2013 (8) TMI 1115 - AT - Income Tax

Summary

Issues Involved:
1. Legality of reference made by the Assessing Officer u/s 55A to the DVO.
2. Correctness of Valuation arrived at by DVO.

Summary:

Legality of Reference Made by the Assessing Officer u/s 55A to the DVO:
The assessee challenged the reference made by the Assessing Officer u/s 131(1)(d), contending that there is a separate provision for reference to the valuation officer u/s 55A. The Tribunal held that as per provisions of Section 55A, when the Assessing Officer finds that the value of the asset as claimed by the assessee is at variance with its fair market value, the Assessing Officer may refer the valuation of the capital asset to a DVO. Since the Assessing Officer was computing capital gains, issuing a commission u/s 131(1)(d) to the DVO for ascertaining the fair market value u/s 55A was justified. The Tribunal found no infirmity in the reference made to the Valuation Officer u/s 55A and dismissed the legal ground raised by the ld. Authorized Representative.

Correctness of Valuation Arrived at by DVO:
The Tribunal noted that the correctness of valuation by the DVO is a question of fact. The DVO has to estimate the fair market value of assets as on the date of transfer, considering the advantages and disadvantages attached to the property. The Tribunal observed that the valuation arrived at by the Stamp Duty Authority was excessive, and the Assessing Officer rightly made a reference to the Valuation Officer u/s 55A. The Tribunal considered the adverse factors affecting the fair market value of the land, including the proposed road reducing the usable area, acquisition proceedings, and the fact that the transaction was more of a family settlement rather than a commercial sale. The Tribunal directed the Assessing Officer to reduce the valuation arrived at by the DVO by 20% and recompute the gain accordingly, dividing it equally between both assessees.

Conclusion:
The Tribunal allowed the appeals in part, directing the Assessing Officer to reduce the valuation by 20% and recompute the gain, considering the adverse factors affecting the fair market value of the land. The gain so computed is to be divided equally between both assessees.