TaxTMI 
TaxTMI 
2021 (6) TMI 975
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....f parties appeal in ITA No. 1584/AHD/2017 was treated as lead case. The assessee has raised the following grounds of appeal. 1. In view of the facts and circumstances of the case, the ld. CIT(A) ought to have directed the Ld. A.O. to adopt the value as on 01st April 1981 as adopted by the appellant as per the valuation report submitted by him and hence Your Petitioner prays that the ld. A.O. be directed to adopt the rate @ 700 per sq. Mt. instead of the rate as per report of DVO. 2. Brief facts of the case are that during the relevant period under consideration, the assessee sold a piece of land along with his three coowners, thus, the assessee was having ¼ shares. The assessee for calculation of Long Term Capital Gain (LTCG) adopted the value of land @ 700 per sq. mtr. As on 01.04.1981. The conveyance deed executed on 04.06.2012 was Rs. 4.90 crore. The assessee was being ¼ shareholder, the assessee received consideration of Rs. 1.22 crore. For the working of Long Term Capital Gain (LTCG), the assessee adopted the fair value of property as on 01.04.1981 @ 700 per sq. mtr. The AO noted that in co-owner's case, the ITO Ward- 3(1)(5), Surat obtained Departmen....
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....r side of Railway Station. The Railway Station is barely less than 1 km. The land was situated in the heart of commercial area of Diamond Market. The DVO relied on the instances on the property satiation at different part of large Varachha area and adopted average value of rates. In one of the instances, the DVO referred a rate of piece of land purchased by Scheduled Bank at Rs. 666 per sq. mtr. The adoption of rate at Rs. 550 per sq. mtr is unfair and unlawful. The ld. AR of the assessee relied on the decision of Mumbai Tribunal in Maria Fernandes Cheryl vs. ITO (International Taxation) (2021) 209 TTJ (Mumbai) 850. 4. On the other hand, the ld. DR for the Revenue supported the order of lower authorities. The ld. DR submits that the report of DVO is based on sound principle. The DVO has taken the sales instances of various property and after taking into account all the factors such as shape, size, situation, location, utility and future potential and determined the Fair Market Value (FMV) as on 01.04.1981 @ Rs. 550/- per Sq Mtr. 5. We have considered the rival submission of both the parties and perused the order of lower authorities carefully. The AO made addition on LTCG on ....
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...., 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 rival contentions and perused the material available on record. The relevant provisions which are under consideration are contained in section 55A, it would, therefore, be relevant to refer to the said provisions which reads as under: "55A. 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- (a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the assessing Officer is of opinion that the value so claimed is at variance with its fair market value; (b) in any other case, if the Assessing Officer is of opinion- (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so c....
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....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 less than its fair market value (as per unamended provisions) or is at variance with its fair market value (as per the amended provisions). The formation of the opinion by the Assessing officer therefore has to be seen and examined in the context of determining the liability towards the capital gains and the liability towards the capital gains can be examined during the course of assessment proceedings. Therefore, the formation of the opinion by the Assessing officer has to be during the course of assessment proceedings and not prior or subsequent to the completion of the assessment proceedings. As per the unamended provisions, the Assessing officer has to 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 of the capital asset is less than its fair market value in the opinion of the Assessing officer, the ma....
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....tal 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 variance from the fair market value. Therefore, in case where the Assessing Officer is of the opinion that the value taken by the assessee as on 1-4-1981 is higher than the fair market value of the asset as on that date, the Assessing Officer would be enabled to make a reference to the Valuation Officer for determining the fair market value of the property. This amendment will take effect from 1st day of July, 2012." Therefore, the intent and purpose behind the amendment is to enable the Assessing officer to make a reference to the Valuation officer where he is of the opinion that the value adopted by the assessee as on 1-4-1981 is higher than the fair market value of the asset as on that date and in order to check whether the adoption of a higher value for the cost of the asset as the fair market value as on 1st April, 1981, has lead to a lower amount of capital gains being offered for tax. It is t....
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....e 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 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 55A(a) of the Act as existing during the period relevant to the Assessment Year 2006-07. At the relevant time, very clearly reference could be made to Departmental Valuation Officer only if the value declared by the assessee is in the opinion of Assessing Officer less than its fair market value. 9. The contention of the revenue that the reference to the Departmental Valuation Officer by the Assessing Officer is sustainable in view of Section 55A(a) (ii) of the Act is not acceptable. This is for the reason that Section 55A(b)of the Act very clearly states that it would apply in any other case i.e. a case not covered by Section 55A(a) of the Act. In this case, it is an undisputable position that the issue is c....
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....e 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 Officer that the value of the asset shown as on 1.4.1981 was less than the fair market value. 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". Thesituation 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....
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....he 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 legal position that for the transaction falling in financial year 2010-11 relevant to AY 2011-12, the matter is covered by the earlier decision in case of Gauranginiben S. Shodhan Indl. (supra). We therefore find that there is convergence of view as evident from these decisions of Hon'ble Bombay and Hon'ble Gujarat High Court that the amendment brought in by the Finance Act, 2012 in section 55A(a) has to be read prospectively and not retrospectively. Secondly, such amendment shall apply to transactions (subject matter of determination of capital gains) which are effected during the period starting on or after 1.07.2012. No contrary High Court decision has been cited before us and in any case, the decision of the Hon'ble Gujarat High Court, being the jurisdictional High Court is binding on us. 24. Further, we find that the Coordinate Benches are also of the consistent view and having been following the legal proposition so la....