Dy. Commissioner of Income Tax, Lucknow V. M/s. Kaysons Builders Pvt Ltd., Lucknow

ITA 290/LKW/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9114 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MEENA
• Assessee Lawyers: J J MEHROTRA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Cost of acquisition; Fair market value; Valuation report
• Section: 50C; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.290/LKW/2013 ASSESSMENT YEAR:2005-06 DY. CIT RANGE IV, LUCKNOW V. M/S KAYSONS BUILDERS PVT. LTD. 48, HAZRATGANJ LUCKNOW TAN/PAN:AABCK8561G (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. K. C. MEENA, D.R. RESPONDENT BY: SHRI. J. J. MEHROTRA, C.A. DATE OF HEARING: 19 11 2014 DATE OF PRONOUNCEMENT: 23 01 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON VARIOUS GROUNDS, WHICH ARE AS UNDER:- 1. THE COMMISSIONER OF INCOME-TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION MADE BY THE A.O. OF RS.61,14,377/- U/S 50C(1) OF THE INCOME-TAX ACT, 1961. 2. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS NEVER CLAIMED DURING THE ASSESSMENT PROCEEDINGS THAT THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY EXCEEDED THE FAIR MARKET VALUE OF LAND IN ORDER TO REQUIRE A REFERENCE FOR VALUATION U/S 50C(2). 3. THE CIT(A) HAS ERRED IN LAW IN ISSUING DIRECTION TO THE A.O. TO ADOPT THE ACTUAL SALE CONSIDERATION SHOWN BY THE ASSESSEE INSTEAD OF VALUATION OFFERED BY THE DVO FOR THE PURPOSE OF :- 2 -: COMPUTATION OF LTCG. 4. THE LD. CIT(A) FAILED TO DO JUSTICE WITH SECTION 50C(2) R.W.S 50C(3) OF THE INCOME-TAX ACT WHILE REJECTING THE VALUATION MADE BY THE DVO AND THE RELIEF GIVEN BY THE LD. CIT(A) IS CONTRARY TO WORDS AND SPIRIT OF SECTION 50C(1) OF THE INCOME- TAX ACT. 1961. 2. THOUGH VARIOUS GROUNDS ARE RAISED BY THE REVENUE, BUT THEY ALL RELATE TO THE DETERMINATION OF THE FAIR MARKET VALUE OF THE LAND SOLD IN THE LIGHT OF PROVISIONS OF SECTION 50C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'). 3. THE FACTS IN BRIEF BORNE FROM THE RECORD ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SOLD LAND AT SHAHMINA ROAD, LUCKNOW FOR A SALE CONSIDERATION OF RS.1.40 CRORES. THE COST OF ACQUISITION OF THE SAME WAS FOUND TO BE RS.21,96,098/-. THE MARKET VALUE OF THE LAND FOR THE PURPOSE OF STAMP DUTY WAS ADOPTED AT RS.2,01,14,377/-. HAVING INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT, THE ASSESSING OFFICER ADOPTED THE MARKET VALUE OF THE LAND AT RS.2,01,14,377/- AND MADE ADDITION OF RS.61,14,377/- TO THE INCOME OF THE ASSESSEE. