TaxTMI 
TaxTMI 
2021 (5) TMI 825
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....o have been deleted. (3) The appellant craves leave to add, alter, amend any ground of appeal." 2. Brief facts of the case are that the assessee while filing the Return of Income for the assessment year under consideration offered Income from House Property, Long Term Capital Gain (LTCG), and Income from Other Sources. The case was selected for scrutiny. During the assessment, the Assessing Officer (AO) noted that the assessee sold a piece of land out of S.No.275, TP No.80, FP No.257 situated at Sultanabad, Surat for a consideration of Rs. 3.30 crore on 15.06.2011. In the computation of income, the assessee has shown the index cost of land by adopting value as on 01.04.1981 @ 290 per sq.mtr and arrived at market rate of Rs. 22,59,100/- and worked out the index cost at Rs. 1,77,33,935/-. The assessee also claimed deduction under section 54B. To support his contention, the assessee also filed report of Government Approved Valuer Shri B.H.Patel who valued the property @ Rs. 290 per sq.mtr as on 01.04.1981. In order to verify the claim of assessee, the AO obtained necessary information form Sub-registrar, Surat and noted that value in nearby area in Bhimpore and Dumas in 19....
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....04.1981 @ Rs. 63 per sq.mtr. The ld.AR for the assessee submits that he is raising a purely legal contention that the assessee while adopting the value of asset as shown asset at higher rate than the FMV and the amendment to section 55A(a) i.e. substitution of the word "is at variance with the Fair Market Value" were inserted in the Income Tax Act w.e.f 01.07.2012 and the same is not applicable respectively. The ld.AR further submits that before making the reference, the AO has to form an opinion that FMV adopted by assessee is not a fair value. Since the amendment made in the statute is not applicable for the assessment year under consideration, therefore, the reference made by the AO was invalid. The ld.AR for the assessee further submits that his contentions is squarely covered by the decision of Tribunal in Ranchodbhai C. Patel vs. ITO in ITA No.821/AHD/2016 dated 27.11.2020, wherein on almost similar set of facts the appeal of that assessee was allowed by the Tribunal, by following the decision of Jurisdictional High Court in CIT Vs Gauranginiben S Sodhan (367 ITR 238 Guj) and Hon'ble Bombay High Court in CIT Vs. Pooja Prints 360 ITR 697 (Bom) The ld.AR for the assessee also p....
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....sion of jurisdictional High Court in CIT Versus Gauranginiben S Shodhan (supra), the issue of validity of reference under section 55A(a) may kindly be addressed first as not in accordance with the law and in case it is held that reference to the DVO is not in accordance with law the additions based on such reference be deleted in such even the other contention raised before the lower authorities would become academic. 8. On the other hand the learned senior department representative for the revenue strongly supported the order of lower authorities. The learned Senior DR submits that the lower authorities have passed a reasoned order. 9. We have considered the rival contention of the parties and have gone through the orders of authorities below. We have noted that on similar set of fact, the coordinate bench of Tribunal in Jignesh Kumar S Modi (HUF) Vs ITO in ITA No.544 /SRT/2018 dated 26 June 2019, while relying on the decision of jurisdictional High Court in CIT Versus Gauranginiben S Shodhan (supra) and the decision of Bombay High Court in Commissioner of Income Tax Versus Pooja Prints (supra) passed the following order ; "13. We have heard the....
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....s not having the jurisdiction to refer the matter to the valuation officer. 15. In order to resolve the controversy, let's examine the provisions of section 55A(a). First and foremost, it provides that 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 a Valuation Officer. In the instant case, for the purposes of this chapter means for the purposes of determining the liability towards the capital gains tax on the sale of the land. There is no dispute that the liability towards the capital gains has arisen during the year as the transfer of the land has happened during the year. The second condition is that where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer. In the instant case, there is no dispute that cost of acquisition as substituted by the assessee with the fair market value as on 1.4.1981 is based on and in accordance with the estimate made by the registered valuer. The third condition is that the Assessing Officer should form an opinion that the value so claimed by the assessee is les....
