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TMI Blog2019 (6) TMI 1571X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 55A(a) of the Act. In order to refer the matter to the valuation officer as per erstwhile provisions of section 55A(a), in the instant case, there is no dispute that the liability towards the capital gains has arisen during the year as the transfer of the land has happened during the year. There is also no dispute that cost of acquisition as substituted by the assessee with fair market value as on 1.4.1981 is based on and in accordance with the estimate made by the registered valuer. In the instant case, the value of the land shown by the assessee as on 1.4.1981 based on the registered valuer report is considered, it would reveal that the same was in fact even higher than the value subsequently determined by the valuation officer and therefore, the Assessing Officer was not empowered to refer the matter Therefore, without going into the merits of the basis of valuation so adopted by the registered valuer and subsequently by the department s valuation officer, in absence of a valid reference to the valuation officer, the addition so made under the head long term capital gains so far as it relates to cost of acquisition as substituted by fair market valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Also the matter relating to valuation of the property as on 18.02.2012 i.e. date of sale of the property was also referred to the DVO in terms of 50C(2) of the Act. The DVO, Surat has furnished his valuation report of property as on 01.04.1981 at ₹ 10.19 per sq. mtr and as on 18.02.2012 at ₹ 2,011/- per sq.mtr. for sale of land admeasuring 8,397/- sq.mtrs vide his report dated 29.01.2016 and 24.02.2016 respectively. 5. In the above factual matrix, the limited dispute before us relates to cost of acquisition wherein the assessee has substituted the cost of acquisition with the FMV as on 01.04.1981 at ₹ 380/- per sq.mtrs and the DVO has valued the property s FMV as on 1.04.1981 at ₹ 10.19 per sq.mtr. There is no dispute regarding full value of consideration which has been determined at ₹ 2011 per sq.mtrs as per the report of the DVO. 6. During the course of reassessment proceedings, pursuant to the receipt of the DVO report, the Assessing Officer has issued a show cause to the assessee as to why the cost of acquisition as determined by the DVO should not be taken and in response, the assessee has objected to the reference to the DVO u/s 55A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such reference could be made when the AO was of the view that the value disclosed by the assessee was less than the FMV. In some cases, it was held by the Hon ble Courts that when the assessee exercises his/her option to substitute fair market value of the capital asset as on 01.04.1981 for the cost of the asset, and if the AO is of the view that such market value as declared by the assessee was more, the AO cannot make a reference to the Valuation Officer. To overcome this position, this amendment provides that w.e.f. 01/07/2012 the AO can make such reference to the Valuation Officer where, in his opinion, the value declared by the assessee is at variance from the fair market value. This provision was amended w.e.f. 01/07/2012 meaning thereby the AO can make such a reference to the Valuation Officer in respect of any assessment pending before him after 01.07.2012. It was accordingly held by the ld CIT(A) that the contention of the assessee that the reference made to DVO is erroneous is misplaced as the reference by the AO to the DVO was rightly made as per the amended provisions made to section 55A of the Act w.e.f. 1st July 2012. On merits, the ld CIT(A) held that the registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nod Harilal Mehta (ITA No. 2945/Ahd/2013) which has clarified the matter in favour of assessee relying upon the judgment of CIT vs. Gaurangiben S. Shrodhan (2014) 367 ITR 238 (Guj) which is squarely applicable to the assessee. Further the assessee also relies on the judgment of M/s Puja Prints ITA No. 248/2012 Mumbai High Court. Also, the ITAT Pune Bench in case of ACIT vs. Shri Bhima Dada Kharate (ITA NO. 1582/Pune/2015) held that prior to 01/07/2012, the provisions of existing section 55A(a) were applicable and the Parliament has not given retrospective effect. It was submitted that the observation conclution of CIT(A) is therefore ill conceived not warranted in view of the jurisdictional High Court Judgment. It was accordingly submitted that in view of the direct judgment of Gujarat High Court, the reference u/s 55A(a) may kindly be adjudged as not in accordance with law may kindly be set aside the assessee registered valuer's valuation as on 01/04/1981 may be adopted the addition of ₹ 10,92,200/- may kindly be deleted. On merits, it was submitted that the rate by DVO @ ₹ 10.19 per Sq. Mt. is very much on lower side compared to registered valuer's r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation.