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TMI Blog2015 (12) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... essee as on 01.04.1981 obtained by him from registerd Valuer and referred the same to DVO. Accordingly, the order of CIT(A) was set aside and Assessing Officer is directed to allow the claim of assessee as prayed. - Decided in favour of assessee. - ITA Nos. 3711 & 6871/Mum/2012 - - - Dated:- 30-9-2015 - Shailendra Kumar Yadav, JM And Ashwani Taneja, AM For the Appellant : Shri Anuj Kisnadwala Shri Nilesh Parekh, AR For the Respondent : Shri Chandra Vijay, DR ORDER Per Shailendra Kumar Yadav, JM Both the appeals in quantum and penalty are arising out from the respective orders of Commissioner of Income-Tax. 2. In ITA No.3711/Mum/2012, assessee has filed appeal on following grounds: On the facts and circumstances of the case, and in law, the learned Commissioner of Income-Tax (Appeals)-30, Mumbai, erred in i. Upholding the validity of reference made to the Departmental Valuation Officer under section 55A of the Income-tax Act, 1961; ii. Not following the decision of jurisdictional High Court in the absence of any other contrary high court decision on the matter under consideration; iii. Upholding the AO's rejection of valuation re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to same, reply was filed by M/s. Star Architects. On verification of valuation report, Assessing Officer found that valuer has no instance of land sale in the year 1981 with him. The valuer valued the property at ₹ 2000 per sq.yard as per his personal acquaintance. Assessing Officer observed that valuer had not adopted the value by following any scientific method. So, he held that valuation report of registered value being out of personal experience of valuer and therefore, does not stand to professional scrutiny and hence this could not be relied upon. In view of above, matter was referred to DVO, Mumbai u/s.55A(b)(ii) of the Income Tax Act. However, till date of passing of assessment order no report was received from DVO. Therefore, Assessing Officer estimated the value as on 1.4.1981. Registered valuer valued the property at ₹ 2000 per sq.yard. Assessing Officer noted that it was difficult to believe land valued at ₹ 22,46,250/-, has increased by 5.5 times in the year of sale i.e. 2007. Therefore, assuming that land prices has gone up 10 times in span of 25 years the cost as on 1.4.1981 is recalculated as under: Cost on 7.07.2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance of land sale in the year 1981, available with him. It is also seen that the value has not been adopted by the valuer on scientific basis. He has not cited any comparable instances before deriving the fair market value as on 10/04/1981. This being so, the A.O. did not rely upon the report of the Registered Valuer on the ground that the said report was prepared out of personal experience of the valuer and does not stand to professional scrutiny. The A. O. also stated that the said property was situated at Rajkot, Gujrat, which was very small city and the valuation seems to be on the higher side. Therefore. Reference was made to the Departmental Valuer u/s 55A of the I.T. Act. Since the Departmental Valuer's Report was not received, till the limitation date of assessment, the A. O. estimated the value as on 01/04/1981 at ₹ 12,70,000/-. By adopting the value at ₹ 12,70,000/- and indexing the same at ₹ 69,97,700/-, the capital gain was arrived at ₹ 57,02,300/-, which was subsequently rectified to ₹ 38,18,296/-. Thereafter, the valuer's report was received from the Valuation Officer, I. T. Department, Rajkot and a copy of which is also marked t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land located at Kasturba Road, Rajkot, Gujarat for ₹ 1,27,00,000 and derived long term capital gains(L TCG) which was invested in new residential house for exemption under section 54F of the Act. The land sold during the year was purchased prior to 1 April 1981. Therefore the LTCG was calculated by adopting the fair market value (FMV) of land as on 1 April 1981 as per the provisions of section 55(2)(b) (i) of the Act. The aforesaid FMV is adopted at ₹ 22,46,250 based on valuation report dated 24 September 2007 of M/s. Star Architects, government approved registered valuer. The Appellant adopted value based on estimate made by registered valuer and therefore the Appellant's case is covered by section 55A(a) of the Act and not otherwise. It has been further held in the above decisions that for rejecting the value claimed by the Appellant as on 01.04.1981 and making reference to DVO under section 55A(a) of the Act, the AO should form an opinion that the value so claimed by the Appellant is less than its fair market value. In the Appellant's case the value adopted by the Appellant is ₹ 22,46,250 which is more than the FMV of ₹ 12,70,000 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 4,94,600/- as on 1st April, 1981 based on estimate made by Departmental Valuation Officer vide order passed u/s.55Aof the Act, 1961 and enhancing long term capital gain by ₹ 28,60,863/- was not justified. In this background, learned Authorized Representative opposed the order of CIT(A) and on other hand, Learned Departmental Representative supported the orders of authorities below. 7. After going through rival submissions and material on record, we find that issue before us is whether Assessing Officer was justified in applying the provisions of Section55A(b)(ii) of the Act at relevant point of time. As stated above, during the year assessee shown land situated at Rajkot, Gujarat for ₹ 1,27,00,000/- and derived long term capital gain, which was invested in new residential house of exemption u/s.54F of the Act. The land sold during the year was purchased prior to 1st April, 1981. Therefore, long term capital gain was calculated by adopting fair market value of land as on 1st April, 1981 as per the provisions of section 55(2)(b)(i) of the Act. Assessee adopted fair market value at ₹ 22,46,250/- based on valuation report dated 24th September, 2007 of M/s. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted by assessee. Thus, reference made by Assessing Officer u/s.55A(b)(ii) was not correct. We find that Hon'ble Bombay High Court in case of CIT vs. Daulal Mohta (HUF) in ITA No. 1031 of 2008 (Bombay High Court), wherein respondent had adopted fair market value of property as on 01.04.1981 at ₹ 2,13,31,000/- based on the valuation report of Government approved Valuer and Assessing Officer determined the fair market value as on 1 April 1981 at ₹ 1,35,40,000/- based on valuation report of DVO. Hon'ble Bombay High Court upheld the order of Tribunal by observing as under: 3. We have perused the judgment of the Tribunal. It is explicitly clear that the questions sought to be raised are with regard to the quantum of valuation which is only a finding of fact and there is absolutely no question of law involved in the above appeal. 4. The Tribunal in its order dated 23rd July, 2008 has categorically observed thus: 5. The first issue that arises for our consideration is whether the reference made by the Assessing Officer to the DVO u/s 55A is bad in law under the facts and circumstances of the case. This issue, in our considered opinion, is covered in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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