2018 (11) TMI 394 - HC - Income Tax

Addition on account of Long Term Capital Gains - reference to the District Valuation Officer for determining the fair market value of the assets as on 01.04.1981 - Held that - A decided in COMMISSIONER OF INCOME TAX VERSUS GAURANGINIBEN S. SHODHAN INDL. 2014 (2) TMI 78 - GUJARAT HIGH COURT Assessing Officer is entitled to make the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so claimed is less than the fair market value. The assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset - Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) - Decided against Revenue.

Summary

Issues:
- Appeal against the judgment of the Income Tax Appellate Tribunal.
- Deletion of addition of ?13,97,290 on account of Long Term Capital Gains.
- Authority of the Assessing Officer to refer to the District Valuation Officer for determining fair market value of assets as on 01.04.1981.

Analysis:

1. The Revenue appealed against the Income Tax Appellate Tribunal's judgment. The main question was whether the Tribunal erred in deleting the addition of ?13,97,290 concerning Long Term Capital Gains for the Assessment Year 2011-12.

2. The issue revolved around the authority of the Assessing Officer to refer to the District Valuation Officer to ascertain the fair market value of assets as of 01.04.1981. The Tribunal based its decision on a previous court ruling in Commissioner of Income Tax v. Gauranginiben S. Shodhan, where it was noted that prior to the amendment in section 55A, the Assessing Officer could only refer to the DVO if the value claimed by the assessee was less than the fair market value as of April 1, 1981. However, the clause did not apply to valuation as of that date. The court emphasized that the situation might differ post-July 1, 2012, but for the period before that, clause (b) of section 55A would not be applicable.

3. The court concluded that the issue was already addressed in a previous decision of the court, and thus, the Tax Appeal was dismissed. The judgment highlighted the specific legal provisions and interpretations that guided the decision-making process, ultimately leading to the dismissal of the appeal.