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TMI Blog2022 (10) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... instances where consideration received is less than the value adopted by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer. In that situation, for the purpose of section 48 computation of capital gain, value so adopted by the stamp valuation authority be deemed to be the full value of the consideration received as a result of such transfer. Meaning thereby the substitution of full value of consideration is possible, if the disclosed consideration is less than the value determined for payment of stamp duty. It had also been prescribed that where the assessee claims that the value adopted by the stamp valuation authority exceeds their fair market value or the value so adopted by the stamp valuation authority is not decided by any other Court or High Court, then the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer under section 55A. Therefore the conclusion is that the Act has prescribed that a reference u/s 55A can be made for a limited purpose as prescribed under section 50C. As seen from records and the Paper Books filed in the present case, the Assessing Officer referred the transaction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /11/2017, the A.O. referred the transaction to the Valuation Officer, Solapur u/s. 142A to ascertain the property value as on the date of sale. The stamp value of the property as on the date of sale was Rs. 2,21,40,900/-. The Valuation Officer submitted his report on 14/08/2018 valued the Fair Market Value of the property at Rs. 1,80,39,000/-. The A.O. based on the Valuation Report issued a show cause notice on 05/09/2018 as to why the said value as per the Valuation Report amounting to Rs. 1,80,39,000/- should not be considered as Fair Market Value of the said immovable property on the date of sale. 2.1. The assessee replied the Valuation Officer has made the higher value, when the assessee sold seven office units vide two sale deed. Naturally when large area is sold, the sale price realized is less. Further the Valuation Officer has valued the same rate for the Terrace area sold. Therefore the valuation arrived by the Valuation Officer is not correct. The above objection was overruled by the Assessing Officer and determined the Long Term Capital Gain as Rs. 11,93,809/- and demanded tax thereon. 3. Aggrieved against the same, the assessee filed an appeal before the Ld. Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than the value as per Stamp Duty Authority. Both the lower authorities have erred in law and on the facts of the appellant's case in not appreciating the fact that value estimated by the Ld. Valuation Officer is excessive. 3. The initiation of penalty proceedings U/s 271(1) (c) of the Act is not justified 4.1. Ld. Counsel Mr. Bandish Soparkar appearing for the assessee submitted that the assessment order passed in the case is barred by time, because the reference made by the Assessing Officer under section 142A is bad and illegal and cannot claim extension of time under section 153 Explanation 1(v) of the Act. Whereas the Assessing Officer could only exercise under section 155(15) namely the Assessing Officer could have amended the order of assessment within four years of receipt of the Valuation Report from the DVO. Thus the Assessing Officer ought to have completed the assessment, for the Assessment Year 2015-16 namely 21 months period as prescribed u/s. 153(1) which expired on 31.12.2017 and could have amended the assessment order u/s. 155(15) of the Act within four years thereafter. As far as the reference of the Valuation Officer made u/s. 50C of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set and the cost of any improvement thereto: Thus no reference can be made under section 142A to the valuation officer for estimating the full value of consideration of the property for the purpose of computation of capital gains under section 48 of the Act. Under section 55A reference to valuation cell can be made for the purpose of determination of fair market value of the capital asset under certain circumstances. Therefore, reference under section 55A of the Act, cannot be made for the purpose of estimating the full value of consideration received or accrued. Further provisions of section 50C of the Act, defines the scope of full value of consideration in certain cases. Under section 50C(1) in a case where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government [stamp valuation authority] for the purpose of payment of Stamp Duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to the full value of the consideration received or accru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Shaik Ahmed Banafe wherein it is held as follows: 8. After hearing the rival contentions, we do not see any merit in the Revenue's ground. The statute permits reference to Valuation Cell under S.50C, S.55A and S.142A. There is no dispute on the powers of the Assessing Officer in making a reference under these sections. However, what the CIT(A) has decided was that those sections do not apply to the facts of the case. Revenue is contesting that for ascertaining the Fair Market Value of a capital asset for computation of capital gains, reference can be made to a Valuation Officer under S.55A of the Act. On the face of it, the statement made on behalf of the Revenue is