ITAT directs to adopt Actual Sale Consideration instead of Stamp Duty Value for calculating Capital Gain Tax [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Jaipur Bench has been directed to adopt actual sale consideration instead of stamp duty value for calculating Capital gain tax.

The appellant, Shri Goverdhan Prasad Singhal, during the course of assessment proceedings shown full value of consideration of the property received on transfer of capital asset, i.e., land and buildings at Rs.8,81,00,000/ whereas the Stamp Valuation Authority has fixed the value of the property at Rs.11,19,00,441/-. The Assessing Officer adopted the sale consideration of property based on stamp duty valuation as against actual fair consideration of Rs. 8, 81, 00, 000/-.

The counsel for the appellant submitted that the actual sale consideration of Rs.8,81,00,000/- coincides with the fair market value prevailing on the date of transfer of the property and the rate of Rs.7000/- per square Meter adopted by the Stamp Duty Valuation Authorities for the said land of the appellant is very much on the higher side when compared to the rate of Rs.2,500/- of the land in Argo Food Park which is adjacent to that of the appellant’s land and shares a common boundary. Despite objection raised by the appellant on adopting the stamp duty value, Assessing Officer has not referred the matter to the DVO as required u/s.50C (2).

The Coram of Dr. Meetha Lal Meena, AM and Smt. S. Seethalakshmi, JM by relying the decision of ITAT Jaipur in the case of Smt. Sharda Devi Alwar Vs ITO has observed that if objection is made by the assessee for value taken, the Assessing Officer ought to have refer the matter to the Valuation Officer as per section 50C(2) to ascertain fair Market value. The Assessing officer neither discussed the contentions of the assessee for taking actual consideration as fair market value of the property sold nor referred the matter to the DVO as was required U/s 50C(2). The AO and the CIT(A) have also not found or alleged that the assessee received any excess amount over the sale consideration mentioned in the deeds.

The Tribunal while dismissing the appeal has held that “the failure of the AO to follow the procedure as prescribed under section 50C (2) in particular, and therefore, the CIT(A) action in confirming such order is held unjustified and against law by sustaining stamp duty value of property Rs 11,19,40,441/- as deemed sale consideration u/s 50C against actual sale consideration and fair market value Rs 8,81,00,000/-. Accordingly, the AO is directed to adopt the value of sale consideration at Rs 8,81,00,000/- of the subject property for the purpose of computation of Long Term Capital Gains.”.

Mr. S.L. Gupta, CA and Mr. Manoj Nehar appeared for appellant and revenue respectively.

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