Tribunal sets aside capital gain addition, directs valuation by DVO under section 50C(2)

The Tribunal allowed the appeal, setting aside the addition of short term capital gain and remanding the matter to the AO for proper consideration in accordance with section 50C(2) provisions. The AO was instructed to refer the matter to the DVO for determining the value to be considered as the full sale consideration for capital gain computation. The appeal was allowed for statistical purposes.

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Issues:
Appeal against the addition of short term capital gain.

Analysis:
The assessee appealed against the addition of Rs. 44,24,800 in short term capital gain confirmed by the ld.CIT(A). The case involved the sale of four pieces of land with a declared aggregate sale consideration of Rs. 7.75 lakhs. The ld.AO, using section 50C, adopted the stamp duty valuation of Rs. 51,99,800 as the sale consideration, resulting in the addition. The assessee contended that under section 50C(2), they could request the AO to refer the matter to the valuation officer for determining the fair market value (FMV) of the property on the transfer date. The assessee argued that as they were not given the opportunity to make such a request, both orders should be set aside.

The Tribunal considered the contentions and relevant provisions. Section 50C deems the value assessed by the stamp duty authority as the full consideration for the purpose of computing capital gain. However, section 50C(2) allows the assessee to dispute this valuation and request a reference to a Valuation Officer if the stamp duty value exceeds the FMV. The Tribunal noted that the AO should have provided the assessee with the opportunity to apply under section 50C(2). As the assessee disputed the stamp duty valuation, the ld.CIT(A) should have called for a report under section 50C(2). The failure to allow the assessee this opportunity was deemed an irregularity. Consequently, the Tribunal allowed the appeal, set aside both orders, and remanded the issue to the AO for readjudication. The AO was instructed to refer the matter to the DVO for determining the value to be considered as the full sale consideration for capital gain computation. The appeal was allowed for statistical purposes.

In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the addition of short term capital gain and remanding the matter to the AO for proper consideration in accordance with section 50C(2) provisions.

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