2015 (10) TMI 1435 - AT - Income Tax

Tribunal upholds deduction for investments, directs re-evaluation of property valuations

The Tribunal dismissed the Revenue's appeal challenging the relief granted by the CIT(A) regarding deduction u/s 54EC, upholding the CIT(A)'s decision to ... Determination of Fair Market Value - determination of claim of deduction u/s 54EC - Held that:- As neither the basis on which the AO has made the valuation nor the valuation report of the Assessee is before us, we are unable to ascertain all the facts in the present case. In these circumstances, in the interest of justice we are of the view that the issue of Fair Market Value of the said two properties as on 1.4.1981 is liable to be restored to the file of the AO who shall obtain a proper valuation from the District Valuation Officer (DVO) in respect of the Fair Market Value of the said properties and re-decide this issue after granting the Assessee adequate opportunity to substantiate his claim and we do so. - Decided partly in favour of assessee for statistical purpose. Issues:1. Challenge to the relief granted by CIT(A) regarding deduction u/s 54EC.2. Dispute over valuation for indexation as on 1.4.1981 for two properties.Analysis:Issue 1:The appeal by the Revenue contested the CIT(A)'s decision to grant relief of Rs. 29,80,000 disallowed by the AO concerning the deduction u/s 54EC exceeding the permissible limit of Rs. 50 lacs specified in Sec. 54EC. The Assessee had invested in REC Bonds Rs. 50 lacs on 28.2.2011 and an additional Rs. 29,80,000 in the subsequent financial year on 16.4.2011, claiming deduction u/s 54EC for both investments. The AO denied the claim citing the restriction to Rs. 50 lacs under Sec. 54EC. The CIT(A) allowed the Assessee's deduction as the investments were made in two different financial years. The issue was compared to a decision by the Hon'ble Madras High Court, supporting the Assessee's stance. The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision.Issue 2:Regarding the Cross objection, the Assessee challenged the CIT(A)'s confirmation of the valuation for indexation as on 1.4.1981 for properties at Verna and Murida. The Assessee's valuation report differed significantly from the AO's valuation based on the Sub-Registrar's assessment. However, neither the AO's valuation basis nor the Assessee's report was presented to the Tribunal for comparison. The Tribunal highlighted the absence of crucial valuation reports and decided to restore the issue of Fair Market Value to the AO. The AO was directed to obtain a proper valuation from the District Valuation Officer (DVO) for the properties and re-evaluate the matter, granting the Assessee a fair opportunity to substantiate the claim. Consequently, the Cross objection by the Assessee was partly allowed for statistical purposes.In conclusion, the Tribunal's judgment dismissed the Revenue's appeal and directed a re-evaluation of the valuation issue by the AO, emphasizing the importance of proper valuation reports and due process in determining Fair Market Value.