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TMI Blog2014 (9) TMI 1200X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000 Less : 1. Cost of selling Rs. 8,26,854 2. Claim of 54EC Rs. 4,00,000 3. Cost of acquisition Rs. 1,25,90,350 Rs. 1,38,17,204 Rs. 2,61,82,796 2.1 From the details furnished by the assessee the Assessing Officer noted that the land was acquired prior to 1981. Therefore, the assessee has adopted the value of the land as on 01-04-1981 at Rs. 22,85,000/- as the cost of acquisition and accordingly arrived the indexed cost of acquisition at Rs. 1,25,90,350/-. On being questioned by the Assessing Officer to justify the claim of cost of acquisition, the assessee submitted the valuation report prepared by one Shri Vishwas Bhat. However, the Assessing Officer referred the matter to the DVO who submitted his report valuing the land at Rs. 12,18,000/- as on 01-04-1981. The Assessing Officer, therefore, asked the assessee to explain as to why Rs. 12,18,000/- should not be treated as value as on 01-04-1981 as against Rs. 22,85,000/- adopted by the assessee. The assessee gave reasons as to why the same should not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act. It was submitted that the Assessing Officer can make the reference u/s.55A only in a case where the value of the asset as claimed by the assessee in accordance with the estimate made by the registered valuer, in the opinion of the Assessing Officer, is less than its fair market value. It was argued that the assessee had adopted the fair market value of the land as on 01-04- 1981 at Rs. 22,85,000/- which is supported by the report of the approved valuer. It was submitted that DVO has determined the fair market value at Rs. 12,18,000/-. It was accordingly argued that the fair market value adopted by the assessee is not less than the fair market value adopted by the DVO. Relying on various decisions it was argued that the Assessing Officer should be directed to adopt the fair market value at Rs. 22,85,000/- and accordingly accept the capital gains determined by the assessee. 3.1 Without prejudice to the above the assessee also questioned the reliance placed by the Assessing Officer on the valuation made by the DVO on the ground that the Assessing Officer proceeded to do so inspite of pointing out specifically the factual and patent errors committed by the DVO. It was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment approved valuer. He accordingly held that the reference made by the Assessing Officer u/s.55A to the DVO is not a valid reference. He, however, held that the valuation report of the DVO will not lose its relevance being a good piece of evidence on the issue of fair market value of the property as on 01-04-1981. 3.3 Referring to the decision of the Hon'ble Supreme Court in the case of Pooran Mal Vs. Director of Inspection (Investigation) reported in 93 ITR 505 wherein the Apex Court has observed that even if the search is held as illegal search, nothing in the Article 19 of the constitution bars use of evidence obtained as a result of such illegal search, the Ld.CIT(A) held that the valuation report of the DVO will not lose its relevance and consequently as evidence. After considering the totality of the facts of the case and in absence of any comparable cases, the Ld.CIT(A) held that there is no flaw in the approach of the Government approved valuer and the Assessing Officer in taking into consideration the stamp duty reckoner rates notified for the first time in the year 1989 for the purpose of ascertaining the fair market value of the land as on 01-04-1981. The Ld.CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointing out any defect therein as well as without taking note of the patent errors in the valuation made by the District Valuation Officer whose report has been considered by the CIT(A) as an admissible piece of evidence despite holding that reference to the District Valuation Officer was illegal. 3. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice." Grounds by Revenue : "1. The order of the Ld. Commissioner of Income Tax (Appeals) is contrary to the law and facts and circumstances of the case. 2. The Ld. Commissioner of Income-tax (Appeals) erred on facts and in law in allowing 5 times the Govt. Rate of Rs. 75,000/- for Cost of Acquisition instead of 4 times fixed the Govt., rate of Rs. 75,000/- as on 01.04,1931, where as the rate of cost of acquisition was fixed by Govt. approved valuer relying on Ready Reckoner Rate as per the Town Planning and Valuation Department, 1989. 3. For these and such above other grounds as may be urged at the time of the hearing, the order of the learned CIT(Appeals) may be vacated and that of the Assessing Officer be restored. 4. The appellant craves, leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) There are several methods of valuation in the absence of comparable instances. It is possible that by adopting those methods there is bound to be difference in the valuation of FMV finally arrived at. Therefore relying on some other method where the FMV as of 01-04-1981 is found to be lesser than the FMV estimated by the approved valuer that per se should not be the criteria for outrightly rejecting the valuation made by the approved valuer. The CIT(A) has therefore erroneously relied on different methods perhaps only because it is beneficial to the revenue. It is submitted that in the converse situation Department does not adopt such an approach. iv) In a case where appellant's claim in respect of FMV is supported by the registered valuer's valuation the Assessing Officer neither could make any reference to the DVO nor there would be any enquiry and examination even if the valuation report of the registered valuer was prima facie not correct. Refer- DCIT v/s Chaturbhuj Vallabhdas-130 ITD 230 - Mumbai Bench relevant Para 10. (Refer page No.28 to 31) v) It is further pertinent to be noted that CIT(A) has not found any vital defect in the valuation made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue adopted by the assessee was less than the fair market value. In the present case, it is an undisputed position that the value adopted by the respondentassessee of the property at Rs. 35.99 lakhs was much more than the fair market value of Rs. 6.68 lakhs even as determined by the Departmental Valuation Officer. In fact, the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer only because in his view the valuation of the property as on 1981 as made by the respondent-assessee was higher than the fair market value. In the aforesaid circumstances, the invocation of section 55A(a) of the Act is not justified. The contention of the Revenue that in view of the amendment to section 55A(a) of the Act in 2012 by which the words "is less then its fair market value" is substituted by the words "is at variance with its fair market value" is clarifactory and should be given retrospective effect. This submission is in face of the fact that the 2012 amendment was made effective only from July 1, 2012. Parliament has not given retrospective effect to the amendment. Therefore, the law to be applied in the present case is section 55A(a) of the Act as existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of law. Regarding Question (c) The Tribunal by its impugned order has merely remanded the issue to the Assessing Officer to determine the date on which the respondent-assessee acquired the property for the purpose of working out the cost of acquisition. No specific submissions in regard to this issue was made by the revenue during the oral submissions. In any event, an order of remand in these facts does not give rise to any substantial question of law. Accordingly, we see no reason to entertain questions (a), (b) and (c) as formulated by the Revenue as they do not raise any substantial questions of law. Accordingly, the appeal is dismissed with no order as to costs". 7.2 Similar view has been taken in various other decisions relied on by the Ld. Counsel for the assessee which are placed in the paper book. Respectfully following the decision of the jurisdictional High Court cited (Supra), we hold that the Assessing Officer has no power to refer the matter u/s.55A for determining the fair market value of the property. Once the reference u/s.55A is held as not in accordance with law, the further exercise as done by the Ld.CIT(A) becomes academic in nature. We accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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