Registered valuer's improvement-cost estimate cannot be rejected without a valuation reference; capital gains require recomputation.

Section 55A requires the Assessing Officer to use the prescribed valuation mechanism where a registered valuer's estimate of indexed cost of improvement is disputed as excessive or unsupported. The notes state that the Assessing Officer could not reject the report outright and treat the improvement cost as nil without referring the valuation to the Departmental Valuation Officer. The registered valuer's reported cost of improvement must therefore be allowed, and capital gains recomputed accordingly.

---

---

Issues: Whether the Assessing Officer could reject the registered valuer's estimate of the cost of improvement and compute capital gains without referring the valuation to the Departmental Valuation Officer.

Analysis: The assessee's claim for indexed cost of improvement was supported by a registered valuer's report. Section 55A permits a reference to the Valuation Officer where the Assessing Officer considers the value claimed on the basis of such report to be at variance with fair market value. Having disputed the estimate as excessive and unsupported, the Assessing Officer was required to obtain a valuation reference rather than reject the claimed improvement cost outright. The rejection without such reference was inconsistent with the applicable valuation mechanism.

Conclusion: The rejection of the registered valuer's report and the treatment of the cost of improvement as nil without a reference to the Departmental Valuation Officer were invalid; the claimed cost of improvement as per the report must be allowed and capital gains recomputed accordingly.

---