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2022 (4) TMI 450 - AT - Income TaxLTCG computation - Reference made by the Assessing Officer to the DVO for valuation - directing the Assessing Officer to adopt the cost of acquisition of asset of the assessee as on 01.04.1981 as against on the basis of the DVO s report - HELD THAT - As held by the Surat Bench of this Tribunal in the case of Shri Mahdevbhai Mohanbhai Naik 2018 (7) TMI 2029 - ITAT SURAT the amendment made in the provision of Section 55A by the Finance Act, 2012 with effect from 01.07.2012 is substantive in nature and the same, therefore, is applicable to AY 2013-14 and onwards. Since the year involved in the present case is AY 2012-13, we respectfully follow the said decision of the Co-ordinate Bench of this Tribunal and uphold the impugned order of the learned CIT(A) in treating the reference made by the Assessing Officer to the DVO under Section 55A of the Act as bad in law and directing the Assessing Officer to adopt the fair market value of the land sold by the assessee as on 01.04.1981 for the purpose of computing Long Term Capital Gain on the basis of valuation report of the Registered Valuer as the said report representing experts opinion on the technical issue of valuation was available on record. Ground Nos. 1 2 of the Revenue s appeal are accordingly dismissed. Deduction u/s 54B - As from the perusal of the agreement to sale, final sale/conveyance deed was to be executed within three months which was done on 13.06.2011 and the sale proceeds had also been received by the assessee substantially at the time of execution of agreement to sale which were duly invested by the assessee in the purchase of new agricultural lands. These findings of facts recorded by the learned CIT(A) in his impugned order clearly show that there was a transfer of original asset, i.e. old agricultural land, by the assessee on 11.04.2011 itself on execution of agreement to sale coupled with possession within the meaning of Section 2(47)(v) of the Income-tax Act, 1961 read with Section 53A of the Transfer of Property Act, 1882; and the assessee having purchased the new agricultural lands within the specified period after the date of the said transfer was entitled to claim deduction under Section 54B of the Act. At the time of hearing before us, learned DR has not been able to bring anything on record to rebut or controvert the finding of facts recorded by the learned CIT(A). We, therefore, find no justifiable reason to interfere with the impugned order of the learned CIT(A) giving relief to the assessee on this issue and upholding the same, we dismiss Ground No.3 of the Revenue s appeal.
Issues Involved:
1. Validity of the reference made by the Assessing Officer to the DVO for valuation under Section 55A of the Act. 2. Deduction under Section 54B of the Act for the investment made in purchase of new agricultural lands. Issue-wise Detailed Analysis: 1. Validity of the Reference to DVO for Valuation: The Revenue challenged the CIT(A)'s decision that the reference made by the Assessing Officer to the DVO for valuation was invalid. The CIT(A) directed the Assessing Officer to adopt the cost of acquisition of the asset as on 01.04.1981 at ?32,22,240/- based on the Registered Valuer’s Report, as opposed to ?89,171/- determined by the DVO. The assessee filed a return for the year declaring a total income of ?4,95,370/- and agricultural income of ?1,88,528/-. The assessee sold ancestral agricultural land for ?9,28,80,948/- and declared his share of long-term capital gain as ?22,05,090/-. The cost of the land as on 01.04.1981 was taken at ?32,22,240/- per the Registered Valuer’s Report. The Assessing Officer disagreed and referred the matter to the DVO, who valued the land at ?89,171/-. The Assessing Officer adopted the DVO's valuation, leading to the dispute. The CIT(A) found that the reference to the DVO was invalid under Section 55A, which allows such a reference only if the value claimed by the assessee is less than its market value. The CIT(A) relied on several judicial precedents, including decisions by the Gujarat High Court, which supported the assessee's position. The Tribunal upheld the CIT(A)'s decision, noting that the amendment to Section 55A by the Finance Act, 2012, effective from 01.07.2012, was substantive and applicable only from AY 2013-14 onwards. Since the year in question was AY 2012-13, the reference to the DVO was invalid, and the Registered Valuer’s Report was to be used for determining the fair market value. 2. Deduction under Section 54B for Investment in New Agricultural Lands: The Revenue also challenged the CIT(A)'s decision to allow the assessee's claim for deduction of ?86,50,005/- under Section 54B. The Assessing Officer disallowed the claim because the new agricultural lands were purchased before the transfer of the old agricultural land, which was transferred on 13.06.2011. The assessee argued that the old land was transferred on 11.04.2011 when an agreement to sell was executed, and possession was given, making it a transfer under Section 2(47)(v) of the Act. The sale proceeds were received on 09.05.2011 and used to purchase new agricultural lands. The CIT(A) accepted this explanation, noting that the agreement to sell was notarized, possession was given, and the sale proceeds were received and invested in new lands. The CIT(A) found that the transfer occurred on 11.04.2011, and the new lands were purchased within two years, making the assessee eligible for the deduction under Section 54B. The Tribunal upheld the CIT(A)’s decision, agreeing that the transfer of the old land occurred on 11.04.2011 under Section 2(47)(v) read with Section 53A of the Transfer of Property Act, 1882. The new lands were purchased within the specified period, entitling the assessee to the deduction under Section 54B. The Tribunal found no reason to interfere with the CIT(A)'s findings and dismissed the Revenue's appeal. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on both issues. The reference to the DVO was invalid, and the assessee was entitled to the deduction under Section 54B for the investment in new agricultural lands. The order was pronounced in the open Court on 6th April 2022 at Ahmedabad.
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