FMV of Agricultural Land to be Determined according to the Guidelines of the FY in which assessee Received Entire Amount of Sale Consideration: ITAT Dismisses Revenue Appeal [Read Order]

The Raipur Bench of Income Tax Appellate Tribunal (ITAT) held that where the date of agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same then the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing full value of consideration for such transfer.

The assessee Nitin Gupta had filed his return of income for (Assessment Year) A.Y.2015-16, declaring an income of Rs.82,84,786/-. Original assessment was framed by the Assessing Officer (AO) vide his order passed under Section 143(3) of the Income Tax Act determining the assessee’s total income at Rs.82,84,786/-.

It was observed by the AO that a mistake had crept in his order passed under Section 143(3) of the Income Tax Act, wherein the Long Term Capital Gain (LTCG) that was disclosed by the assessee on the sale of agricultural land at Iskcon, Raipur on 15.04.2014 by adopting sale consideration of Rs.66 lakhs as against Fair Market value (FMV) of Rs.78,97,500/- (as was discernible from sale deed), though not in conformity with the provisions of Section 50C of the Income Tax Act was summarily accepted by him while framing the assessment.

The assessee had sold agricultural land situated at Iskcon, Raipur for a consideration of Rs.66 lakhs. On a perusal of the “agreement to sell”, it transpires that the assessee had received part of the sale consideration of Rs. 20 lakhs, the balance amount of sale consideration of Rs.46 lakhs (out of Rs.66 lacs) was received by the assessee in the preceding year i.e. F.Y.2013-14.

The AO vide his order passed under Section154 of the Income Tax Act rectified the assessment order by recasting/reworking out the LTCG (Long Term Capital Gain) on sale of agricultural land situated at Iskcon, Raipur by substituting the sale consideration by an amount of Rs.78,99,500/-, i.e. FMV as against actual sale consideration. Thus the A.O revised the assessed income of the assessee at Rs.95,84,286/-.

Aggrieved the assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) referring to the “1st proviso” to Section 50C(1) of the Income Tax Act,  observed that as the assessee had entered into an “agreement to sell” dated 06.03.2014 and received entire amount of sale consideration of Rs.66 lacs by cheque before 31.03.2014.

Therefore, FMV of the agricultural land sold by him was to be determined on the basis of guidelines rate notified for financial year 2013-14 and not those pertaining to financial year 2014-15 i.e. the year in which registered sale deed was executed by him.

Accordingly, the CIT(Appeals) on the basis of his aforesaid observations partly allowed the appeal of the assessee. Aggrieved with the order of the CIT(A), filed an appeal before the Tribunal.

The bench comprising of Ravish Sood, Judicial Member and Arun Khodpia, Accountant Member observed that as per the “1st proviso” to Section 50C(1) of the Income Tax Act as had been made available vide the Finance Act, 2016 , where the date of agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same then the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing full value of consideration for such transfer.

Therefore the Tribunal found no infirmity in the view taken by the CIT(A) who had rightly triggered the “1st proviso” to Section 50C(1) of the Income Tax Act, thus uphold the same.

Hence, appeal of the revenue was dismissed.

To Read the full text of the Order CLICK HERE

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