Pr. Commissioner of Income-tax-15 v. Modern Lace House
[Citation -2019-LL-0806-77]

Citation 2019-LL-0806-77
Appellant Name Pr. Commissioner of Income-tax-15
Respondent Name Modern Lace House
Court HIGH COURT OF DELHI AT NEW DELHI
Relevant Act Income-tax
Date of Order 06/08/2019
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags district valuation officer • long term capital loss • barred by limitation • sale consideration • fair market value • valuation report • stamp duty
Bot Summary: The Revenue is in appeal against the order dated 28th May, 2018 passed by the Income Tax Appellate Tribunal in ITA No. 1032/Del/2015 for the Assessment Year 2011-12. The question of law sought to be urged by the Revenue is whether the Commissioner of Income Tax CIT and ITAT erred in ITA 30/2019 Page 1 of 4 deleting an addition of Rs. 4,58,68,000/- made by the Assessing Officer, based on the value adopted by the Stamp Duty Officer in terms of Section 50 C of the Income Tax Act, 1961 4. Where a reference had been made to the DVO, the AO was duty-bound to wait for the report before finalizing the assessment. Learned counsel for the Revenue sought to urge that the Assessee sought a reference to the DVO only at the last minute and that the AO is justified in declining to accept the request and in proceeding to finalize the assessment. The CIT(A) in the order dated 1st October, 2014 held that under Section 50(3) of the Act, the value adopted for payment of stamp duty can be adopted as sale consideration only if the fair market value determined by DVO is less than the value adopted for stamp duty purposes. The Court fails to appreciate how an AO can avoid making a reference to the DVO, when it is made more than one month earlier than the final date of completion of the assessment. The mandatory language of Section 50 C does not allow the AO to avoid making a reference thereunder and in surmising that the valuation report would not be received before the time limit for completion of assessment.


IN HIGH COURT OF DELHI AT NEW DELHI ITA 30/2019 PR.COMMISSIONER OF INCOME TAX-15 Appellant Through: Ms.Lakshmi Gurung, Senior Standing Counsel , Mr.Tushar Gupta, Junior Standing Counsel and Mr.Siddharth Gupta, Advocate. versus M/S MODERN LACE HOUSE Respondent Through: None. CORAM: JUSTICE S.MURALIDHAR JUSTICE TALWANT SINGH ORDER 06.08.2019 C.M.No.1736/2019 (Delay) 1. For reasons stated therein, delay in re-filing appeal is condoned. application is disposed of. ITA 30/2019 2. Revenue is in appeal against order dated 28th May, 2018 passed by Income Tax Appellate Tribunal (ITAT) in ITA No. 1032/Del/2015 for Assessment Year (AY) 2011-12. 3. question of law sought to be urged by Revenue is whether Commissioner of Income Tax (Appeal) [CIT (A)] and ITAT erred in ITA 30/2019 Page 1 of 4 deleting addition of Rs. 4,58,68,000/- made by Assessing Officer (AO), based on value adopted by Stamp Duty Officer in terms of Section 50 C of Income Tax Act, 1961 ( Act )? 4. facts in brief are that Assesse, engaged in business of knitted fabric and export of garments, filed return for AY 2011-12, declaring loss of Rs. 11,44,200/-. Besides above, Assessee carried forward Rs.2,35,72,000/- as long term Capital Loss on sale of factory land. factory was claimed to have been sold by Assessee for Rs.10.25 crore, whereas property was valued at Rs.14,83,68,000/- for stamp duty purposes. Before AO, Assessee requested matter to be referred to District Valuation Officer (DVO) for ascertaining its Fair Market Value. This request was made on 20th February 2014, whereas according to AO, assessment would be barred by limitation on 31st March, 2014. On ground that there was no likelihood of valuation report being received before above date, AO proceeded to pass assessment order on 20th February, 2014 itself. 5. In appeal filed by Assessee, CIT (A) noted that AO had not complied with Section 50 C(2) read with 50 C(3) of Act. Where reference had been made to DVO, AO was duty-bound to wait for report before finalizing assessment. Relying on decision of Madras High Court in N. Meenakshi v. ACIT [2010] 326 ITR 229 (Madras), CIT (A) deleted additions. ITA 30/2019 Page 2 of 4 6. Revenue s appeal was dismissed by ITAT by impugned order, by referring to decisions of its coordinate benches, as well as aforementioned decision of Madras High Court. 7. Learned counsel for Revenue sought to urge that Assessee sought reference to DVO only at last minute and that AO is justified in declining to accept request and in proceeding to finalize assessment. 8. CIT(A) in order dated 1st October, 2014 held that under Section 50 (C)(3) of Act, value adopted for payment of stamp duty can be adopted as sale consideration only if fair market value determined by DVO is less than value adopted for stamp duty purposes. In present case since report had not been obtained by making reference to DVO, addition made by AO was held not to be in accordance with Act. 9. This appears to be consistent view taken by ITAT in several cases, which have been referred to by CIT (A) in aforementioned order. Court fails to appreciate how AO can avoid making reference to DVO, when it is made more than one month earlier than final date of completion of assessment. It is not for AO to presume that valuation report would not be received in time. mandatory language of Section 50 C does not allow AO to avoid making reference thereunder and in surmising that valuation report would not be received before time limit for completion of assessment. That per se would not justify proceeding with making addition when there was specific request for reference of matter to DVO. ITA 30/2019 Page 3 of 4 10. view taken by CIT (A) and ITAT in facts and circumstances of case cannot be said to be perverse. No substantial question of law arises. appeal and pending application are, therefore, dismissed. S. MURALIDHAR, J. TALWANT SINGH, J. AUGUST 06, 2019 mr ITA 30/2019 Page 4 of 4 Pr. Commissioner of Income-tax-15 v. Modern Lace House
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