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What if Stamp Duty Valuation is higher than actual sale consideration due to distinguishable factors
Notional income is the biggest worry for every taxpayer. Tax is not required to be paid on actual I income but on Notional income.
One such provision is section 50C which requires capitals gain computatiom on the basis of stamp duty valuation or ready reckoner valuation of it is higher than the actual sale consideration.
Section 50 C totally ignores the genuineness of the transactions. Question arises as to whether Departmental Valuation Officer (DVO) can value the property on the basis of other critical factor of the property? If DVO don’t accept the submission, whether objections raised by the Assessee regarding value determined by DVO has to be considered by AO & CIT(A) before adopting Deemed Value of Consideration under section 50C for computation of Capital Gain.”?
It must be noted that Section 50C authorises AO to use the Stamp Duty Value of the Immovable Property as Deemed Value of Consideration where actual sale consideration is less than the Stamp Duty Value of the property.
In such circumstances if assessee finds that stamp duty value is higher than the Fair Market Value of the Property then he can file the return with actual sale consideration by claiming it as full value consideration before AO.
In sich case , AO can refer the matter to DVO for valuation.
As per legal privision, if Value determined by DVO if it exceeds the Stamp Duty Value than , Stamp Duty Value has been accepted as Deemed Sale Consideration u/s 50C.
If the value determined by DVO is less than the Stamp Duty Value in such cases , value determined by DVO is taken as the Deemed Sale Consideration u/s 50C.
Assessee can puts objection before AO as well as before DVO for determing the Fair Market Value of the Property.
What if DVO or AO don’t consider the objection raised by the Assessee ?
Undoubdetly, Value determined by DVO is the expert value and AO is duty bound to adopt this value for determining Deemed Sale Consideration u/s 50C.
Assessee has apl the right to put objections regarding Fair Market Value determined by DVO before DVO, AO as well as before CIT(A).
DVO as well as AO has to offer a fair hearing to the Assessee before computing / finalising the Fair Market Value of the Property on the basis of objections of Assessee.
Even where Assessee raised this issue before CIT(A), proper opportunity of hearing shall be given to the Assessee.
DVO has to consider the objections of Assessee before arriving the final valuation figure which ultimately held as Deemed Value Of Consoderation u/s 50C.
In short, I am of the opinion that AO and CIT(A) has power to advise DVO to revise the Fair Market Value based on objections of Assessee.
This view has find favour of Tribunals.
It was decided in favour of Assessee in the following Cases:
- Smt.Kalavathy Sundaram Vs. ITO.
- Lovy Ranka Vs. DCIT.
Crux of above discussion and above judgement is as under :
- Assessee’s objection has to be considered by DVO to arrive at the final Fair Market Value of the Property.
- AO as well as CIT(A) can advise DVO to determine the Fair Market Value of the property after considering the objections of Assessee.
- It is advisable Assessee has to put his objetions before DVO, AO as well as CIT(A) where value determined by DVO is not acceptable to him.