2016 (8) TMI 1528 - AT - Income Tax

Tribunal Upholds Appellant's Fair Market Value Position, Confirms Relief Grant

Dy. Commissioner of Income Tax, Circle-7, Ahmedabad Versus Vinod Harilal Mehta

The Tribunal upheld the decision to reject the Departmental Valuation Officer's report and maintain the appellant's position on the fair market value of ... LTCG computation - Reference to DVO for ascertaining the fair market value as on 1.4.1981 - whether CIT(A) has erred in law and on facts on reducing the LTCG by rejecting the valuation report of the Departmental Valuation Cell and adopting the Valuation Report of the Regd. Valuer? - HELD THAT:- We find that the issue is squarely covered by the case of GAURANGINIBEN S. SHODHAN INDL. [2014 (2) TMI 78 - GUJARAT HIGH COURT] prior to the amendment in section 55A with effect from 1.7.2012 in a case, the value of the asset claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer was of the opinion that the value so claimed was less than its fair market value as on 1.4.1981. It would not be the case of the Assessing Officer that the value of the asset shown as on 1.4.1981 was less than the fair market value. Such clause, therefore, as it stood at the relevant time, had no application to the valuation as on 1.4.1981. Thus we confirm the relief granted by the learned CIT(A) and decline to interfere in the matter. - Decided against revenue. Issues:Challenging the correctness of the order reducing LTCG, Interpretation of provisions of section 55A of the I.T. Act, Upholding the order of the Assessing Officer enhancing LTCG.Analysis:1. The Assessing Officer challenged the order reducing Long Term Capital Gains (LTCG) by rejecting the Departmental Valuation Cell's report and adopting the Valuation Report of the Registered Valuer. The dispute centered around the interpretation of section 55A of the Income Tax Act, with the Assessing Officer arguing for the adoption of the Departmental Valuation Officer's report. The appellant contended that the Finance Bill 2012 amendment supported their position that the Assessing Officer cannot substitute the value provided by the DVO if the appellant submitted a government-approved valuer report. The Assessing Officer sought to enhance the LTCG based on their valuation.2. The material facts revealed that the Assessing Officer, dissatisfied with the fair market value of a property sold by the assessee, referred the matter to the DVO under section 55A(b)(ii) of the Income Tax Act. The Assessing Officer recomputed the capital gains based on the DVO's report, differing significantly from the value adopted by the assessee. The CIT(A) reversed the Assessing Officer's action, citing the Finance Bill 2012 amendment and the appellant's submission of a government-approved valuer report as justifying the rejection of the DVO's valuation.3. The Tribunal considered the arguments, examined the facts, and evaluated the legal position applicable to the case.4. The Tribunal found that the issue was decisively addressed in the judgment of the Hon'ble Gujarat High Court in CIT vs. Gauranginiben S. Shodhan. The High Court's judgment clarified that prior to the 2012 amendment, references to the DVO for ascertaining fair market value as of 1.4.1981 were not competent unless specific conditions were met. The High Court highlighted the inapplicability of certain clauses and subclauses in the context of valuation as of 1.4.1981, providing a clear legal framework for such cases.5. Following the precedent set by the Hon'ble Gujarat High Court, the Tribunal confirmed the relief granted by the CIT(A) and declined to interfere in the matter, upholding the decision to reject the DVO's valuation and maintain the appellant's position on the fair market value.6. Consequently, the appeal was dismissed, and the judgment was pronounced on August 30, 2016.