INCOME TAX ACT, 1961

Section 50C

Capital gains - Full value of consideration - Specific objection of assessee to preliminary report of DVO was not considered by DVO while giving his final report -

Issue that arose for consideration was with regard to computation of full value received on sale of property by assessee for the purpose of computing long term capital gain. Assessee sold 4 acres of land for a consideration of Rs. 80 lakhs. AO took value for the purpose of capital gains as equal to stamp duty and registration value of Rs.160 lakhs. Assessee had requested for a reference to the District Valuation Officer (DVO) for evaluating the value of the property under section 50C(2). AO made reference to the DVO but since the report was not received by that time, assessment was completed and AO could not take cognizance of the same. Held: In the light of the objections given by the assessee to the preliminary report of the AO, the second sale instance which appeared to be an extraordinary instance of sale ought to have been excluded. The admitted position was that all the khatas in the relevant survey were cancelled by the Tahsildar, and there were several litigations. There was also a third acquisition by Mysore Urban Development Authority (MUDA). The specific objection of the assessee to the preliminary report of the DVO was not considered by the DVO while giving his final report. In the circumstances, submission made by assessee were accepted and it was directed that price of Rs. 80 lakhs received by the assessee should be accepted as correct. Consequently, there could be addition on account of application of provisions of section 50C.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

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