TMI Blog2019 (8) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... ied by way of third proviso to section 50C(1) has been inserted by the Finance Act, 2018, w.e.f. 1-4-2019 In the instant case, the variation is only ₹ 35,99,208/-, which is 1.49% of the value determined by the Stamp Valuation Authority which should thus be ignored and the value so declared by the assessee should be accepted. In the result, the value so declared by the assessee should be adopted as full value of consideration and the addition of ₹ 35,99,208 is hereby directed to be deleted. The ground of appeal taken by the assessee is thus decided in favour of the assessee and against the Revenue. Deduction under clause (i) to Section 48 in the computation of the Long Term Capital Gain - HELD THAT:- There is a direct and close linkage between the signing of the MOU dated 18.11.2010 and the sale deed executed on 06.12.2010 and the payment of ₹ 1 Cr is connected with the transfer of the impugned property in favour of M/s Triveni Kripa Enterprises Pvt. Ltd and the assessee should therefore be eligible to claim the same while computing the capital gains. We therefore, affirm the findings of the ld. CIT(A). The matter is thus decided in favour of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect assumption of facts and against the established norms of the valuation and without following standard practice and procedures of the Revenue department for determination FMV - HELD THAT:- fundamental difference where the DVO has taken the status of the property as residential whereas the facts on record suggest that the assessee was carrying out commercial activities by itself put a big question mark on the value finally determined by the Valuation Officer. - the valuation report so issued by the Valuation Officer suffer from serious deficiencies and the same cannot be held as reliable piece of evidences which can be applied by the Assessing Officer. - the adjustment made by the Assessing Officer basis the valuation report so submitted by the DVO cannot be accepted as the same suffer from serious infirmity. In the result, the cross objection taken by the assessee is allowed. Action of ACIT in directing the AO to complete assessment on the basis of report submitted by DVO vide his order passed U/s 144A - HELD THAT:- Present proceedings are against the findings of the Assessing officer while passing the order u/s 143(3) where following the directions of the Add. CIT u/s 144A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot considering the valuation report of a registered valuer, submitted during the course of assessment proceedings in right prospective. (ii) Referring the case to DVO u/s 55A for determining the fair market value of property. (iii) Drawing inferences for referring the case to DVO which were based on incorrect assumption of facts and without providing opportunity of being heard, hence, against the principle of natural justice. (iv) not considering the submission made during the course of assessment proceedings in right prospective. (v) not considering in logical manner, the legal and factual objections raised during the assessment proceedings on the DVO report. 3. Under the facts and circumstances of the case and in law, Ld. CIT(A) has erred in not deciding ground of Appeal no. 3 before him while Ld. DVO has erred in:- (i) determining fair market value of the property as on 01.04.1981. (ii) drawing inferences based on incorrect assumption of facts (iii) drawing inferences based on un-authenticated material (iv) drawing infe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sale consideration ₹ 17,61,42,188/- Purchase Date 1/4/1981 Purchase Cost ₹ 2,72,94,000/- Indexed cost of acquisition ₹ 19,40,60,340/- Loss ₹ 1,79,18,152/- 3. As per sale deed, the land was initially allotted to Vasudev Nagarmal on 02.12.1943 by the then Maharaja of the Jaipur State. Subsequently, the land was sold to M/s Jaipur Glass and Potteries and thereafter, to Sh. Sri Narayan Bajaj on 13.11.1964. In the year 1980, the assessee firm M/s Bajaj Bros came into existence with Shri Sri Narayan Bajaj as one of its partners and the said land became the asset of the assessee firm. Further, it is also apparent from records that the Sub-Registrar has determined the value of this property at ₹ 18,99,70,208/- for the purpose of levying the stamp duty as against stated sale consideration of ₹ 18,63,71,000/-. 4. In the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y relates to determination of indexed cost of acquisition where the adoption of the FMV as on 1.4.1981 basis the DVO s report was deleted by the ld CIT(A) holding that the reference to DVO itself is not valid and hence, the valuation so determined by the DVO cannot be adopted. Further, the Revenue has challenged the action of the ld. CIT(A) in allowing at ₹ 1 cr u/s 48 while computing the long term capital gains. In its cross appeal, the assessee firm has challenged the adoption of the full value of consideration as per the valuation done by the Stamp Duty Authority as against the transaction value recorded in the sale deed. Further, the assessee firm has challenged the action of the ld. CIT(A) in non adjudication of grounds of appeal on merits relating to determination of FMV as on 01.04.1981 by the Assessing Officer. 