TaxTMI 
TaxTMI 
2021 (7) TMI 246
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....ion of the AO for making addition of Rs. 22,34,938/- by rejecting registered valuer's report for determining cost of acquisition of land as on 01.04.1981 at Rs. 185/- and Rs. 200/- per sq. Mt. as against cost determined by RVO at Rs. 300/- per sq. Mt. (2) On facts and circumstances of the appellant's case as well as in law, learned CIT(A)-I, Surat has erred in dismissing appellants claim u/s 54B of the act on incorrect ground that the assessee has not pressed the said ground during appellate proceedings.. 2. The assessee has raised following additional ground of appeal; "That on facts and in law, the Ld. CIT(A) as well as the A.O. has erred in computing LTCG by taking FMV as on 01.04.1981 on the basis of DVO report ignoring the statutory position of law that reference to DVO u/s 55A is not valid prior to 01.07.2013." 3. Perusal of record shows that the appeal is filed after 29 days of prescribed period of limitation. The assessee has filed application dated 25.09.2017 for condonation of delay, supported by affidavit of assessee. In the application, the applicant/ assessee has contended that ld. CIT(A) passed order on 03.07.2017, which was collected by the accountant o....
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.... was processed and accepted u/s 142(1). Thereafter, the case was selected for scrutiny during. During the scrutiny assessment, the Assessing Officer (AO) noted the assessee along with his six co-owner sold in property out of R.S./Block No. 272/2, 272/3 & 283 at Moje Gavier Surat for a consideration of Rs. 6,17,36,500/-. The AO on further verification of fact noted that the assessee while calculating the capital gain on the sale of the said property and adopted Rs. 300 per sq. mtr for the purpose of indexation cost as on 01.04.1981. The assessee adopted the value on the basis of valuation report on Shri P.K. Desai Registered valuer of Ahmedabad. The AO collected the sale instances from Sub-Registrar office in the year 1981 and took his view land rate of similar land in the year 1981 were Rs. 94.45/- per sq. mtr only. 8. The AO on the basis of aforesaid discrepancies issued show cause notice dated 21.01.2015 as to why the value shown by assessee should not be rejected and the value on the basis of sale instances collected from the Sub-Registrar office should not be applied. The assessee filed its reply and stated that ITO Ward-2(3)(1) has already referred the matter to DVO in anothe....
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....ent in residential house. The assessee further stated that the Assessing Officer repudiated the claims of deductions on the ground that no such claim was made in the return of income. The assesse further stated that addition of long term capital gain made by AO is without appreciating the fact and adopting value of land as on 01.04.1981 @ Rs. 185 per sq. mtr Block No. 283 and @ 200 per sq. mtr in R.S./Block No. 272/2, 272/3 it is quite justifiable. There is no much difference in the location as well as other factor effecting value of land. All three lands were allotted in the same range and all lands were agriculture land and the factors affecting the value of land was same. Therefore, there was no reason to the Assessing Officer to discriminate the value of these units. The AO has valued claim much lower rate and that the arbitrary determined the value of non-agriculture land. 10. The Ld. CIT(A) after considering the submission of assessee rejected the contention of the assessee for accepting the value suggested by Government approved valuer for adopting market value as on 01.04.1981 @ 300 sq. mtr on the ground mentioned at para 6.2 of the order and approved the value suggested b....
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....facts shall require to be brought on record. The Ld. AR submits that assessee has sold the land prior to 01.07.2012 and the amended provision of section 55A (a) is not applicable on the transaction of sale of land, which is the bone of contention in the present appeal. The Ld. AR submits that the ground of appeal raised by assessee is purely legal in nature. The assessee is entitled to raise additional account of appeal as per the decision of Hon'ble Supreme Court in National Thermal Power Corporation (NTPC) v. CIT 229 ITR 383 and Jute Corporation of India Ltd. v. CIT 187 ITR 688. 13. On merit, the Ld. AR of the assessee submits that the assessee while calculating long term capital gain adopted the fair market value as suggested by Government approved value @ Rs. 300 per sq. mtr as on 01.04.1981. The AO adopted the value suggested by DVO @ 180 per sq. mtr for one part of land and Rs. 200 per sq. Mtr on other part of the property. The Ld. AR submits that he has raised from the legal contention that while adopting the value of asset fair market value. The amendment of section 55A(a) substitution of the word " is at variance with fair market value" were inserted in the Income Tax....
