2017 (3) TMI 1526 - HC - Income Tax

Disallowance u/s 14A - Held that - There was no claim of the assessee for exemption of income for payment of tax, and therefore, relying upon the decision of the Division Bench of this Court in the case of Corrtech Energy P. Ltd.(2014 (3) TMI 856 - GUJARAT HIGH COURT ), the learned tribunal has rightly held that no disallowance can be made under Section 14A of the Income Tax Act. In view of the aforesaid, it cannot be said that the learned tribunal has committed any error in deleting the addition Appeal admitted on question nos.(A) to (E)

Summary

Issues:
1. Capital gain computation based on property acquisition cost
2. Requirement of fair market value report from DVO
3. Justification of cost of acquisition determination
4. Acceptance of valuation by Government approved valuer
5. Evaluation of prevalent market rate for property valuation
6. Disallowance under Section 14A of the Income Tax Act

Capital Gain Computation:
The appeal questions the ITAT's direction to recompute capital gain by adopting a property acquisition cost of ?980 per sq meter for the Assessment Year 2009-10. The appellant challenges this decision, questioning the correctness of the cost determination.

Fair Market Value Report Requirement:
Another issue raised is the ITAT's directive for the AO to obtain a report from the DVO to ascertain the fair market value of the asset. The appellant contests this decision, citing the absence of fitting conditions under Section 55A(a) of the IT Act.

Cost of Acquisition Determination:
The ITAT's decision to set the cost of acquisition as ?980 per sq meter as of 01/04/1981 is also challenged. The appellant argues against this determination, highlighting discrepancies in the valuation methodology and the acceptance of the Government approved valuer's assessment.

Acceptance of Valuation by Government Approved Valuer:
The ITAT's rejection of the valuation provided by the Government approved valuer is questioned by the appellant. The issue revolves around the authorities' failure to accept the valuation despite the submission of an expert report.

Evaluation of Prevalent Market Rate:
The ITAT's assessment of the prevalent market rate as of 01/04/1981 is disputed by the appellant. The appellant asserts that the AO's valuation was based on information collected from relevant sources, including the Sub Registrar, and should have been considered in the assessment order.

Disallowance under Section 14A:
Lastly, the issue of disallowance under Section 14A of the Income Tax Act is addressed. The ITAT's decision to dismiss the disallowance based on the absence of a claim for exemption of income for tax payment is upheld, citing a previous court decision in a similar case.

In summary, the High Court admitted the appeal for consideration on various issues related to capital gain computation, fair market value determination, cost of acquisition, valuation acceptance, market rate evaluation, and disallowance under Section 14A. The judgment provides detailed analysis and reasoning for each issue raised, ultimately dismissing the appeal on one specific question while admitting it for further review on others.