7. Firstly, we take up the matter relating to adoption of the Stamp Duty Valuation for the purpose of determining the full value of consideration u/s 50C of the Act. In this regard, the ld. AR submitted that the value determined by Stamp Valuation Authority is ₹ 18,99,70,208/- as against transaction value of ₹ 18,63,71,000/-, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee had dismissed the appeal filed by the Revenue where the CIT(A) had deleted the unexplained investment in house construction on the ground that the difference between the figure shown by the assessee and the figure of the DVO is hardly 10 per cent. Similarly, we find that the Pune Bench of the Tribunal in the case of ITO vs. Kaaddu Jayghosh Appasaheb, vide ITA No. 441/Pn/2004 for the asst. yr. 1992-93 and relied on by the learned counsel for the assessee following the decision of the J K High Court in the case of Honest Group of Hotels (P) Ltd. vs. CIT (2002) 177 CTR (J K) 232 had held that when the margin between the value as given by the assessee and the Departmental valuer was less than 10 per cent, the difference is liable to be ignored and the addition made by the AO can not be sustained. Since in the instant case such difference is less than 10 per cent and considering the fact that valuation is always a matter of estimation where some degree of difference is bound to occur, we are of the considered opinion that the AO in the instant case is not justified in substituting the sale consideration at ₹ 20,55,000/- as against the actual sale cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue which is less than the value adopted or assessed by the Stamp Valuation Authority. The case of the appellant is not covered under Sub-section 3 of Section 50C. Therefore, it is held that the AO has rightly adopted u/s 50C, the full value of consideration accruing to the appellant, as a result of the transfer of the asset at ₹ 18,99,70,208/- as against the sale consideration of ₹ 18,63,71,000/- declared by the appellant. Hence, this ground of appeal is dismissed. 10. We have heard the rival contentions and perused the material available on record. We find that during the course of assessment proceedings, the Assessing Officer observed that the value determined by the stamp duty authority is higher than what has been stated in the sale deed and the assessee has not disputed the value so adopted by the stamp duty authority and accordingly, he has adopted the full value of consideration of ₹ 18,99,70,208/- as against stated sale consideration of ₹ 18,63,71,000/- for the purpose of determining the capital gains in the hands of the assessee as per the provisions of section 50C of the Act. In terms of section 50C(2), where the assessee objects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee should be accepted. We find that the reasoning behind acceptance of variation within the tolerable limits is that DLC rates are indicative rates of a particular locality and not of a particular property and depending upon various factors, the value of two properties in the same locality may vary. Therefore, we find that the concept of determining a tolerable range has to be appreciated more so in the context of deeming fiction where the liability is fastened on the assessee based on such stamp duty valuation and a fact which has lately been recognized by the legislature whereby tolerance range of 5% has been specified by way of third proviso to section 50C(1) has been inserted by the Finance Act, 2018, w.e.f. 1-4-2019 which reads as under: Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration. 13. In the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed, a relinquishment from the earlier Purchaser i.e. Shri Ram Chandra Agarwal of his right with respect to the said Property was necessary. The Appellant and Shri Ram Chandra Agarwal agreed vide a MOU dated 18.11.2010 that since the Appellant would be getting higher sales consideration, in lieu of assignment of his rights, the appellant would give a sum of ₹ 1,00,00,000/- to Shri Ram Chandra Agarwal and which was paid through account payee cheque. 18. It was submitted that Section 48 of the Act deals with the mode of computation of capital gain and contains that from the value of sale consideration, under clause (i) of section 48, expenditure incurred wholly and exclusively in connection with such transfer shall be reduced. It is also important to note that clause (i) of section 48 allows deduction of the expenditure incurred in connection with transfer and it is not restricting the expenditure for transfer only. Hence, the said expenditure ought to be reduced while making the final computation of Long Term Capital Gain, since without paying said amount, the sale under consideration could not be affected. Therefore, the said expenditure is very well incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act in the computation of the Long Term Capital Gain and the order of the ld CIT(A) should be confirmed and the ground so taken by the Revenue should be dismissed. 