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THE FAIR MARKET VALUE OF THE PROPERTY SOLD WAS LOWER THAN THE VALUE ADOPTED FOR STAMP DUTY PURPOSE. IT WAS FURTHER CLAIMED THAT THE ASSESSING OFFICER SHOULD HAVE REFERRED THE MATTER REGARDING ASCERTAINMENT OF THE FAIR MARKET VALUE OF THE PROPERTY TO THE DVO, BUT HE DID NOT DO THE SAME. HE HAS ALSO FILED WRITTEN SUBMISSIONS STATING THEREIN THAT BEFORE THE ASSESSING OFFICER ASSESSEE HAS RAISED A CLAIM THAT THE FAIR MARKET VALUE OF THE LAND IS LESS THAN THE VALUATION ADOPTED FOR THE PURPOSE OF STAMP DUTY AND IN THE LIGHT OF THIS OBJECTION, THE ASSESSING OFFICER SHOULD HAVE MADE A :- 3 -: REFERENCE TO THE DVO TO DETERMINE THE FAIR MARKET VALUE OF THE LAND/PROPERTY AS PER PROVISIONS OF SECTION 50C(2) OF THE ACT. 5. THE LD. CIT(A) RE-EXAMINED THE ENTIRE CLAIM AND FINDING FORCE IN THE CONTENTIONS OF THE ASSESSEE, HE DIRECTED THE ASSESSING OFFICER TO MAKE REFERENCE TO THE DVO TO ASCERTAIN THE FAIR MARKET VALUE OF THE PROPERTY. ACCORDINGLY, A REFERENCE WAS MADE AND THE ASSESSING OFFICER FORWARDED THE VALUATION REPORT OF THE DVO DATED 30.3.2010 TO THE LD. CIT(A) AND AS PER DVOS REPORT, THE FAIR MARKET VALUE WAS DETERMINED AT RS.1,58,90,358/-. IN THE LIGHT OF THE DVOS REPORT, THE LD. CIT(A) HAS OBSERVED THAT THE DIFFERENCE IN SALE CONSIDERATION ADOPTED BY THE ASSESSEE AND DETERMINED BY THE DVO IS RS.18,90,358/-, WHICH IS APPROXIMATELY 11.9% OF THE VALUE ESTIMATED BY THE DVO. SINCE THE DIFFERENCE WAS NOMINAL, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ADOPT THE ACTUAL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. 6. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT BEFORE THE ASSESSING OFFICER ASSESSEE HAS NOT RAISED A DISPUTE WITH REGARD TO THE VALUATION ADOPTED FOR THE PURPOSE OF STAMP DUTY, THEREFORE, REFERENCE TO THE DVO CANNOT BE MADE AND THE ASSESSING OFFICER HAS RIGHTLY ADOPTED THE VALUATION TAKEN FOR STAMP DUTY PURPOSE AS SALE CONSIDERATION AND COMPUTED THE CAPITAL GAIN. THEREFORE, THERE IS NO ERROR IN THE ASSESSMENT ORDER. 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS SUBMITTED THAT BEFORE THE ASSESSING OFFICER ASSESSEE HAS TAKEN A PLEA THAT THE LAND WAS USED FOR MEDICAL PURPOSES AS PER LDAS LETTER AND 13% OF THE LAND WAS WASTED, BESIDES CONTENDING THAT THE FAIR MARKET VALUE OF THE PROPERTY IS LESS THAN THE VALUATION ADOPTED FOR THE PURPOSE OF STAMP DUTY. WHEN THE ASSESSEE HAS TAKEN A SPECIFIC PLEA BEFORE THE ASSESSING OFFICER THAT THE FAIR MARKET VALUE IS LESS THAN THE VALUATION ADOPTED FOR THE PURPOSE OF STAMP DUTY, THE ASSESSING OFFICER WAS UNDER OBLIGATION, AS PER PROVISIONS OF :- 4 -: SECTION 50C(2) OF THE ACT, TO MAKE REFERENCE TO THE DVO TO DETERMINE THE FAIR MARKET VALUE, BUT HE DID NOT DO SO. MOREOVER, WHEN THE LD. CIT(A) HAS APPRECIATED THE LEGAL PROPOSITION AND DIRECTED THE ASSESSING OFFICER TO MAKE REFERENCE AND WHEN THE REFERENCE WAS MADE, THE DVO HAS ESTIMATED THE FAIR MARKET VALUE OF THE PROPERTY AT RS.1,58,90,358/-, WHICH IS CERTAINLY LESS THAN THE VALUATION ADOPTED FOR THE PURPOSE OF STAMP DUTY. THE LD. CIT(A) HAS RIGHTLY NOTICED THAT THE DIFFERENCE IN SALE CONSIDERATION DECLARED AND ADOPTED BY THE DVO IS NOMINAL, THEREFORE, THE SAME CAN BE IGNORED AND THE SALE CONSIDERATION DECLARED BY THE ASSESSEE SHOULD BE ADOPTED. 8. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS RAISED AN OBJECTION WITH REGARD TO THE ADOPTION OF THE VALUE OF THE PROPERTY TAKEN FOR THE PURPOSE OF STAMP DUTY AS SALE CONSIDERATION. THE ASSESSING OFFICER HAS RECORDED THE REPLY OF THE ASSESSEE DATED 25.9.2007, IN WHICH ASSESSEE HAS CLAIMED THAT THE FAIR MARKET VALUE OF THE LAND IS LESS THAN THE VALUATION ADOPTED FOR THE PURPOSE OF STAMP DUTY FOR DIFFERENT REASONS, WHICH ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- (A) THE LAND USED IS ONLY FOR MEDICAL HOSPITAL PURPOSE (L.D.A LETTER ENCLOSED). THEREFORE, THE USE OF LAND WAS LIMITED. (B) THE 10 METER ROAD WILL HAVE TO BE LEFT FOR MAD WIDENING PURPOSE IN FUTURE. ALMOST 13% OF THE TOTAL LAND WILL BE WASTED. (C) THE VALUATION REPORT BY APPROVED VALUATION OFFICER CLEARLY CALCULATED REAL/TRUE MARKET VALUE WHICH IS AVAILABLE AT THE TIME OF ITS SALE. (VALUATION REPORT ATTACHED). 9. WHEN THE ASSESSEE HAS RAISED A DISPUTE WITH REGARD TO THE ADOPTION OF THE VALUATION DECLARED FOR THE PURPOSE OF STAMP DUTY AS FAIR MARKET VALUE OF THE LAND/SALE CONSIDERATION, THE ASSESSING OFFICER WAS UNDER OBLIGATION TO MAKE REFERENCE TO THE DVO TO DETERMINE THE FAIR MARKET VALUE OF THE LAND :- 5 -: AS PER PROVISIONS OF SECTION 50C(2) OF THE ACT, BUT THE ASSESSING OFFICER DID NOT MAKE COMPLIANCE OF THE PROVISIONS OF THE ACT AND HE HAS ADOPTED THE VALUATION DECLARED FOR THE PURPOSE OF STAMP DUTY AS SALE CONSIDERATION FOR COMPUTING THE CAPITAL GAIN; WHEREAS THE LD. CIT(A) HAS APPRECIATED THE FACTS AND DIRECTED THE ASSESSING OFFICER TO MAKE REFERENCE TO THE DVO. CONSEQUENTLY REFERENCE HAS BEEN MADE AND THE DVO HAS ESTIMATED THE FAIR MARKET VALUE OF THE PROPERTY AT RS.1,58,90,358/- WHICH IS LESS THAN THE VALUATION ADOPTED FOR THE PURPOSE OF STAMP DUTY. THESE FACTS CLEARLY DEMONSTRATE THAT THERE WAS SUBSTANCE IN THE OBJECTIONS OF THE ASSESSEE RAISED BEFORE THE ASSESSING OFFICER WITH REGARD TO THE VALUATION TO BE ADOPTED AS SALE CONSIDERATION. 10. WE HAVE ALSO CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A) AND WE FIND THAT THE LD. CIT(A) HAS TAKEN INTO ACCOUNT THE SALE CONSIDERATION MENTIONED IN THE SALE DEED AND FAIR MARKET VALUE DETERMINED BY THE DVO. HAVING NOTED THAT THE DIFFERENCE BETWEEN THE VALUATION DECLARED AND FAIR MARKET VALUE ESTIMATED BY THE DVO IS INSIGNIFICANT, THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ADOPT THE SALE CONSIDERATION DECLARED BY THE ASSESSEE FOR COMPUTING THE CAPITAL GAIN. