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TMI Blog1999 (8) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... Saraf, learned counsel appearing for the assessee. The dispute relates to the assessment years 1982-83 and 1983-84, but they have been decided and disposed by a common order. The point involved is short relating to legal competence of the Assessing Officer to refer the matter to the Departmental Valuation Officer/Cell to evaluate the cost of construction, for the purpose of assessment proceedings. The brief facts are that in response to the notice under section 143(2), a return filed by the assessee disclosed the fact of construction of a house at Calcutta, spending a sum of Rs. 1,75,000 in the year 1982-83 and another sum of Rs. 1,70,000 in the subsequent accounting year totalling to an amount of Rs. 3,45,000. The assessee, it appears, also filed a valuation report by some registered valuer of Calcutta according to which the cost of the construction was Rs. 3,32,000. The Assessing Officer, thereafter, asked the Valuation Officer, Income-tax Department to evaluate the cost of construction of the property. According to the report of the Departmental Valuation Officer the estimated cost of the construction comes to Rs. 8,10,000. A break up of the cost of construction, in the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation of the capital asset to a Valuation Officer--- (a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Income-tax Officer is of opinion that the value so claimed is less than its fair market value ; (b) in any other case, if the Income-tax Officer is of opinion--- (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do." Learned counsel has then referred to section 133(6) of the Income-tax Act which falls in Chapter XIII of the Act which relates to the Income-tax authorities, Sub-section (6) of section 133 reads as follows : "133. The Assessing Officer, the Deputy Commissioner (Appeals), the Deputy Commissioner or the Commissioner (Appeals) may, for the purposes of this Act---. . . (6) require any person, including a banking company or any officer thereof, to furnish information in relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay make such enquiry as he considers necessary." Learned counsel for the Revenue his submitted that the provisions contained under sections 55A, 133(6) and 142(2) of the Income-tax Act are all enabling provisions which legally vest power in the assessing authority to call for a valuation report from the Valuation Officer of the Department regarding the cost of construction of a building. It is submitted that these are machinery provisions and are to be interpreted in a manner, that they provide workability to the provisions of the Act and effectuate them. Learned counsel for the assessee, however, refutes the contention raised on behalf of the Revenue and submits that the purpose of section 55A is to ascertain the fair market value of a property, that is to say, for the purpose, of evaluating the price it may fetch in the market, which has nothing to do with the cost of construction or value of capital assets. The provision can be put to restricted use only, namely, for the purpose for which it has been provided and not for any other purpose. It falls under Chapter IV of the Act which is for the purpose of computation of income from capital gains. Therefore, it cannot be put to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the report of the Departmental Valuation Officer under section 55A. On an objection raised against the said report, it has been held that the assessing authority, in the reassessment proceeding could invoke section 133(6) of the Act for revaluation of the property. Section 133(6) of the Act applies to any proceedings under the Act. Mere mention of a wrong section in the requisition sent to the Valuation Officer, viz., section 55A, will not vitiate the report. It is held that the valuation report could be called for under section 133(6) of the Act to evaluate the cost of construction, in reassessment proceedings. We find that section 131 of the Act falls in Chapter XIII of the Act which relates to powers of the authorities regarding discovery and production of evidence, etc. It reads as under : "131. (1) The Assessing Officer ... shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the following matters, namely:--- (a) discovery and inspection ; (b) enforcing the attendance of any person including any officer of a banking company and examining him on oath ; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequences, whereas the machinery provisions are not to be so strictly interpreted, but they are broadly to be utilised to provide a machinery to achieve the purpose of the Act or to effectuate the charging provisions of the Act. There is no doubt about the legal position that section 55A of the Income-tax Act is meant for the purposes of assessing the capital gains, which is obviously different from valuing cost of construction of a building. It is rightly submitted by learned counsel for the assessee that for the purpose of capital gains the prevailing market value of the property may be relevant and not the cost of construction. In our view, nothing jurisdictional is involved about it and the two decisions relied upon on behalf of the assessee themselves amply clarify the legal position. In the case of Hotel Amar [1993] 200 ITR 785 (Orissa), it has been held that a reference cannot be made to the Valuation Officer under section 55A of the Act in reassessment proceedings, but at the same time it was held that a report obtained under section 55A can be used as a piece of evidence which would be rebuttable. Similarly, in the case of Jindal Strips Ltd. [1979] 116 ITR 825, a Full ..... X X X X Extracts X X X X X X X X Extracts X X X X
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