TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 1549
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....e of a plot. All these three assessee's are challenging the additions of Rs. 6,98,630/-, 1,74,650/- & 13,97,290/- in their respective heads i.e Ilaben K. Patel, Babubhai Ramanlal Patel & Shantaben P Patel under the head long term capital gain. 3. Brief facts of the case are that assessee's were co-owners of a property which was sold for Rs. 5,10,00000/-. Smt. Ilaben K. Patel was having 1/32 shares in the property. While computing the capital gain they have adopted the cost of acquisition as on 01.04.1981 at Rs. 800 per sq. meter. The Ld. Assessing Officer made reference to the DVO for valuation of the property as on 01.04.1981. The valuation officer has determined the value of the property at Rs. 36,54,000/- as against Rs. 67,98,400/- adopted by the assessee's. In other words the assessee's have worked out the cost of acquisition as on 01.04.1981 @ 800 per sq. meter whereas valuation officer worked out the value @ Rs. 430/- per sq. meter. The Assessing Officer after taking into consideration the cost of acquisition at the value of 430 per sq. meter worked out the capital gain assessable in the hands of each assessee according to their share in the property. 4. Appeal to the Ld. C....
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....Such clause, 'therefore, as it stood at the relevant time, had no application to the valuation as on 1.4.1981. We are conscious that with effect from 1.7.2012, the expression now used in clause (a) of section 55A is "is at variance with its fair market value". The situation may, therefore, be different after 1.7.2012. We are, however, concerned with the period prior thereto. Clause (b) of section 55A is in two parts and permits a reference to DVO if the Assessing Officer is of the opinion that (i) the fair market value of the asset exceeds the value of the asset so claimed by the assessee by more than such percentage of the value of the asset so claimed or by more than such amount as may be prescribed in this behalf; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do. Sub-clause (i) of clause (b) also for the same reasons recorded above, would have no bearing on the fair market value as on 1.4.1981. The Assessing Officer had not resorted to subclause( ii) of clause (b). In any case, clause (b) would apply where clause (a) does not apply since it starts with the expression "in any other case". In other words if assess....
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....n. 10. In the case of Babubhai Ramanlal Patel there is one more ground of appeal whereby assessee has challenged disallowance of interest expense of Rs. 2,02,376/-. The brief facts of the case are that on scrutiny of the account it reveals to the Assessing Officer that assessee has borrowed loan @ 12% and he has given loans @ 6% to the persons covered under section 40A(2)(b). Ld. Assessing Officer has made an analysis and disallowed interest expenditure by a sum of Rs. 2,02,376/-. 11. Appeal to the CIT(A) did not bring any relief to the assessee. 12. Before us it was contended that assessee is in the business. It has used the borrowed fund for the purpose of the business when funds were lying ideal and not required for the purpose of the business then in order to reduce burden of interest expenditure, he has given these funds on a lower rate of interest. 13. I have duly considered the rival contention and gone through the record carefully. Section 40A(2)(b) of the Income tax Act contemplates that if an assessee incurred expenditure for availing the services or purchase of a goods from the persons mentioned in sub-clause-(b) and make them payments over and above the market price....
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....400/- adopted by the assessee's. In other words the assessee's have worked out the cost of acquisition as on 01.04.1981 @ 800 per sq. meter whereas valuation officer worked out the value @ Rs. 430/- per sq. meter. The Assessing Officer after taking into consideration the cost of acquisition at the value of 430 per sq. meter worked out the capital gain assessable in the hands of each assessee according to their share in the property. 4. Appeal to the Ld. CIT(A) did not bring any relief to the assessee. 5. Before me Ld. Counsel for the assessee contended that issue in dispute is squarely covered in favour of the appellant by the decision of Hon'ble Gujarat High Court rendered in the case of CIT vs. Gauranginiben S. Shodhan Indl. reported in 367 ITR page 238. He pointed out that Assessing Officer had no power to refer the matter to the DVO as per section 55A of the Act, as the value shown by the appellants was not less than fair market value which is a basic condition for referring the matter to the DVO. He further pointed out that in the case of other co-shares namely Late Shri Ramanbhai Kakubhai Patel this proposition was accepted by the CIT(A) whose order is placed on page No. 71....
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....hat having regard to the nature of the asset and other relevant circumstances, it is necessary so to do. Sub-clause (i) of clause (b) also for the same reasons recorded above, would have no bearing on the fair market value as on 1.4.1981. The Assessing Officer had not resorted to subclause( ii) of clause (b). In any case, clause (b) would apply where clause (a) does not apply since it starts with the expression "in any other case". In other words if assessee has relied upon a Registered Valuer's Report, Assessing Officer can proceed only under clause (a) and clause (b) would not be applicable. 16. In the present case, admittedly the assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset. Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) thereof as held by the Division Bench of this Court in the case of Hiaben Jayantilal Shah v. ITO [20091 310 1TR 31/181 Taxman 191 (Guj.). In the said decision, it was held and observed as under:- "10. Under clause(a) of sec. 55A of the Act under the Assessing Officer is entitled to make th....