2016 (8) TMI 1150 - AT - Income Tax

Reference to DVO - effect of amendment to Section 55A(a) - addition made by the AO by disregarding the valuation made by the assessee on the basis of government approved valuer s report as on 1-4-1981 - Held that - As the year under consideration is 2004-05 much prior to the amendment so brought in Section 55A(a) by 2012 Act w.e.f. 1st July, 2012, we do not find any merit in the reference so made by the AO to the DVO when the fair market value offered by the assessee was more than the value determined by DVO. - Decided in favour of assessee

Summary

Issues involved:
Appeals against order of CIT(A) for assessment year 2004-2005 - Addition made by AO disregarding valuation based on government approved valuer's report as on 1-4-1981.

Detailed Analysis:
1. Common grievance of the assesses: The issue in all appeals was the addition made by the AO by disregarding the valuation based on the government approved valuer's report as on 1-4-1981.

2. Facts of the case: The co-owners of land transferred their rights to a construction company for a total consideration. The co-owners adopted the fair market value (FMV) of the land as on 01.04.1981 at a certain rate per square meter. The AO, believing the FMV adopted by the assesses was higher, referred the valuation to the DVO, who valued the land at a lower rate per square meter.

3. Arguments of the parties: The assesses argued that the AO could not refer to the DVO when the value adopted by them was higher than the FMV of the land, citing relevant decisions and the Finance Bill 2012. The revenue contended that the CIT(A) relied on comparable sale instances and location factors.

4. Legal analysis: The ITAT analyzed the relevant legal provisions and cited the decision of the Bombay High Court in a similar case. The ITAT found that the AO's reference to the DVO was not justified as the value declared by the assesses was higher than the fair market value. The ITAT also noted that the 2012 amendment to Section 55A was not retrospective, so the law applicable was the one existing during the relevant assessment year.

5. Decision: Considering the assessment year as 2004-05, predating the 2012 amendment, the ITAT allowed all appeals of the assesses, concluding that there was no merit in the AO's reference to the DVO when the fair market value offered by the assesses was higher than the DVO's valuation.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the reasoning behind the ITAT's decision, providing a comprehensive overview of the case.