TaxTMI 
TaxTMI 
2026 (6) TMI 1125
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.... 2. The learned JCIT(A) erred in directing to adopt sale consideration at Rs. 93 lacs without issuing notice in terms of provisions of section 251(2) of I.T. Act 1961. 3. The addition made by A.O. under the head long term capital gain at Rs. 8,45,170/- by invoking provisions of section 50C of I.T. Act 1961 is unjustified, unwarranted and excessive. 4. The learned A.O. erred in adopting the fair market value of immovable land sold at Rs. 68,45,170/- as against actual sale consideration at Rs. 60,00,000/- resulting into addition at Rs. 8,45,170/- under the head Long Term Capital Gain. 5. The learned A.O. ought to have accepted the actual sale consideration at Rs. 60,00,000/- as fair market value to determine the Long Term Capital Gain on land sold. 6. Any other ground that shall be prayed at the time of hearing." 3. Facts of the case in brief are that assessee, an individual, e-filed his return of income for A.Y. 2016-17 on 31.03.2017 declaring total income of Rs. 49,12,300/-. Case of the assessee was selected for scrutiny through CASS. Statutory notices u/s. 143(2) & 142(1) of the Act were issued and served upon the assessee. Assessment was c....
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.... the fair market value. C) The assessee had filed objection before Valuation Officer. Objection of assessee has been discussed at para 11 of valuation report (P- 24). The assessee is in support of FMV of property submitted valuation report of registered Valuer, copy of valuation report is placed at paper book at page Nos.13-18. D) DVO at para 7 of the valuation report has observed that the valuation is made on the basis of comparable sales instances. However no such sale instances are provided along with valuation report, copy of relevant para is placed at page Nos.23 - 26. E) DVO at para 5 of valuation report observed that land is having Brick Kilns on one side and Koradi Thermal Power Station on other side in nearby area and civic amenities like electricity, water supply and sewerage etc. not available in the vicinity. However no deduction has been given by DVO while computing the FMV of property. (P- 22 & 26) F) Method of valuation of DVO is hypothetical with presumption that agricultural land sold by assessee would be developed in layout FMV determined by DVO is not the value of agricultural land sold by assessee "As is where basis". It is es....
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.... has been made by the Ld. AO by invoking the provisions of section 50C of the Act. The assessee had sold an agricultural land for sale consideration of Rs. 60,00,000/-, whereas stamp duty valuation adopted by Stamp Valuation Authority was Rs. 93,00,000/-. On objection raised by the assessee, matter was referred to DVO for determination of fair market value of property. The DVO determined the value of property at Rs. 68,45,170/. Consequently, Ld. AO adopted the value determined by DVO u/s. 50C of Act and made an addition of Rs. 8,45,170/- being difference between sale consideration declared by the assessee and value determined by the DVO. 8. We noticed that difference between valuation as made by DVO and the consideration received by the assessee is less than 13% of fair market value. The aforesaid variation can be reasonably considered on account of estimation in determining fair market value of property. The Coordinate Bench of this Tribunal in case of Yashoda Builders and Developers (supra) while considering the provisions of section 43CA r.w.s. 50C(2) of the Act has held that variation at less than 15% is within the tolerance band and therefore no addition is required to be m....
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....05/10/2017, as return filed in compliance of the notice under section 148 of the Act. Accordingly, notice under section 143(2) was issued on 16/12/2021, and notices under section 142(1) of the Act were issued, calling for information to the assessee from time to time and served upon assessee. The Assessing Officer examined the impounded documents and found that page no.6 to 24 of Annexure A2/35 is copy of sale deed dated 31/05/2016 of land at Khasra no.83, MouzaDongargaon, P.S.K. 73, having area of 2.63 hectares, Nagpur between the assessee and M/s. Tirupati Developers. As per the sale deed, value of the immovable property adopted by the stamp duty authority is 7.20 crore whereas the sale consideration paid by the assessee is only 3.50 crore, and thus there was a difference of 3.70 crore between the market value of the property adopted by Stamp Duty Authority and the actual sale consideration attracted the provision of section 43CA of the Act. Thus, the Assessing Officer completed the assessment vide order dated 24/03/2022, and has made the addition of 57,68,020, under section 43CA of the Act. The Assessing Officer has thus determined the total loss as () 48,45,771. Aggrieved by th....
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....2,68,020/-by the Departmental Valuation Officer (DVO) on a reference made by Assessing Officer. The detail of the transaction is summarized as under: Sr. No. Particulars Rupees 1. Actual Sale Price 825,00,000 2. Stamp Duty Valuation 13,49,20,000 3. Valuation as per DVO 8,82,68,020 2. The immoveable property sold was an agricultural land with following Khasara Number: a) KH.No.85/1&85/2 b) KH.No.72 c) KH.No. 83 3. MOU for the sale of the property between the Assessee and the buyer (M/s. Tirupati Developers) was done by single agreement on 20/07/2015. The copy of the same was submitted during assessment proceeding as well as during appellate proceeding before CIT(A). The MOU between the Assessee and buyer is not in dispute. 4. The property with above Khasara Numbers was purchased by the Assessee from M/s. Grace Realities (India) Pvt Ltd by single sale deed only on 14/08/2013. The copy of the purchase deed was submitted during assessment proceeding as well as during appellate proceeding before CIT(A). 5. The property purchased by the Assessee was litigation and disputes....