correct. However, ascertaining Fair Market Value will arise only in certain situations. Under S.50C in determining the sale value of consideration according to stamp value, if the assessee objects to the valuation, then reference under S.50C can be made to Valuation Officer. This situation does not arise in this case. Under S.55A, with a view to ascertain the fair market value of a capital asset, Assessing Officer can refer the valuation to Valuation Officer, but the fair market value under this Chapter is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;full value of the consideration received or accruing as a result of the transfer'. Therefore, section 55A cannot give any assistance to compute the capital gain under section 48. The expression 'full value of consideration' (section 48) does not have the same meaning and cannot be used in place of 'fair market value' (section 55A) section 48 do not prescribe that the capital gain is to be computed on the fair market value of a capital asset, but it only prescribes to charge capital gain on the consideration received, therefore, section 55A cannot be used for the purpose of computation of capital gain under section 48. Even further, section 55A is meant only to ascertain the fair market value of a capital asset but not meant to determine the full value of the consideration received as a result of the transfer therefore section 55 A has its own limitation for I its operation. Since section 48 do not prescribe the determination of capital gain on 'Fair market value', hence out of the ambits of reference prescribed under section 55A [Para 12] Section 50C is titled as 'Special provision for full value of consideration in certain cases'. Meani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope of section 142A is limited in its span only to determine the value of investment in respect of certain assets, such as, bullion, jewellery, valuable articles etc. In this section as well there is no power vest with Assessing Officer to seek the help of Valuation Officer in respect of determination of capital gain prescribed under section 48 of the Act. [Para 14] Section 45 talks about substitution affair market value with the full value of consideration only in certain special circumstances, such as, determination of value of damage as a result offload, riot, accident, fire, etc. section 45(4) also prescribes that the fair market value be deemed to the fall value of the consideration in respect of distribution of capital asset on the dissolution of a firm. Certain specific instances have been prescribed under the Act and only under those circumstances the fair market value can be substituted with the amount of full value of consideration. But as per above discussion, there is no such clause of substitution while computing the capital gain under section 48 of the Act and the gain has to be computed on the basis of the 'full value of the consideration'. A reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in sections 69, 69A, 69B are required to be made, the A.O. may require the Valuation Officer to make an estimate of such value and report the same to A.O. Thus the scope of section 142A is limited in its span only to determine the value of investment in respect of certain assets, such as, bullion, jewellery, valuable articles etc. In this section as well there is no power vest with A.O. to seek the help of Valuation Officer in respect of determination of capital gain prescribed under section 48 of the Act. 6.1. Similarly Section 50C of the Act, is titled as 'Special provision for full value of consideration in certain cases'. Meaning thereby this section is not applicable to each and every case of sale but this is to be applied in respect of those sales instances where consideration received is less than the value adopted by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer. In that situation, for the purpose of section 48 computation of capital gain, value so adopted by the stamp valuation authority be deemed to be the full value of the consideration received as a result of such transfer. Meaning thereby the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eto, and the period of four years shall be reckoned from the end of the previous year in which the order revising the value was passed in that appeal or revision or reference.] 6.4. Reading of the above provisions makes it very clear that the Assessing Officer is necessarily to pass the assessment order within the time limit as prescribed under section 153(1) of the Act which is in this case namely 31.12.2017. However the Assessing Officer has wrongly referred the valuation of the immovable property under section 142A of the Act which is not provided under the provisions of the Income Tax Act. However after receipt of the Valuation Report from the DVO, the A.O. passed the assessment order on 28.09.2008 which is clearly barred by limitation which is not sustainable in law. Therefore the assessment order is hereby invalid in law. Thus the ground no. 1 raised by the assessee is hereby allowed. As the entire assessment order itself is quashed, the second ground raised by the assessee does not require any adjudication by us. 7. In the result, the appeal filed by the Assessee is hereby allowed. Order pronounced in the open court on 19 -10-2022 - - TaxTMI - TMITax - Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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