TaxTMI 
TaxTMI 
2017 (9) TMI 1221
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....etails of expenditure for earning exempt income. The assessee submitted its reply that no expenses were incurred for earning dividend income and the investments were made out of surplus funds of the assessee. Not convinced with the submissions of the assessee and not satisfied with the claim of the assessee that no expenditure was incurred for earning exempt income, the Assessing Officer invoking the provisions of Rule 8D computed the disallowance at Rs..78,96,449/- comprising of interest of Rs..37,28,564/- under Rule 8D2(ii) and towards administrative expenses of Rs..35,56,410/- being 0.5% of average value of investments under Rule 8D2(iii). 4. Assessee preferred an appeal before the Ld.CIT(A) and the Ld.CIT(A) in so far as interest is concerned accepted the contentions of the assessee that the investments were made out of own funds, deleted the interest disallowance. While coming to the said conclusion Ld.CIT(A) examined the bank account of the assessee and found that the funds were invested from out of the sale proceeds of land and there is one to one correlation. Following the decision of the Hon'ble Bombay High Court in the case of Reliance Utilities and Power Ltd [313 IT....
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.... account understatement of capital gains. 10. Briefly stated the facts are that the Assessing Officer while completing the assessment noticed that in the return of income assessee declared long term capital gain of Rs..164,02,62,678/- on sale of land and claimed exemption u/s 56EC of the Act. Assessing Officer also noticed that assessee claimed indexed cost of acquisition at Rs..31,32,65,612/- by adopting the cost as on 01.04.1981 at Rs..5,68,54,013/-. Assessing Officer noticed that revaluated cost of the land at Rs..5,68,54,013/- as on 01.04.1981 was taken on the basis of valuation report of the Registered Valuer. Assessing Officer was of the view that the fair market value as on 01.04.1981 arrived by the Registered Valuer does not based upon any comparative sale instance in the immediate vicinity of the locality. He was also of the opinion that the estimation made by the Registered Valuer did not have any basis. Therefore, the property was referred to Departmental Valuation Officer (in short "DVO") u/s 55A(b)(ii) of the Act to find out the fair market value of the property as on 01.04.1981 and as on 04.02.2008. The DVO determined the fair market value of the property at Rs..3,58....
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....ng the valuation to the DVO for such reference is that, the fair market value as on 01.04.1981 arrived by the Registered Valuer of the assessee is not based upon any comparative sale instances and the estimation made by the Registered Valuer did not have any basis. This is the only reason the Assessing Officer recorded for refereeing the matter for valuation u/s 55A(b)(ii). The Assessing Officer has not given any extraordinary circumstances and the circumstances warranting for reference in relation to the asset in question for reference u/s 55A(b)(ii) of the Act. The reference u/s 55A(b)(ii) can only be made in the circumstances when it does not fall u/s 55A(a). The Assessing Officer has not given any reasons why the reference should not be made u/s 55A(a) and why it should be made u/s 55A(b)(ii) which is a residuary provision. Admittedly in this case the valuation adopted by the Registered Valuer is based on the stamp duty valuation and the stamp duty valuation was applied only on the land portion excluding the structures i.e administrative building on such land. Therefore, the observation of the Assessing Officer that valuation adopted by Registered Valuer has no basis is not cor....
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....icer 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 respondent-assessee 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 of the property as on 1981 as made by the respondent-assessee was higher than the fair market value. In the aforesaid circumstances, the invocation of Section 55A(a) of the Act is not justified. 8. The contention of the revenue that in view of the amendment to Section 55A(a) of the Act in 2012 by which the words "is less than the fair market value" is substituted by the words " "is at variance with its fair market value" is clarifactory and should be given retrospective effect. This submission is in face of the fact that the 2012 amendment was made effective only from 1 July 2012. The Parliament has not given retrospective effect to the amendment. Therefore, the law to be applied in the present case is Section ....