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.... and have also been sold a single purchaser. The transactions are not independent and should be viewed as a whole on an aggregate basis to have a holistic view. The details of transactions of an aggregate basis are summarised as under: S.no. Particulars Amount (Rs. ) 1. Actual Sale Price 8,25,00,000 2. Stamp Duty Valuation 13,49,20,000 3. Valuation as per DVO 8,82,68,020 4. In view of the valuation as per DVO being lower than the stamp duty valuation, the comparison has to be made between actual sale price and the valuation as per DVO. The difference is 57,68,020. Such difference is 6.99% of the actual sale price. The difference within tolerance band of 10% and the application of such band will relate from 01/04/2014. The case of the assessee is covered by the order dated 02/07/2021, passed by the Coordinate Bench rendered in Stalwart Impex Pvt. Ltd. v/s ITO, ITA no.5752/Mum./2019, for the assessment year 201617. There relevant part of the order is reproduced below:- "Both sides heard, orders of authorities below examined. The solitary issue as sailed by the assessee is addition made u/s 43CA of the Act in respect of difference ....
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....fair market value determined by the DVO and actual sale consideration is Rs. 7,14,530/- i.e slightly more than 2 per cent of the sale consideration. The co-ordinate Bench of the Tribunal in the case of Rahul Construction V/s. DCIT (supra) has held that where difference between the sale consideration declared by the assessee and fair market value as determined by the DVO u/s 50C is less than 10 percent, the Assessing Officer was not justified in substituting the value determined for sale consideration disclosed by the assessee. The Co-ordinate Bench after considering the provisions of Section 50C of the Act and the provision of section 23A and 24(5) of the Wealth Tax Act held as under :- 13. Combined reading of the above provisions shows that the valuation adopted by the DVO is subject to appeal and the same is not final. In the instant case we find that as against the value of Rs. 28,73,000/- adopted by the stamp valuation authorities, the DVO has determined the FMV on the date of transfer at Rs. 20,55,000/-. This itself shows that there is wide variation between the two values. Further, the value adopted by the DVO is also based on some estimate. We find that the differen....
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....r the purposes of addition. High Court in the case of CIT V/s. Sadna Gupta 352 ITA 595 held that unless and until there was some other evidence to indicate that extra consideration had flowed in transaction for purchase of property, report of DVO could not form basis of any addition on part of revenue. In absence of any evidence no reliance could be placed on the report of DVO for making addition. 10. Thus, in view of the fact that the difference between sale consideration and the market value determined by the DVO is not substantial and is approximately little over 2 per cent of the actual sale consideration, we find no reason for rejecting actual sale consideration mentioned in the Sale Deed for determining long term capital gain. Accordingly, the ground No.1 raised in appeal by the assessee is allowed. The Assessing Officer is directed to adopt actual sale consideration as mentioned in the Sale Deed as a fair market value for determining the long term capital gain." 6. In the light of the facts of the case and the decisions discussed above, we find merit in the submissions of assessee. In the present case, since difference between the value declared by the asse....
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....and the stated consideration of an immovable property. In other words, as long as the variations are within the permissible limits, the anti-avoidance provisions of Section 50C do not come into play. As we have noted earlier, the CBDT itself accepts that there could be various bonafide reasons explaining the small variations between the sale consideration of immovable property as disclosed by the assessee vis-à-vis the stamp duty valuation for the said immovable property. Obviously, therefore, disturbing the actual sale consideration, for the purpose of computing capital gains, and adopting a notional figure, for that purpose, will not be justified in such cases. On a conceptual note, an estimation of market price is an estimation nevertheless, even if by a statutory authority like the stamp duty valuation authority, and such a valuation can never be elevated to the status of such a precise computation which admits no variations. The rigour of Section 50C(1) was thus relaxed, and very thought fully so, to take these bonafide cases of small variations between the stated sale consideration vis-à-vis stamp duty valuation, out of the scope of adjustments contemplated in t....
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....ied that the amendment in the scheme of Section 50C(1), by inserting the third proviso thereto and by enhancing the tolerance band for variations between the stated sale consideration vis-à-vis stamp duty valuation to 10%, are curative in nature, and, therefore, these provisions, even though stated to be prospective, must be held to relate back to the date when the related statutory provision of Section 50C, i.e. 1st April 2003. In plain words, what is means is that even if the valuation of a property, for the purpose of stamp duty valuation, is 10% more than the stated sale consideration, the stated sale consideration will be accepted at the face value and the anti-avoidance provisions under section 50C will not be invoked. 8. Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of section 50C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation, anti- avoidance provisions under section 50C could be pressed into service, and thus remedied the law, there is no escape from holding that these amendments are effective with e....
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....he proviso and exposition by the Tribunal for retrospective application of the said proviso, I have no hesitation in holding that the proviso to sub-section (1) to section 43CA and the subsequent amendment thereto relates back o the date on which the said section was made effective i.e. 01/4/2014. 7. In light of above findings, the Assessing Officer is directed to delete the addition of Rs. 6,81,500/- under section 43CA of the Act. The impugned order is quashed and appeal of the assessee is allowed. 10. The learned Departmental Representative only submitted that during the assessment year 201718, the tolerance band was up to 5%, however, we reject his argument in view of the decision of the Coordinate Bench cited supra since the difference is below tolerance band, the entire addition of 57,68,020, is directed to be deleted. Accordingly, all the ground no.2, raised by the assessee in its appeal for the assessment year 201718 is allowed." 16. The facts in assessee's case clearly indicate that difference in the value between the fair market value as per Valuation Officer and sale consideration received and ready recoknor value of Plot No.270 is within the to....