Tribunal partially grants appeal, remits cost apportionment issues, rules in favor of assessee on DVO reference.

The tribunal partly allowed the appeal, remitting issues on apportionment of preliminary costs, common amenities, and interest costs back to the FAA for fresh adjudication. The tribunal decided in favor of the assessee on the additional ground concerning the reference to the DVO. The matter of the cost of settlement with the tenant was dismissed as not pressed.

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Issues Involved:
1. Valuation of land at Boat Club Road, Pune
2. Apportionment of Preliminary Costs & Common Amenities
3. Apportionment of Interest Cost
4. Cost of Settlement with Tenant
5. Reference to Valuation Officer u/s 55A of the Income Tax Act, 1961

Issue-wise Detailed Analysis:

1. Valuation of Land at Boat Club Road, Pune:
- Value as on Date of Conversion (12.06.1995): The CIT(A) confirmed the valuation of the land at Rs. 12,82,41,000 as per the DVO's report. The assessee argued that this valuation was incorrect and should be reconsidered.
- Valuation of Part of the Land Converted in January 2001: The CIT(A) confirmed the valuation at Rs. 94,79,000 instead of the appellant's claimed Rs. 2,04,11,552. The assessee contended that the valuation should be proportional to the area based on the 1995 valuation.

2. Apportionment of Preliminary Costs & Common Amenities:
- Preliminary Costs (Rs. 36,87,001) & Common Amenities (Rs. 76,96,000): The CIT(A) upheld the apportionment of these costs proportionately to Building A based on its saleable area ratio to the total project area. The assessee argued that these costs should be entirely attributed to Building A. The tribunal found that the FAA did not provide a reasoned order and remitted the matter back for fresh adjudication.

3. Apportionment of Interest Cost (Rs. 69,69,203):
- Interest Cost Allocation: The CIT(A) confirmed the apportionment of interest costs proportionately to Building A. The assessee argued that interest should be fully attributed to Building A or, alternatively, apportioned differently. The tribunal remitted the issue back to the FAA for a reasoned order, considering the decision of the jurisdictional High Court.

4. Cost of Settlement with Tenant (Rs. 40,00,000):
- Disallowance as Capital Expenditure: The assessee did not press this ground during the hearing, and it was dismissed as not pressed.

5. Reference to Valuation Officer u/s 55A:
- Legality of Reference: The assessee challenged the AO's reference to the DVO for determining the FMV of the property. The tribunal admitted the additional ground, citing the importance of substantial justice and the legal nature of the issue. It was noted that the AO did not form a clear opinion before making the reference, and the tribunal found no justification for the reference under the specific provisions of section 55A, particularly given that the value shown by the assessee was not less than the FMV. The tribunal reversed the FAA's order on this ground.

Conclusion:
The tribunal allowed the appeal partly, remitting issues related to the apportionment of preliminary costs, common amenities, and interest costs back to the FAA for fresh adjudication, while deciding the additional ground regarding the reference to the DVO in favor of the assessee. The issue of the cost of settlement with the tenant was dismissed as not pressed.

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