2022 (9) TMI 704 - AT - Income Tax

Capital gain computation - FMV determination - reference to district valuation officer (DVO) u/s 55A - HELD THAT - We find that there is no dispute that the assessee has transferred the impugned land prior to 01/7/2012. The assessee while computing the capital gain adopted the fair market value then the value adopted by AO. As relying on similar ground of appeal in Kantilal Manilal Patel 2019 (7) TMI 1948 - ITAT AHMEDABAD almost all similar fact while following the decision in CIT Vs Gauranginiben S. Shodhan, Indl. 2014 (2) TMI 78 - GUJARAT HIGH COURT we hold that the assessee has transferred his land prior to 01/7/2012 and the amended provision of Section 55A is not applicable on the facts of assessee, thus, the reduction in the cost of acquisition on the basis of report of DVO cannot be made applicable on the assessee. Thus, the assessing officer is directed to delete the additions of long term capital - Decided in favour of assessee. Additional ground for deduction u/s 54B - As in our view the facts necessary for consideration of additional claim was available on record. Considering the fact that the assessee has raised this ground first time before the ld. CIT(A), therefore, we find merit in the submissions of ld AR for the assessee that the appellate authorities have jurisdiction to admit the additional grounds/ claim, thus, we admit the additional grounds of appeal. Our view gets support from the decision of Hon ble Apex Court in Goetz India Ltd 2006 (3) TMI 75 - SUPREME COURT Prithivi Brokers Share Holders (P) Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT also held that Tribunal have jurisdiction to consider the additional claim and discretion to permit additional ground by way of additional claims. Such claims need not to be those which became available on account of change of circumstances of law but which was even available when return was filed - we admit the additional ground of appeal of the assessee for just decision of the case under section 54B and direct the assessing officer to examine the fact and grant the benefit to the assessee under section 54B, as per law. Ground of appeal is allowed for statistical purpose.

Summary

Issues Involved:
1. Validity of reference to the Valuation Officer under Section 55A.
2. Fair Market Value (FMV) determination as on 01/04/1981.
3. Rejection of the additional ground of appeal relating to exemption under Section 54B.

Issue-wise Detailed Analysis:

1. Validity of Reference to the Valuation Officer under Section 55A:
The primary issue raised by the assessee was the legality of the reference made by the Assessing Officer (AO) to the District Valuation Officer (DVO) under Section 55A of the Income Tax Act. The assessee contended that the reference was illegal because, at the relevant time, the law did not permit the AO to make such a reference if the value claimed by the assessee was more than the fair market value. The Tribunal noted that the amendment to Section 55A, which allowed the AO to make a reference if the value was at variance with the fair market value, was effective from 01/07/2012 and not retrospective. Therefore, for transactions occurring before this date, the AO could not make such a reference if the value declared by the assessee was higher than the fair market value.

2. Fair Market Value (FMV) Determination as on 01/04/1981:
The assessee had adopted a FMV of Rs. 100 per square meter based on a registered valuer's report, whereas the DVO estimated it at Rs. 3.09 per square meter. The Tribunal found that the AO's reliance on the DVO's report to reduce the cost of acquisition was not permissible. The Tribunal referred to the decision of the Hon'ble Gujarat High Court in CIT Vs Gauranginiben S. Shodhan, which held that if the value declared by the assessee was more than the fair market value assumed by the AO, the AO could not make a reference to the DVO under the old provisions of Section 55A. Consequently, the Tribunal directed the AO to delete the addition of Rs. 38,03,718/- based on the DVO's report, upholding the assessee's valuation.

3. Rejection of the Additional Ground of Appeal Relating to Exemption under Section 54B:
The assessee raised an additional ground of appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], claiming exemption under Section 54B for purchasing another agricultural land within two years of selling the original agricultural land. The CIT(A) rejected this ground, stating that it was not claimed in the original return or during the assessment proceedings. The Tribunal, however, held that appellate authorities have the jurisdiction to admit additional grounds or claims. The Tribunal referred to the Hon'ble Supreme Court's decision in Goetz India Ltd. and the Hon'ble Gujarat High Court's decision in CIT Vs Mitesh Impex, which affirmed the discretion of appellate authorities to permit additional claims. The Tribunal directed the AO to examine the facts and grant the benefit under Section 54B, providing the assessee an opportunity to substantiate the claim with required evidence.

Conclusion:
The appeal was partly allowed. The Tribunal quashed the addition of Rs. 38,03,718/- made by the AO based on the DVO's report and directed the AO to consider the assessee's claim for exemption under Section 54B after proper examination. The judgment emphasized the non-retrospective application of the amended Section 55A and upheld the assessee's right to raise additional grounds at the appellate stage.