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 4(7) I FIND THAT THE APPELLANT SOLD PROPERTY FOR RS. 1,40,00,000/-, THE VALUE OF WHICH FOR THE PURPOSE OF STAMP DUTY WAS RS. 2,01,14,377/-. THUS THERE IS A DIFFERENCE IN VALUE PROPERTY AS SHOWN FOR STAMP DUTY PURPOSES AND AS PER ACTUAL SALE CONSIDERATION. THE AO CHOSE NOT TO REFER THE MATTER TO THE DVO. THE FIRST ISSUE IS THEREFORE WHETHER IF THE APPELLANT CLAIMS THAT THE FAIR MARKET VALUE IS LOWER THAT THE VALUE ADOPTED FOR STAMP DUTY PURPOSES, THE REFERENCE TO THE DVO IS OPTIONAL OR MANDATORY. 4(8)(I) A REFERENCE MAY THEREFORE BE MADE TO PROVISIONS OF SECTION 50C OF THE ACT, WHICH PROVIDES AS UNDER- :- 6 -: (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH 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. EXPLANATION I. FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). :- 7 -: EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY. (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECTION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED 93 [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB SECTION (1), THE VALUE SO ADOPTED OR ASSESSED 93 [OR ASSESSABLE] BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. 4(8)(II) EVIDENTLY, SECTION 50C OF THE ACT IN SIMPLE TERMS SAYS THAT THE VALUE TAKEN FOR STAMP DUTY BY STATE REGISTRATION AUTHORITY SHALL BE CONSIDERED DEEMED SALE CONSIDERATION. THERE IS SOLACE FOR ASSESSEE UNDER SECTION 50C(2) OF THE ACT WHICH PROVIDES THAT IF THE ASSESSEE OBJECTS TO THE VALUATION FOR STAMP DUTY PURPOSES, THE AO MAY REFER THE VALUATION TO THE DVO. THUS, SECTION 50C(2) OF THE ACT, PROVIDES TWO REMEDIES AT THE OPTION OF THE ASSESSEE, IN THAT, HE CAN EITHER FILE APPEAL AGAINST STAMP VALUE OR SEEK REFERENCE TO VALUATION CELL. ADOPTION OF THE VALUE BY THE VALUATION CELL IS AGAIN SUBJECT TO REGULAR APPEALS AVAILABLE AGAINST THE ORDER OF THE AO. THE ISSUE THEREFORE IN THE IMPUGNED APPEAL IS WHETHER THE WORD 'MAY' REALLY PROVIDES DISCRETION TO THE AO EVEN WHEN THE ASSESSEE HAS PROTESTED THE VALUATION FOR STAMP DUTY PURPOSE. 4(8)(III) HON'BLE ITAT, MUMBAI IN THE CASE OF NANDITA KHOSLA 11 TAXRNANN.COM 344 LAID DOWN THAT WHERE ASSESSEE HAS POINTED OUT STRONG REASONS THAT SALE CONSIDERATION WAS LESS THAN THE VALUE DETERMINED FOR STAMP DUTY PURPOSES, THEN SUCH CASES HAVE TO BE REFERRED TO THE DVO. HON'BLE ITAT, CHENNAI ALSO EXAMINED THE ISSUE IS THE CASE OF SHAIK MOHIDEEN VS ITO (2009) 123 TTJ (CHENNAI) 411: (2009) 24 DTR 63 AND LAID DOWN AS UNDER- :- 8 -: IT HAS TO BE APPRECIATED AS TO WHAT IS IT THAT THE ASSESSEE IS ASKING FOR MERELY A CHANCE TO BE ABLE SAY THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, EXCEEDED THE FAIR MARKET VALUE OF THE PROPERTY. GIVING A CHANCE TO THE ASSESSEE TO MAKE SUCH A PLEA, AS PER LAW, IS NOT THE SAME THING AS ACCEPTING THE