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2020 (12) TMI 171 - AT - Income TaxCapital gain computation - justification of reference made to the DVO in contravention of the legal position under section 55A - Whether DVO not qualified to carry out valuation of agricultural land as per the condition prescribed in Rule 8(A)(3) of Wealth Tax Act? - HELD THAT - In the present case the assessee has shown the value of asset at a higher rate than the fair market value and the amendment to the section 55A( a) i.e. substitution of the words is at variance with the fair market value were inserted with effect from 1st July 2012 and the same is not applicable retrospectively, further the assessing officer has to form an opinion that fair market value as on1st April 1981 as claimed by assessee is not fair value. As decided in Tribunal in Jignesh Kumar S Modi (HUF) 2019 (6) TMI 1571 - ITAT SURAT while relying on the decision of jurisdictional High Court in CIT Versus Gauranginiben S Shodhan 2014 (2) TMI 78 - GUJARAT HIGH COURT the value of the land shown by the assessee as on 1.4.1981 based on the registered valuer report is considered, it would reveal that the same was in fact even higher than the value subsequently determined by the valuation officer and therefore, the AO was not empowered to refer the matter to the valuation officer even as per erstwhile provisions of section 55A(a) prior to amendment by the Finance Act, 2012. Without going into the merits of the basis of valuation so adopted by the registered valuer and subsequently by the department s valuation officer, in absence of a valid reference to the valuation officer, the addition so made under the head long term capital gains so far as it relates to cost of acquisition as substituted by fair market value as on 1.4.1981 is directed to be deleted. In the result, the appeal of the assessee is allowed Considering the decision of co-ordinate bench of Tribunal on almost similar set of fact while considering the similar contention of assessee in the said held that when the transaction of sale of land was taken during the financial year 2011-12 relevant to the assessment year 2012 -13, the amended provision of section 55A(a) would not be applicable and one shall be guided by the wrest while provision of un-amended section 55 A(a) of the Act. We allow the ground No. 1 raised by the assessee.
Issues Involved:
1. Validity of the reference made to the District Valuation Officer (DVO) under Section 55A of the Income Tax Act. 2. Qualification of the DVO to carry out the valuation of agricultural land. 3. Confirmation of interest under Sections 234A, 234B, 234C, and 234D of the Income Tax Act. Issue-wise Detailed Analysis: 1. Validity of the reference made to the DVO under Section 55A: The primary issue was whether the reference made by the Assessing Officer (AO) to the DVO for ascertaining the fair market value of the property was valid under Section 55A. The assessee argued that the provision of Section 55A, prior to its amendment effective from 1st July 2012, allowed such a reference only if the AO believed the value declared by the assessee was less than the fair market value. Since the assessee had declared a higher value, the AO could not validly refer the matter to the DVO. The Tribunal referred to several precedents, including the Bombay High Court's decision in Commissioner of Income Tax Versus Pooja Prints and the Gujarat High Court's decision in Hiaben Jayantilal Shah Versus Income Tax Officer, which established that the amendment to Section 55A was not retrospective. Consequently, the Tribunal concluded that the AO's reference to the DVO was invalid as the amendment was not applicable for the assessment year in question. 2. Qualification of the DVO to carry out the valuation of agricultural land: The assessee contended that the DVO was not qualified to value agricultural land as per Rule 8(A)(3) of the Wealth Tax Act. However, this issue was rendered moot because the Tribunal had already determined that the reference to the DVO itself was invalid under the unamended provisions of Section 55A. Therefore, the qualifications of the DVO were not further scrutinized. 3. Confirmation of interest under Sections 234A, 234B, 234C, and 234D of the Income Tax Act: The Tribunal did not specifically address the issue of interest under Sections 234A, 234B, 234C, and 234D in detail, as the primary ground regarding the invalid reference to the DVO was sufficient to decide the appeals in favor of the assessee. Since the main issue was resolved in favor of the assessee, the other grounds became academic and did not require further adjudication. Conclusion: The Tribunal allowed the appeals, holding that the reference to the DVO was invalid under the unamended provisions of Section 55A. Consequently, the additions made based on the DVO's report were deleted. The Tribunal's decision was based on the legal principle that the amendment to Section 55A was not retrospective and could not be applied to the assessment year in question. The appeals were decided in favor of the assessees, and the interest-related issues were not further addressed due to the primary issue being resolved. Order Pronouncement: The order was pronounced on 27 November 2020 as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1963. Both appeals were allowed.
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