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2014 (10) TMI 34 - AT - Income TaxAdmission of additional ground Held that - Both on principle and on precedent, there is no reason why the Tribunal must be precluded from handling a point, whether of law or fact which relate to an assessment, which appertains to the assessee s assessment merely because nobody else had handled it before or because it had not occurred either to the assessee or to the Department to raise and urge that point at earlier stages of the proceedings - it is not the case of the revenue that necessary facts for deciding the controversy involved in the additional plea are not available on record - It is also not a case where facts are to be investigated rather it is a pure legal issue that has been raised - merely because the plea in the Additional Ground was not taken by the assessee before the FAA, it could not be a ground to refuse the application for permission to raise an Additional Ground - so, the Additional Ground raised by the assessee is to be admitted. Reference made to DVO u/s 55A Determination of FMV Held that - Section 55A(a) of the Act very clearly at the relevant time provided that a reference could be made to the DVO only when the value adopted by the assessee was less than the fair market value - the value adopted by the assessee of the property was much more than the fair market value of ₹ 6. 68 lakhs even as determined by the DVO - the AO referred the issue of valuation to the DVO only because in his view the valuation of the property as on 1981 as made by the respondent-assessee was higher than the fair market value - the invocation of section 55A(a) of the Act is not justified - The contention of the Revenue that in view of the amendment to section 55A(a) of the Act in 2012 by which the words is less than its fair market value is substituted by the words is at variance with its fair market value is clarifactory and should be given retrospective effect - the 2012 amendment was made effective only from July 1, 2012 - Parliament has not given retrospective effect to the amendment - the law to be applied in the present case is section 55A(a) of the Act as existing during the period relevant to the AY 2006-07 - very clearly reference could be made to DVO only if the value declared by the assessee is in the opinion of AO less than its fair market value. It is not clear as to whether the reference was made under clause 55A(a) or 55A(b)(ii) of the Act and if it was made u/s 55A(b)(ii) then what were the relevant circumstances for making such reference - Recording of reasons for invoking a particular section of the Act and justification for invoking the specific clause are not available and nor were they brought to our notice. As the value shown by the assessee was not less than the FVM, so, there was no justification for making any reference to the DVO, by the AO in the year - Amendment to the section 55A of the Act is effective from 01. 07. 2012 - the order of the FAA is reversed. Allocation of interest cost Held that - The FAA had dealt with the issue of interest apportionment in a single line and it is the part of the same paragraph that deals with apportionment of other expenses - the matter is remitted back to the AO for apportionment of expenses - Following the same, issue of apportioning the interest expenditure is also remitted back to the file of the FAA for passing a speaking order after hearing the assessee Decided in favour of assessee.
Issues Involved:
1. Valuation of land at Boat Club Road, Pune 2. Apportionment of Preliminary Costs & Common Amenities 3. Apportionment of Interest Cost 4. Cost of Settlement with Tenant 5. Reference to Valuation Officer u/s 55A of the Income Tax Act, 1961 Issue-wise Detailed Analysis: 1. Valuation of Land at Boat Club Road, Pune: - Value as on Date of Conversion (12.06.1995): The CIT(A) confirmed the valuation of the land at Rs. 12,82,41,000 as per the DVO's report. The assessee argued that this valuation was incorrect and should be reconsidered. - Valuation of Part of the Land Converted in January 2001: The CIT(A) confirmed the valuation at Rs. 94,79,000 instead of the appellant's claimed Rs. 2,04,11,552. The assessee contended that the valuation should be proportional to the area based on the 1995 valuation. 2. Apportionment of Preliminary Costs & Common Amenities: - Preliminary Costs (Rs. 36,87,001) & Common Amenities (Rs. 76,96,000): The CIT(A) upheld the apportionment of these costs proportionately to Building A based on its saleable area ratio to the total project area. The assessee argued that these costs should be entirely attributed to Building A. The tribunal found that the FAA did not provide a reasoned order and remitted the matter back for fresh adjudication. 3. Apportionment of Interest Cost (Rs. 69,69,203): - Interest Cost Allocation: The CIT(A) confirmed the apportionment of interest costs proportionately to Building A. The assessee argued that interest should be fully attributed to Building A or, alternatively, apportioned differently. The tribunal remitted the issue back to the FAA for a reasoned order, considering the decision of the jurisdictional High Court. 4. Cost of Settlement with Tenant (Rs. 40,00,000): - Disallowance as Capital Expenditure: The assessee did not press this ground during the hearing, and it was dismissed as not pressed. 5. Reference to Valuation Officer u/s 55A: - Legality of Reference: The assessee challenged the AO's reference to the DVO for determining the FMV of the property. The tribunal admitted the additional ground, citing the importance of substantial justice and the legal nature of the issue. It was noted that the AO did not form a clear opinion before making the reference, and the tribunal found no justification for the reference under the specific provisions of section 55A, particularly given that the value shown by the assessee was not less than the FMV. The tribunal reversed the FAA's order on this ground. Conclusion: The tribunal allowed the appeal partly, remitting issues related to the apportionment of preliminary costs, common amenities, and interest costs back to the FAA for fresh adjudication, while deciding the additional ground regarding the reference to the DVO in favor of the assessee. The issue of the cost of settlement with the tenant was dismissed as not pressed.
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