The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has directed the re-computation of capital gain as the stamp duty was valued as full value of the consideration by invoking the provisions under Section 50C(1) of the Income Tax Act, 1961.
By applying Section 50C of the Income Tax Act and adopting stamp duty value as the full value of consideration, the Assessing Officer arrived at the Long Term Capital Gain arising from the sale of capital assets and brought to tax, which represented the Appellant’s share of 8.19% in the capital gains so determined, in the Appellant’s hands.
The ownership of the assets, being three separate plots of land, was disputed amongst the legal heirs/descendants of the original owner and their nominees and was settled through adalath.The Appellant, Padmakar Matondkar submitted that he had no control over the determination of the sale price of the capital assets as the same was determined by the Lok Adalat.
The Assessee objected to adoption of the stamp duty value as full value of consideration in terms of Section 50C of the Income Tax Act by the Assessing Officer during the assessment proceedings.
On behalf of the revenue, Sirsalewala Shri Sridhar Govind Menon argued that the disputes were resolved through a consent decree that was based on consent terms that were drafted and accepted by the parties to the dispute themselves. The court had not given any specific instructions regarding the valuation of the capital assets sold, he claimed.
Rajeshkumar argued on behalf of the assessee that the Assessing Officer had overlooked the fact that the capital assets in question were encumbered, making it impossible to compare their market worth to that of capital assets that were not encumbered.
The Bench observed that, sale consideration for transfer of the capital assets, being the suit property, could have been decided by the parties to the dispute.
The two-member Bench of Maharishi, (Accountant Member) and Rahul Chaudhary, (Judicial Member) allowed the appeal filed by the assessee directing re-computation of the capital gain after making reference to the valuation officer and considering the report of valuation officer as per law.
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