2016 (9) TMI 1181 - AT - Income Tax

Tribunal Upholds Referral to Valuation Officer Despite Revenue's Objections

The Tribunal dismissed the Revenue's appeal, upholding the Commissioner of Income Tax (Appeals) decision to refer the valuation of land to the Valuation ... Reference to Valuation Officer - fair market value - powers of Commissioner (Appeals) under section 251 - reference under section 55A for valuation - Sub-Registrar value as evidence of market valuePowers of Commissioner (Appeals) under section 251 - reference to Valuation Officer - reference under section 55A for valuation - Validity of the Commissioner (Appeals) directing reference of the assessees' property valuation to the Valuation Officer. - HELD THAT: - The Tribunal held that the Commissioner (Appeals) possesses powers co-terminus with the Assessing Officer when disposing of an appeal and may direct such steps as are necessary in the appeal. A combined reading of the statutory scheme authorising references to a Valuation Officer for ascertaining fair market value (as contemplated by the provisions governing such references) supports the view that the Commissioner (Appeals) may direct a reference to the Valuation Officer. The appellate authority's direction to refer valuation for determination of fair market value was therefore within the scope of his powers and in accordance with law. [Paras 7]Commissioner (Appeals) was justified in directing reference to the Valuation Officer; the direction is within the statutory powers of the appellate authority.Fair market value - Sub-Registrar value as evidence of market value - Whether the Assessing Officer correctly adopted the Sub-Registrar's historical value and treated building value as nil without further determination. - HELD THAT: - The Tribunal noted that the assessee had produced a valuation report claiming a higher cost of acquisition and that the Assessing Officer disagreed with that report relying on the Sub-Registrar's historical entries and on demolition records to treat building value as nil. Given the conflicting materials and the availability of statutory procedure to ascertain fair market value through a Valuation Officer, the Tribunal was not inclined to disturb the Commissioner (Appeals)'s exercise of directing a valuation reference. The Tribunal therefore declined to accept the Revenue's contention that the Assessing Officer's reliance on the Sub-Registrar alone rendered the appellate direction impermissible. [Paras 7]Assessing Officer's unilateral adoption of Sub-Registrar value and treating building value as nil did not preclude the Commissioner (Appeals) from referring valuation to the Valuation Officer; the Tribunal dismissed the Revenue's challenge.Final Conclusion: The Revenue's appeal was dismissed; the Commissioner (Appeals) acted within his powers in directing reference of the property's valuation to the Valuation Officer for determination of fair market value, and the Tribunal declined to disturb that direction. Issues Involved:- Valuation of land referred to Valuation Officer- Distinction in case from Madras High Court decision- Consideration of market value based on Sub-Registrar report- Adoption of fair market value- Dispute over referring the matter to valuation officerAnalysis:Valuation of Land Referred to Valuation Officer:The appeal was filed by the Department against the order of the Commissioner of Income-tax (Appeals) directing the valuation of land to the Valuation Officer. The Revenue contended that this action was against the law and the decision of the Jurisdictional High Court. The Commissioner of Income Tax (Appeals) relied on judicial decisions and directed the matter to the valuation officer, which the Revenue disputed.Distinction in Case from Madras High Court Decision:The Revenue argued that the case of the assessee was different from the decision of the Madras High Court in a specific case due to a distress sale of property. However, the Commissioner of Income Tax (Appeals) considered various arguments and judicial decisions, ultimately directing the matter to the valuation officer in accordance with the law.Consideration of Market Value Based on Sub-Registrar Report:The Assessing Officer adopted the value of the land as per the Sub-Registrar's report, while the assessee claimed a higher fair market value. The Commissioner of Income Tax (Appeals) referred to relevant provisions of the Income Tax Act and directed the matter to the valuation officer for fair market value determination.Adoption of Fair Market Value:The assessee adopted a fair market value for the property as on a specific date, which was disputed by the Assessing Officer. The Commissioner of Income Tax (Appeals) considered the arguments, judicial decisions, and the written submissions filed by the assessee before partially allowing the appeal and directing the matter to the valuation officer.Dispute Over Referring the Matter to Valuation Officer:The Revenue challenged the decision of the Commissioner of Income Tax (Appeals) in referring the matter to the valuation officer. However, after considering the provisions of the Income Tax Act, material on record, and judicial decisions, the Tribunal dismissed the grounds of the Revenue and upheld the Commissioner's decision.In conclusion, the Tribunal dismissed the appeal of the Revenue, upholding the decision of the Commissioner of Income Tax (Appeals) to refer the valuation matter to the valuation officer in accordance with the provisions of the law and judicial decisions cited.