TaxTMI 
TaxTMI 
2013 (9) TMI 563
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.... situated at village Dhandari Khurd, Tehsil and District Ludhiana (Punjab), through separate sale deeds Nos. 12686 and 12687 and received a total consideration of Rs. 85,50,000. In the assessment order, the Assessing Officer held that on the basis of the DVO report the sale consideration should be adopted at Rs. 1,50,55,425 under section 50C of the Act. The Assessing Officer relied upon the report of the Valuation Officer, Ludhiana under section 55A of the Act dated August 27, 2009 wherein he adopted circle rate at Rs. 5,500 per square yard for the land sold considering the above valuation as fair market value of the land sold. We have perused the entire assessment order and relevant paragraphs 10 and 11 of the findings which read as under : "10. The submissions of the stamp valuation authority and the submissions of the authorised representative for the assessee were carefully considered but cannot be accepted in the light of the following : 10.1 There is no value adopted or assessed by the stamp valuation authority for the land which was subject-matter of sale. The value of the stamp valuation authority as reflected in the sale deeds furnished by the assessee, does not ....
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....sessee invoked the first appellate authority, i. e., the learned Commissioner of Income-tax (Appeals) and the appeal was allowed deleting the addition made by the Assessing Officer with finding as reproduced below: "6. I have considered the findings in the order of assessment, submissions made by the assessee along with evidence on record. The issue involved in ground Nos. 1 to 3 of the grounds of appeal is in respect of addition of Rs. 65,05,425 by determining long-term capital gain arising on sale of land at Rs. 94,41,793 as against declared capital gain of Rs. 29,36,368 by enhancing the sale consideration from Rs.85,50,000 to Rs. 1,50,55,425 under section 50C of the Act on the basis of the report of the Valuation Officer, Ludhiana under section 55A of the Act dated August 27, 2009. According to the Assessing Officer, circle rate of the land sold is Rs. 5,500 per sq. yard whereas according to the assessee the circle rate is Rs. 1,300 per sq. yrd. It has been contended that, since the sale consideration received is at an average rate of Rs. 3,12,346 per sq. yd, which is far higher than the circle rate of Rs. 1,300 per sq. yard application of section 50C of the Act is not tenable.....
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....t been disputed or adversely commented by the Assessing Officer. Hence, on the above basis, it is held that the sale of the land was of a land located at Dhandari Kalan and not Dhandari Khurd and, thus, circle rate applicable is Rs. 1,300 per sq. yard and not Rs. 5,500 per sq. yard. The DVO should have made correct verification of land in the field with the appellant on her representative, and then should have given a proper report. 6.2 As regards, the letter from the Sub-Registrar, Ludhiana, dated May 14, 2010 the same stands clarified vide letter dated September 8, 2010 wherein he has stated as under : 'In the above noted case regarding vasika Nos. 12686 and 12687 dated November 1, 2006, Smt. Anjali Dua has made a representation and submitted that the land in the above vasikas is situated in Khasra No. 279/3 situated at village Dhandari Khurd and the said vasikas are rightly registered at Rs. 2,794 and Rs. 3,360 sq. yard respectively whereas the collector rate for the land was Rs. 1,300 per sq. yard and, vasikas were rightly registered at Rs. 2,794 and Rs. 3,360 per sq. yard respectively, which is higher than the collector rate at that time. The letter No. 933/SR dated May 14, ....
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....he appellant as a result of transfer of the agricultural land, the full value of consideration even for the purpose of section 50C of the Act has to be taken at Rs. 85,50,000 and not Rs. 1,50,55,425 as adopted by the learned officer. Reliance in support of the aforesaid submission is placed on the judgment of the Jodhpur Bench in the case of Navneet Kumar Thakkar v. ITO reported as [2008] 298 ITR (AT) 42 (Jodhpur) wherein on consideration of the provisions contained in section 50C of the Act, including the memorandum explaining provisions of the Finance Bill, 2002, it was held in paragraph 7 as under (page 48) : 'But for section 50C, there is absolutely no warrant for replacing the value adopted by the stamp valuation authority with the actual sale consideration for the purposes of computing capital gain. Thus it is clear that the property in respect of which valuation is made for purposes of stamp duty must be the very same property, which is the subject-matter of transfer for calculating capital gain by invoking the provisions of this section. It is wholly irrelevant to consider the assessed value of another property for stamp duty purposes as full value of consideration by maki....
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....ng that the circle rate of the land sold was Rs. 1,300 per sq. yd. The Assessing Officer also submitted that the letter of Tehsildar and Sub-Registrar, Ludhiana, dated December 11, 2009 clearly showed that the land situated in the area Dhandari Khurd, Abadi Prem Nagar was bearing maximum collecteral rate in the year 2006-07 at Rs. 1,300 per sq. yd. and the sale deeds were executed by the assessee, viz., Vasika No. 12686 dated November 1, 2006 was for the consideration at 2794 per sq. yd. and Vasika No. 12687 on the same date was for the consideration at 3360 per sq. yd. and both sale deeds were executed on sale consideration on the much higher side than the collateral rates. The authorised representative also drew our attention towards the Patwari report of Kh. No. 29/3 area village Dhandari Khurd Abadi Prem Nagar, to support this fact that the land sold was situated on the west side of Delhi Ludhiana Road and the fair market value of the said land in the year 2006A-07 was estimated by the Patwari at Rs. 2,800 and Rs. 2,900 per sq. yd. On behalf of the assessee, the authorised representative vehemently contended the submissions of the learned Departmental representative and submitt....
