TMI Blog2018 (7) TMI 2029X X X X Extracts X X X X X X X X Extracts X X X X ..... rring the matter to DVO can be invoked only in case the valuation report is not submitted by assessee. Thus, reference made by Assessing Officer u/s.55A(b)(ii) was not correct. Where the fair market value of property is shown more than the Fair Market Value, the AO cannot refer the same to valuation relating to assessment year falling before the date of 01.07.2012. Since the assessment made is for the assessment year 2010-11, the AO cannot make reference to DVO for the valuation of property, where value of property is not less than the value of fair market value. This view is supported with decision of CIT v. Puja Prints [ 2014 (1) TMI 764 - BOMBAY HIGH COURT] wherein it was held that the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer only because in his view the valuation of property as on 1981 as made by the assessee was higher than the fair market value. Therefore, invocation of section 55A (a) was not justified. Contention of the Learned Departmental Representative that reference was made after 01.07.2012 is not tenable in law as the amendment made in section is substantive in nature which is relevant to assessment year commencin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income tax (Appeals). It was explained that the sale price of land was at ₹ 51.63 Lakh as against which valuation of land as per Valuer of the assessee as on 01.04.1981 comes to ₹ 7,36,560 @ 80 per sq. meter of 9207 sq. meter in which assessee`s share comes to ₹ 1,22,760 (1/6th ) However, the AVO vide his report dtd. 26.12.2014 estimated FMV as on 01.04.1981 for entire land of 9207 sq. meter @ 18.90 per sq. meter at ₹ 1,74,012 as against the Fair market value ₹ 80 per sq. meter claimed by the assessee. it was contended that reference to AVO can only be made if in the opinion of the AO that the value shown is less than FMA. Since the FMV shown by the assessee is more than FMV hence, the AO cannot refer it to AVO. The amendment in section 55A(a) is introduced with effect from 01.07.2012 by Finance Act, 2012 which is applicable for the assessment year commencing after 01.07.2012. Therefore, as per provisions of section 55A(a) as stood for the assessment year 2010-11 no reference can be made to DVO. The assessee has placed reliance in the case of CIT v. Puja Prints [2014] 360 ITR 697 (Bom) wherein it was held that the Assessing Officer referred the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is in accordance with the estimate made by the registered valuer, if the AO was of the opinion that the value so claimed was less than its fair market value as on 1st April, 1981. It would not be the case of the AO that the value of the asset shown as on 1st April, 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 1st April, 1981. With effect from 1st July, 2012, the expression now used in clause (a) of s.55A is is at variance with its fair market value . The situation may, therefore, be different after 1stJuly, 2012. It was contended that the AO has no power to make reference under section 55A nor he can himself value the property. The learned counsel for the assessee further placed reliance in the case of Hussain Ismail Dawoodani v. ACIT [I.T.A.No. 2499/Mum/2013 A.Y. 2007-08] dated 03.09.2014 Trib-Mumbai ] and Seksaria Industries Pvt. Ltd. v. ITO [ I.T.A.No. 2835/Mum/2013 A.Y. 09-10 dtd. 31.10.2014] in support of his contentions. The learned counsel for the assessee submitted that the Mumbai Tribunal in the case of Pradeep G. Vora v. ITO [2015] 58 taxmann.com 110 (Mum-Trib) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 less than 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 per-centage 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 9. Thus reference to DVO can be made in two situations; first, the value is adopted based on report of registered valuer and second, in any other case. In assessee's case, fair market value adopted as on 01.04.1981 is based on valuation report of registered Valuer. Therefore, Assessing Officer should have applied the provisions of 55A(a) and according to said provision, fair market value claimed by assessee can be rejected only if f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reference made by the Assessing Officer to the DVO u/s 55A in the peculiar facts and circumstances of the case is bad in law. Thus, on the sole grounds of appeal of the assessee has to be allowed. 10. Further, where the fair market value of property is shown more than the Fair Market Value, the AO cannot refer the same to valuation relating to assessment year falling before the date of 01.07.2012. Since the assessment made is for the assessment year 2010-11, the AO cannot make reference to DVO for the valuation of property, where value of property is not less than the value of fair market value. This view is supported with decision of Hon`ble Bombay High Court in the case of CIT v. Puja Prints [2014] 360 ITR 697 (Bom) wherein it was held that the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer only because in his view the valuation of property as on 1981 as made by the assessee was higher than the fair market value. Therefore, invocation of section 55A (a) was not justified. 11. We find that the Hon`ble Jurisdictional High Court of Gujarat in the case of CIT v. Gauragiben S Shodhan[2014] 108 DTR 442 (Gujarat) wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 VO only if the value declared by the assessee is in the opinion of AO less than its fair market value. 12. Thus, the contention of the Learned Departmental Representative that reference was made after 01.07.2012 is not tenable in law as the amendment made in section is substantive in nature which is relevant to assessment year commencing after the date of amendment i.e. F.Y. 2012-13 relevant to A.Y. 2013-14, hence, it is not applicable for the assessment year 2010-11, as the assessment involved is prior to period of 01.07.2012. In view of these facts and circumstances, we are of the considered opinion that the law has been settled by the decision of Hon`ble Bombay High Court, Hon ble Gujarat High Court, Mumbai tribunal and Pune Tribunal. Therefore, the AO was not justified in referring to DVO or adopting valuation based on valuation report. The amendment in section 55A was qua prior period to 01.07.2012 and not qua proceeding prior to 01.07.2012. Hence, respectfully the following the ratio laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X
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