Consistent valuation required for all co-owners of same property in LTCG computation

ITAT Delhi allowed the assessee's appeal regarding LTCG computation on co-ownership land sale. The AO adopted different valuations for co-owners of the same property - accepting DVO valuation for assessee's brother but rejecting it for assessee and using higher fair market value. CIT(A) upheld AO's rejection of DVO report citing 50% reduction for large plot size. ITAT held that consistent valuation must be applied for all co-owners of same property in same assessment year, directing AO to adopt DVO valuation used in brother's case for computing assessee's 1/6th share of capital gains.

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Issues Involved:
1. Legality of the CIT(A)'s order.
2. Application of Section 50C of the Income Tax Act.
3. Consideration of additional evidence without a remand report.
4. Disagreement with the DVO's valuation method.
5. Inconsistent methods in calculating Long-Term Capital Gains for co-owners.

Summary:

Issue 1: Legality of the CIT(A)'s Order
The assessee contested the CIT(A)'s order dated 25.01.2017, arguing it was "bad in law and on facts and merits to be set aside."

Issue 2: Application of Section 50C of the Income Tax Act
The assessee challenged the CIT(A)'s decision to uphold the AO's computation of Long-Term Capital Gains based on the circle rate, invoking Section 50C of the Act. The AO had adopted a circle rate of Rs. 6,46,80,000/- instead of the actual sale consideration of Rs. 3,25,00,000/-, leading to a higher capital gains calculation.

Issue 3: Consideration of Additional Evidence Without a Remand Report
The assessee argued that the CIT(A) accepted the Departmental Valuation Officer's (DVO) report as additional evidence without seeking a remand report from the AO or the DVO, violating Rule 46A of the Income Tax Rules 1962. The DVO's report valued the property at Rs. 3,39,57,000/-.

Issue 4: Disagreement with the DVO's Valuation Method
The CIT(A) disagreed with the DVO's method of reducing the circle rate by 50% to determine the Fair Market Value, stating it lacked a scientific basis. This decision was made without reference to the DVO or the appellant, despite the DVO's valuation being accepted in the assessment of another co-owner, Smt. Krishna Nand Chahal.

Issue 5: Inconsistent Methods in Calculating Long-Term Capital Gains for Co-Owners
The assessee highlighted the inconsistency in methods adopted by different AOs for the same transaction involving co-owned property. The AO in the assessee's brother's case accepted the DVO's valuation, while in the assessee's case, a higher circle rate was used.

Judgment:
The Tribunal found merit in the assessee's arguments, particularly regarding the inconsistency in valuation methods. It emphasized that the same valuation should be used for all co-owners to ensure fairness and consistency. The Tribunal directed the AO to adopt the DVO's valuation report dated 16.12.2016, which was used in the co-owner's case, for computing the assessee's 1/6th share of the capital gains. Consequently, Ground Nos. 3 and 5 of the appeal were allowed, and the other grounds were deemed academic and not adjudicated.

The appeal was partly allowed, and the order was pronounced in the open court on 22/11/2023.

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