Capital gains: Section 50C: A. Y. 2003-04: Stamp duty value higher than sale consideration: Reference to DVO: Report of DVO binding on AO:

In the previous year relevant to the A. Y. 2003-04, the assessee sold an immovable property for a consideration of Rs. 51,75,000/-. The Assessing Officer applied section 50C and substituted the stamp duty value of Rs. 1,38,00,000/- for the consideration. Assessee’s registered valuer valued the property at Rs. 48,37.500/. Assessing Officer rejected the said value and referred the matter to the DVO for determining the market value. The DVO determined the market value of the property at Rs. 58,50,000/- The Assessing Officer rejected the DVO’s report and adopted the stamp duty valuation. The Tribunal held that the valuation by the DVO had to be adopted.

On appeal by the Revenue, the Allahabad High Court upheld the decision of the Tribunal and held as under:

“i) Section 50C of the Act provided 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, the Assessing Officer may refer the valuation of the relevant asset to a Valuation Officer in accordance with section 55A. Generally, when the Assessing Officer has obtained the report of the DVO it is binding on him.

ii) The valuation of the DVO had to be adopted.”