22. We have heard the rival contentions and perused the material available on record. In terms of MOU dated 18.11.2010 signed between the assessee firm and Mr Ram Chandra Agarwal, it has been stated that the assessee has agreed to sell the property to Mr. Ram Chandra Agarwal in terms of agreement to sell dated 27.09.2009 which was subsequently amended vide agreement dated 27.12.2009 and thereafter on 13.09.2010 and as on the date of signing of MOU, Mr Ram Chandra Agarwal has already paid a sum of ₹ 4,11,01,111/- to the assessee firm. It has been further stated in the MOU that Mr. Ram Chandra Agarwal has agreed to assign his rights in the property in favour of M/s Triveni Kripa Enterprises Pvt. Ltd and has also agreed with M/s Triveni Kripa Enterprises Pvt. Ltd for higher sale consideration of ₹ 18,63,71,000/- to be paid to the assessee firm as against the earlier sale consideration of ₹ 17,27,25,000/- agreed upon between the assessee firm and Mr. Ram Chandra Agarwal. And in consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on 01.04.1981 at ₹ 34,57,660/-. It was further submitted that the assessee was provided a copy of the report of the DVO on 13.03.2013 and subsequently, the assessee vide letter dated 07.03.2014 has raised the certain objections with regard to the reference made u/s 55A to the DVO on the plea that the reference made was invalid as amendment in section 55A is effective from 01.07.2012. Further, it was submitted that the assessee vide letter dated 18.03.2014 also filed an application u/s 144A to the Addl. CIT, Range-6, Jaipur for seeking necessary direction to the Assessing Officer. In this regard, our reference was drawn to the direction issued by the Addl. CIT, Range-6, Jaipur u/s 144A wherein the relevant findings are as under:- 4. I have considered the submissions made by the assessee in its application u/s 144A dated 18/3/2014, report of the Assessing Officer and the submissions made by the assessee during the course of hearing on 21/3/2014. After due consideration, the position emerged is discussed as under:- (a) On perusal of the case records, I find that the assessee filed the copy of the valuation report of the registered valuer, Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been substituted in place of is less than its fair market value w.e.f. 01/07/2012, it is noticed in the memorandum explaining the provisions of Finance Bill, 2012, the Legislature has clearly specified the assessment year from which the amendments made in Section 47 and Sec. 2 (19AA)(iv), Section 49(1), Section 50 D, Section 54 B, Section 54 GB and Section 112(1) will be effective whereas in respect of amendment made to Section 55A, the date from which the amendment will be applicable has been clearly specified as w.e.f. 01/07/2012 . This shows that the amendment in Sec. 55 A is not applicable from a particular assessment year, but it is effective from the date 01/07/2012 on all pending proceedings. Prior to 1/7/2012, Assessing Officer was not empowered to make a reference in a case in which the fair market value as on 1/4/1981 was shown at a higher value as the word used in the section was where in the opinion of the Assessing Officer value of asset as claimed by the assessee is less than its market value . If the fair market value of the asset is taken at a higher figure, then the capital gain being offered for tax would be lower. It is with an intention to cure this l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Hira Ben Jayantilal Shah Vs. CIT, refers to a case where the value declared by the assessee is not in accordance with the estimate made by the registered valuer. Also there are judicial decisions to the effect that even in a case there is registered valuer's report, there is no bar for making reference under clause (b) (ii) of Sec. 55A. However, the enabling section for referring the matter of valuation for computation of capital gain is section 55A of the IT Act, 1961. In the instant case the AO has clearly mentioned in the reference itself that During the course of assessment proceedings, the assessee has filed a copy of the valuation report of the register valuer, Shri G.S. Bapna (copy enclosed for ready reference), in which the value of the land as on 1/4/81 has been taken at ₹ 90,98,000/- if it is considered as residential and ₹ 27294000/- if it is taken as commercial. For the purpose of computation of long term capital gain, it is necessary to arrive at the value of the land as on 1/4/1981. I am of the opinion that the value estimated by the register valuer is at variance with the fair market value of the asset having regard to the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the FMV ascertained by the Registered Valuer was less. 28. It was submitted that to appreciate under what circumstances, the A.O. can make a reference, the relevant section i.e. 55A of the Act as applicable for the assessment year under consideration may be considered and which reads as under: Reference to Valuation Officer:- 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 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 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 natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t part of the order (Page 10 of the assessment order) which is reproduced below:- From the above, it is noted that prior to 1.7.2012, the Assessing Officer had no option to refer a case to the Valuation Officer in which the fair market value as on 1st April, 1981 was shown at a higher value as the word used in the Section was where in the opinion of the Assessing Officer value of asset as claimed by the assessee is less than its market value . 