TaxTMI 
TaxTMI 
2016 (5) TMI 712
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....Registrar (Class 2) Jalna-1 has sold the land situated at Survey No.44 to the extent of 1 Hector 23R for Rs. 88,65,000/- to M/s. Om Sai Ram Steel and Alloys Pvt. Ltd., Jalna. The fair market value for the purpose of stamp duty was also determined by the State Govt. authorities at Rs. 88,65,000/-. 2.1 On going through the computation of long term capital gain on sale of land, the AO noted that the assessee has shown substantial cost of acquisition of land as on 01-04-1981 at Rs. 12,76,576/- and indexed cost of acquisition at Rs. 80,67,960/-. After reducing the indexed cost of acquisition of Rs. 80,67,960/- from the sale consideration of Rs. 88,65,000/-, the assessee has worked out the long term capital gain at Rs. 7,97,040/-. To support the claim of cost of acquisition as on 01-04-1981 at Rs. 12,76,576 the assessee furnished a certificate dated 03-09- 2010 from Shri C.V. Chandekar, Government approved valuer. The Government approved valuer, for ascertaining the fair market value as on 01-04-1981, applied and calculated the reduction factor for the value of sale deed as on the date of sale which according to the AO is absolutely a wrong method. Therefore, he held that the fair marke....
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....gued that the valuation of land as on 01-04-1981 adopted by the assessee is correct and the value of the land arrived at by the DVO is incorrect. It was argued that the comparable sale instance given by the DVO, i.e. property located at Survey No.501 and Survey No.10 as given in the valuation report are not comparable with the property sold by the assessee. It was argued that the ready reckoner rates were declared by the Government of Maharashtra in 1989 and the ready reckoner rate for the property sold by the assessee is Rs. 200/- per sq.mtr in the year 1989 whereas the DVO has considered ready reckoner rate at Rs. 125/- per sq.mtr. It was submitted that rate as on 01-04-1981 is 40% of ready reckoner rate of 1989. However, the DVO in the instant case has valued the property at a minimum value by adopting various slab rates, i.e., for first 4,000 sq.mtrs at Rs. 1,00,000, next 3000 sq.mtrs at Rs. 1,20,000/- and for the remaining portion at Rs. 1,66,000/-. The action of the DVO to value a single property in 3 different slabs is unjust and should be discarded. It was also submitted that the value adopted by the Sub Registrar office is usually lower than the market value. The assessee ....
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....ssee was not less than its fair market value, reference to DVO u/s 55A is not permissible. The Hon'ble Court has further held that the amendment in section 55A(a) by substituting the words "is at variance with its fair market value" for the words "is less than its fair market value is applicable from 01/07/2012 and cannot be considered as clarificatory, having retrospective application. The Hon'ble Court has also rejected the reliance placed by the revenue on CBDT Circular No.96 dated 25/11/1972. The Hon'ble Court has also rejected the contention of the revenue that the A.O. has power for call for the report from the DVO to determine fair market value u/s 131, 133(6) and 142(2) of the Act. (2) Smt.Krushnabai Tingre Vs. ITO (2006) 101 ITD 317 (Pune) In this case, it has been held that reference to DVO can only be made in cases where the value of capital asset shown by the assessee is less than its Fair Market Value; value of land as on Ist April, 1981, shown by the assessee on the basis of approved valuer's report being more than its Fair Market Value, reference u/s 55A was not valid . (3) Smt.Sarala N. Sakraney Vs. ITO [2011]130 ITD 167 (Mum) In this case, it h....
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....g the property for valuation by DVO u/s.55A of the Act and following the said valuation report of the DVO. The addition of Rs. 66,68,712/- is, therefore, deleted. The first issue raised by the appellant is allowed. 9. The second issue to be decided is whether the valuation of the land as on 01/04/1981 claimed by the appellant or arrived at by the D.V.O. is to be adopted for arriving at capital gain on sale of impugned agricultural land. In this regard, it is to be noted that while deciding the first issue, it has been held that the reference made by the A.O. u/s 55A of the Act for valuing the impugned property is bad-in-law and hence the value of the property' claimed by the appellant on the basis of Registered Valuer's report is required to be accepted. In this regard, it has also been noticed that the report of the Registered Valuer is based on valuation given by the Stamp Duty Authorities. It has also been noticed that the provisions of section 50C. 56(2) and section 43CA also lay down that while assessing income of the assessees the sale consideration is to be considered at the value of the property for Stamp Duty purpose and the same cannot be considered less than the....
