2019 (4) TMI 1022 - AT - Income Tax

Tribunal upholds application of section 50C for capital gains computation

Shri Narendra Kumar Singh Versus Asstt. Commissioner of Income Tax, New Delhi

Shri Narendra Kumar Singh Versus Asstt. Commissioner of Income Tax, New Delhi - TMI Issues Involved:1. Addition of Rs. 50,61,000/- upheld by CIT(A).2. Applicability of provisions of section 50C of the Income-tax Act, 1961.3. Computation of capital gains and the fair market value of the property.4. Chargeability of interest under sections 234B, 234C, and 234D of the Act.Detailed Analysis:1. Addition of Rs. 50,61,000/- Upheld by CIT(A):The appellant contested the addition of Rs. 50,61,000/-, which comprised two components: Rs. 49,12,040/- by invoking section 50C and Rs. 1,48,956/- by treating a declared loss of Rs. 74,478/- as profit. The appellant argued that the Assessing Officer (AO) made an arithmetical error by starting the computation with a profit of Rs. 74,478/- instead of a loss. The Tribunal directed the AO to verify this claim.2. Applicability of Provisions of Section 50C:The appellant argued that section 50C, which pertains to the valuation of capital assets for calculating capital gains, should not apply as the gains were from business activities. However, the Tribunal noted that the appellant had declared the income as short-term capital gains in the return and had not revised the return or raised this issue before the lower authorities. The Tribunal rejected the appellant's claim, stating that the nature of the transaction should align with the declared return.3. Computation of Capital Gains and Fair Market Value:The AO computed the short-term capital gain by considering the higher value between the actual sale consideration and the value adopted by the Stamp Valuation Authority (SVA). The appellant contended that the AO should have referred the matter to the District Valuation Officer (DVO) under section 50C(2) as the SVA's value exceeded the fair market value. The Tribunal noted that the appellant neither requested a reference to the DVO nor provided a valuation report. The Tribunal upheld the CIT(A)'s decision, which found no infirmity in the AO's action as the appellant did not invoke the specific remedy available under section 50C.4. Chargeability of Interest Under Sections 234B, 234C, and 234D:The appellant's challenge to the chargeability of interest under sections 234B, 234C, and 234D was not specifically addressed in detail, as the primary focus was on the applicability of section 50C and the computation of capital gains.Conclusion:The Tribunal dismissed the appeal, upholding the CIT(A)'s decision to apply section 50C and compute the capital gains based on the higher value adopted by the SVA. The Tribunal also directed the AO to verify the alleged arithmetical error. The grounds of the appeal were dismissed, and the order was pronounced in the open court on April 12, 2019.