The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) directed the assessing officer to determine the Fair Market Value (FMV) of the property by considering the District Valuation Officer’s ( DVO) report from the co-owner’s case.
Niket Ravibhai Patel, the assessee filed an income tax return for the assessment year 2013-14 declaring total income of Rs. 10,98,540. The assessment was scrutinized due to lower reported capital gains compared to sale consideration for immovable properties.
Handbook To Income Tax Rules
The assessee had two properties, co-owned with others, sold on February 26, 2013, for Rs.1,20,60,000 and Rs. 1,85,40,000. The assessee’s share was 5% of Rs. 6,03,000 and Rs. 9,27,000.
Stamp duty values for these properties were Rs. 3,34,40,600 and Rs. 5,14,78,100, which led the Assessing Officer (AO) to invoke Section 50C of the Income Tax Act. The AO determined the assessee’s share under Section 50C at Rs. 16,72,030 and Rs. 25,73,905 and added Rs. 27,15,935 as taxable income.
The assessee argued that the sale involved agricultural land converted to non-agricultural (NA) land on December 26, 2012, but possession was handed over before conversion on December 4, 2012. The AO dismissed the assessee’s arguments and imposed tax based on stamp duty values.
The assessee appealed to the CIT(A) by submitting the valuation report used for a co-owner that reduced the valuation but was not considered by the CIT(A) and the case was dismissed upholding the AO’s additions.
The assessee appealed to the Income Tax Appellate Tribunal (ITAT) arguing that the co-owner’s valuation by the District Valuation Officer (DVO) which indicates the value of the properties at Rs. 1,93,11,000 and Rs. 1,25,44,000.
Handbook To Income Tax Rules
The two-member bench comprising T.R. Senthil Kumar (Judicial Member) and Makarnad Vasant Mahadeokar (Accountant Member) observed that the valuation reports by DVO dated April 18, 2016, and discrepancies in valuation treatment between co-owners.
The tribunal observed that CIT(A) failed to consider the DVO’s report. So, the tribunal set aside orders from lower authorities and directed a reassessment considering the DVO’s valuation report. The appeal was allowed for statistical purposes with directions for reassessment.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
