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2022 (8) TMI 128 - AT - Income TaxCapital gain computation - validity of reference made to the DVO u/s 142A - land(s) formed subject matter of a joint venture development agreement - Assessee foremost argument that no cost of acquisition at all regarding the asset in issue and therefore, the same ought to have been adopted at nil than 12% allegedly paid by the owner / their predecessor - HELD THAT - We find no substance in the learned counsel s foregoing arguments as this is an instance of perfection of title by the assessee s predecessor in interest by paying 12% charges to the government; which in turn, would result in acquisition of absolute title on government land. Learned counsel could hardly dispute that his predecessor-in-interest only enjoyed possession than having title of this land earlier. We conclude in this factual backdrop that the learned lower authorities have rightly rejected the assessee s contention of nil cost of acquisition in the given facts and circumstances. This identical and first foremost ground is rejected all these appeals. Validity of impugned assessments which have been claimed to be barred by limitation - As came on record that the Assessing Officer had made section 142A reference to the DVO and the time limit in submission of such a report of valuation is further extended to 60 days in light of foregoing statutory proviso (supra). We thus reject the assessees instant second substantive ground as well. Land in issue stood converted into stock-in-trade and the learned lower authorities ought to have initiated section 147/148 reopening mechanism - No merit therein since the chargeability of capital gains to tax u/s 45(1) in an instance of a capital asset converted to stock-in-trade arises only in the year of transfer of the asset under sub-section (2) thereof. We make it clear that these assessees have transferred their respective shares in the land in financial year 2013-14 relevant to the impugned assessment year 2014-15 wherein the learned lower authorities have framed the respective assessments. We thus reject the assessees instant fourth substantive ground as well. Converting the limited scrutiny to a complete one - Reason of scrutiny selection was non corporate assessee having income to business to which section 44AB applies . Learned counsel could hardly dispute that these assessees have transferred their stock-in-trade (supra) as non corporate assessees resulting in business income. We thus reject the assessees instant last substantive ground as well. This is indeed coupled with the fact that the Assessing Officer(s) had converted this limited scrutiny to complete one as per CBDT Instruction No.20/2015 after obtaining the PCIT-2, Pune s prior approval. This identical fifth substantive ground is also rejected in all these three appeals therefore. Reference was made u/s 142A whereas the valuation as on 01/04/1981 should have been referred u/s 55A - This is an instance of assessee having converted his agricultural lands to stock-in-trade as on 01.04.2010 followed by transfer thereof in the impugned assessment year giving rise to chargeability of income tax provisions in the latter assessment year 2014-15 in light of section 45(2) - That being the case, we fail to understand as to how the amended proviso w.e.f. 01.07.2012 would not be applicable in assessment year 2014-15. We further deem it appropriate to observe that section 55A; even if it is held to be applicable herein, would come into play for the computation of assessee s capital gains as on the date of conversion coming to 01.04.2010 whereas the correct corresponding statutory provision applicable as in the instant case is section 142A(1) only. That being the case, we conclude that the CIT(A) has erred in treating the impugned section 142A(1) reference as not maintainable by drawing analogy from amended proviso to section 55A(a) which itself is not applicable. We thus reverse the learned CIT(A) s order as well as the findings herein to this limited extent and restore the Revenue s instant sole substantive ground back to him for his fresh appropriate adjudication as per law.
Issues Involved:
1. Validity of reference to the DVO under section 142A. 2. Cost of acquisition of the capital asset. 3. Time limit for completion of assessment under section 153. 4. Time limit for receipt of valuation report under section 142A. 5. Conversion of limited scrutiny into complete scrutiny. 6. Validity of the assessment being barred by limitation. Detailed Analysis: 1. Validity of Reference to the DVO under Section 142A: The Revenue's appeal questioned the CIT(A)'s decision that the reference to the DVO was invalid, relying on the judgment of the Bombay High Court in CIT vs Pooja Prints. The CIT(A) held that the reference should have been made under section 55A for valuation as on 01-04-1981 and 01-04-2010, rather than under section 142A, which was amended effective from 01-10-2014. The Tribunal noted that the correct statutory provision applicable was section 142A(1) and reversed the CIT(A)'s order, restoring the matter back to CIT(A) for fresh adjudication. 2. Cost of Acquisition of the Capital Asset: The assessees contended that there was no cost of acquisition for the capital asset, arguing it should be adopted at nil. The CIT(A) found that the predecessor had paid 12% charges to the government for the re-grant of the property, which constituted the cost of acquisition. The Tribunal upheld this view, stating that the cost of acquisition was ascertainable and rejecting the assessees' arguments. 3. Time Limit for Completion of Assessment under Section 153: The assessees argued that the assessments were barred by limitation as they were completed beyond the statutory period. The CIT(A) noted that the period from the date of reference to the DVO to the receipt of the report was excluded from the limitation period, and an additional 60 days were granted as per the statutory proviso. The Tribunal agreed, finding that the assessments were completed within the extended time limit. 4. Time Limit for Receipt of Valuation Report under Section 142A: The assessees claimed that the DVO report was received beyond the permissible time limit. The Tribunal found no merit in this argument, noting that the statutory provisions allowed for the exclusion of the period taken by the DVO in submitting the report, and hence the report was not time-barred. 5. Conversion of Limited Scrutiny into Complete Scrutiny: The assessees contended that the conversion from limited scrutiny to complete scrutiny was invalid. The Tribunal noted that the reason for scrutiny selection was related to business income under section 44AB, and the Assessing Officer had obtained prior approval from the PCIT-2, Pune, as per CBDT Instruction No.20/2015. Therefore, the Tribunal rejected this ground. 6. Validity of the Assessment Being Barred by Limitation: The assessees argued that the assessments were barred by limitation. The CIT(A) and the Tribunal found that the assessments were completed within the extended time limit provided by the statutory provisions, considering the period of reference to the DVO and the additional 60 days. Conclusion: The Tribunal dismissed the assessees' appeals on all grounds, finding that the cost of acquisition was ascertainable, the assessments were completed within the extended time limits, and the conversion to complete scrutiny was valid. The Revenue's appeal was allowed for statistical purposes, with the matter of the reference to the DVO being restored to the CIT(A) for fresh adjudication.
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