DVO Reference us 50C2 must when assessee requested. It was wrong to say that since stamp value was not challenged there was no such need. This was held in a recent judgment by ITAT Hyderabad.
Case Law Details:
ITA.No.708/Hyd/2014 Assessment Year 2008-2009
T. Vijayasaradhi vs. Addl. CIT
Date of Judgment/Order: 13/05/2016
Brief Facts of the Case:
During the assessment proceedings u/s 143(3) in the case of the appellant assessee, the A.O. observed that the assessee had declared long term capital gain on sale of land with sale consideration of Rs.1 crore whereas the value adopted by the stamp valuation authority (SRO) for the property was Rs.3 crores. He therefore, adopted the value of Rs.3 crores for computation of capital gains. In reply to the show cause notice, the assessee submitted that the said land at alwal was under encroachment including disputes and there were no buyers for the said land. The assessee stated that he could neither use it nor dispose it off due to these complications and the land had to be sold at a price agreed upon in an ‘as is condition’. Therefore the provisions of section 50C were not attracted because the consideration was fixed keeping in view disputes in respect of the property transferred. It was also submitted that the same was brought to the notice of the A.O. through a letter requesting a reference to the DVO. However, the AO on the notion that the assessee never challenged the value adopted by the stamp valuation authority opined that there was no need for a reference to DVO. Accordingly he took Rs.3 crore as sale consideration and computed the long term capital gain.
Aggrieved with the assessment, the assessee preferred an appeal before CIT(A) but in vain.
The Tribunal observed that the assessee had written a specific request to the AO for making a reference to the DVO.
Important Excerpts from ITAT Judgment:
we find that sub-section (2) of section 50C provides that where the assessee challenges the valuation adopted by the SRO to be excessive, then the A.O. is bound to make reference to the DVO for the valuation of the fair market value of the property. Admittedly, in the case before us, there were disputes with regard to the property and assessee had also filed copies of the orders of the Court to demonstrate that there were disputes with regard to the property. In such circumstances, the SRO value of the property cannot be adopted. Further, the A.O. himself has recorded that the assessee had requested for a reference to the DVO for valuation of the property. Such being the case, the A.O. ought to have referred the matter to the DVO. In view of the same, we set aside the orders of both the authorities below and remit the issue to the file of the A.O. with a direction to refer the matter to the DVO for the valuation of the property.
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