TaxTMI 
TaxTMI 
2012 (9) TMI 118
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.... by the stamp duty authorities at Rs. 3,98,31,000 as on the date of sale. The assessee as a co-owner had 50% share in the said property. Accordingly, long term capital gain was determined on the transfer of such property, against which exemption was claimed u/s 54 and 54EC thereby reducing taxable long term capital gain to Rs. Nil. Deduction u/s 54 was claimed for a payment of Rs. 17.50 lakh against the construction cost of the additional flats received. The deduction u/s 54EC was claimed on account of investment in NHAI bonds, on which there is no dispute in the present appeal. While computing long term capital gain, the assessee had shown the value of property as on 01.04.1981 at Rs. 12 lakh, being the cost of acquisition on such date. This value was arrived at as per the valuation report of the registered valuer, a copy of which was submitted by the assessee along with the return of income. The Assessing Officer disputed various aspects of the capital gain, viz, the full value of consideration, cost of acquisition and exemption u/s 54. It was noticed by the AO that the assessee received monetary consideration of Rs. 1.50 crore and non-monitory consideration in the shape of two f....
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....in. From this value, the learned CIT(A) deducted indexed cost of acquisition on the basis of the market value of property determined by the DVO at Rs. 6,85,800 as on 01.04.1981 as against Rs. 24.00 declared by the assessee as per the report of the registered valuer. In this way, the learned CIT(A) determined assessee's 50% share in the amount of capital gain at Rs. 1,28,65,287. After allowing exemption u/s 54EC and 54 at Rs. 16.50 lakh and Rs. 8.75 lakh respectively, the net amount of long term capital gain was determined at Rs. 1,03,40,287 as against Rs. 1,14,26,500 determined by the A.O. 5. The assessee is in appeal against various aspects of the computation of capital gain. The first issue raised, through ground no. 1 in the appeal is against the application of Section 50C of the Income Tax Act in the facts and circumstances of the present case. At the very outset, the ld. AR fairly admitted that similar issue about the applicability of sec. 50C, was raised in the appeal of the other co-owner of the same property, namely, Mrs. Arlette Rodrigues v. ITO [2011] 10 taxmann.com 235/46 SOT 199 (Mum.) (URO) decided such issue against the assessee. A copy of the tribunal order dated 18....
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....red valuer, if the Assessing Officer is of opinion that the value so claimed is less than its fair market value ; (b) in any other case, if the Assessing Officer is of opinion-- (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf ; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do, and where any such reference is made, the provisions of subsections (2), (3), (4), (5) and (6) of section 16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act." 9. A bare perusal of cl. (a) of section 55A indicates that the Assessing Officer is empowered to make a reference to a valuation officer fo....
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.... for ascertaining the fair market value of asset was necessary having regard to the nature of the asset and other relevant circumstances. The Hon'ble Rajasthan High Court in CIT v. Hotel Joshi [2000] 242 ITR 478/108 Taxman 199 has held that the powers u/s 55A cannot be exercised in a routine manner. It has been held that : "For invoking sub-clause (ii) of clause (b) of section 55A, the Assessing Officer is required to form an opinion on the basis of the material on record that reference to the District Valuation Officer for ascertaining the fair market value of the asset is necessary having regard to the nature of the asset and other relevant circumstances. It is also necessary to record as to why it is necessary to adopt such a course.". From the above judgment it is manifest that unless the AO has formed an opinion on the basis of material on record that reference to the DVO was necessary for ascertaining fair market value of the capital asset, such a reference u/s 55A(b)(ii) is invalid. Similar view has been canvassed by the Hon'ble Gujarat High Court in the case of Hiaben Jayantilal Shah v. ITO [2009] 310 ITR 31/181 Taxman 191. In this case also the assessee computed capital ga....
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.... Rs. 2.91 crore. The difference in the value as determined by the AO and DVO has arisen due to the excess area wrongly considered by the AO. Insofar as valuation aspect is concerned, both the AO as well as DVO were on the same platform by applying the rate of Rs. 8200 per square feet. We have upheld the action of the Assessing Officer in applying the provisions of section 50C by dismissing ground no. 1 raised by the assessee, dealt with above. Since there is no difference of opinion between the assessee and the Revenue as regards the built-up area transferred, we are restricting ourselves only to examining as to whether the DVO was justified in adopting the rate of Rs. 8200 per square feet. 14. The learned AR contended that the registered valuer adopted the rate of around Rs. 4,182 per sq.feet. It was argued that the rate adopted by the registered valuer was on the basis of Stamp Duty Ready Reckoner, 2005 for Mumbai, a copy of whose relevant part was placed on page 228 of the paper book. We have perused the copy of such Stamp Duty Ready Reckoner, 2005. It is observed that the rate of Rs. 45,000 per sq.mtr. or Rs. 4182 per sq. feet has been given against the column "Dev. land FSI".....
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....and the order passed by the Delhi bench of the Tribunal in ACIT v. Smt. Gita Duggal ITA No.3613/Del/2010. A copy of the said order dated 07.06.2011 passed by the Delhi Bench of the Tribunal was placed on record. Per contra, the learned Departmental Representative, apart from relying on the Special Bench order considered by the authorities below, also placed significant reliance on the judgment of the Hon'ble jurisdictional High Court in K.C. Kaushik v. P.B. Rane, Fifth ITO [1990] 185 ITR 499/51 Taxman 51 (Bom.). It was also contended that the Hon'ble Punjab & Haryana High court in Pawan Arya v. CIT [2011] 200 Taxman 66/11 taxmann.com 312 has also reiterated similar view in allowing exemption u/s 54 in respect of one property only. It was submitted that since the assessee was allotted two flats on two different stories, there was no question of treating these two independent flats as one house. 18. We have heard the rival submissions and perused the relevant material on record. The short controversy is as to whether exemption u/s 54 is available in respect of one house or more than one house. In the present case, the assessee was allotted two flats on two different stories which he....