TaxTMI 
TaxTMI 
2017 (6) TMI 1148
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....t of long term capital gains on sale of hotel land and building made on 16.01.2010. 2] The learned CIT(A) erred in adopting the fair market value of hotel property as on 01.04.1981 at Rs. 41,400/- as determined by the DVO as against the fair market value of Rs. 45,37,500/- determined by the Govt. Approved Valuer for the purposes of computing long term capital gains on sale of the impugned property. 3] The learned CIT(A) failed to appreciate that the fair market value of hotel property as on 01.04.1981 claimed by the assessee on the basis of Govt. approved valuer's report was more than the fair market value sought to be adopted by the A.O. and hence, the reference made to the DVO u/s 55A for the current year was bad in law and ther....
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....e than the Fair Market Value sought to be adopted by the Assessing Officer. 4. The learned Authorized Representative for the assessee at the outset pointed out that the issue raised in the present appeal is squarely covered by the order of Tribunal in the case of Shri Rajendra Keshavrao Kulkarni, who is brother of assessee and was co-owner of the property. Another point raised by the learned Authorized Representative for the assessee was that the Registered Valuer had adopted the cost of acquisition of land to be the Fair Market Value as on 01.04.1981 and had also valued the structure thereon at Rs. 45 lakhs, whereas the DVO had erred only in considering the value of land for determining the Fair Market Value of the land as on 01.04.1981. ....
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....O at Rs. 41,400/- and the cost of super structure was separately worked out but the same was not considered by the Assessing Officer while computing the income from long term capital gains in the hands of assessee. 7. The first issue which needs to be addressed in the present case is the action of Assessing Officer in making reference under section 55A of the Act to the DVO to determine the Fair Market Value of property as on 01.04.1981 on the surmise that the value declared by the assessee is higher. I find identical issue of reference under section 55A of the Act to the DVO by the Assessing Officer arose in the case of brother of assessee who was the co-owner of the property. The Tribunal in ITA No.1340/PN/2015, relating to assessment ye....
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....s appeal need not be entertained. However, as submissions were made on merits, we have independently examined the same. 7. We find that Section 55A(a) of the Act very clearly at the relevant time provided that a reference could be made to the Departmental Valuation Officer only when the value adopted by the assessee was less than the fair market value. In the present case, it is an undisputed position that the value adopted by the respondentassessee of the property at Rs. 35.99 lakhs was much more than the fair market value of Rs. 6.68 lakhs even as determined by the Departmental Valuation Officer. In fact, the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer only because in his view the valuation o....
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....not 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 to the Departmental Valuation Officer in exercise of its power under Sections 131, 133(6) and 142(2) of the Act is entirely based upon the decision of the Guwahati High Court in Smt. Amiya Bala Paul (supra). Howev....
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....appeal is dismissed with no order as to costs." 9. The Hon'ble Bombay High Court in the case of CIT Vs. Daulal Mohta (HUF) reported in 360 ITR 680 has held that reference to DVO can only be made in a case where value of asset shown by the assessee is less than its fair market value of the land. 10. In view of the above binding precedents of the Hon'ble jurisdictional High Court and considering the fact that the fair market value as on 01-04-1981 claimed by the assessee on the basis of the registered valuer's report was more than the fair market value sought to be adopted by the AO, therefore, no reference could have been made by the AO u/s.55A of the Act to the DVO. In view of the above discussion, I set aside the order of the CIT(A) ....