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Issues: (i) Whether exemption under sections 54 and 54F was admissible on transfer of the property at M-21, Greater Kailash-II, on the footing that it was a commercial-cum-residential property used for residence to the extent of the upper floors. (ii) Whether the addition under section 56(2)(vii) on account of difference between the declared purchase price and the stamp valuation of the property at E-383, Basement, Greater Kailash-II, was sustainable without reference to the Departmental Valuation Officer.
Issue (i): Whether exemption under sections 54 and 54F was admissible on transfer of the property at M-21, Greater Kailash-II, on the footing that it was a commercial-cum-residential property used for residence to the extent of the upper floors.
Analysis: The material on record, including the completion certificate, maps, house-tax records and registered valuer reports, showed that the property comprised a commercial component at the ground floor and residential use on the upper floors by the assessee and his brothers. The sale deed describing the property as commercial did not by itself displace the actual user of the upper floors as residential. The sale consideration was capable of being apportioned between the commercial and residential portions, and the assessee had invested the consideration in another residential property. The fact that a co-owner had been granted similar relief in respect of the same property also supported the claim.
Conclusion: The claim for exemption was accepted and the issue was decided in favour of the assessee.
Issue (ii): Whether the addition under section 56(2)(vii) on account of difference between the declared purchase price and the stamp valuation of the property at E-383, Basement, Greater Kailash-II, was sustainable without reference to the Departmental Valuation Officer.
Analysis: The assessee had disputed the stamp valuation before the authorities. In such a situation, the proper course was to obtain a valuation from the Departmental Valuation Officer before making an addition based on the stamp value. As that exercise was not undertaken, the valuation issue required fresh adjudication by the Assessing Officer after DVO reference and determination of the correct value in accordance with law.
Conclusion: The addition was set aside and the matter was remanded for fresh consideration, resulting in relief to the assessee on this issue for statistical purposes.
Final Conclusion: The appeal was allowed in part, with full relief on the exemption issue and remand of the valuation issue for fresh decision.
Ratio Decidendi: For exemption on transfer of a house property, actual residential user and the residential character of the relevant portion may prevail over a mere commercial description in the sale deed, and where stamp valuation is specifically disputed, the valuation should be tested through the statutory valuation mechanism before making an addition.
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