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TMI Blog2021 (6) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Mehul Shah CA For the Revenue : Ms. Anupama Singla Sr.DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-2, Surat dated 19.05.2017 for Assessment Year (AY) 2012-13. The assessee has raised the following grounds of appeal. 1. On the facts and circumstances of the case as well as law on the subject, the learned Assessing Officer has erred in reopening the assessment u/s. 147 of the Act and thereby erred in framing the assessment u/s. 147 of the I.T. Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of Assessing Officer by adopting the cost of acquisition as on 01.04.1981 at ₹ 48 per sq. meter as per DVO report as against ₹ 350 adopted by assessee on the basis of Government approved valuer. 3. On the facts and circumstances of the case as well on the subject, the learned Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The objection/submission of assessee was not accepted by AO. The AO accepted the report of DVO and worked out the Long Term Capital Gain (LTCG) on the basis of rate suggested by DVO. The assessee claimed deduction under section 54B of the Act of ₹ 13,75,300/-, thus, the AO after granting set off of deduction under section 54B made addition of ₹ 92,22,624/-. 4. On appeal before the ld. CIT(A), the assessee filed additional evidence and furnished the copy of another valuer namely Ramesh Jain who estimated the value of land as on 01.04.1981 @ 225 per sq. mtr. vide his report dated 24.08.2015. The assessee made application for considering the additional evidence. The additional evidence of assessee was not accepted and upheld the addition made by AO. Further aggrieved, the assessee has filed the present appeal before this Tribunal. 5. We have heard the submissions of the learned AR for the assessee and the ld. Sr DR for the revenue and seen the orders of the lower authorities. The ld. AR of the assessee submits that assessee along with his co-owner sold a piece of land admeasuring 13606 Sq Mtr on 06.09.2011. The assessee adopted the FMV of property as on 01.04.1981 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission of ld. AR of assessee, the ld. DR submits that the report of DVO was based on scientific parameter. 9. We have considered the rival submission of the parties and have gone through the orders of authorities below. We find that there is no dispute about the certain fact which we have noted hereinabove. The assessee sold a piece of land on 06.09.2011 along with his co-owner. Thus, the amended provision of section 55A(a) is not applicable for the year under consideration. Further, we find that the AO while making the reference to the DVO has not form an opinion that FMV adopted by assessee is not a fair value. As noted earlier, the amended provision under section 55A(a) is not applicable for the year under consideration, therefore, the reference made by AO was invalid. We have further noted that on similar set of fact, in Nanubhai G. Ahir (supra), this combination passed the following order: 6. We have heard the submission of learned authorised representative of assessee and the learned Department of representative for revenue. We have also gone through the orders of lower authorities carefully. We learned of the assessee submits that he has raised purely a legal gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of jurisdictional High Court in CIT Versus Gauranginiben S Shodhan (supra) and the decision of Bombay High Court in Commissioner of Income Tax Versus Pooja Prints (supra) passed the following order ; 13. We have heard the rival contentions and perused the material available on record. The relevant provisions which are under consideration are contained in section 55A, it would, therefore, be relevant to refer to the said provisions which reads as under: 55A. 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- (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 assessing Officer is of opinion that the value so claimed is at variance with its fair market value; (b) in any other case, if the Assessing 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 pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (as per unamended provisions) or is at variance with its fair market value (as per the amended provisions). The formation of the opinion by the Assessing officer therefore has to be seen and examined in the context of determining the liability towards the capital gains and the liability towards the capital gains can be examined during the course of assessment proceedings. Therefore, the formation of the opinion by the Assessing officer has to be during the course of assessment proceedings and not prior or subsequent to the completion of the assessment proceedings. As per the unamended provisions, the Assessing officer has to 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 of the capital asset 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 valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 55A of the Income-tax Act to enable the Assessing Officer to make a reference to the Valuation Officer where in his opinion the value declared by the assessee is at variance from the fair market value. Therefore, in case where the Assessing Officer is of the opinion