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2014 (2) TMI 1286 - AT - Income TaxJustification of referring the matter to the Valuation Officer u/s.55A - Held that - Reference to the VO can be made only when value adopted by the assessee is less than the Fair Market Value. We find that FAA had held that reference by the AO to the VO was against the provisions of law. If he was of the opinion that reference made by the AO was contrary to the provisions of Act, he should not have referred to the Valuation Report of the VO and should not have adopted Fair Market Value as indicated by the VO. We are not able to endorse his views, therefore, decided in favour of the assessee. Charging of interest u/s. 234A and 234B - Held that - We find that assessee had taken specific ground about charging of interest of ₹ 1.54 and 2.54 lacs respectively u/s. 234A and 234B of the Act. We find that while deciding the appeal, FAA has not decided the issue, therefore, in the interest of justice we restore back the issue to the file of the FAA for fresh adjudication. - Decided in favour of the assessee in part.
Issues Involved: Valuation of Property, Reference to Valuation Officer, Indexation for Capital Gains, Charging of Interest under Sections 234A and 234B
Valuation of Property: The Assessing Officer (AO) referred the matter for valuation to the Valuation Officer (VO) under section 55A(b)(ii) of the Income Tax Act to estimate the cost of acquisition as on 01.04.1981. The AO adopted the value estimated by the VO at Rs. 4.59 lakhs instead of the cost of acquisition claimed by the assessee at Rs. 7,31,000. The First Appellate Authority (FAA) held that the AO's reference to the VO was not justified and was merely a technical error. The FAA directed the AO to allow indexation from 01.04.1981 based on the previous owner's acquisition date. The FAA also determined a lower value for the property, considering the approved valuer's estimate as abnormally high. The Authorized Representative argued that the reference to the VO was improper, relying on the decision in Puja Printers. The Tribunal found that the AO's reference to the VO was against the law as the value declared by the assessee was not less than the fair market value, thus deciding in favor of the assessee. Indexation for Capital Gains: The AO allowed indexation of the property based on the date of acquisition by the assessee, considering half portion inherited from the mother from 1991-92 and the remaining half portion acquired from the father in AY 2006-07. The assessee contended that the period held by the previous owner should also be considered for indexation. The FAA, citing the judgment in the case of Manjula J Shah, directed the AO to allow indexation from 01.04.1981 based on the previous owner's acquisition date. The Tribunal upheld the FAA's decision, emphasizing the importance of considering the previous owner's acquisition date for indexation purposes. Charging of Interest under Sections 234A and 234B: The assessee raised a specific ground regarding the charge of interest under sections 234A and 234B of the Income Tax Act. However, the FAA did not address this issue in the appeal decision. The Tribunal, in the interest of justice, restored the issue of charging interest back to the FAA for fresh adjudication, directing the FAA to provide a reasonable opportunity of hearing to the assessee. The Tribunal partially decided in favor of the assessee on this issue. In conclusion, the Tribunal partly allowed the appeal filed by the assessee, ruling in favor of the assessee on the valuation of property and indexation issues, while directing a fresh adjudication on the charging of interest under sections 234A and 234B.
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