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....e Assessing officer on or after 1.07.2012, given that the Assessing officer has to form an opinion during the course of assessment proceedings, the amended provisions will apply. In this regard, it would be useful to refer to the Memorandum explaining the Finance Bill, 2012 which reads as under: "Under the provisions of section 55A, where in the opinion of the Assessing Officer value of asset as claimed by the assessee is less than its market value, he may refer the valuation of a capital asset to a Valuation Officer. Under section 55 in a case where the capital asset became the property of the assessee before 1st April, 1981, the assessee has the option of substituting the fair market value of the asset as on 1st April, 1981 as the cost of the asset. In such a case the adoption of a higher value for the cost of the asset as the fair market value as on 1st April, 1981, would lead to a lower amount of capital gains being offered for tax. Accordingly, it is proposed to amend the provisions of section 55A of the Income-tax Act to enable the Assessing Officer to make a reference to the Valuation Officer where in his opinion the value declared by the assessee is at var....
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....ndently 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 then 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 then 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 then 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 t....
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....d particularly in view of clear provisions of law as existing during the period relevant to Assessment Year 2006-07, we are of the view that questions (a) and (b) do not raise any substantial question of law." 18. We now refer to the Hon'ble Gujarat High Court decision in case of CIT vs. Gauranginiben S. Shodhan Indl. [2014] 224 Taxman 253 (Gujarat) wherein it was held section 55A as it stood at the relevant time, has to be seen and emphasis was laid on the period of the transaction and where the transaction was for the period prior to 1.7.2012, amended provisions were held not applicable. The findings of the Hon'ble High Court are as under: "15. Coming to the question of reference to DVO for ascertaining the fair market value as on 1.4.1981 also, we find that such reference was not competent. We have noticed that prior to the amendment in section 55A with effect from 1.7.2012 in a case, the value of the asset claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer was of the opinion that the value so claimed was less than its fair market value as on 1.4.1981. It would not be the case of the Assessing Offi....
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....he Act, the Assessing Officer has to record an opinion that (i) the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage or by more than such an amount as may be prescribed; or (ii) having regard to the nature of the asset and other relevant circumstances, it is necessary to make such a reference." 19.xxxxxxxxxx 20 xxxxxxxxxx 21 xxxxxxxxxx 22 xxxxxxxxxx 23. As we have noted above, the Hon'ble Bombay High Court in case of CIT vs. Puja Prints (supra) has held that the Parliament has not given retrospective effect to the amendment and the law to be applied is as existing during the period relevant to the Assessment Year 2006-07. Similarly, the Hon'ble Gujarat High Court in case of CIT vs. Gauranginiben S. Shodhan Indl. (supra) has held that section 55A as it stood at the relevant time, has to be seen and emphasis was laid on the period of the transaction and where the transaction was for the period prior to 1.7.2012, amended provisions were held not applicable. Similarly, in case of Late Shantaben P Patel, Ahmedabad (supra), the Hon'ble Gujarat High Court has reiterated the le....
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.... The third condition is that the Assessing Officer should form an opinion that the value so claimed by the assessee is less than its fair market value. Therefore, only in a scenario, the value so claimed by the assessee is less than its fair market value in the opinion of the Assessing officer, the matter can be referred to the valuation officer. In a scenario, where the value so claimed by the assessee is more than its fair market value, the matter couldn't be referred to the valuation officer. In the instant case, the value of the land shown by the assessee as on 1.4.1981 based on the registered valuer report is considered, it would reveal that the same was in fact even higher than the value subsequently determined by the valuation officer and therefore, the Assessing Officer was not empowered to refer the matter to the valuation officer even as per erstwhile provisions of section 55A(a) prior to amendment by the Finance Act, 2012. 27. Therefore, without going into the merits of the basis of valuation so adopted by the registered valuer and subsequently by the department's valuation officer, in absence of a valid reference to the valuation officer, the addition s....