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2010 (11) TMI 199 - AT - Income TaxSection 50C - Whether the CIT(A) was having power to admit assessee s claim without filing revised return of income - During the assessment proceedings assessee filed a valuation report stating the value as on 1-4-1981 at ₹ 3,80,000 and the indexed cost of acquisition has been arrived at ₹ 18,24,000 - The AO did not accept the sale consideration at ₹ 21,00,000 and on noticing that the stamp value for the purpose of registration was at ₹ 42,27,104 has adopted the stamp value pending valuation by the DVO under the provisions of section 50C, the assessment would be rectified after the receipt of valuation report Regarding the power of CIT(A) Hon ble Supreme Court in the case of Goetze (India) Ltd. v. CIT (2006 -TMI - 5171 - SUPREME Court) Held that CIT(A) has also similar power like ITAT under section 251(1)(c) - In the interest of natural justice the matter is remitted back to CIT(A) In fact the assessee, without prejudice to the claim under section 50C, has furnished a revised capital gains working to the Assessing Officer vide letter dated 17-12-2007, which is received by the Assessing Officer but the Assessing Officer did not choose to accept the same - It is to be noted that the Assessing Officer has no power to refer to valuation to fix the fair market value on the first day of April 1981 on the interpretation given to section 55A to a value less than the value offered by the assessee following the principles established by the Hon ble Bombay High Court in the case of Daulal Mohta HUF, ITA No. 1031 of 2008 dated 22-9-2008 - Ground Nos. 1,2 & 3 are considered allowed Adoption of substituted value on the basis of DVO s report - Consequent to the receipt of the report, the CIT(A) without considering the objections of the assessee, directed the Assessing Officer to adopt the valuation of ₹ 30,08,000 as sale consideration in place of ₹ 42,27,104 adopted by the Assessing Officer It is the objection of the assessee that the CIT(A) had not considered the objections as per the letter dated 1-6-2008 submitted to the DVO - The assessee should be given an opportunity before adopting the value Decided in the favour of the assessee and the matter is remitted back to the file of AO for fresh adjudication
Issues Involved:
1. Adoption of fair market value as on 1-4-1981. 2. Adoption of sale consideration under section 50C without considering objections. 3. Powers of CIT(A) and ITAT to admit claims without revised return. 4. Examination of DVO's report and objections thereto. Issue-Wise Analysis: 1. Adoption of Fair Market Value as on 1-4-1981: The assessee contested the valuation adopted for the purpose of cost of acquisition, arguing that the fair market value as on 1-4-1981 should be considered instead of the actual cost shown in the return of income. The Tribunal noted that under section 55(2)(b), the assessee has the option to adopt either the actual cost of acquisition or the fair market value as on 1-4-1981. The assessee had mistakenly taken the purchase cost as on 1-9-1978 instead of the fair market value as on 1-4-1981. The Tribunal held that the Assessing Officer should have entertained the assessee's claim when he chose to modify the capital gains working by adopting a different sale value as per section 50C. The Tribunal directed the Assessing Officer to adopt the fair market value of Rs. 3,80,000 as on 1-4-1981 for the purpose of working out the capital gains after due examination. 2. Adoption of Sale Consideration Under Section 50C Without Considering Objections: The Assessing Officer adopted the market value as per section 50C based on the stamp value of Rs. 42,27,104, subject to modification after receiving the DVO's report. The CIT(A) directed the Assessing Officer to adopt the valuation of Rs. 30,08,000 as the sale consideration without considering the objections raised by the assessee. The Tribunal noted that the objections of the assessee had not been considered and directed the Assessing Officer to examine the valuation report afresh, taking into consideration the objections of the assessee. 3. Powers of CIT(A) and ITAT to Admit Claims Without Revised Return: The Tribunal examined whether the CIT(A) had the power to admit the assessee's claim without a revised return. Referring to the Supreme Court decision in Goetze (India) Ltd. v. CIT, the Tribunal noted that while the Assessing Officer does not have the power to entertain a claim for deduction without a revised return, the CIT(A) and ITAT have the power to admit such claims. The Tribunal cited the Supreme Court's decision in Commissioner of Income-tax v. Nirbheram Deluram, which confirmed that the appellate authority has plenary powers in disposing of an appeal and can entertain an additional ground raised by the assessee. 4. Examination of DVO's Report and Objections Thereto: The Tribunal directed the Assessing Officer to consider the objections raised by the assessee regarding the DVO's report. It was noted that the objections had not been examined either by the Assessing Officer or the CIT(A). The Tribunal restored the matter to the file of the Assessing Officer to examine the valuation as per the provisions of section 50C after giving due opportunity to the assessee. The Tribunal also noted that this exercise might become academic as the cost of indexation allowed under the previous grounds might reduce the capital gains, potentially resulting in no taxable capital gains. Conclusion: The appeal was considered allowed for statistical purposes, with directions to the Assessing Officer to adopt the fair market value as on 1-4-1981, consider the objections to the DVO's report, and examine the valuation afresh as per the provisions of section 50C.
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