Tribunal orders property revaluation for accurate capital gain calculation

The Tribunal partly allowed the appeal, directing the AO to refer the property valuation to the DVO under section 50C(2) for fair market value assessment and accurate capital gain calculation. The Tribunal set aside previous orders and remitted the issues for further assessment, emphasizing the importance of determining fair market value for capital gains calculation.

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Issues:
Appeal against order of ld.CIT(A) confirming addition under section 50C of Income Tax Act, 1961 for assessment year 2012-13.

Analysis:
The assessee filed an appeal before ITAT against the order of ld.CIT(A) confirming the addition of Rs. 23,46,939 under section 50C of the Income Tax Act, 1961. The case involved the discrepancy between the sale consideration shown by the assessee and the value determined by the Sub-Registrar office for stamp duty purposes. The AO added the difference to the total income of the assessee for calculating long-term capital gain under section 50C. The ld.CIT(A) partly accepted the appeal, agreeing with the assessee's cancellation of the sale deed for one plot but not for the other. The Tribunal considered the contentions of both parties.

The assessee contended that the plot deed mentioned as a sale deed was a mistake and should be considered a cancellation deed, thus section 50C should not be applied. The Tribunal noted that a plot purchased with legal documents cannot be cancelled by merely executing another deed. The ld.CIT(A) rightly rejected this stand. Additionally, the Tribunal observed that the assessee had created a fresh right to the seller by executing a new deed, contradicting the claim of cancellation.

Regarding the alternative contention, the Tribunal analyzed section 50C, which deems the value assessed for stamp duty as the full consideration for capital gain calculation. The Tribunal found that the remaining plot's potential value had reduced substantially due to encumbrances. It directed the AO to refer the valuation of the property to the DVO under section 50C(2) to determine the fair market value and assess capital gains accordingly. The Tribunal set aside the previous orders and remitted the issues to the AO for further assessment.

In conclusion, the Tribunal partly allowed the appeal for statistical purposes, emphasizing the need for a fair market value assessment by the DVO for accurate capital gain calculation.

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