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2017 (9) TMI 464 - AT - Income TaxValidity of reference made by the AO to the DVO - Long term capital gain for transfer of share in development rights of land - rights already been transferred on 11-11-1999 and valuation of DVO adopting fair market value as on 01-04-1981 - Held that - As in assessee s own case for AY 2004-05 2017 (1) TMI 730 - ITAT MUMBAI wherein identical issue was considered following case of CIT vs. 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. Thus 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.
Issues:
1. Determination of long term capital gains for the transfer of share in development rights of land. 2. Valuation of land as on 01-04-1981 for computing capital gains. 3. Validity of the reference to Departmental Valuation Officer (DVO) under Section 55A of the Income Tax Act. Issue 1: Determination of long term capital gains: The appeal concerns the confirmation by the CIT(A) of the AO's action in assessing long term capital gains for the transfer of share in development rights of land. The assessee contended that the transfer occurred in the assessment year 2000-01, not in 2006-07 as determined by the authorities. The grounds of appeal challenged the valuation adopted by the DVO and the CIT(A), arguing that the transfer had already taken place as per the Income Tax Act. The Tribunal referred to a similar case decided by the Bombay High Court, emphasizing that the AO's reference to the DVO was not justified when the value declared by the assessee exceeded the fair market value. Consequently, the Tribunal allowed the appeal partly, ruling in favor of the assessee based on the precedent set by the High Court. Issue 2: Valuation of land for capital gains computation: The dispute also revolved around the valuation of the land as on 01-04-1981 for calculating capital gains. The assessee had adopted a higher valuation compared to the DVO's assessment, leading to a disagreement between the parties. The Tribunal, following the principles established by the Bombay High Court, held that the AO's reference to the DVO was unwarranted when the assessee's valuation exceeded the fair market value. The Tribunal, relying on legal precedents and the relevant provisions of the Income Tax Act, concluded that the AO's actions were not justified. Consequently, the Tribunal partially allowed the appeal, aligning with the decision rendered in a similar case by the High Court. Issue 3: Validity of reference to DVO under Section 55A: The validity of the reference to the DVO under Section 55A of the Income Tax Act was a crucial aspect of the appeal. The Tribunal, guided by the judgment of the Bombay High Court, emphasized that such a reference was not warranted when the value declared by the assessee exceeded the fair market value. Citing legal provisions and precedents, the Tribunal concluded that the AO's decision to refer the valuation to the DVO was unjustified. Given that the assessment year in question predated the relevant amendment to Section 55A, the Tribunal ruled in favor of the assessee, echoing the High Court's stance on the matter. Consequently, the Tribunal partially allowed the appeal, highlighting the inapplicability of the reference to the DVO in the given circumstances. In summary, the judgment by the Appellate Tribunal ITAT Mumbai addressed the issues surrounding the determination of long term capital gains, the valuation of land for capital gains computation, and the validity of the reference to the DVO under Section 55A of the Income Tax Act. The Tribunal, drawing on legal precedents and statutory provisions, ruled in favor of the assessee, emphasizing that the AO's actions were not justified given the circumstances and the applicable law.
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