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....the case law in Jagrutiben V. Patel (supra) wherein the observation of Bench that "revenue is unable to produce any material to controvert the aforesaid finding of the Co-ordinate Bench". The Ld. DR furnished raised new point in his written note dated 02.06.2021. 15. We have considered the rival submissions of the parties and has gone through the orders of authorities below. We find that the assessee has raised additional ground of appeal. The assessee has challenged the validity of reference to DVO under section 55A, being not proper and valid for the transaction prior to the date of 01.07.2013, which is the date of amendment in section 55A. We find that no new facts are required to be brought on record for adjudication on this ground of appeal. All facts are emanating from assessment order or order of first appellate authority for adjudication of additional ground of appeal. Considering the decision of Hon'ble Supreme Court in National Thermal Power Corporation (supra) and Jute Corporate India Ltd. (supra) we admit the additional ground of appeal for adjudication. 16. We find that there is no dispute that assessee while computing the capital gain adopted fair market value o....
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.... as on1st April 1981 as claimed by assessee is not fair value. The learned AR of the assessee would submit that the ratio of decision of Hon'ble was rather High Court in case of CIT Versus Gauranginiben S Shodhan Ind. reported in (367 ITR 238) is squarely applicable on the facts of the present case. The learned AR of the assessee also relied on the following case laws. * JigneshKumar S Modi (HUF) and 6 others Vs ITO (ITA No. 544 to 550/Srt/2018, * Shantaben P Patel Vs ITO & 2 other ( ITA No. 781, 784 & 785/Ahd/2011, * Gujarat High court in PCIT Vs Shantiben P Patel ( Tax Appeal No. 1204 of 2018 and * Mahadevi Mohanbhai Naik Vs ITO ( ITA No.82/Ahd/2016) 7. The learned AR for the assessee submits that in view of the decision 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 senio....
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....) of section 2 of the Wealth-tax Act, 1957 (27 of 1957)." 14. The aforesaid provisions are as amended by the Finance Act, 2012 with effect from 1.07.2012 wherein in clause (a), for "is less than its fair market value" was substituted for "at variance with its fair value". As per the Revenue, the amended provisions of section 55A(a) are applicable for the impugned assessment year 2012-13 and the Assessing officer was well within his jurisdiction to refer the matter to the valuation officer. The assessee's contention is that unamended provisions of section 55A(a) are relevant for the impugned assessment year 2012-13 and the Assessing officer was 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....
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....n to refer the matter to the valuation officer. 16. The question is how one should read the amendment in section 55A(a) which has been brought on the statue books w.e.f 1.07.2012. Whether we should read the amendment in the context of transactions which have happened on or after 1.07.2012 and which are liable for capital gains tax and therefore, satisfying the initial condition of reference "for the purposes of this chapter" to the valuation officer. Alternatively, irrespective of period to which the transaction pertains, where the assessment proceedings are initiated by the Assessing officer or pending before the 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....
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....owing the respondent assessee's appeal holding that no reference to the Departmental Valuation Officer can be made under Section 55A of the Act, only follows the decision of this Court in the matter of Daulal Mohta HUF (supra). The revenue has not been able to point out how the aforesaid decision is inapplicable to the present facts nor has the revenue pointed out that the decision in Daulal Mohta HUF (supra) has not been accepted by the revenue. On the aforesaid ground alone, this 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 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....
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.... that if the power to refer any dispute with regard to the valuation of the property was already available under Sections 131(1), 136(6) and 142(2) of the Act, there was no need to specifically empower the Assessing Officer to do so in circumstances specified under Section 55A of the Act. It further held that when a specific provision under which the reference can be made to the Departmental Valuation Officer is available, there is no occasion for the Assessing Officer to invoke the general powers of enquiry. In view of the above and 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. C....
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.... 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 the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so claimed is less than the fair market value. In any other case, as provided under clause(b) of Sec. 55A of the 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. Simila....
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....luation officer as per erstwhile provisions of section 55A(a), in the instant case, 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. There is also no dispute that cost of acquisition as substituted by the assessee with 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. 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, th....