VIJAY RAI MARWAHA,DELHI V. ACIT, CIRCLE INT. TAXATION 2(2)(1), DELHI

ITA 2375/DEL/2023

AI Insights

The case involves an appeal by Sh. Vijay Rai Marwaha against the assessment order for the year 2020-21, which included additions to his income based on capital gains from the sale of a residential property. The primary contention was regarding the application of Section 50C of the Income-tax Act, which pertains to the consideration received from the sale of a capital asset. The Assessing Officer had added an amount to the assessee's income based on the difference between the actual sale price and the stamp duty value of the property. The Tribunal found that Section 50C did not apply as the declared sale price was higher than the stamp duty value, leading to the deletion of the addition. Furthermore, discrepancies in the valuation reports used to determine the cost of acquisition for indexation were noted, resulting in a revised lump sum valuation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26109 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2020-2021
• Other Referred Cases: CIT v/s Gillanders Arbuthnot & Co [1973] 87 ITR 407, CIT v. Smt. Nilefer I. Singh [309 ITR 233 (Del)], Eldeco Infrastructure & Properties Ltd v/s Commissioner of Income-tax, Delhi-IV
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY B. BASANTA
• Assessee Lawyers: AJAY SABARWAL
• Keywords: Capital asset; Sale consideration of property below Jantri Value; Fair market value; Cost of acquisition; Capital Gains; Valuation report
• Section: 143(3); 119; 48; 50C; 55A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘D’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.2375/Del/2023 Assessment Year: 2020-21 Sh. Vijay Rai Marwaha, C-3, Lajpat Nagar-III, New Delhi Vs. ACIT, Circle- Intl. Taxation-2(2)(1), Delhi PAN: CWLPM5029C (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2020-21 is directed against the Assessing Officer’s final assessment order dated 23.06.2023 passed in DIN & Order No. ITBA/AST/S/143(3)/2023-24/1053932276(1) involving proceedings under section 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. Heard both the parties. Case file perused. Assessee by Sh. Ajay Sabarwal, CA Department by Sh. Vijay B. Basanta, CIT(DR) Date of hearing 05.03.2025 Date of pronouncement 19.03.2025 ITA No.2375/Del/2023 2 | P a g e 3. The assessee pleads the following substantive grounds in the instant appeal: “1. That the appellant denies its liability to be assessed at income of Rs. 37,30,983/- 2. That having regard to the facts and circumstances of the case. Honourable Dispute Resolution Panel-II (DRP-2), Delhi has erred in law and on facts of the case to confirm addition made by Learned Assessing Officer, ACIT, Circle Int. Tax 2(2)(1) of Rs. 4,26,562 (computation as per grounds no 3) by totally ignoring the facts as under: Section 48 of the Act prescribes the mode of computation of Capital Gains as under:- \"The income chargeable under the head \"Capital gains\" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely:- (1) Expenditure incurred wholly and exclusively in connection with such transfer, (ii) The cost of acquisition of the asset and the cost of any improvement thereto; (iii) In case of value of any money or capital asset received by a specified person from a specified entity referred to in sub section (4) of section 45, the amount chargeable to income-tax as income of such specified entity under that sub-section which is attributable to the capital asset being transferred by the specified entity, calculated in the prescribed manner 39:…………………… The term fully value of consideration is not defined under the Act. However, it has been interpretated by the Hon'ble Apex Court in the case of CIT v/s Gillanders Arbuthnot & Co [1973] 87 ITR 407. \"The expression \"Full Value Consideration cannot be construed as the market value but as the price bargained for by the parties to the sale. The same view was given by Honourable Delhi High Court (Jurisdictional High Court) in the case of CIT v. Smt. Nilefer I. Singh reported at 309 ITR 233 (Del), in high court held that The expression \"full value of consideration\" cannot be construed as having reference ITA No.2375/Del/2023 3 | P a g e to the market value of the asset transferred but only means the full value of consideration received by the transferor in exchange of the capital asset transferred by him Similar view was given Honourable ITAT Delhi Bench-B in the case T Appeal NO. 3677 (DELHI) OF 2011 Eldeco Infrastructure & Properties Ltd v/s Commissioner of Income-tax, Delhi-IV 3. That having regard to the facts and circumstances of the case, Honourable Dispute Resolution Panel-II (DRP-2), Delhi has erred in law and on facts of the case to confirm addition made by Learned Assessing Officer, ACIT, Circle