2018 (11) TMI 444 - HC - Income Tax

Addition on account of Long Term Capital Gains - reference to the District Valuation Officer for determining the fair market value of the assets as on 01.04.1981 - Held that - As decided in LATE SHANTABEN P. PATEL, L/H GOVINDBHAI P. PATEL 2018 (11) TMI 394 - GUJARAT HIGH COURT as relying on COMMISSIONER OF INCOME TAX VERSUS GAURANGINIBEN S. SHODHAN INDL. 2014 (2) TMI 78 - GUJARAT HIGH COURT AO 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. 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.

Summary

Issues:
- Appeal against deletion of addition of Long Term Capital Gains
- Authority of Assessing Officer to make reference to District Valuation Officer for determining fair market value of assets as on 01.04.1981

Analysis:
1. The High Court considered an appeal by the Revenue against the deletion of an addition of Long Term Capital Gains. The issue raised was whether the Appellate Tribunal erred in deleting the addition of ?6,98,630 on account of Long Term Capital Gains. The Tribunal's decision was based on the authority of the Assessing Officer to make a reference to the District Valuation Officer for determining the fair market value of assets as on 01.04.1981.

2. The Court referred to a similar issue in Tax Appeal No.1204 of 2018, which was dismissed by an order dated 08.10.2018. The issue in question pertained to the Assessment Year 2011-12 and the authority of the Assessing Officer to make a reference to the District Valuation Officer for determining the fair market value of assets as on 01.04.1981. The Tribunal relied on a previous decision of the Court in the case of Commissioner of Income Tax v. Gauranginiben S. Shodhan, where it was observed that the reference to the DVO for ascertaining the fair market value as on April 1, 1981 was not competent.

3. The Court highlighted that prior to the amendment in section 55A with effect from July 1, 2012, the valuation as on April 1, 1981 did not fall under the purview of the Assessing Officer's opinion if the value claimed by the assessee was in accordance with the estimate made by the registered valuer. The Court emphasized that the situation might be different after July 1, 2012, but for the period prior to that, the Assessing Officer's authority to refer to the DVO was limited. The decision in the case at hand was in line with the previous judgment, and hence, the Tax Appeal was dismissed.

4. Therefore, the High Court upheld the Tribunal's decision to delete the addition of Long Term Capital Gains and dismissed the appeal by the Revenue. The Court reiterated the limitations on the Assessing Officer's authority to refer to the District Valuation Officer for determining the fair market value of assets as on 01.04.1981, as established in previous judgments.