Sec. 50C. However, the appellant contended that they requested valuation referral to the Valuation Cell, which the AO did not comply with. The ITAT found merit in the appellant's objection, noting the lack of basis for the property valuation on 1.4.1981. Consequently, the ITAT directed the AO to recompute the long term capital gain after referring the valuation to the Valuation Cell, allowing the appeal for statistical purposes.Judges' Decision:The ITAT allowed the appeal for statistical purposes, emphasizing the need for proper valuation procedures and compliance with statutory provisions, directing the AO to reevaluate the property value as on the sale date and 1.4.1981 through the Valuation Cell.