PUNJAB POLY JUTE CORPORATION Vs. ASSTT COMMR OF INCOME TAX
LAWS(IT)-2008-4-13
INCOME TAX APPELLATE TRIBUNAL
Decided on April 11,2008

Appellant
VERSUS
Respondents

JUDGEMENT

Chandra Poojari, Accountant Member - (1.) THIS appeal by the assessee is directed against the order of the CIT(A), Bhatinda, dated 10.09.2007.
(2.) The assessee agitated the ground that the Ld. CIT(A) has erred in sustaining an addition made by the AO on wrong application of Section 50C of the Income tax Act, 1961. The brief facts of the case are that the assessee has sold land, building and machinery in the assessment year under consideration. The capital gain attributable to sale of land is subject matter of dispute before us. The assessee sold the land situated at Bhatinda. The assessee registered the property at Rs. 220.81 per sq. yd for consideration of Rs. 16.34 lakhs. According to the AO, the value is applicable to the land as per Punjab State Rules dated 20.09.2006 is Rs. 500/- per sq. yd. Accordingly, the AO invoked the provisions of Section 50C of the Income Tax Act, 1961 and referred the matter to DVO and got the valuation from the DVO at Rs. 72 lacs and after taking indexed cost of acquisition of the land at Rs. 9.60 lacs, determined the capital gain at Rs. 62.40 lacs. Aggrieved, the assessee in appeal before the CIT(A) and the Ld. CIT(A) confirmed the order of the A.O. Further aggrieved, the assessee in appeal before us.
(3.) WE have heard both the parties and perused the material on record. Relevant paragraph of Section 50C reads as under: 50C Special provision for full value of consideration in certain cases- (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereinafter in this section referred to as the 'Stamp valuation authority' for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of Section 48, be deemed to, be the full value of the consideration received or accruing as a result of such transfer. It is observed that Section 50C by the Finance Act, 2002 came into force w.e.f. 1st April, 2003. Clause 24 of the Finance Bill as per Notes on Clauses states that the insertion of this provision is to provide for a special provision for the full value of consideration in certain cases. It has been provided that where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land and building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, the value sol adopted or assessed shall for the purposes of Section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. Memorandum Explaining Provisions of Finance Bill, 2002, states in this regard as under: The Bill proposes to insert a new Section 50C in the it Act to make a special provision for determining the full value of consideration in cases of transfer of immovable property. It is proposed to provide that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed by any authority of State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration and capital gains shall be computed accordingly under Section 48 of the IT Act. It is further proposed to provide that where the assessee claims that the value adopted or assessed for stamp duty purposes exceeds the fair market value of the property as on the date of transfer and he has not disputed the value so adopted or assessed in. any appeal or revision or reference before any authority or Court the AO may refer the valuation of the relevant asset to a Valuation Officer in accordance with Section 55A of the IT Act. If the fair market value determined by the Valuation Officer is less than the value adopted for stamp duty purposes, the AO may take such fair market value to be full value of consideration. However, if the fair market value determined by the Valuation Officer is more than the value adopted or assessed for stamp duty purposes, the AO shall not adopt such fair market value and will take the full value of consideration to be the value adopted or assessed for stamp duty purposes. It is also proposed to provide that if the value adopted or assessed for stamp duty purposes is revised in any appeal, revision or reference, the assessment made shall be amended to recompute the capital gains by taking the revised value as the full value of consideration. These amendments will take effect from 1st April, 2003, and will, accordingly, apply in relation to the asstt. year 2003-04 and subsequent years. From the perusal of Notes on Clauses and Memorandum Explaining the Provisions in the Finance Bill, 2002, it becomes explicitly clear that if the consideration declared to be received on sale of land or building or both is less than the value adopted or assessed by any authority of the State Government for the purposes of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of consideration and capital gain shall be computed accordingly under Section 48 of the Act.;


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