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TMI Blog2022 (8) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... identical and first foremost ground is rejected all these appeals. Validity of impugned assessments which have been claimed to be barred by limitation - As came on record that the Assessing Officer had made section 142A reference to the DVO and the time limit in submission of such a report of valuation is further extended to 60 days in light of foregoing statutory proviso (supra). We thus reject the assessees instant second substantive ground as well. Land in issue stood converted into stock-in-trade and the learned lower authorities ought to have initiated section 147/148 reopening mechanism - No merit therein since the chargeability of capital gains to tax u/s 45(1) in an instance of a capital asset converted to stock-in-trade arises only in the year of transfer of the asset under sub-section (2) thereof. We make it clear that these assessees have transferred their respective shares in the land in financial year 2013-14 relevant to the impugned assessment year 2014-15 wherein the learned lower authorities have framed the respective assessments. We thus reject the assessees instant fourth substantive ground as well. Converting the limited scrutiny to a complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lwadkar. The Revenue appeal ITA No.824/PUN/2019 and first assessee Vilas Dashrath Balwadkar s cross appeal ITA No.931/PUN/2019 arise against the CIT(A)-3, Pune s order dated 28-03-2019 passed in case No.PN/CIT (A)-3/Cir-2,Pn/133/2017-18/2. Latter twin assessees have filed their respective appeals ITA Nos.932 933/PUN/2019 against the very CIT(A) s separate even dated orders, passed in case Nos.PN/CIT (A)-3/Cir-2,Pn/134/2017-18/1 and PN/CIT(A)-3/Cir-2,Pn/132/2017-18/3; respectively. Relevant assessment year herein is assessment year 2014-15 and proceedings are u/s 143(3) of the Income Tax Act, 1961, in short the Act . Heard all the assessees through their counsel Shri Deepak Sasar and the departmental represented by Shri M.G. Jasanani/DR. 2. The Revenue appeal ITA No.824/PUN/2019 raises the foregoing substantive grounds: 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the reference made to the DVO is invalid by relying on the judgment of the Hon ble Bombay High Court delivered in the case of CIT vs Pooja Prints 360 ITR 697 [2014], which relate to sec 55A and A.Y. 2006-07. Whereas, in present case reference wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in light of hon ble Bombay high court s decision in Pooja Prints case (supra). This leaves all these four parties aggrieved. 5. We proceed to decide these three assessees identical five substantive grounds in this factual backdrop. Learned counsel s first and foremost argument is that there is no cost of acquisition at all regarding the asset in issue and therefore, the same ought to have been adopted at nil than 12% allegedly paid by the owner / their predecessor. The CIT(A) has discussed the entire issue as follows: 5.3. DECISION :- The submissions of the appellant and the material on record have been considered. 5.4. On this issue, the appellant has stated that there is an inherent limitation in concept of capital asset. This limitation is that the liability to tax on capital gain would arise in respect of only those capital assets in the acquisition of which an element of cost is etc actually present or capable of being reckoned and not in respect of those capital asset in the acquisition of which the element of cost is altogether inconceivable. The appellant has relied upon several case laws. The appellant raised this issue before the AO vide letter date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SED. 6. We find no substance in the learned counsel s foregoing arguments as this is an instance of perfection of title by the assessee s predecessor in interest by paying 12% charges to the government; which in turn, would result in acquisition of absolute title on government land. Learned counsel could hardly dispute that his predecessor-in-interest only enjoyed possession than having title of this land earlier. We conclude in this factual backdrop that the learned lower authorities have rightly rejected the assessee s contention of nil cost of acquisition in the given facts and circumstances. This identical and first foremost ground is rejected all these appeals. 7. The assessee s next ground is regarding validity of impugned assessments which have been claimed to be barred by limitation. The CIT(A) s identical detailed discussion on the instant issue reads as follows: 7.3. DECISION :- The submissions of the appellant and the material on record have been considered. 7.4. On this issue, the appellant has stated that for A.Y. 2014-15 the notice u/s 143(2) of the Act was issued on 31/8/2015 and assessment was completed on 31/8/2017. The appellant argued that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f elaborate facts discussed earlier, I do not agree with the allegation of the appellant, Ground No 3 of the appellant is DISMISSED. 8. Suffice to say, it has come on record that the Assessing Officer had made section 142A reference to the DVO and the time limit in submission of such a report of valuation is further extended to 60 days in light of foregoing statutory proviso (supra). We thus reject the assessees instant second substantive ground as well. 9. The assessee s third ground also follows suit in very terms since learned counsel could hardly pinpoint any statutory provision applicable in the given facts and circumstances which could lead us to the conclusion that the DVO report itself was time barred. Ordered accordingly. 10. Coming to the assessee s fourth substantive ground that the land in issue stood converted into stock-in-trade and the learned lower authorities ought to have initiated section 147/148 reopening mechanism we hardly see any merit therein since the chargeability of capital gains to tax u/s 45(1) in an instance of a capital asset converted to stock-in-trade arises only in the year of transfer of the asset under sub-section (2) thereof. We make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made with respect to the valuation claimed by the assessee was higher than the valuation determined by the Departmental Valuation Officer. No reference is valid before 1/7/2012 when valuation claimed by the assessee is more than valuation determined by the Departmental Valuation officer. In our case the assessee has adopted valuation at the Rate of Rs.300/- per Sq.Meter which is higher than valuation determined by District Valuation Officer which was Rs. 202.90/- per S-q.Meter. Similarly the fair market value is determined as on 01/04/2010 and the amendment to the Income Tax Act is made on 01/7/2012 and amendment is prospective in the nature. Hence there was no jurisdiction to the assessing officer to refer the matter to the valuation officer. The appellant also argued, without prejudice to above submission, that the reference for assessment year 2014-15 is invalid reference u/s 142A of the Act as on the book of the statute the section 142A was amended w.e.f. 1/10/2014 i.e. it is applicable for AY. 2015-16 by Finance Act No.2 of 2014. 6.6. The appellant relied upon the decision of the Hon'ble Bombay High Court in the case of CIT Vs Pooja Prints 360 ITR 697 (2014). In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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. Thus, the Hon'ble High Court held 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 than the fair market value and that the amendment to Section 55A(a) of the Act in 2012 by which the words is less than the fair market value is substituted by the words is at variance with its fair market value has not been given retrospective effect by the Parliament. Therefore, the law to be applied in the present case is Section 55A(a) of the Act is as existing during the period relevant to the Assessment Year 2006-07. 6.7. Following the decision in the case of Pooja Prints (Supra), Hon'ble ITAT Pune decided on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 55A of the Act are attracted. The pre-amended provisions of said clause very clearly provided that a reference could be made to the valuation officer only in cases where the Assessing Officer was of the opinion that the value so claimed by the assessee was less than its fair market value. In the instant case, the Registered Valuer had worked out the value of property at Rs. 19,29,500/-, whereas the DVO has worked out the value of property at Rs.2,04,000/-. Consequently, where the value as determined by the DVO was lesser than the value as declared by the DVO was lesser than the value as declared by the assessee as on 01.04.1981, then the reference to the DVO under section 55A of the Act is not warranted. In this regard, we find support from the ratio laid down by the Hon'ble Bombay High Court in Puja Prints case (supra), wherein it has been held that where the Assessing Officer referred the issue of valuation to the DVO only because in his view, the valuation of the property as on 01.04.1981 as made by the respondent assessee was higher than the fair market value, thus, in such cases, invocation of section 55A of the Act was not justified. The Hon'ble High Court furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isition of the immovable property at Rs.1,15,99,280/- as on 01.04.1981. The AO was of the view that the cost of acquisition adopted by the assessee was excessive and hence not acceptable. He referred the matter to the District Valuation Officer (DVO) for the valuation of the property. The DVO vide order dt.07.02.2014 passed u/s 55A r.w.s. 16A(5) of the Wealth Tax Act, 1957 determined the fair market value of the property at Rs.51,000/- and accordingly, the assessee's share was worked out at Rs.12,750/- (1/4th of Rs.51,000/-). AO on the basis of report of DVO considered the cost of acquisition of the property at Rs.12,750/-. Thereafter, the assessment was framed u/s 143(3) of the Act vide order dt.28.03.2014 and the total income was determined at Rs.71,93,380/-. Thus, the amendment to the Sec 55A of the Act was made w.e.f. 01-07-2012 and the reference to DVO was made after this date (as the notice u/s 148 of the Act was issued on 25.03.2013). The CIT(A) confirmed the addition made by the AO saying that sec. 55A is a procedural section and any amendment to the procedural section is applicable from the date of amendment. It has no relevance to the assessment year. However, the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t: Provided that nothing contained in this section shall apply in respect of an assessment made on or before the 30th day of September, 2004, and where such assessment has become final and conclusive on or before that date, except in cases where a reassessment is required to be made in accordance with the provisions of section 153A. 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).] Thus, before 01-10-2014, the use of Sec 142A of the Act was limited to Sec 69, 69A, 69B and 56(2) of the Act which is not the case of the appellant. In view of the above facts and judicial pronouncements of jurisdictional Bombay High Court and jurisdictional ITAT Pune, it is held that reference could not be made to DVO for valuation of property u/s 142A of the Act on a date prior to 01-10-2014. Accordingly, Ground No 2 of the appellant is ALLOWED. 13. Mr. Sasar vehemently supported the CIT(A) s detailed discussion. His case is that section 55A stood amended w.e.f. 01.07.2012 (supra) whereas the first assessee herein Mr. Vilas Dasrath Balwadkar had converted his agricultural lands to stock-in-trad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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