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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether addition to capital gains could be sustained under section 50C of the Income-tax Act, 1961, when the assessee's registered valuer determined the property's fair market value to be lower than the declared sale consideration and the property was affected by restrictive land-use conditions.
Analysis: The property was shown to be situated within a restricted area near defence land, subject to no-development constraints, reduced accessibility, and other locational disadvantages. The Government Registered Valuer's report, which considered these factors along with the surrounding circumstances and comparable local evidence, valued the property below the sale consideration declared by the assessee. In these circumstances, the higher valuation adopted by the DVO was not accepted as the correct basis for substitution of the declared consideration, and the factual foundation for invoking section 50C was found wanting.
Conclusion: The addition made by the Assessing Officer and sustained by the first appellate authority was deleted, and the declared capital gain was accepted.
Final Conclusion: The assessee succeeded on merits, and the impugned addition based on substituted valuation was set aside.
Ratio Decidendi: Where reliable valuation evidence establishes that the fair market value of an immovable property is below the declared sale consideration, and the property is burdened by material restrictive conditions affecting marketability, substitution of consideration under section 50C is not warranted.
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