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....55A that, in a case where capital asset become property of the assessee before 1.4.1981 and assessee has option of substituting fair market value as the cost of asset in such cases adoption of higher value as the fair market value as on 1.4.1981 was rampant and leading to lower amount of capital gain being offered to tax. 4. The learned CIT(A) erred in coming to a conclusion that, this amendment is effective from 1.7.2012 in respect of transaction executed after the said date when in fact the section intends to proved the powers to the AO for reference to valuation in cases of positive or negative variances. 5. It is inconvincible to think that, the provisions would apply to instances after 1.7.2012 when section by itself speaks of valuation as on 1.4.1981. It is clear that, powers are intended to be provided to the AO for reference to valuation substantially variance in respect of value as on 1.4.1981. 6. Under the facts and circumstances of the case the variance in the value adopted as on 01-04-1981 being substantial, the reference made by to the DVO was correct. This can also be borne out from the valuation report of the DVO arriving at fair market value as on 01-04- 1981 at ....
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.... by referring the matter for valuation to the DVO u/s.55A of the I.T. Act. 12. We do not find any infirmity in the order of the CIT(A). We find the provisions of section 55A reads as under : "55A - Reference to Valuation Office With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the [Assessing] Officer may refer the valuation of capital asset to the Valuation Officer - (a) In a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the [Assessing] Officer is of opinion that the value so claimed [is at variance with its fair market value]; (b) . . . . . . . ." 13. We find the words "is at variance with its fair market value" were substituted for "is less than its fair market value" by the Finance Act, 2012 w.e.f. 01-07-2012. Therefore, the question that arises is as to whether prior to insertion of the words "is at variance with its fair market value" the AO has the power to refer the matter to the DVO where the value declared by the assessee is more than the fair market value. We find identical issue had come up before the Hon'ble Bombay High Court in th....
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....very clearly reference could be made to Departmental Valuation Officer only if the value declared by the assessee is in the opinion of Assessing Officer less than its fair market value. 9. The contention of the revenue that the reference to the Departmental Valuation Officer by the Assessing Officer is sustainable in view of Section 55A(a) (ii) of the Act is not acceptable. This is for the reason that Section 55A(b)of the Act very clearly states that it would apply in any other case, i.e. a case not covered by Section 55A(a) of the Act. In this case, it is an undisputable position that the issue is covered by Section 55A(a) of the Act. Therefore, resort cannot be had to the residuary clause provided in Section 55A(b)(ii) of the Act. In view of the above, the CBDT Circular dated 25 November 1972 can have no application in the face of the clear position in law. This is so as the understanding of the statutory provisions by the revenue as found in Circular issued by the CBDT is not binding upon the assessee and it is open to an assessee to contend to the contrary. 10. The contention of the revenue that the Assessing Officer is entitled to refer the issue of valuation of the property....
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....e is less than the fair market value that the AO has power to refer the matter to the DVO u/s.55A of the Act prior to 01-07- 2012. Since the assessment year involved in the instant case is A.Y. 2010-11 and since the value adopted by the assessee as on 01-04-1981 is more than the fair market value, therefore, the AO has no power to refer the matter to DVO u/s.55A of the I.T. Act. The argument of the Ld. Departmental Representative that the amendment will apply to pending cases in our opinion is also not correct in view of the decision of Hon'ble Bombay High Court cited (Supra). We therefore uphold the order of the CIT(A) on this issue and the grounds raised by the revenue are dismissed. ITA No.674/PN/2014 (Shri Surendra Shrirangprasad Mehra) : 15. Grounds raised by the revenue are as under : "1. On the facts and circumstances of the case the CIT(A) erred in deleting the addition made at Rs. 99,18,640/- on account of long term capital gain. 2. Under the facts and circumstances of the case the learned CIT(A) erred in coming to a conclusion that the provisions of section 55A of the IT Act,1961 by way of reference to a DVO by the Assessing Officer is operative with effect from 1.7.....