TMI Blog2018 (1) TMI 1523X X X X Extracts X X X X X X X X Extracts X X X X ..... by : Shri Vivek Aggarwal. ORDER Anil Chaturvedi, 1. This appeal filed by the assessee u/s 253 of the Income Tax Act, 1961 is emanating out of the order of Commissioner of Income Tax (A) - 6, Pune, dt.29.01.2017 for the assessment year 2010-11. 2. The relevant facts as culled out from the material on record are as under :- Assessee is an individual having income from business, capital gains and other sources. Assessee filed his return of income for AY. 2010-11 on 30.03.2012 declaring total taxable income of ₹ 59,019/-. Thereafter, notice u/s 148 of the Act was issued on 25.03.2013 and served on the assessee. In response to the notice, assessee filed revised return of income on 12.03.2014 declaring total income of ₹ 1,87,987/-. 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 ₹ 71,93,380/-. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A), who vide order dt.29.01.2017 (in appeal No.PN/CIT(A)-V/ITO Wd.8(4)/343/2014-15) dismissed the appeal of the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 ₹ 51,000/- and accordingly, the assessee's share was worked out at ₹ 12,750/- (1/4th of ₹ 51,000/-). AO on the basis of report of DVO considered the cost of acquisition of the property at ₹ 12,750/-. AO also noticed that assessee had claimed deduction u/s 54F for construction of three house properties. (₹ 94,50,000/- for property at Rahatani, Tal. Haveli, ₹ 22,71,500/- for property at Patas, Tal. Daund and ₹ 43,52,750/- for property at Nane, Tal. Maval) AO was of the view that u/s 54F deduction is allowable only in case of one house property. He accordingly granted deduction for house property constructed at Rahatani of ₹ 23,62,500/- (being assessee's 1/4th share out of ₹ 94,50,000/-) which was the higher amount of the three house properties. He accordingly worked out the long term capital gain at ₹ 69,47,370/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who upheld the order of AO by holding as under : 4.1 Ground No.1: In this grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO has correctly referred the matter to the DVO for ascertaining the market value as the value adopted by the assessee is at variance with the FMV. Therefore this ground of the appellant is dismissed. The action of the AO in referring the matter to DVO is upheld. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us. 5. Before us, Ld.A.R. reiterated the submissions made before the AO and Ld.CIT(A) and further submitted that the fair market value declared by the assessee on 01.04.1981 was higher than the fair market value admitted by the DVO and therefore there was no legal necessity to refer the matter of valuation of fair market value as on 01.04.1981 to the DVO. He further submitted that the amendment to Sec.55A was made effective from 01.07.2012 and therefore not applicable to the facts of the case under appeal. He also placed reliance on the decision of the Bombay High Court in the case of CIT Vs. Puja Prints reported in [2014] 360 ITR 697 (Bom). He further submitted that in the case of three co-owners, on identical issue of capital gains arising out of the same land, the Ld.CIT(A) in the case of co-owners, after relying the decision of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. The Hon'ble Bombay High Court has held that reference to DVO can only be made when the value adopted by the assessee was less than the fair market value. The relevant question of law formulated in the aforesaid case and the decision of the Hon'ble High Court is reproduced hereunder. 1. ........ The following questions of law have been formulated by the revenue for consideration by this Court:-- (a) Whether on the facts and in the circumstances of the case and in law, the ITAT was right in holding that the reference made by the AO to the valuation officer per se is bad in law? Further, whether the ITAT was justified in observing that the reference to the DVO u/s. 55A of the IT Act 1961 is to be made when the value of the property disclosed by the assessee is less than the fair value and not vice versa thereby ignoring the provisions of section 55A(b)(ii) of the Act 1961 and paragraph 26 to 28 of circular No.96 dated 25.11.1972 of the CBDT? (b) Whether on the facts and in the circumstances of the case and in law, the ITAT was right in directing the AO to accept the valuation given by the respondent as the Fair Market Value on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. This is so as the understanding of the statutory provisions by the revenue as found in Circular issued by the CBDT is not binding upon the assessee and it is open to an assessee to contend to the contrary. 10. The contention of the revenue that the Assessing Officer is entitled to refer the issue of valuation of the property to the Departmental Valuation Officer in exercise of it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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