INCOME TAX ACT, 1961

Section 50C

Capital gains - Applicability of section 50C - Circle rate being higher than sale consideration recorded in sale deeds - No reference to valuation officer despite being request made by assessee

AO found that assessee sold some properties however, no income from capital gain was declared in return of income. According to the AO, sale value of properties for the purpose of stamp duty, i.e., circle rate being higher than the sale consideration recorded in sale deeds, provisions of the section 50C were applicable in the case of the assessee and long-term capital gain was to be computed accordingly. Assessee requested vide a letter to refer the valuation of the properties to DVO, but his contention was rejected by the AO on the ground that it was not maintainable because the Sub-Registrar being a government authority, thus, no need arose for valuation from the DVO. Subsequently, the AO invoked section 50C and computed the long-term capital gain. Held: Since sale value of properties in question assessed by stamp valuation authority exceeded the sale consideration recorded in sale deeds, the AO should have referred the valuation of the capital assets to a valuation officer instead of adopting the value taken by the state authority for the purpose of stamp duty. Thus, not making such reference to the valuation officer, despite being request made by the assessee, accordingly, the AO was barred from invoking provision of section 50C for computation of the long-term capital gain on the sale transactions carried out by the assessee. Hence, the issue of computation of long-term capital gain on sale of the properties was remanded to the AO with the direction to compute the long-term capital gain afresh keeping in view the aforementioned findings.

Followed:ITO v. M/s. Aditya Narain Verma (HUF) ITA No. 4166/Del/2013 : 2017 TaxPub(DT) 1632 (Del-Trib)

REFERRED :

FAVOUR : Matter remanded.

A.Y. :

INCOME TAX ACT, 1961

Section 54

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