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2024 (3) TMI 772 - AT - Income TaxCapital gain - Valuation of the property sold by the assessee - reference to DVO for the determination of the value of the cost of suggestion declared by assessee - Scope of amendment in section 55A(a) w.e.f. 01-07-2012 allowing reference for determination of fair market value of cost of land - HELD THAT - Amendment brought w.e.f. 01-07-2012 would be applicable from Assessment Year 2013-14 and therefore the submission made by the ld. A.R. that such reference cannot be made u/s. 55A of the Act for the year under consideration i.e. Assessment Year 2012-13 is found to be acceptable. Therefore, argument advanced by the ld. senior counsel on the merit of the matter and the order passed by the Kolkata Bench, we do not hesitate to hold that the reference made by the ld. A.R. in the instant case u/s. 55A of the Act is not found to be sustainable in view of the amendment in section 55A(a) w.e.f. 01-07-2022 applicable from Assessment Year 2013-14 and not to the instant case for Assessment Year 2012-13. Thus we delete the addition made by the authorities below.
Issues involved:
The appeal challenges the order confirming the assessment under section 143(3) of the Income Tax Act, 1961. The grounds of appeal include disputing the valuation adopted by the Assessing Officer, denial of cost of improvement claimed by the appellant, and the legality of the reference made to the Valuation Officer under section 55A of the Act. Valuation of Property and Reference to DVO: The appellant contested the valuation of the property sold, arguing that the reference to the DVO was not in line with section 55A of the Act. The appellant relied on a judgment from the ITAT Kolkata Bench, asserting that the reference made by the Assessing Officer was not valid for the year under consideration. The Tribunal noted the amendment to section 55A effective from 01-07-2012, clarifying that it was prospective and not applicable to the assessment year 2012-13. Citing legal precedent, the Tribunal held that the valuation determined by the DVO could not be accepted as it was against the provisions of the Act. Consequently, the Tribunal deleted the addition made by the authorities below, upholding the appellant's argument. Cost of Improvement Disallowance: The appellant contended that the cost of improvement claimed was wrongly disallowed by the CIT(A). The Tribunal observed that the CIT(A) had differentiated the appellant's case from legal precedent without sufficient grounds. It was argued that the improvement cost, though relatively small compared to the property value, should not have been denied solely for lack of evidence. The Tribunal found the disallowance to be legally flawed and ordered its deletion, granting relief to the appellant. Legal Interpretation of Section 55A Amendment: The Tribunal analyzed the applicability of the amendment to section 55A of the Act, emphasizing that amendments effective from a specific date other than the first day of April would apply to subsequent assessment years. Relying on a Supreme Court judgment, the Tribunal concluded that the amendment effective from 01-07-2012 would be applicable from Assessment Year 2013-14. As the valuation declared by the appellant exceeded the fair market value, the Tribunal held that no reference to the Valuation Officer should have been made as per the Act's provisions at the relevant time. Consequently, the Tribunal upheld the appellant's argument and quashed the revision order as lacking jurisdiction. In conclusion, the Tribunal allowed the appeal of the assessee, deleting the additions made by the authorities below and providing relief based on the legal interpretations and precedents discussed during the proceedings.
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