Tribunal directs property revaluation by Valuation Officer for tax purposes, emphasizes legal procedure importance.

The Tribunal allowed the appeal for statistical purposes, directing the AO to refer the valuation of the property to the Valuation Officer and recompute the taxable capital gain based on the Valuation Officer's report. The Tribunal emphasized the importance of following the legal procedure when disputing a registered valuer's report and provided detailed references to relevant case laws to support its decision. The issues related to the year of assessability and the value of the built-up area allotted by the developer were not pressed by the assessee and were consequently rejected.

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Issues Involved:
1. Assessability of capital gains in the year of entering the development agreement.
2. Valuation of land and building as on 01-04-1981.
3. Adoption of the value of built-up area allotted by the developer.

Detailed Analysis:

1. Assessability of Capital Gains:
The primary issue was whether the capital gains arising from the development agreement should be assessed in the year of entering the agreement or in the year of obtaining construction permission. The Assessing Officer (AO) followed the judgment of the Hon'ble High Court of Andhra Pradesh in the case of Sri Potla Nageswara Rao vs. DCIT, which held that capital gains from a development agreement are taxable in the year of entering the agreement and handing over possession. The assessee contended that the capital gains were not chargeable in the year under consideration as the construction permission was obtained only in December 2013, and no construction was commenced during the year. The AO rejected this argument and assessed the capital gains in the year of the agreement.

2. Valuation of Land and Building as on 01-04-1981:
The AO did not accept the valuation report submitted by the assessee, which was prepared by a registered valuer. The AO adopted the SRO value for the land and building, which was significantly lower than the valuer's estimate. The Tribunal noted that it is a settled law that if the AO disputes the valuation submitted by the assessee, the matter should be referred to the Valuation Officer under Section 55A of the Income Tax Act. The Tribunal cited several case laws to support this view, including:

- Shri Barjinder Singh Bhatti vs. ITO: The Tribunal held that the AO should refer the matter to the Departmental Valuation Officer if not satisfied with the registered valuer's report.
- Ajanta Tubes Ltd: The Tribunal emphasized that the AO must provide evidence to contradict the registered valuer's report or refer the matter to the Valuation Officer.
- ITO vs. Padarti Venkata Rama Chandra Rao: The Tribunal held that the AO erred in adopting the SRO value without referring the matter to the Valuation Officer.

Based on these precedents, the Tribunal directed the AO to refer the valuation of the property to the Valuation Officer and recompute the taxable capital gain accordingly.

3. Adoption of the Value of Built-up Area Allotted by the Developer:
The assessee did not press this ground during the hearing. Consequently, the Tribunal rejected this ground as not pressed.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing the AO to refer the valuation of the property to the Valuation Officer and recompute the taxable capital gain based on the Valuation Officer's report. The Tribunal emphasized the importance of following the legal procedure when disputing a registered valuer's report and provided detailed references to relevant case laws to support its decision. The issues related to the year of assessability and the value of the built-up area allotted by the developer were not pressed by the assessee and were consequently rejected.

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