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of <h1>Tribunal Applies Section 50C Income Tax Act: Deemed Owner, Revised Valuations</h1> <h3>Dilip Shantilal Jain Versus The Asst. Commissioner of Income Tax, Central Circle 2 (2), Pune</h3> Dilip Shantilal Jain Versus The Asst. Commissioner of Income Tax, Central Circle 2 (2), Pune - TMI Issues Involved:1. Applicability of Section 50C of the Income Tax Act.2. Determination of fair market value for the purpose of computing long-term capital gains.3. Validity of the valuation conducted by the District Valuation Officer (DVO).Issue-wise Detailed Analysis:1. Applicability of Section 50C of the Income Tax Act:The primary issue was whether Section 50C of the Income Tax Act was applicable to the assessee, who argued that he was not the legal owner of the property as per the Transfer of Property Act. The CIT(A) rejected this argument, stating that the assessee had full rights to the property since its purchase in 1994 and continued to enjoy all rights including rent from the tenant, M/s. Millenium Marbles Pvt. Ltd. The CIT(A) concluded that the assessee was the de facto owner and thus, Section 50C was applicable.2. Determination of Fair Market Value for Computing Long-Term Capital Gains:The Assessing Officer (AO) initially adopted the stamp duty valuation of Rs. 2,54,87,000 as the fair market value for computing capital gains, which the assessee contested. The CIT(A) directed the AO to adopt the DVO's valuation of Rs. 1,84,93,000 instead of the stamp duty valuation. The assessee further argued that the DVO's valuation was still excessive, particularly the valuation of the shed, which the DVO valued at Rs. 49,62,358. The CIT(A) partially accepted the assessee's contention and directed the AO to adopt the DVO's valuation of Rs. 1,84,93,000.3. Validity of the Valuation Conducted by the DVO:The assessee argued that the DVO's valuation of the shed was unrealistic and excessive, suggesting a fair market value of Rs. 2.10 lakhs. The CIT(A) rejected this argument, stating that the DVO had considered all relevant factors. However, upon appeal, the Tribunal found that both the DVO's valuation of Rs. 69,64,713 and the assessee's valuation of Rs. 2.10 lakhs were unreasonable. The Tribunal decided that a valuation of Rs. 20 lakhs for the shed would be just and directed the AO to rework the capital gains accordingly.Conclusion:The Tribunal concluded that the AO should adopt the DVO's valuation of Rs. 1,84,93,000 for the land and a revised valuation of Rs. 20 lakhs for the shed. This adjustment was deemed to meet the ends of justice, thereby allowing the appeal of the assessee. The final order directed the AO to rework the capital gains based on these revised valuations. The appeal was allowed, and the order was pronounced on January 14, 2020.
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