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TMI Blog2021 (5) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... F INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the orders of ld. Commissioner of Income tax (Appeals)-1, Surat, dated 27.06.2016, for assessment year (AY) 2012-13. The assessee raised the following grounds of appeal: (1) That on facts and in law, the learned CIT(A)has grievously erred in confirming the action of the AO in determining the long term capital gains at ₹ 1,48,41,340/- instead of ₹ 9,40,565/- as shown by the appellant. (2) That on facts and in law, the learned CIT(A) ought to have held that the indexed cost of acquisition is rightly adopted by the appellant at ₹ 1,7,33,935/- @ ₹ 290/- per sq.mt., and the entire addition as long term capital gains ought to have been deleted. (3) The appellant craves leave to add, alter, amend any ground of appeal. 2. Brief facts of the case are that the assessee while filing the Return of Income for the assessment year under consideration offered Income from House Property, Long Term Capital Gain (LTCG), and Income from Other Sources. The case was selected for scrutiny. During the assessment, the Assessing Officer (AO) noted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, arbitrary and unrealistic and not having any scientific basis. The ld.CIT(A) accepted the rate of DVO by treating it as a quite fair and reasonable and scientific basis. Further aggrieved, the assessee filed present appeal before this Tribunal. 4. We have heard the submission of Ld. Authorised Representative (AR) of the assessee and ld. Departmental Representative (Sr. DR) of the Revenue and perused the material available on record. At the outset of hearing, the ld.AR of the assessee after explaining fact that while computing Long Term Capital Gain, the assessee adopted Fair Market Value(FMV) of property on the basis of valuation suggested by Government Approved Valuer @ ₹ 290 per sq.mtr as on 01.04.1981. The AO referred the matter to the DVO, the DVO suggested the rate of the property as on 01.04.1981 @ ₹ 63 per sq.mtr. The ld.AR for the assessee submits that he is raising a purely legal contention that the assessee while adopting the value of asset as shown asset at higher rate than the FMV and the amendment to section 55A(a) i.e. substitution of the word is at variance with the Fair Market Value were inserted in the Income Tax Act w.e.f 01.07.2012 and the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that fair market value as on1st April 1981 as claimed by assessee is not fair value. The learned AR of the assessee would submit that the ratio of decision of Hon ble was rather High Court in case of CIT Versus Gauranginiben S Shodhan Ind. reported in (367 ITR 238) is squarely applicable on the facts of the present case. The learned AR of the assessee also relied on the following case laws. JigneshKumar S Modi (HUF) and 6 others Vs ITO (ITA No. 544 to 550/Srt/2018, Shantaben P Patel Vs ITO 2 other ( ITA No. 781, 784 785/Ahd/2011, Gujarat High court in PCIT Vs Shantiben P Patel ( Tax Appeal No. 1204 of 2018 and Mahadevi Mohanbhai Naik Vs ITO ( ITA No.82/Ahd/2016) 7. The learned AR for the assessee submits that in view of the decision of jurisdictional High Court in CIT Versus Gauranginiben S Shodhan (supra), the issue of validity of reference under section 55A(a) may kindly be addressed first as not in accordance with the law and in case it is held that reference to the DVO is not in accordance with law the additions based on such reference be deleted in such even the other contention raised before the lower authorities would become academic. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and the Assessing officer was not having the jurisdiction to refer the matter to the valuation officer. 15. In order to resolve the controversy, let s examine the provisions of section 55A(a). First and foremost, it provides that with a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer. In the instant case, for the purposes of this chapter means for the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 Assessing officer on or after 1.07.2012, given that the Assessing officer has to form an opinion during the course of assessment proceedings, the amended provisions will apply. In this regard, it would be useful to refer to the Memorandum explaining the Finance Bill, 2012 which reads as under: Under the provisions of section 55A, where in the opinion of the Assessing Officer value of asset as claimed by the assessee is less than its market value, he may refer the valuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. We have considered the rival submissions. We find that the impugned order dated 18 February, 2011 allowing the respondent assessee'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 that Section 55A(a) of the Act very clearly at the relevant time provided that a reference could be made to the Departmental Valuation Officer only when the value adopted by the assessee was less then the fair market value. In the present case, it is an undisputed position that the value adopted by the respondent assessee of the property at ₹ 35.99 lakhs was much more than the fair market value of ₹ 6.68 lakhs even as determined by the Departmental Valua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l (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 period relevant to Assessment Year 2006-07, we are of the view that questions (a) and (b) do not raise any substantial question of law. 18. We now refer to the Hon ble Gujarat High Court decision in case of CIT vs. Gauranginiben S. Shodhan Indl. [2014] 224 Taxman 253 (Gujarat) wherein it was held section 55A as it stood at the relevant time, has to be seen and emphasis was laid on the period of the transaction and where the transaction was for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 asset as claimed by the assessee by more than such percentage or by more than such an amount as may be prescribed; or (ii) having regard to the nature of the asset and other relevant circumstances, it is necessary to make such a reference. 19.xxxxxxxxxx 20 xxxxxxxxxx 21 xxxxxxxxxx 22 xxxxxxxxxx 23. As we have noted above, the Hon ble Bombay High Court in case of CIT vs. Puja Prints (supra) has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions 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 opinion of the Assessing officer, the matter can be referred to the valuation officer. In a scenario, where the value so claimed by the assessee is more than its fair market value, the matter couldn t be referred to the valuation officer. In the instant case, the value of the land shown by the assessee as on 1.4.1981 base ..... X X X X Extracts X X X X X X X X Extracts X X X X
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