Tribunal directs AO to use stamp duty valuation for Section 50C & Rs. 607 per sq. meter rate for indexed cost calculation.

The Tribunal partly allowed the appeal in the case involving additions under Section 50C of the Income Tax Act and disallowance of cost of indexation. It directed the Assessing Officer to consider the stamp duty valuation as of 29.09.2010 for Section 50C purposes if the agreement to sell and partial consideration were received through banking channels. Additionally, the Tribunal instructed the AO to apply the rate of Rs. 607 per sq. meter for calculating the indexed cost of acquisition for the purpose of computing Long Term Capital Gain.

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Issues Involved:
1. Addition under Section 50C of the Income Tax Act due to difference in value adopted by the DVO and the sale consideration declared by the assessee.
2. Addition due to disallowance of cost of indexation claimed by the assessee.

Detailed Analysis:

Issue 1: Addition under Section 50C
The assessee sold a property along with two co-owners for Rs. 4,00,00,000, where the assessee's share was Rs. 1,79,50,000. The Stamp Valuation Authority valued the property at Rs. 5,29,72,000. The Assessing Officer (AO) adopted the value of Rs. 4,77,32,590 as per the Departmental Valuation Officer (DVO) and recalculated the Long Term Capital Gain (LTCG) at Rs. 1,55,65,753, making an addition of Rs. 34,70,000 under Section 50C.

The assessee argued that the property was sold based on an agreement dated 29.09.2010, during FY 2010-11, where substantial payment (54.20%) was received, and the possession was given on 30.05.2012. The sale deed was registered on 07.11.2012. The assessee contended that the jantri rate as of the agreement date should be considered for Section 50C purposes, not the date of registration. The Tribunal noted that the first proviso to Section 50C, effective from 01.04.2017, is curative and should be applied retrospectively to avoid undue hardship. The Tribunal remitted the issue back to the AO to adopt the stamp duty valuation as of 29.09.2010 if the agreement to sell was executed and partial consideration was received through banking channels.

Issue 2: Disallowance of Cost of Indexation
The AO adopted the fair market value (FMV) as on 01.04.1981 at Rs. 5,08,750 (Rs. 114.30 per sq. meter) as per the DVO's report, resulting in an indexed cost of Rs. 19,45,130 for the assessee's share. The assessee claimed an indexed cost of Rs. 1,40,40,883 based on a valuation report by a government-approved valuer, who valued the land at Rs. 825 per sq. meter as on 01.04.1981.

The Tribunal observed that the DVO did not provide a satisfactory reason for rejecting the government-approved valuer's report, which considered factors like location, utility, and future potential. The Tribunal referred to similar cases where the valuation by government-approved valuers was accepted over the DVO's report. The Tribunal concluded that the FMV should be Rs. 607 per sq. meter to meet the ends of justice, directing the AO to apply this rate for calculating the indexed cost of acquisition.

Conclusion:
The appeal was partly allowed. The Tribunal directed the AO to:
1. Consider the stamp duty valuation as of 29.09.2010 for Section 50C purposes if the agreement to sell and partial consideration were received through banking channels.
2. Apply the rate of Rs. 607 per sq. meter for calculating the indexed cost of acquisition for the purpose of computing LTCG.

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