9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (6) TMI 535 - AT - Income TaxCapital gain computation - invoking provisions of section 50C of the Act while making the addition to capital gains - AO referred the property to the DVO to ascertain the FMV as on 01/04/1981 - HELD THAT - We note that at the relevant time, that is, AY 2012-13, the Assessing Officer can make a reference to the DVO under section 55A of the Act only if the value so adopted by the assessee under section 48 is not supported by the Valuation Report and Government Approved Valuer and if the AO is the opinion that the value of capital asset claimed by the assessee is less than its fair market value and not when it is more than its fair market value . We note that none of the conditions got fulfilled, hence ld. Assessing Officer is not legally competent to make reference to the DVO. As explained above the amended provisions under section 55A is not applicable to all those documents which got registered before 1st July, 2012, therefore we note that the Assessing Officer has (with its fair market value) misinterpreted the provisions and erroneously applied it retrospectively. We note that with effect from 1st July, 2012, the expression now used in Clause (a) of Section 55A is at variance the situation may therefore, be different after 1st July, 2012, which is applicable for assessment year 2013-14, whereas the assessee s case under consideration relates to assessment year 2012-13, hence amended provisions are not applicable to the assessee under consideration. We allow appeal of assessee.
Issues Involved:
1. Invocation of Section 50C of the Income Tax Act for addition to capital gains. 2. Non-provision of material relied upon by the AO for addition to capital gains. 3. Variation of cost of acquisition and Fair Market Value (FMV) as on 01/04/1981. 4. Adoption of FMV by the AO based on DVO’s report instead of the assessee’s Approved Valuer’s Report. 5. Deletion of the entire addition made towards computation of capital gains. Issue-wise Detailed Analysis: 1. Invocation of Section 50C of the Income Tax Act for Addition to Capital Gains: The assessee argued that the AO erroneously invoked Section 50C of the Act while making the addition to capital gains. The Tribunal noted that the AO referred the property to the DVO, who calculated the FMV at ?71.60 per sq. meter as on 01/04/1981. The AO adopted this valuation, rejecting the assessee’s valuation of ?1400 per sq. meter. The Tribunal observed that the amendment to Section 55A of the Act, effective from 01.07.2012, was not applicable to the assessment year 2012-13. Therefore, the AO was not legally competent to make the reference to the DVO as the conditions for such reference were not fulfilled. 2. Non-provision of Material Relied Upon by the AO for Addition to Capital Gains: The assessee contended that the AO did not provide the material gathered and relied upon for making the addition to capital gains, thereby not providing a reasonable opportunity to rebut the same. The Tribunal did not specifically address this issue separately but implied that the procedural fairness was compromised by the AO’s erroneous application of the law. 3. Variation of Cost of Acquisition and FMV as on 01/04/1981: The assessee claimed that the cost of acquisition and FMV could not be varied by simply relying on the case of another assessee. The Tribunal referred to the case of Jagrutiben V. Patel, where it was established that the AO could only make a reference to the DVO if the value claimed by the assessee was less than its FMV, not more. The Tribunal found that the AO misinterpreted the provisions and erroneously applied them retrospectively. 4. Adoption of FMV by the AO Based on DVO’s Report Instead of the Assessee’s Approved Valuer’s Report: The Tribunal noted that the AO adopted the DVO’s FMV instead of the assessee’s valuation based on an Approved Valuer’s Report. The Tribunal reiterated that the AO could not refer the valuation to the DVO under the pre-amended Section 55A, as the valuation claimed by the assessee was higher than the FMV. The Tribunal cited several precedents, including decisions from the Bombay High Court and the Gujarat High Court, supporting the assessee’s position. 5. Deletion of the Entire Addition Made Towards Computation of Capital Gains: The Tribunal concluded that the reference made by the AO to the DVO was not justified and upheld the assessee’s valuation. Consequently, the Tribunal allowed the appeal, directing the deletion of the entire addition made towards the computation of capital gains. Conclusion: The Tribunal allowed the appeals filed by the assessees, holding that the AO was not legally competent to make the reference to the DVO under Section 55A of the Act for the assessment year 2012-13. The Tribunal’s decision was based on the fact that the amendment to Section 55A was not applicable retrospectively and that the AO misinterpreted the provisions. The Tribunal’s observations and conclusions applied mutatis mutandis to all the appeals under consideration.
|