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.... keeping aside the report of the stamp valuation authority. In the impugned order, the learned Commissioner of Income-tax (Appeals) considered the submissions of the assessee which are being reproduced below : "5. In the appellate proceedings, the appellant has submitted as under : (i) It is submitted that, the learned Assessing Officer has erred in adopting the circle rate at Rs. 5,500 per sq. yard for determining the full value of consideration, which is clear and blatant disregard of the fact that, circle rate of the land was Rs. 1,300 per sq. yd. It is submitted that, in arriving at the above conclusion, the learned officer has over looked the following evidences on record : (a) A letter dated December 11, 2009 (pages 60 to 61 of the paper book) from the Tehsildar cum Sub-Registrar, Ludhiana (East) ; (b) A letter dated November 5, 2009 of Tehsildar cum Sub- Registrar, Ludhiana (East) (pages 51 to 53 of the paper book) ; (c) Confirmation from M/s. Padam Motors (page 48 of the paper book) ; (d) Clarification from Sub-Registrar, Ludhiana dated September 11, 2009 (page 63) ; (e) Copies of registration deed, the stamp authority has clearly mention....
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....vneet Kumar Thakkar v. ITO reported in [2008] 298 ITR (AT) 42 (Jodhpur) and, Amritsar Bench in the case of Punjab Poly Jute Corporation v. Asst. CIT [2009] 313 ITR (AT) 178 (Asr). (vii) Also, amendment made in section 50C(1) of the Act made by the Finance (No. 2) Act, 2009 with effect from October 1, 2009 clarifies the position that, even for the sake of argument, it is assumed that, value assessable is Rs. 5,500 per sq. yd. (as it is not value assessed) though the same is seriously disputed, no addition can be made in the instant year by invoking the provisions contained in section 50C of the Act. (viii) Lastly, fair market value cannot be adopted for computing capital gain. Reliance is placed on the following : (a) CIT v. Smt. Nilofer I. Singh reported in [2009] 309 ITR 233 (Delhi) ; (b) CIT v. George Henderson and Co. Ltd. reported in [1967] 66 ITR 622 (SC) ; (c) CIT v. Gillanders Arbuthnot and Co. reported in [1973] 87 ITR 407 (SC) ; and (d) K. P. Varghese v. ITO reported in [1981] 131 ITR 597 (SC). (ix) It is well-settled that, deeming provisions creating legal fictions, especially in taxing statute, have to be strictly construed vide the decisions i....
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....is being reproduced as under : From Tehsildar cum Sub-Registrar Ludhiana (East) To The Assistant Commissioner of Income-tax, Circle 42(1), Room No. 621, Mayur Bhawan, Connaught Place, New Delhi. No. /S.RDated : Sub : Determination of market value in vasika Nos. 12686 and 12687 dated November 1, 2006 regarding payment of stamp duty. Sir, In the above noted case regarding vasika Nos. 12686 and 12687 dated November 1, 2006. Smt. Anjali Dua has made a representation and submitted that the land in the above vasika is situated in Khasra No. 279/3 situated at village Dhandari Khurd and the said vasikas were rightly registered at Rs. 2,794 per sq.yd. and 3,360 per sq. yd. respectively whereas the collector rate for the land was Rs. 1,300 per sq. yd. and vasikas were rightly registered at Rs. 2,794 and Rs. 3,360 per sq. yd. respectively which is higher than the collector rate at that time. The letter No. 933/SR. dated May 14, 2010 which was earlier sent to Collector (ADC), Ludhiana and the copy of which was sent to you has been recalled and the same may be considered as annulled. The above noted vasikas were got registered in the office of Sub-Registrar (East) and colle....
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....odies the legal fiction by which the stamp duty authority is considered as the full value of consideration for the property transferred. It does not go beyond the cases in which the subject transferred property has not become the subject-matter of registration and the question of valuation for stamp duty purposes has not arisen. In above case of Navneet Kumar Thakkar [2008] 298 ITR (AT) 42 (Jodhpur) the Jodhpur ITAT Bench also held that the value adopted or assessed by the stamp valuation authorities has to be of the very same property, which is the subject-matter of transfer. The language of this section provides in unambiguous terms that the value adopted or assessed by the stamp valuation authority has to be substituted with the sale consideration of such property. But for section 50C of the Act there is absolutely no warrant for replacing the value adopted by the stamp valuation authority with the actual sale consideration for the purposes of computing capital gain. Thus, it is clear that the property in respect of which valuation is made for the purpose of stamp duty must be the very same property, which is the subject-matter of the transfer for calculating capital gai....