2026 (4) TMI 124 - HC - Income Tax

Capital gains valuation under Section 50C: probate guideline value prevailed over stamp valuation for recomputation.

In computing capital gains under Section 50C of the Income-tax Act, the Court held that the guideline value fixed in probate proceedings had to be adopted ... Computation of capital gains u/s 50C - matter referred to the Departmental Valuation Officer (DVO) - property had been valued in probate proceedings - AO taking the guideline value as fixed by the Sub Registrar and the valuation report given by the Departmental Valuation Officer under Section 50C demanded capital gain - subject property was initially owned by her grandmother and by a Will she bequeathed the property to the appellant and her uncle HELD THAT: - The Court held that the view taken by the Tribunal in the co-owner's case represented the correct legal position and was in consonance with the decision in CIT Vs. Vummidi Amarendran [2020 (6) TMI 74 - ITAT CHENNAI]. Proceeding on that basis, it accepted the assessee's grievance against the valuation adopted by the authorities below and directed that the guideline value as on 03.10.2006 be taken for recomputing the capital gains after giving reasonable opportunity to the assessee. [Paras 8] The orders of the authorities below were set aside and the Assessing Officer was directed to adopt the guideline value as on 03.10.2006 and recompute the capital gains. Final Conclusion: The appeal was allowed. The Court set aside the orders under challenge and directed fresh computation of capital gains by adopting the guideline value as on 03.10.2006 after affording opportunity to the assessee. Issues: Whether, for computation of capital gains under Section 50C of the Income-tax Act, 1961, the guideline value fixed in the probate proceedings should prevail over the stamp valuation adopted by the Assessing Officer.Analysis: The property had been valued in probate proceedings and the Assessing Officer nevertheless adopted the higher stamp valuation for computing capital gains. The appellate authorities had upheld that approach. The Court followed the co-owner's case and the earlier decision of this Court, holding that the correct legal position required adoption of the guideline value as on the relevant date for working out capital gains in the facts of the case.Conclusion: The issue was answered in favour of the assessee. The lower orders were set aside and the Assessing Officer was directed to adopt the guideline value as on 03.10.2006 and recompute the capital gains after giving reasonable opportunity.