2022 (1) TMI 1102 - AT - Income Tax

Capital gain computation - reference to the Valuation Officer under s.55A - CIT-A confirming the action of the AO in adopting the value of property as on 01.04.81 as per the report of the Valuation Officer instead of value thereof as on 01.04.81 as determined by the Valuation Officer u/s.55A(a) - HELD THAT - As no claim was made by the assessee for forming any opinion as to existence of prescribed difference between value of asset as claimed by assessee and fair market value as relying on Hiaben Jayantilal Shah 2008 (4) TMI 292 - GUJARAT HIGH COURT wherein it is held that Section 55A of the Act did not permit the authority to find out the fair market value of the property outside of the sale. Also in RANCHODBHAI C. PATEL 2020 (12) TMI 171 - ITAT AHMEDABAD held that where in case of immovable property sold by the assessee determined by Valuation Officer lesser than value declared by the assessee as on 01.04.1981, in that case reference to the Valuation Officer under s.55A of the Act was not warranted and it was also mentioned that amendment brought in Section 55A of the Act w.e.f. 01.07.2012 by Finance Act, 2012, according to which, reference could be made by the AO to D.V.O. if value of immovable property determined by assessee was lesser than fair market value of property, is applicable prospectively and not retrospectively. As prior to 01-07-2012, no section 55A valuation if value of asset given by assessee was more than its market price - See M/S. PUJA PRINTS 2014 (1) TMI 764 - BOMBAY HIGH COURT - Appeal filed by the assessee is allowed.

Summary

Issues:
1. Valuation of property as on 01.04.1981
2. Adoption of sale consideration
3. Taxable Long Term Capital Gain calculation
4. Application of Section 55A of the Income Tax Act, 1961

Valuation of property as on 01.04.1981:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) concerning the valuation of a property as on 01.04.1981. The Assessing Officer referred the matter to the Valuation Officer for estimation of the property's value on that date. The dispute arose as the AO adopted a lower value compared to the value claimed by the assessee. The AR cited judgments emphasizing that Section 55A does not permit authorities to find out the fair market value of the property outside of the sale. The Tribunal, following the High Court order and in line with ITAT Surat Bench, allowed the appeal, stating that the AO was not justified in adopting the lower value.

Adoption of sale consideration:
The assessee declared a long term capital loss on the sale of a property based on a valuation report from a registered valuer. The AO, however, adopted a different value for the property, leading to a dispute regarding the sale consideration. The CIT(A) confirmed the addition made by the AO, rejecting the assessee's contention to accept the Jantri rate. The Tribunal did not adjudicate the matter on merits as relief was granted to the assessee on a technical ground related to the valuation of the property.

Taxable Long Term Capital Gain calculation:
The AO recomputed the long term capital gain, leading to a disagreement between the assessee and the tax authorities. The CIT(A) confirmed the addition made by the AO, which was objected to by the assessee during the appellate proceedings. However, the Tribunal granted relief to the assessee based on the technical ground related to the valuation of the property, making the remaining grounds academic.

Application of Section 55A of the Income Tax Act, 1961:
The dispute revolved around the application of Section 55A of the Income Tax Act, 1961, which allows the Assessing Officer to refer the valuation of a capital asset to a Valuation Officer under certain circumstances. The AR cited relevant judgments to support the contention that the AO's adoption of a lower property value was not justified under Section 55A. The Tribunal allowed the appeal based on the technical ground related to the valuation, rendering the other issues academic.