CLAIM ITSELF. WE SEE NO GOOD GROUND FOR THE DEPARTMENT TO MAKE OUT A CASE OF A SERIOUS GRIEVANCE ON THIS COUNT. FURTHER, ONE HAS TO UNDERSTAND THAT DENYING SUCH AN OPPORTUNITY TO THE ASSESSEE CAN RESULT IN AN OTHERWISE MERITORIOUS CASE BEING THROWN OUT AT THE VERY THRESHOLD, THEREBY RESULTING IN CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS, IF SUCH AN OPPORTUNITY IS ALLOWED TO THE ASSESSEE, THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERITS. THE COURTS HAVE HELD THAT, UNLESS THE LAW EXPRESSLY OR BY NECESSARY IMPLICATION EXCLUDES THE APPLICATION OF THE RULES OF NATURAL JUSTICE, THE SAID REQUIREMENT HAS TO BE READ IN ENACTMENTS THAT ARE SILENT. IT IS WELL- SETTLED THAT THE PRINCIPLES OF NATURAL JUSTICE SHALL BE PRESUMED TO BE NECESSARY UNLESS THERE EXISTS A STATUTORY INTERDICT. THE PRINCIPLES OF NATURAL JUSTICE, A CARDINAL PART OF WHICH IS AUDI ALTERAM PARTEM, IS THE BEDROCK OF ALL QUASI JUDICIAL DETERMINATIONS. AND, THE SUPREME COURT HAS APTLY CAUTIONED, SAYING THAT WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATION WERE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVED TO BE PREFERRED. IT ALSO NEEDS TO BE MENTIONED HERE THAT IN THE CASE OF MEGHRAJ BAID VS. ITO (2008) 114 TTJ (JD) 841 : (2008) 4 DTR (JD)(TRIB) 509 THE TRIBUNAL HELD THAT THE WORD 'MAY' USED IN SUB-S. (2) OF S. 50C SIGNIFIED THAT IN CASE THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, :- 9 -: HE 'SHOULD' REFER THE -MATTER TO THE DVO. IN OTHER WORDS, THE TRIBUNAL WAS OF THE VIEW THAT 'MAY' BE READ AS 'SHOULD' 4(8)(IV) SIMILAR OBSERVATIONS HAVE BEEN RECORDED BY HON'BLE ITAT, DELHI IN THE CASE OF ITO VS MANJU RANI JAIN 24 SOT 24 AND HON'BLE ITAT, MUMBAI IN THE CASE OF AJMAL FRAGRANCE AND FASHIONS (P) LTD., VS ACIT 34 SOT 57. IT WAS OBSERVED THAT DENIAL OF SUCH REQUEST OR IGNORING OF SUCH OBJECTION OF THE ASSESSEE AGAINST THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY BY THE AO IS AGAINST THE SPIRIT OF LEGISLATION UNDER THE PROVISIONS OF SECTION 50C OF THE ACT. FURTHER, IT HAS BEEN HELD IN N. MEENAKSHI 226 CTR 625 (MAD.) THAT K ONCE THE ASSESSEE APPLIES TO AO FOR MAKING REFERENCE TO DVO UNDER SECTION 50C OF THE ACT, 'MAY' BECOMES 'SHALL'. THEREFORE, IF ASSESSEE APPLIES, AO SHALL MAKE REFERENCE TO DVO. IT IS NOT OPTIONAL FOR AO TO MAKE REFERENCE TO DVO. IT WAS HELD THAT RIGHT OF ASSESSEE UNDER SECTION 50C OF THE ACT IS A VALUABLE STATUTORY RIGHT AVAILABLE TO PROTECT HIS INTEREST AGAINST ARBITRARINESS WHICH MAY CREEP IN WHILE FIXING THE VALUE OF CAPITAL GAIN AND IT IS THE SAFEGUARD GIVEN TO THE ASSESSEE. THE SAID RIGHT IS MORE EFFECTIVE IN CASES WHERE THE PARTIES TO THE DOCUMENT HAVE NOT TAKEN ANY STEPS TO DEFEND OR TO INITIATE PROCEEDINGS UNDER STAMP LAW. [JITENDRA MOHAN SAXENA 117 TTJ 974 (TRIB. LUCK.)] 