Court clarifies valuation process under Income Tax Act pre-2012 amendment

The Commissioner of Income Tax-13 Versus M/s. Puja Prints

The Commissioner of Income Tax-13 Versus M/s. Puja Prints - [2014] 360 ITR 697 Issues:
1. Interpretation of Section 55A of the Income Tax Act 1961 regarding reference to the Departmental Valuation Officer for valuation.
2. Validity of the valuation given by the respondent for capital gains calculation.
3. Examination of the ownership of the property in relation to partnership deeds for determining the date of acquisition.

Interpretation of Section 55A:
The appeal challenged the ITAT order regarding reference to the Departmental Valuation Officer under Section 55A of the Income Tax Act. The appellant argued that the Finance Act 2012 amendment should apply retrospectively, but the court held that the law applicable for the Assessment Year 2006-07 was the version before the amendment. The court clarified that the reference to the Valuation Officer is permissible only if the value declared by the assessee is less than the fair market value. The court rejected the revenue's argument that the reference was justified under Section 55A(b)(ii) as the issue fell under Section 55A(a). The court also dismissed reliance on the CBDT Circular, stating it is not binding on the assessee.

Validity of Valuation for Capital Gains:
The respondent claimed a higher valuation for the property, leading to a dispute with the Assessing Officer who referred the valuation to the Departmental Valuation Officer. The Tribunal directed the AO to accept the respondent's valuation based on a registered valuer's report. The court upheld this decision, citing the Daulal Mohta HUF case. It emphasized that the valuation should align with the fair market value, and in this case, the respondent's valuation exceeded the fair market value determined by the DVO. Therefore, the reference to the DVO was not justified under Section 55A(a) of the Act.

Examination of Ownership for Date of Acquisition:
The Tribunal remanded the issue of determining the date of acquisition of the property by the respondent for indexation purposes. The court noted that the revenue did not provide specific submissions on this issue. It concluded that the remand order did not raise substantial questions of law. Therefore, the court dismissed the appeal as it found no substantial legal issues in the remanded matter.