ACIT v. MIL Industries Ltd. (2013) 21 ITR 627 (Chennai) (Trib.)

S.50C: Capital gains-Full value of consideration-Value for stamp purposes-Applies mandatorily when

consideration stated by assessee less than guideline value-Appellate authority not bound by valuation by

Valuation Officer-Entitled to fix value below that determined by Valuation Officer.

The assessee sold a portion of the land of its factory property for a consideration of Rs.2, 22,64,409. At the time, the guideline value adopted by the registering authority was Rs. 3,95,91,000. In the computation of long-term capital gains the assessee adopted the consideration at Rs. 2, 22,64,409 but, the Assessing Officer held that the guideline value of Rs. 3,95,91,000 must be adopted in computing the long-term capital gains. On the assessee's request the Assessing Officer referred the matter to the Valuation Cell under section 50C of the Income-tax Act, 1961. But since the Assessing Officer had to complete the assessment before the limitation period expired he completed the assessment before the Valuation Report was available adopting the guideline value of Rs.3,95,91,000. The District Valuation Officer finally valued the property at Rs.3,54,73,536. On appeal, the Commissioner (Appeals) held that the valuation report was not binding on the appellate authorities and determined the consideration at Rs. 2.25 crores. On appeal by the Department, the Tribunal held thatthe document consideration was less than the guideline value. The deeming provision of section 50C(1) operated, howeverit was within the authority of the appellate authority to hear the assessee on the question of value of

consideration and grant appropriate relief, depending upon the facts and circumstances of the case. The Commissioner (Appeals) determined the valuation at Rs 2.25 crores. On appeal by revenueThe Tribunal heldthat when all these variables were changing from time to time, from authority to authority, it was not possible to reject the contentions of the assessee as a whole. Nor could the valuation reported by the Valuation Officer be accepted as sacrosanct. Taking into all aspects of the case, the consideration accountable in the hands of the assessee-company for the purpose of section 50C was to be fixed at Rs. 2.5 crores and the long-term capital gains assessable in the hands of the assesse company was to be accordingly modified. Departmental appeal was partly allowed. (A.Y. 2005-2006)