| The Tax Publishers2020 TaxPub(DT) 4012 (Pune-Trib) INCOME TAX ACT, 1961
Section 56(2)(vii)
Where rate adopted by DVO for determining the fair market value of property in question was without any basis, therefore, in absence of any elaboration of the rate adopted by the DVO in his final report, the AO was directed to restrict the fair market value rate at the average of seven sales instances given in the DVO's preliminary report, and then work out addition, if any, under section 56(2)(vii).
|
Income from other Soruces - Under section 56(2)(vii) - DVO valued profit without any basis -
Assessee purchased a property, having 1/6th share along with other five co-owners, for a total consideration at Rs. 1,80,00,000. Resultantly, the assessee showed Rs. 30,00,000 as her share towards investment in the property. AO observed that the stamp value of the property was Rs. 2,61,73,956 and considering the provisions of section 56(2)(vii), he worked out the assessee's share in the said property and determined excess amount at Rs. 13,62,326. Assessee requested for making reference to DVO for determining the fair market value of the property. However, as assessment was getting time barred and no valuation report was received till the date of passing of the assessment order, the AO made addition of the differential amount of Rs. 13,62,326. During the course of first appellate proceedings, the assessee submitted the report of the DVO, wherein the fair market value of the property was determined at Rs. 2,11,42,000. Accordingly, CIT(A) worked out the assessee's share in the excess by adopting fair market value of Rs. 2,11,42,000. Aggrieved, the assessee was in appeal before Tribunal.Held: On perusal of DVO's report, it was found that rate of Rs. 77,640 per sq. meter was adopted by him for valuing the commercial area as well as car parking determining the total value of the property at Rs. 2,11,42,000. However, there was no basis for computing Rs. 77,640 per sq. meter in the DVO's report. Further, on perusal of preliminary valuation report by the DVO, it was found that the said report referred to seven comparable sale instances with per sq. meter sale rate at Rs. 84,859, Rs. 57,498, Rs. 63,223, Rs. 56,740, Rs. 71,443, Rs. 59,613 and Rs. 41,130. In absence of any elaboration of the rate adopted by the DVO in his final report, the AO was directed to restrict the fair market value rate at the average of the seven sales instances given in the preliminary report, which came to Rs. 62,073 and then work out addition, if any, under section 56(2)(vii).
REFERRED :
FAVOUR : Partly in favour of assessee.
A.Y. : 2015-16
 SUBSCRIBE FOR FULL CONTENT
|