-In this section, Valuation Officer has the same meaning, as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). 14. The aforesaid provisions are as amended by the Finance Act, 2012 with effect from 1.07.2012 wherein in clause (a), for is less than its fair market value was substituted for at variance with its fair value . As per the Revenue, the amended provisions of section 55A(a) are applicable for the impugned assessment year 2012-13 and the Assessing officer was well within his jurisdiction to refer the matter to the valuation officer. The assessee s contention is that unamended provisions of section 55A(a) are relevant for the impugned assessment year 2012-13 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scenarios and has provided that where the value so claimed by the assessee is at variance with its fair market value, the matter can be referred to the valuation officer. In the instant case, the Assessing officer has invoked the amended provisions and has held that the value so claimed by the assessee is at variance with its fair market value. The contention of the assessee is that the amended provisions have only been brought on the statue books w.e.f 1.07.2012 and the same cannot be invoked in the instant case and therefore, the AO lacks the necessary jurisdiction to refer the matter to the valuation officer. 16. The question is how one should read the amendment in section 55A(a) which has been brought on the statue books w.e.f 1.07.2012. Whether we should read the amendment in the context of transactions which have happened on or after 1.07.2012 and which are liable for capital gains tax and therefore, satisfying the initial condition of reference for the purposes of this chapter to the valuation officer. Alternatively, irrespective of period to which the transaction pertains, where the assessment proceedings are initiated by the Assessing officer or pending before the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s empowered to make a reference to the valuation officer with effect from 1.07.2012. 17. In this regard, we refer to the decision of the Hon ble Bombay High Court in case of CIT vs. Puja Prints [2014] 224 Taxman 22 (Bom) wherein it was held that the Parliament has not given retrospective effect to the amendment and the law to be applied is as existing during the period relevant to the Assessment Year 2006-07. The findings of the Hon ble High Court are as under:- 6. We have considered the rival submissions. We find that the impugned order dated 18 February, 2011 allowing the respondentassessee's appeal holding that no reference to the Departmental Valuation Officer can be made under Section 55A of the Act, only follows the decision of this Court in the matter of Daulal Mohta HUF (supra). The revenue has not been able to point out how the aforesaid decision is inapplicable to the present facts nor has the revenue pointed out that the decision in Daulal Mohta HUF (supra) has not been accepted by the revenue. On the aforesaid ground alone, this appeal need not be entertained. However, as submissions were made on merits, we have independently examined the same. 7. We find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue as found in Circular issued by the CBDT is not binding upon the assessee and it is open to an assessee to contend to the contrary. 10. The contention of the revenue that the Assessing Officer is entitled to refer the issue of valuation of the property to the Departmental Valuation Officer in exercise of its power under Sections 131, 133(6) and 142(2) of the Act is entirely based upon the decision of the Guwahati High Court in Smt. Amiya Bala Paul (supra). However, the Apex Court in Smt. Amiya Bala Paul (supra) has reversed the decision of the Guwahati High Court and held that if the power to refer any dispute with regard to the valuation of the property was already available under Sections 131(1), 136(6) and 142(2) of the Act, there was no need to specifically empower the Assessing Officer to do so in circumstances specified under Section 55A of the Act. It further held that when a specific provision under which the reference can be made to the Departmental Valuation Officer is available, there is no occasion for the Assessing Officer to invoke the general powers of enquiry. In view of the above and particularly in view of clear provisions of law as existing during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has relied upon a Registered Valuer's Report, Assessing Officer can proceed only under clause (a) and clause (b) would not be applicable. 16. In the present case, admittedly the assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset. Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) thereof as held by the Division Bench of this Court in the case of Hiaben Jayantilal Shah v. ITO [2009] 310 ITR 31/181 Taxman 191 (Guj.). In the said decision, it was held and observed as under:- 10. Under clause(a) of sec. 55A of the Act under the Assessing Officer is entitled to make the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so claimed is less than the fair market value. In any other case, as provided under clause(b) of Sec. 55A of the Act, the Assessing Officer has to record an opinion that (i) the fair market value of the asset exceeds the value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer made reference to the Stamp Valuation Authority in this regard and relying on the report of the Stamp Valuation Authority, adopted the cost of acquisition as on 01.04.1981 at ₹ 64,675/- and worked out the indexed cost of acquisition at ₹ 3,76,409/-. The CIT(A) on the other hand, has relied on the ratio laid down by the Hon'ble Bombay High Court in CIT Vs. Puja Prints (supra). The dictate of the Hon'ble Bombay High Court is that reference could be made to the Departmental Valuation Officer only when the value adopted by the assessee was less than the fair market value. In case the value adopted by the assessee of any property was more than the fair market value as determined by the DVO, then such invocation of provisions of section 55A(a) of the Act was held to be not justified. Reference was also made to the amendment to section 55A(a) of the Act in 2012, wherein for the words is less than the fair market value was substituted by the words is at variance with its fair market value , was held to be clarificatory and it was categorically held that where the amendment was made effective only from 01.07.2012; the Parliament has not given retrospectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard the rival contentions of both the parties and also gone through the orders of the lower authorities and the case laws relied upon by the assessee. In the instant case, assessee has declared the value for the cost of acquisition for the property at a higher value than the value determined by the DVO. The first technical issue arose before us is whether the reference made by the AO to the DVO for the valuation of the property is valid for the year under consideration. In this regard we note there was an amendment u/s 55A of the Act which was effective from 01.07.2012. Prior to the amendment u/s 55A of the Act, the provision of said section reads as under:- [Reference to Valuation Officer. 55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the 60[Assessing] Officer may refer the valuation of 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 60[Assessing] Officer is of opinion that the value so claimed is less than its fair market value From the above provision we note that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment for that year, even if the assessment is actually made after the amendments come into force. From the above proposition of law, it is clear that the amendments which are being applicable from any date other than first April of assessment year would be applied from the next Assessment Year. For example, in the instant case, the amendment was brought with effect from 01.07.2012. Thus, the amendment would be applicable from the Assessment Year beginning from first April, 2013 i.e. Assessment Year 2013-14. Thus, it is clear that the amendment brought under the statutory provisions of Section 55A of the Act is not applicable in the year under consideration. As the value adopted by assessee is more than the fair market value then no reference to Valuation Officer would have been made as per the provision of Section 55A(a) of the Act as it is administered at the relevant time. Once, we have reached to the conclusion no reference can be made to the DVO for the year under consideration in the given facts and circumstances. Thus on the same basis, the assessment order cannot be held as erroneous in so far as prejudicial to the interest of revenue. Keeping in view all these discussio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng from first April, 2013 i.e. Assessment Year 2013-14 and not applicable to Assessment Year 2012-13. 25. In light of above discussions, if the facts of the present case are examined, the transaction of sale of land has taken place during the financial year 201112 relevant to Assessment year 2012-13, therefore, the amended provisions of section 55A(a) would not be applicable and one shall be guided by the erstwhile provisions of section 55A(a) of the Act. 26. In order to refer the matter to the valuation officer as per erstwhile provisions of section 55A(a), in the instant case, there is no dispute that the liability towards the capital gains has arisen during the year as the transfer of the land has happened during the year. There is also no dispute that cost of acquisition as substituted by the assessee with fair market value as on 1.4.1981 is based on and in accordance with the estimate made by the registered valuer. The third condition is that the Assessing Officer should form an opinion that the value so claimed by the assessee is less than its fair market value. Therefore, only in a scenario, the value so claimed by the assessee is less than its fair market value in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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