2013 (12) TMI 1254 - HC - Income Tax

Reference to valuation officer for valuation of land - Held that - The assessee had purchased the plot in question from the UPSIDC - The UPSIDC had informed the Revenue authority through its letter dated 7.1.1997 that the cost of plot as on 1st April, 1981 was Rs.9.75 per square yard, which has not been disputed by the assessee then in such a situation it was not necessary for the assessing authority to refer the matter to the valuation officer - Once from the documentary evidence and material on record, it is established that the cost of land is Rs. 9.75 per square yard then there appears to be no reason to invoke the provisions of Section 55A of the Income Tax Act - The power conferred in Section 55A deals the controversy to refer to valuation officer, in case there is dispute or doubt or inability to find out the fair market value of capital assets - Decided against assessee.

Summary

Issues:
- Obligation of Assessing Officer to make reference under Section 55A of the Income Tax Act
- Valuation of land for assessment year 1995-96
- Rejection of request for reference to valuation officer
- Interpretation of Section 55A(b)(ii) regarding referral to valuation officer

Analysis:

The case involved an appeal under Section 260-A of the Income Tax Act concerning the obligation of the Assessing Officer to make a reference under Section 55A. The dispute revolved around the valuation of land for the assessment year 1995-96, specifically plot no. C-19, Industrial Area, Amausi, leased by the assessee from UPSIDC. The assessee claimed a long-term capital loss upon selling the business assets, including the land. The Assessing Authority valued the land based on information from UPSIDC, resulting in a capital gains assessment that differed from the assessee's claim.

The Tribunal upheld the orders of the lower authorities, emphasizing the reliance on UPSIDC's information for valuation. The assessing authority's refusal to refer the matter to a valuation officer was challenged by the appellant's counsel. Section 55A of the Income Tax Act was scrutinized, particularly Section 55A(b)(ii), which outlines circumstances necessitating a referral to a valuation officer. The Tribunal concluded that since the assessee did not dispute UPSIDC's quoted rate for the land, there was no need to invoke Section 55A for a valuation officer's intervention.

The Tribunal clarified that Section 55A is applicable when there is a dispute or uncertainty regarding the fair market value of assets. In this case, as the cost of the land was established and undisputed, the Assessing Authority's decision not to refer the matter to a valuation officer was deemed appropriate. Consequently, the substantial question of law was resolved in favor of the revenue authority against the assessee, leading to the dismissal of the appeal.

In summary, the judgment addressed the Assessing Officer's obligation under Section 55A, the valuation of land, the denial of a referral to a valuation officer, and the interpretation of Section 55A(b)(ii) in the context of undisputed valuation information provided by UPSIDC. The decision highlighted the importance of resolving valuation disputes and the Assessing Authority's discretion in invoking Section 55A based on the circumstances of each case.