4(8)(V)THE APPELLANT CLAIMS THAT THE PROPERTY SOLD HAD INHERENT DRAW BACKS FOR WHICH IT COULD NOT HAVE BEEN SOLD AT THE CIRCLE RATE ADOPTED FOR STAMP DUTY PURPOSE. IN OTHER WORDS THE APPELLANT CLAIMS THAT THE DRAWBACK IN THE PROPERTY MEANT THAT THE MARKET RATE AT WHICH THE PROPERTY COULD BE SOLD WAS LOWER THAN THE VALUE ADOPTED FOR THE STAMP DUTY PURPOSES. SOME OF THE DRAWBACKS AS MENTIONED BY THE APPELLANT ARE AS UNDER - A) THE LAND USED IS RESTRICTED FOR MEDICAL PURPOSES ONLY. B) 10 METER WIDE ROAD HAS TO BE LEFT AS PER MASTER PLAN FOR WIDENING OF ROAD AND ALMOST 13% OF THE TOTAL LAND WILL BE WASTED IN THE SAME, AND :- 10 -: C) THE VALUATION REPORT OF THE APPROVER VALUER HAS BEEN FILED BY THE APPELLANT TO SUPPORT THE SALE CONSIDERATION OF THE PROPERTY. 4(8)(VI) THE ABOVE DRAWBACKS CLEARLY REVEAL THAT THE FAIR MARKET VALUE COULD HAVE BEEN LOWER THAN THE VALUE DETERMINED FOR STAMP DUTY PURPOSES. IN VIEW THEREOF, I FIND THAT ONCE THE ASSESSEE RAISES OBJECTION AS REGARDS VALUATION ADOPTED AS PER SECTION 50C OF THE ACT, NO HARM WOULD BE CAUSED TO THE REVENUE IF THE MATTER IS REFERRED TO THE VALUATION OFFICER FOR THE PROPER VALUATION OF THE PROPERTY. RESPECTFULLY FOLLOWING THE DECISIONS OF THE HIGH COURT ON THE ISSUE AND DECISION OF BENCHES OF THE TRIBUNAL SUPRA, I FIND SUBSTANCE IN THE CONTENTION OF THE APPELLANT THAT BEFORE ADOPTING VALUATION OF THE PROPERTY SOLD, BY THE STAMP VALUATION AUTHORITY THE AO SHOULD HAVE CONSIDERED THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE SAME AND SHOULD HAVE REFERRED THE MATTER TO THE DVO UNDER SUB SECTION (2) OF SECTION 50C OF THE ACT. 4(9) NEVERTHELESS, IT WAS IN THE BACKGROUND OF THE POSITION OF LAW AS DISCUSSED ABOVE, THAT A DIRECTION WAS ISSUED TO THE ASSESSING OFFICER VIDE ORDER UNDER SECTION 250(4) OF THE ACT DATED 26,10.2009 TO MAKE A REFERENCE TO THE DVO FOR ASCERTAINING THE FAIR MARKET VALUE OF THE PROPERTY. THE AO HAS FORWARDED THE VALUATION REPORT OF THE DVO DATED 30.03.2010 THROUGH HIS LETTER DATED 11.11.2010. THE OVO HAS VALUED THE FAIR MARKET VALUE AT RS.1,58,90,358/-. IT WOULD THEREFORE SUFFICE TO RECORD THE VALUES AS UNDER - SALE CONSIDERATION RS. 1,40,00,000/- VALUE AS PER REGISTERED VALUER OF APPELLANT RS. 1,39,28,000/- VALUE FOR THE PURPOSE OF STAMP DUTY RS.2,01,14,377/- VALUE AS PER DVO RS. 1,58,90,358/- THE ISSUE NOW IS THE VALUE WHICH HAS TO BE ADOPTED FOR THE PURPOSE OF SECTION 50C OF THE ACT. 4(10) THE APPELLANT IN ITS SUBMISSIONS HAS STATED THAT THERE ARE CERTAIN ASPECTS WHICH HAVE STILL NOT BEEN FULLY APPRECIATED BY THE DVO IN HIS REPORT. THE APPELLANT CONTENDS THAT THE VALUE OF THE :- 11 -: PROPERTY WOULD BE LOWER THAN THAT ESTIMATED BY THE DVO BECAUSE OF THE FOLLOWING FACTORS. OWING TO THE 10 METER DEPTH ON ROAD SIDE TO BE GIVEN FOR