Section 50C valuation must reflect statutory land restrictions and pipeline encumbrances, not a mechanical stamp-rate substitution.

For section 50C valuation, the sale consideration of agricultural land may not be substituted mechanically by the stamp valuation rate where the property is subject to material adverse factors affecting market value. A pipeline passing through the land, together with statutory restrictions on construction, excavation and related use under the Petroleum and Mineral Pipelines Act, was treated as a relevant valuation discount. The registered valuer's report and affidavit supported a lower market value, and the DVO's valuation was found not to have given proper effect to those constraints. On that basis, a 25% deduction from the DLC rate was accepted and the capital gains adjustment was set aside.

---

---

Issues: Whether, for the purpose of section 50C, the sale consideration of agricultural land was liable to be substituted by the stamp valuation rate, or whether a deduction was warranted because an IOCL pipeline passed through the land and statutory restrictions under the Petroleum and Mineral Pipelines Act affected its market value.

Analysis: The sale was of agricultural land through which an IOCL gas pipeline passed, and the land was subject to restrictions on construction, excavation, and allied use. The valuation material placed on record, including the assessee's registered valuer's report and affidavit, indicated that the pipeline and related constraints reduced the land's marketability and justified a lower valuation than the unadjusted DLC rate. The matter had already been referred to the DVO, but the DVO did not give effect to the adverse factors arising from the statutory and practical restrictions on the land. The statutory restriction under section 9 of the Petroleum and Mineral Pipelines Act was found to be relevant to valuation, and the comparable judicial precedent supported allowance of a deduction where specific disadvantages materially affected market value.

Conclusion: The addition made by applying the full stamp valuation without allowing the claimed reduction was not sustained, and the assessee's claim for a 25% deduction on the DLC rate was accepted.

Final Conclusion: The disputed capital gains adjustment was set aside and the assessee obtained complete relief on the valuation issue.

Ratio Decidendi: For section 50C valuation, specific statutory and factual disadvantages affecting the property's market value must be given effect, and a stamp-based valuation cannot be applied mechanically where the land is encumbered by material restrictions.

---