Section 55A reference and section 54B relief turn on prospective amendment and transfer by possession-coupled agreement.

A reference to the DVO under section 55A for valuing land as on 01.04.1981 was held unsustainable for assessment year 2012-13 because the amendment enlarging that power operated prospectively from assessment year 2013-14. The Registered Valuer's valuation therefore remained the valid value for that date. For section 54B, transfer of the original agricultural land was treated as occurring when the agreement to sell was executed and possession was handed over, attracting section 2(47)(v) read with section 53A of the Transfer of Property Act. The later purchase of new agricultural land was within the permissible period, so deduction under section 54B was allowed.

---

---

Issues: (i) Whether the reference made by the Assessing Officer to the Departmental Valuation Officer for valuing the land as on 01.04.1981 under section 55A was valid, and whether the fair market value determined by the Registered Valuer had to be adopted; (ii) Whether the assessee was entitled to deduction under section 54B in respect of investment in new agricultural lands purchased before the date of execution of the registered sale deed.

Issue (i): Whether the reference made by the Assessing Officer to the Departmental Valuation Officer for valuing the land as on 01.04.1981 under section 55A was valid, and whether the fair market value determined by the Registered Valuer had to be adopted.

Analysis: The applicable law for the assessment year concerned required the Assessing Officer to form the requisite opinion under section 55A as it stood prior to the Finance Act, 2012 amendment. The amendment enlarging the power of reference was held to be substantive and applicable only from assessment year 2013-14 onwards. Since the assessment year involved was 2012-13, the reference made to the DVO could not be sustained. The valuation supported by the Registered Valuer remained the only valid valuation on record for the relevant date.

Conclusion: The reference under section 55A was invalid and the assessee succeeded on this issue; the Registered Valuer's valuation was to be adopted.

Issue (ii): Whether the assessee was entitled to deduction under section 54B in respect of investment in new agricultural lands purchased before the date of execution of the registered sale deed.

Analysis: The decisive question was the date of transfer of the original agricultural land. The agreement to sell was executed and possession was handed over earlier, bringing the transaction within section 2(47)(v) read with section 53A of the Transfer of Property Act, 1882. On those facts, transfer had taken place on the date of the agreement coupled with possession, and the subsequent purchases of agricultural land were within the permissible period for claiming relief under section 54B. The factual findings recorded by the first appellate authority were not rebutted.

Conclusion: The assessee was entitled to deduction under section 54B and the Revenue failed on this issue.

Final Conclusion: The Revenue's appeal failed in full and the relief granted to the assessee was sustained on both valuation and capital gains exemption issues.

Ratio Decidendi: A reference to the valuation officer under section 55A cannot be sustained for an earlier assessment year on the basis of a substantive amendment made effective prospectively, and for section 54B purposes, a transfer occurs when an agreement to sell coupled with possession satisfies section 2(47)(v) read with section 53A of the Transfer of Property Act, 1882.

---