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2014 (2) TMI 78 - HC - Income TaxReference to DVO - Held that - As per section 55A(a) - 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 - Relying upon the decision in Hiraben Jayantilal Shah vs. Income-tax Officer 2008 (4) TMI 292 - GUJARAT HIGH COURT - The assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset - Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) - Decided against Revenue.
Issues:
Computation of capital gain in the hands of the respondent assessee; Competency of the reference to Departmental Valuation Officer (DVO) for fair market value determination on specific dates. Issue 1: Computation of Capital Gain: The case involved a dispute regarding the computation of capital gain in the hands of the respondent assessee. The Assessing Officer referred the valuation of a property to the DVO, leading to an addition of capital gain based on the DVO's valuation report. The Tribunal dismissed the Revenue's appeal, prompting the present Tax Appeal. The Court analyzed Section 48 of the Income Tax Act, which outlines the method for computing capital gains. The section focuses on deducting the full value of consideration received from the transfer of a capital asset, after accounting for relevant expenditures and acquisition costs. The Court highlighted that the DVO's valuation for fair market value, as per Section 55A, is irrelevant for determining the full value of consideration under Section 48. The Court emphasized the importance of adhering to the provisions of Section 48 for accurate capital gain computation. Issue 2: Competency of DVO Reference: The Court examined the competency of the reference to the DVO for fair market value determination on specific dates. The Assessing Officer had referred the valuation to the DVO for ascertaining the fair market value of the property on the date of sale and as on 1.4.1981. The Court noted that the reference for the date of sale was redundant as per Section 48's requirements. Additionally, the Court discussed the provisions of Section 50C, which provide for special provisions in certain cases, but clarified that it was not applicable in this scenario. The Court referenced a previous judgment to support its stance that the reference to the DVO was not competent for ascertaining the fair market value on specific dates. The Court highlighted the limitations of Section 55A and the necessity to adhere to the relevant provisions for fair market value determination. The judgment delved into the intricacies of capital gain computation and the competency of references to the DVO for fair market value determination. By dissecting the provisions of the Income Tax Act and relevant sections, the Court provided a detailed analysis of the issues at hand. The decision emphasized the importance of following the statutory framework for accurate computation of capital gains and fair market value assessment, ultimately dismissing the Tax Appeal based on the outlined legal principles and precedents.
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