Int. Tax 2(2)(1) of Rs. 4.26,562/ on account of difference value of Total Sale Consideration as under:- Fair Market Value as on 23.01.2020 as per valuation report dated 14-09-2022 issued by Valuation Officer-Ill, Delhi 2,14,26,652 Less:- Actual Sale Consideration Received by the Appellant on account of Sale of Residential Property Flat No 119 FF, Category-III, Pocket-A. East of Kailash, Mount Kailash, New Delhi- 110055 vide Registered Sale Deed Dated 21-01- 2020 2,10,00,000 Difference 4,26,652 Whereas, stamp duty value/circle rate in reference to section 50C was Rs.92,96,400/-only. 4. That having regard to the facts and circumstances of the case, Honourable Dispute Resolution Panel-II (DRP-2), Delhi has erred in law and on facts of the case to confirm act of the Learned Assessing Officer in making a reference to the Valuation Officer to ascertain the fair market value of the property sold as on 01/04/2001 u/s 142A of the Act instead of u/s 55A of the Act and rejecting a well-reasoned valuation report of a Registered Valuer 5. That having regard to the facts and circumstances of the case, Honourable Dispute Resolution Panel-II (DRP-2), Delhi has erred in law and on facts of the case to confirm act of the Learned Assessing Officer in adopting the Fair Market Value of the property sold as on 01/04/2001, as estimated by the Valuation Officer, who wrongly applied the plinth area rate indices as notified by CPWD to the Circle Rate Value determined as on 01/10/2007 to pare it down to the market value as on 01/04/2001, as against the Cost Inflation index, which was rightly applied by the Registered Valuer appointed by the assessee. ITA No.2375/Del/2023 4 | P a g e 6. That having regard to the facts and circumstances of the case, Honourable Dispute Resolution Panel-II (DRP-2), Delhi has erred in law and on facts of the case to confirm confirm addition made by Learned Assessing Officer, ACIT, Circle Int. Tax 2(2)(1) of Rs. 22,23,861on account of difference of Fair Market Value as on 01.04.2001 of the Residential Property Flat No 119 FF, Category-III, Pocket-A, East of Kailash, Mount Kailash, New Delhi-110055 as under:- Fair Market Value as on 01.04.2001 as per valuation report dated 27-11-2019 issued by registered valuer Mr. Amod Sood, Reg No CAT-1/001 of 2002 u/s 34 AB of WT Act, 1957 20,15,000 Less:- Fair Market Value as on 01.04.2001 as per valuation report dated 14-09-2022 issued by Valuation Officer-III, Delhi 12,45,498 Difference 7,69,502 Indexed Value of Rs. 7,69,502 X 289/100 22,23,861 7. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 4. We come to the first and foremost issue of section 50C addition made by both the learned lower authorities to the tune of Rs.4,26,562/-; in the course of assessment framed on 23.06.2023 as upheld in the lower appellate discussion. Suffice to say, it has already come on record that the stamp/circular value of the assessee’s relevant capital asset was Rs.92,96,400/- as against the actual price of property at Rs.2.10 crores, disclosed in his capital ITA No.2375/Del/2023 5 | P a g e gain computation and that determined by the Valuation Officer of Rs.2,14,26,562/-; respectively. 5. That being the case, we are of the considered view that once the assessee has already declared his long-term capital gains with much more the stamp/circle value, section 50C itself does not apply since the same gets attracted only an instance of the actual sale price coming to be less than the stamp/circle rates. We thus delete the impugned section 50C addition of Rs. 4,26,562/- in very terms. 6. Next comes the cost of acquisition issue for the purpose of granting indexation benefit to the assessee. There is no dispute that he had filed his registered valuer report dated 27.11.2019 stating the same to be Rs.20.15 lakhs as on 01.04.2001 as against that ascertained by Valuation Officer-III, Delhi in his report dated 14.09.2023 amounting to Rs.12,45,498/-; respectively. 7. Faced with this situation and in light of the fact that the above different valuation reports have arrived at different cost(s) of acquisition; we are of the considered view that some irregularity in both of them on such a purely subjective issue, could not be per se ruled out. We accordingly are of the considered view in the larger ITA No.2375/Del/2023 6 | P a g e interest of just that a lump sum cost of acquisition amounting to Rs.18 lakhs only in given facts would be just and proper with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law. 8. No other ground or arguments has been pressed before us. 9. This assessee’s appeal is partly allowed in above terms. Order pronounced in the open court on 19th March, 2025 Sd/- sd/- (S. RIFAUR RAHMAN) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 19th March, 2025. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "