ITAT directs adoption of actual consideration for sale instead of value of stamp duty for calculation of capital gains tax

ITAT - Actual Sale Consideration - Stamp Duty Value - Capital Gains Tax - taxscan

The Income Tax Appeal Tribunal (ITAT), Jaipur Bench, has been instructed to adopt the actual sale consideration instead of the stamp duty value for the calculation of the gains tax in capital.

The appellant, Shri Goverdhan Prasad Singhal, during the valuation procedure showed the full value of the property consideration received upon transfer of the fixed asset i.e. land and buildings at Rs.8,81,00,000/ while the Stamp Valuation Authority has fixed the value of the property at Rs.11,19,00,441/-. The valuation agent passed the sale consideration of the property based on the valuation of the stamp duty against the actual fair consideration of Rs. 8, 81, 00, 000/-.

Counsel for the Appellant argued that the actual sale consideration of Rs.8,81,00,000/- coincides with the fair market value prevailing on the date of transfer of ownership and the rate of Rs.7000 /- per square meter adopted by the stamp duty assessment authorities for the said land of the appellant are very high compared to the rate of Rs.2,500/- of the land of Argo Food Park which is adjacent to that of the land of the appellant and shares a common border. Despite the objection raised by the Appellant on the adoption of the stamp duty value, the Valuation Officer did not refer the matter to the DVO as required u/s.50C(2).

The Coram of Dr. Meetha Lal Meena, AM and Smt. S. Seethalakshmi, JM relying on the decision of ITAT Jaipur in the case of Smt. Sharda Devi Alwar vs ITO observed that if the objection is made by the assessee for the value taken, the valuation agent should have referred the matter back to the valuation agent pursuant to Section 50C(2) to determine the fair market value. The appraiser neither discussed the claims of the appraisee for actual consideration of the fair market value of the property being sold, nor referred the matter to the DVO as required by U/s 50C (2 ). Nor did the AO and CIT(A) find or allege that the appraise received an amount in excess of the consideration for the sale referred to in the deeds.

The Tribunal, while dismissing the appeal, held that “the failure of the AO to follow the procedure prescribed under Section 50C(2) in particular, and therefore the action of the CIT(A) in confirming this order is deemed to be unwarranted and contrary to law by maintaining the stamp duty value of the 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 responsible for adopting the value of the sale consideration at Rs 8,81,00,000/- of the subject property for the purpose of calculating long-term capital gains.”.

Mr. SL Gupta, CA and Mr. Manoj Nehar appeared for appellant and income respectively.

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DCIT versus Shri Goverdhan Prasad Singhal

Counsel for the Appellant: Shri SL Gupta

Counsel for the Respondent: Shri Manoj Nehar


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