TaxTMI 
TaxTMI 
2016 (4) TMI 1175
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....ssee worked out Long Term Capital Gains (LTCGs) on the sale of this property and filed a computation of the same before the A.O. showing the LTC Loss of Rs. 1,38,585/-. The property was sold for an amount of Rs. 45,00,000/- on 29.07.2008. The value of the property for the purpose of stamp duty was fixed at Rs. 2,09,40,000/-. The assessee worked out the cost of acquisition of the property as on 1.4.1981 at Rs. 825/- per sq.mt. on the basis of a valuation report prepared by a Government Approved Valuer. The long term capital loss worked out by the assessee was as under :- Sale consideration of the property Rs. 2,09,40,000/- Less: Fair market value of the property as on 1.4.1981 as determined by the approved valuer Rs. 36,12,750/- Indexed cost of acquisition = 36,12,750 X 582/100 = Rs. 2,10,78,585/- Long Term Capital Loss Rs.1,38,585/- The A.O. did not accept the FMV of the property as on 1.04.1981 as determined by the approved valuer at Rs. 825/- per sq.mt. and observed that the value determined by the approved valuer was on a higher side. the A.O. asked the assessee to explain why the valuation adopted by the approved valuer should not be ....
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..... 13.67 per sq.mt. The appellant claimed the value of this property at Rs. 825/- per sq.mt. as on 01.04.1981 on the basis of the report of a Government approved valuer. The A.O. did not accept this valuation by holding that this was at a much higher rate as compared to some of the sale instances which have been quoted by the A.O. in the assessment order, according to which the value of sale instances as on 01.04.1981 was about Rs. 30/- per sq.mt. The A.O. further observed that the same registered valuer had valued certain other lands @ Rs. 200/- per sq.mt. as on 01.04.1981. The A.O., therefore, adopted the rate of Rs. 115/- per sq.mt. by starting from the purchase price of the land in the year 1972 at Rs. 15/- per sq.mt. and applying an increase of20% per year till 1981. 18. The A.O. also referred the property for valuation to DVO u/s. 55A of the IT.Act. The DVO submitted his report after completion of the assessment i.e. vide his report dated 31.05.2012 determining the value of the property at Rs. 4,65,000/- as on 01.04.1981 i.e. Rs. 106/- per sq.mt. The appellant has objected to this reference to the DVO on the ground that the A.O. could have referred the property to DVO....
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....re-A. However, on a perusal of Annexure A it is seen that no such factors are listed to throw light as to what had influenced the DVO's mind while arriving at the valuation of the property. At point No. 9.1. the DVO has simply stated that he was determining the FMV of the property as on 0l.04.1981 at Rs. 4,65,000/- by applying the rate of Rs. 106/- per sq.mt. However, no basis has been pointed out by the DVO for adopting the rate of Rs. 106/- per sq.mt. For all these reasons, the report of the DVO also cannot be relied upon. 20. Thus, the reports of both the DVO as well as approved valuer of the appellant, cannot be relied upon for the reasons discussed above. The only basis therefore left was the comparison of the comparable instances of sale. The instances listed by the AO in the assessment order are in respect of land situated at a distance of more than 5 kms., as has been pointed out by the appellant from a copy of the map placed at Annexure-13 page no. 111 of the paper book, whereas the sale instances pointed out by the appellant are within ½ km. of the land sold by the appellant. Even, the DVO in his report has not made any adverse observation with regard ....
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....852/- 100 Long term capital gain Rs. 20,33,148/- Therefore, the addition on account of LTCGs is restricted to Rs. 20,33,148/-. The AO is directed accordingly." 6. Against the above order of CIT(A), revenue is in appeal before us and assessee has filed cross objection against upholding of addition of Rs. 20,33,148/-. 7. It was argued by ld. AR that issue with regard to making reference to the valuation officer is covered by the decision of jurisdictional High Court in the case of Puja prints, 360 ITR 697, wherein the Hon'ble High Court held that reference u/s.55A(a) could be made to the DVO only when the value adopted by the assessee was less than the fair market value. As per the Hon'ble High Court when value of property adopted by the assessee was much more than fair market value even as determined by the DVO, invocation of Section 55A(a) was not justified. The court further held that CBDT Circular dated 25-11-1972 has no application as the understanding of the statutory provisions by the revenue as found in the circular issued by the CBDT is not binding upon the assessee and it is open to an assessee to contend to the contrary. Reliance was also placed on the decision of co....
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....further found that the DVO has not taken sale instances pointed out by the assessee and registered valuer in his report. It was observed that the value of any property is primarily and to a large extent on account of value of land, whereas the cost of construction remains almost the same irrespective of where the land is situated. After taking into account all the facts and circumstances of the case as well as sale instances quoted and the allocation of land, the CIT(A) arrived at valuation of Rs. 740/- per sq.mtr., after applying indexation the long term capital gain was worked out at Rs. 20,33,148/-. 10. The issue with regard to making a reference to the DVO for ascertaining value of property as on 1-4-1984 is covered by the decision of Hon'ble Bombay High Court in the case of Puja Prints, 224 Taxman 22, wherein the Hon'ble High Court held that reference can be made to the DVO only if value declared by the assessee is in the opinion of AO is less than its fair market value. In the instant case before us, apparently the value disclosed by the assessee as on 1-4-1981 is much more than the fair market value, therefore, reference to the valuation officer was not correct. The ITAT ....