2017 (1) TMI 730 - AT - Income Tax

Validity of reference made by the AO to the DVO - Fair Market Value as offered by assessee was more than the value determined by the AO - Held that - As carefully gone through the order of the Bombay High Court in case of Puja Prints (2014 (1) TMI 764 - BOMBAY HIGH COURT) wherein the facts are exactly similar and reference so made by the AO was held to be invalid for the assessment year falling prior to the amendment so brought in by Finance Act 2012. Undisputedly, relevant assessment year under consideration is assessment year 2004-05, which is prior to the amendment brought in Section 55A(a) by Finance Act 2012 w.e.f. 01/07/2012. Facts and circumstances in all the appeals before us are same, respectfully following the decision of Bombay High Court, we do not find any merit for the reference so made by the AO to the DVO, when the value offered by assessee was more than the value determined by the AO in respect of assessment year falling prior to introduction of amendment brought in Section 55A(a) by Finance Act 2012 w.e.f. 1/7/2012. - Decided in favour of assessee.

Summary

Issues:
Validity of reference made by AO to DVO in AY 2004-2005 regarding Fair Market Value as on 01/04/1981.

Analysis:
1. The appeals were filed by the assessee against the order of CIT(A) for AY 2004-2005 concerning the order passed under section 143(3) read with section 147 of the IT Act.
2. The common grievance of the assessee pertained to the validity of the reference made by the AO to the DVO in AY 2004-05 regarding the Fair Market Value as on 01/04/1981.
3. The co-owners had transferred their rights in parcels of land at a specific value, and the AO referred the determination of FMV to the DVO, who valued the land significantly lower. The CIT(A) upheld the reference but allowed a higher FMV based on non-comparable sale instances.
4. The assessee disputed the validity of the reference to the DVO, citing precedents and the year of assessment. The Tribunal observed that the AO's reference was not justified when the FMV offered by the assessee was higher than the DVO's value.
5. The Tribunal considered the decision of the Bombay High Court in a similar case and concluded that the reference made by the AO to the DVO was invalid for the assessment year prior to the amendment in Section 55A(a) by the Finance Act 2012.
6. Based on the above analysis and following the decision of the Bombay High Court, the Tribunal allowed all the appeals of the assessee, as the reference to the DVO was deemed unwarranted when the value offered by the assessee exceeded the value determined by the AO for the assessment year before the relevant amendment.

This detailed analysis covers the issues involved in the legal judgment, the arguments presented by the parties, the relevant legal precedents cited, and the final decision rendered by the Tribunal based on the interpretation of the law and applicable provisions.