Appeal allowed, Assessing Officer to delete addition for Plot No. 1, reduce 6% for Plot No. 2. Importance of considering all factors.

The appeal was allowed by the Tribunal, directing the Assessing Officer to delete the addition for Plot No. 1 and allow a 6% reduction for Plot No. 2 in the difference between the sale consideration and the District Valuation Officer's valuation. The judgment highlighted the importance of considering all relevant factors affecting the land's value and the retrospective applicability of the amendment to Section 50C(1).

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Issues Involved:
1. Substitution of value determined by DVO under Section 50C.
2. Applicability of stamp duty valuation on the date of the agreement to sale.

Issue-wise Detailed Analysis:

1. Substitution of Value Determined by DVO under Section 50C:

The primary issue in this appeal is whether the Assessing Officer (AO) was correct in substituting the sale consideration with the value determined by the District Valuation Officer (DVO) under Section 50C of the Income Tax Act, 1961. The assessee argued that the difference between the sale consideration and the DVO's valuation was negligible and should not have been substituted. The AO made an addition of Rs. 1,91,67,730/- to the capital gain based on the difference between the sale consideration shown in the sale deed and the value determined by the stamp valuation authority.

The CIT(A) directed the AO to adopt the rate suggested by the DVO and pass a rectification order under Section 154. The assessee contended that the sale consideration was mutually agreed upon by the parties and that the stamp duty valuation was only for the purpose of registration. The assessee also pointed out that the valuation by the DVO was close to the actual sale consideration.

2. Applicability of Stamp Duty Valuation on the Date of Agreement to Sale:

For the land situated at Saniya Hemand, the assessee argued that the stamp duty valuation should be applied based on the date of the agreement to sale (29.03.2011), which was lesser than the value determined by the DVO. The assessee had received part consideration by cheque on the date of the agreement, and various factors affecting the land's value were recorded in the agreement.

Judgment Analysis:

For Plot No. 1 (Moje Vankla, R.S. No. 24):

The Tribunal noted that the difference between the sale consideration and the DVO's valuation was 9.11%, which falls within the 10% tolerance range as per the amendment in Section 50C(1) by the Finance Act 2018. Citing the Mumbai Tribunal's decision in Maria Cheryl vs. ITO, the Tribunal held that the amendment is curative in nature and should apply retrospectively from 01.04.2003. Therefore, the AO was directed to delete the addition and compute the capital gain based on the actual sale consideration.

For Plot No. 2 (Moje Saniya Hemand, R.S. No. 56, 57/1 & 57/2):

The Tribunal acknowledged that the difference between the sale consideration and the DVO's valuation was 15.88%. The assessee had entered into an agreement to sale on 29.03.2011, and various factors affecting the land's value, such as a 5 feet deep hole, drainage issues, and waterlogging, were recorded in the agreement. The Tribunal noted that these factors were not considered by the DVO in his valuation.

Referring to the Ahmedabad Tribunal's decision in Vishnubhai V Navadia Vs DCIT, where a 50% relaxation was granted due to similar factors, the Tribunal allowed a 6% reduction in the difference between the sale consideration and the DVO's valuation. The AO was directed to compute the capital gain accordingly.

Conclusion:

The appeal was allowed, with the Tribunal directing the AO to delete the addition for Plot No. 1 and allow a 6% reduction for Plot No. 2 in the difference between the sale consideration and the DVO's valuation. The judgment emphasized the importance of considering all relevant factors affecting the land's value and the retrospective applicability of the amendment to Section 50C(1).

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