that the value taken by the assessee as on 1-4-1981 is higher than the fair market value of the asset as on that date, the Assessing Officer would be enabled to make a reference to the Valuation Officer for determining the fair market value of the property. This amendment will take effect from 1st day of July, 2012. Therefore, the intent and purpose behind the amendment is to enable the Assessing officer to make a reference to the Valuation officer where he is of the opinion that the value adopted by the assessee as on 1-4-1981 is higher than the fair market value of the asset as on that date and in order to check whether the adoption of a higher value for the cost of the asset as the fair market value as on 1st April, 1981, has lead to a lower amount of capital gains being offered for tax. It is therefore an empowering provision wherein the Assessing officer has been given requisite power and auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1 July 2012. The 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 during the period relevant to the Assessment Year 2006-07. At the relevant time, very clearly reference could be made to Departmental Valuation Officer only if the value declared by the assessee is in the opinion of Assessing Officer less than its fair market value. 9. The contention of the revenue that the reference to the Departmental Valuation Officer by the Assessing Officer is sustainable in view of Section 55A(a) (ii) of the Act is not acceptable. This is for the reason that Section 55A(b)of the Act very clearly states that it would apply in any other case i.e. a case not covered by Section 55A(a) of the Act. In this case, it is an undisputable position that the issue is covered by Section 55A(a) of the Act. Therefore, resort cannot be had to the residuary clause provided in Section 55A(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the opinion that the value so claimed was less than its fair market value as on 1.4.1981. It would not be the case of the Assessing Officer that the value of the asset shown as on 1.4.1981 was less than the fair market value. Such clause, therefore, as it stood at the relevant time, had no application to the valuation as on 1.4.1981. We are conscious that with effect from 1.7.2012, the expression now used in clause (a) of section 55A is is at variance with its fair market value . Thesituation may, therefore, be different after 1.7.2012. We are, however, concerned with the period prior thereto. Clause (b) of section 55A is in two parts and permits a reference to DVO if the Assessing Officer is of the opinion that (i) the fair market value of the asset exceeds the value of the asset so claimed by the assessee by more than such percentage of the value of the asset 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. Sub-clause(i) of clause (b) also for the same reasons recorded above, would have no bearing on the fair market value as on 1.4.1981. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ben P Patel, Ahmedabad (supra), the Hon ble Gujarat High Court has reiterated the legal position that for the transaction falling in financial year 2010-11 relevant to AY 2011-12, the matter is covered by the earlier decision in case of Gauranginiben S. Shodhan Indl. (supra). We therefore find that there is convergence of view as evident from these decisions of Hon ble Bombay and Hon ble Gujarat High Court that the amendment brought in by the Finance Act, 2012 in section 55A(a) has to be read prospectively and not retrospectively. Secondly, such amendment shall apply to transactions (subject matter of determination of capital gains) which are effected during the period starting on or after 1.07.2012. No contrary High Court decision has been cited before us and in any case, the decision of the Hon ble Gujarat High Court, being the jurisdictional High Court is binding on us. 24. Further, we find that the Coordinate Benches are also of the consistent view and having been following the legal proposition so laid down by the Hon ble Bombay and Gujarat High Court. The Coordinate Bench in case of Sonali Roy (supra) drawing support from the decision of the Hon ble Supreme Court in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 value as on 1.4.1981 is directed to be deleted. In the result, the appeal of the assessee is allowed. 10. Considering the decision of co-ordinate bench of Tribunal on almost similar set of fact while considering the similar contention of assessee in the said held that when the transaction of sale of land was taken during the financial year 2011-12 relevant to the assessment year 2012 -13, the amended provision of section 55A(a) would not be applicable and one shall be guided by the wrest while provision of un-amended section 55 A(a) of the Act. Therefore, respectfully following the same, we allow the ground No. 1 raised by the assessee. No contrary facts or law is brought to our notice to take other view. 10. We further find that following the aforesaid order, similar order was passed in Ranchodbhai C. Patel Rakshaben (supra) reported in 186 ITD 523. Thus, considering the aforesaid factual and legal discussion and keeping in view the binding decision of jurisdictional High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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