INCOME TAX ACT, 1961

50C

Capital gains - Determination of market value of asset as on date of sale by DVO - Difference between declared sale consideration and value determined by DVO -

Assessee had sold immovable property consisting of land and constructed portion. The Stamp Valuation Authority had determined the value of property. Thus, AO issued a show-cause-notice to the assessee to explain, why the value determined by the Stamp Valuation Authority should not be considered as deemed sale consideration. Though the assessee objected to the proposed action of AO, however, AO rejected assessee's submission and proceeded to substitute the declared sale consideration with the value determined by the Stamp Valuation Authority in terms of section 50C and also proceeded to compute short-term capital gain. Assessee having already offered STCG, AO made a net addition. Held: Admittedly, after determination of market value of asset as on the date of sale by the Departmental Valuation Officer, difference between the declared sale consideration and the market value is within the range of 5%, as referred to, in third proviso to section 50C(1). This, being a beneficial provision, benefit provided under the third proviso to section 50C(1) should be extended to the assessee, as, ultimately the value determined by the Stamp Valuation Authority was substituted by Departmental Valuation Officer's valuation in terms of sub-section (3) of section 50C. Thus, addition towards short-term capital gain needed to be deleted.

Followed:Maria Fernandes Cheryl v. ITO International Taxation 2 (3) (1) (2021) 123 taxmann.com 252 (Mum.) : 2021 TaxPub(DT) 0386 (Mum-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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