|CORAM:||Kul Bharat (JM), Vikram Singh Yadav (AM)|
|CATCH WORDS:||capital gains, deemed income|
|DATE:||July 27, 2016 (Date of pronouncement)|
|DATE:||August 5, 2016 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 50C: Valuation is a matter of estimation and some degree of difference is bound to be there. If the difference between the stamp duty valuation and the declared sale consideration is less than 10%, addition u/s 50C should not be made|
(i) The Pune Bench of the Tribunal in the case of Asstt. CIT vs. Harpreet Hotels (P) Ltd. vide ITA Nos. 1156-1160/Pn/2000 dismissed the appeal filed by the Revenue where the CIT (A) had deleted the unexplained investment in house construction on the ground that the difference between the figure shown by the assessee and the figure of the DVO is hardly 10 per cent.
(ii) The Pune Bench of the Tribunal in the case of ITO vs. Kaaddu Jayghosh Appasaheb, vide ITA No. 441/Pn/2004 for the asst. yr. 1992-93 following the decision of the J&K High Court in the case of Honest Group of Hotels (P) Ltd. vs. CIT (2002) 177 CTR (J&K) 232 had held that when the margin between the value as given by the assessee and the Departmental valuer was less than 10 per cent, the difference is liable to be ignored and the addition made by the AO cannot be sustained.
(iii) In Rahul construction vs. DCIT in ITA No. 1543/PN/2007 (2010) 38 DTR (Pune Trib. It was held that since the difference is less than 10 per cent and considering the fact that valuation is always a matter of estimation where some degree of difference is bound to occur, the AO is not justified in substituting the sale consideration at Rs. 20,55,000/- as against the actual sale consideration of Rs. 19,00,000 disclosed by the assessee.
(iv) In the instant case, the difference between the valuation adopted by the Stamp Valuation Authority and declared by the assessee is less than 10%. Therefore, respectfully following the decision of the Hon’ble Coordinate Bench, we hereby direct the AO to adopt the value as declared by the assessee. This ground of the assessee is allowed.
Sir, in such cases of difference being less than 10% , CBDT can consider issue of instructions to field officers not to make additions . Similar view is taken in disproportionate asset cases also where difference between declared value and estimation by authorities is less than 10-15%. on their own AOs will not consider the judicial view prevailing and go on making additions of small amounts resulting in more litigation.