Eldeco Infrastructure & Properties Ltd. v. CIT

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The Tax Publishers2013 TaxPub(DT) 0976 (Del-Trib) : (2013) 053 (II) ITCL 0137 : (2013) 153 TTJ 0033 Income Tax Act, 1961 --Revision --Erroneous and prejudicial order Computation of capital gains--Assessee sold a property for sale consideration of Rs. 11.70 crores. However, the valuation officer on being referred, determined the fair market value of property at Rs. 12,78,79,481 assessing officer computed the capital gain by adopting the fair market value determined by valuation officer. Subsequently, commissioner formed an opinion that assessment order passed by assessing officer was erroneous and prejudicial to the interest of revenue because the assessing officer failed to take cognizance of sales instance of an adjoining property which was similar to the assessee while determining the fair market value of the plot sold by the assessee for the purpose of computing capital gain. By adopting the rate at which similar adjoining property was sold the fair market value came out to Rs. 33,47,66,257. Accordingly, commissioner modified the assessment order directing assessing officer to adopt this fair market value in place of full value of consideration. Assessee contended that assessing officer could not deviate from estimate made by the Valuation Officer therefore, there was no apparent error in the order of the assessing officer which authorized the commissioner to take cognizance under section 263. *Held :* The auction at Vasant Kunj was prior to the sales effected by the assessee, therefore, to the extent that the valuation officer failed to take cognizance of a similarly situated sales instances, the report of the Valuation Officer could be termed as an erroneous one which had been effected in the assessment order and which resulted the assessment order as erroneous. The cognizance taken by the commissioner to this extent was justified. However, he was not justified in substituting full value of consideration disclosed by the assessee on transfer of a capital asset with fair market value of Rs. 33,47,66,357. As the expression 'full value of consideration' as used in section 48 does not have the same meaning and could not be used in place of 'fair market value' as stated in section 55A. Since the issue whether the sale consideration disclosed by the assessee at Rs. 11.70 crores was to be adopted or an amount of Rs. 12,78,79,481 adopted by the assessing officer on the strength of valuation report was not raised before the Tribunal, therefore, the figure adopted by the assessing officer was not disturbed. Income Tax Act, 1961, Sections 263, 48, 45 and 50C IN THE ITAT, Delhi B Bench Rajpal Yadav, J.M. & K.D. Ranjan, A.M. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0976 (Del-Trib) : (2013) 053 (II) ITCL 0137 : (2013) 153 TTJ 0033

Income Tax Act, 1961

--Revision --Erroneous and prejudicial order Computation of capital gains--Assessee sold a property for sale consideration of Rs. 11.70 crores. However, the valuation officer on being referred, determined the fair market value of property at Rs. 12,78,79,481 assessing officer computed the capital gain by adopting the fair market value determined by valuation officer. Subsequently, commissioner formed an opinion that assessment order passed by assessing officer was erroneous and prejudicial to the interest of revenue because the assessing officer failed to take cognizance of sales instance of an adjoining property which was similar to the assessee while determining the fair market value of the plot sold by the assessee for the purpose of computing capital gain. By adopting the rate at which similar adjoining property was sold the fair market value came out to Rs. 33,47,66,257. Accordingly, commissioner modified the assessment order directing assessing officer to adopt this fair market value in place of full value of consideration. Assessee contended that assessing officer could not deviate from estimate made by the Valuation Officer therefore, there was no apparent error in the order of the assessing officer which authorized the commissioner to take cognizance under section 263. Held : The auction at Vasant Kunj was prior to the sales effected by the assessee, therefore, to the extent that the valuation officer failed to take cognizance of a similarly situated sales instances, the report of the Valuation Officer could be termed as an erroneous one which had been effected in the assessment order and which resulted the assessment order as erroneous. The cognizance taken by the commissioner to this extent was justified. However, he was not justified in substituting full value of consideration disclosed by the assessee on transfer of a capital asset with fair market value of Rs. 33,47,66,357. As the expression 'full value of consideration' as used in section 48 does not have the same meaning and could not be used in place of 'fair market value' as stated in section 55A. Since the issue whether the sale consideration disclosed by the assessee at Rs. 11.70 crores was to be adopted or an amount of Rs. 12,78,79,481 adopted by the assessing officer on the strength of valuation report was not raised before the Tribunal, therefore, the figure adopted by the assessing officer was not disturbed.

Income Tax Act, 1961, Sections 263, 48, 45 and 50C

IN THE ITAT, Delhi B Bench

Rajpal Yadav, J.M. & K.D. Ranjan, A.M.