WIDENING, APPROXIMATELY 1,110 SQUARE METER AREA IS UN- UTILIZABLE. THERE ARE PERMANENT CONSTRUCTIONS OF ON NORTH AND EAST WHICH REDUCE THE VALUE OF THE PROPERTY. THERE IS NO JUSTIFICATION IN ADDITION 15% TO THE DM CIRCLE RATE AS DONE BY THE DVO FOR CORNER PLOT. 4(11) I AGREE WITH THE APPELLANT TO A CERTAIN EXTENT THAT THE VALUE OF THE LAND IS BOUND TO BE AFFECTED BECAUSE OF THE LIMITED USER AND THE ENCUMBRANCES, ENUMERATED ABOVE. THERE IS ALSO NO JUSTIFICATION FOR INCREASING THE RATE BY 15% FOR CORNER PLOT AS THE SITE PLAN ATTACHED WITH THE SALE DEED DOES NOT SHOW THE MANNER IN WHICH THERE COULD BE ANY BENEFIT BEING DERIVED FOR THE CORNER PLOT. IN VIEW OF THE ABOVE FACTORS I FIND THAT THE VALUE OF LAND IS BOUND TO BE LOWER THAN THE VALUE ESTIMATED BY THE DVO. IN ANY CASE, I FIND THAT THE DIFFERENCE IN THE SALE CONSIDERATION AND THE FAIR MARKET VALUE ESTIMATED BY THE DVO IS RS.18,90,358/- (RS. 1,58,90,358/- LESS RS.1,40,00,000/-). THE DIFFERENCE OF RS.18,90,358/- IS APPROXIMATELY 11.9% OF THE VALUE ESTIMATED BY THE DVO, I FIND THAT THERE IS ONLY A MINOR VARIANCE BETWEEN THE VALUE ASCERTAINED BY THE DVO AND THE ACTUAL SALE CONSIDERATION, WHICH COULD BE IGNORED. THE AO IS THEREFORE DIRECTED TO ADOPT THE ACTUAL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING THE CAPITA! GAINS. IN VIEW OF THE DISCUSSION ABOVE, THE ADDITION OF RS.61,14,377/- MADE BY THE AO IS DELETED GIVING RELIEF TO THE APPELLANT. 11. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. CIT(A) HAS NOTICED THE IRREGULARITIES COMMITTED BY THE ASSESSING OFFICER BY NOT MAKING REFERENCE TO THE DVO ON THE OBJECTIONS RAISED BY THE ASSESSEE WITH REGARD TO THE FAIR MARKET VALUE OF THE PROPERTY AND DIRECTED THE ASSESSING OFFICER :- 12 -: TO MAKE REFERENCE TO THE DVO AS PER PROVISIONS OF SECTION 50C(2) OF THE ACT AND CONSEQUENTLY THE DVO HAS DETERMINED THE FAIR MARKET VALUE AND REPORT WAS SUBMITTED TO THE LD. CIT(A) BY THE ASSESSING OFFICER. WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THIS EXERCISE, AS EFFORT WAS MADE BY THE LD. CIT(A) TO MAKE COMPLIANCE OF THE PROVISIONS OF THE ACT IN ORDER TO DETERMINE THE FAIR MARKET VALUE OF THE LAND. IT IS ALSO AN ADMITTED FACT THAT DIFFERENCE IN THE ESTIMATED VALUE BY THE DVO AND THE SALE CONSIDERATION DECLARED BY THE ASSESSEE WAS ONLY 11.9% OF THE VALUE ESTIMATED BY THE DVO. SINCE THE DIFFERENCE WAS NOMINAL, THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ADOPT THE SALE CONSIDERATION DECLARED BY THE ASSESSEE. IN THIS DIRECTION ALSO, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY. WE, THEREFORE, HAVING AGREED WITH THE ORDER OF THE LD. CIT(A), CONFIRM HIS ORDER. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:23 RD JANUARY, 2015 JJ:0901 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR