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TMI Blog2023 (4) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 value as on 1-4-1981 is directed to be deleted. Therefore, respectfully following the binding judgment of the Co-ordinate Bench above, we allow the appeal of the assessee. - ITA No.18/SRT/2023 - - - Dated:- 18-4-2023 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Appellant : Shri Rushin Patel, AR For the Respondent : Shri Vinod Kumar, Sr. DR ORDER PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2012-13, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), [in short the ld. CIT(A) ], National Faceless Appeal Centre (In short NFAC ), Delhi, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The grounds of appeal raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 01.07.2012 which is applicable for the AY. 2013-14. However, in the assessee s case under consideration, the assessment year involved is AY.2012- 13, therefore, the amended provisions are not applicable to the assessee under consideration. Hence, Ld. Counsel for the assessee submitted that the present appeal is squarely covered by the aforesaid order of Tribunal, a copy of which also placed before the Bench. 4. The Departmental Representative (Ld. DR) for the Revenue relied on the order of lower authorities. 5. We see no reasons to take any other view of the matter than the view so taken by the Division Bench of this Tribunal in the case of Virendra Natwarlal Jariwala (supra) vide order dated 21.06.2021. In this order, the Tribunal has inter alia observed as follows: 5. We have considered the rival submission of both the parties and perused the order of lower authorities carefully. The AO made addition on LTCG on the basis of report of DVO, received in assessee's co-owners case Shri Sudhir N. Jariwala and apply the cost as on 1-4-1981 @ Rs. 550 per sq. mtr. Since, the assessee adopted rate of 700 per sq.mtr. Accordingly, on the basis of difference, the AO added R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 value so claimed by the assessee is more than its fair market value, the matter couldn't be referred to the valuation officer. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 authority w.e.f 1-7-2012 to refer the matter relating to valuation of a capital asset to the valuation officer. The question however remains in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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)(ii) of the Act. In view of the above, the CBDT Circular dated 25 November 1972 can have no application in the face of the clear position in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue 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. The Assessing Officer had not resorted to sub-clause (ii) of clause (b). In any case, clause (b) would apply where clause (a) does not apply since it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier 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 1-7-2012. 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 case of Karimtharuvi Tea Estate (supra) has further clarified that the amendments which are being applicable from any date other than first April of assessment year would be applied from the next A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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