32. While throwing light on the said amendment, the Ld. A.O. has also reproduced the memorandum explaining the provision of the Finance Bill, 2012 related to the said amendment at Page 10 of his order. According to which also, reference cannot be made before the amendment where the FMV is higher in the opinion of the Assessing Officer. From the forgoing discussions, it is clear that Ld. A.O. agrees that before the amendment, no such reference could be made under such circumstance but due to an amendment with effect from 1.7.2012, such reference can be made. Under the circumstances, without repeating the judgments relied upon during the assessment proceedings, the surviving issue emerges as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right has been diluted. 35. It was further submitted that it is an admitted fact that the amendment is w.e.f. 1.7.2012, means it has come into force from 1.7.2012. It is pertinent to note that income tax proceeding of each assessment year is separate from the other assessment year. It has to be assessed according to the provisions applicable to that particular assessment year. Even on various occasions in the past as well, whenever the legislature intended to apply a provision retrospectively, it was specifically mentioned that it would be applicable retrospectively which has not been done for the amendment under consideration. The Ld. A.O. has grossly erred by assuming the power which is in force from 1.7.2012, for the period from 1.4.2010 to 31.3.2011. Error of assuming such power lead to retrospective effect which is not the intent of the legislature. It is further submitted that such error of assuming power is a result of not recognizing the principle of independence of each assessment year for applicability of provisions of the Act. 36. It was accordingly submitted that basis the forgoing discussions, it clearly shows that the amendment is appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent, we have noticed that prior to the amendment in section 55A with effect from 1.7.2012 in a case, the value of the asset claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer was of the opinion that the value so claimed was less than its fair market value as on 1.4.1981. It would not be the case of the Assessing Officer that the value 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 . The situation 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; o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ima Dada Kharate Vs Assistant Commissioner of Income Tax, Nashik (ITA No. 1582/Pun/ 2015 dated 31.10.2017) Late Kum. Allobai Bezonji Vs Income Tax Officer, Jalna (ITA No. 895/Pun/2015 dated 23.11.2017) Maruti G.Thopte, Pune vs Income-Tax Officer, Pune on 5 January, 2018 ITO V/S. M/S. Bhatia Industrial Company(ITA No. 5385 /Mum./2016 dated 25.04.2018) Smt. Dhiraj Ben Pravin Bhai Patel Vs. ITO (ITA No. 902/Ahd./2017) Bhudevi Kishan Rao Gurantyal V/S. ITO (ITA No. 1036/PUN/2015) 38. It was accordingly submitted that in light of above judicial pronouncement directly dealing with the issue under consideration, it is very much clear that the amendment is not applicable to the year under consideration and ld. CIT(A) has rightly reversed the action of the Assessing Officer and our reference was drawn to the findings of the ld. CIT(A) at para No. 4.3 of his order which reads as under:- I have gone through the assessment order, direction given by Addl. CIT u/s 144A, statement of facts, grounds of appeal and the submission of the appellant carefully. Appellant challenged the ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Bombay High Court in case of Puja Prints (supra), wherein the facts are exactly similar and reference so made by the AO was held to be invalid for assessment year falling prior to the amendment so brought in by Finance Act,2012. Undisputedly, relevant assessment year under consideration is assessment year 2004-05, which is prior to the amendment brought in Section 55A(a) by Finance Act,2012 w.e.f. 1.7.2012. 8. Facts and circumstances in all the appeals before us are same, respectfully following the decision of Bombay High Court, we do not find any merit for the reference so made by the AO to the DVO, when the value offered by assessee was more than the value determined by the AO in respect of assessment year falling prior to introduction of amendment brought in Section 55A(a) by Finance Act,2012 w.e.f. 1.7.2012. 9. In the result, all the appeals of the assessee are allowed in terms indicated hereinabove. Respectfully following the above judgments, I am of the considered view that the 2012 amendment was made effective only from 1 July,2012. Therefore, the law to be applied in the present case is Section 55A(a) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce made by the AO u/s 55A(a) of the DVO for estimating the fair market value as on 1.4.1981 of the property should by the Appellant is held to be invalid. Hence, the addition made by the AO by adopting indexed cost of acquisition at ₹ 2,45,83,536/- on the basis of DVO s report, as against the indexed cost of acquisition of ₹ 19,40,60,340/- adopted by the Appellant, is hereby deleted. Accordingly, this ground of appeal is decided in favour of appellant. This ground is allowed. 39. We have heard the rival contentions and perused the material available on record. The issue under consideration is whether the amendment to section 55A(a) made by the Finance Act, 2012 w.e.f. 1.7.2012 can apply to the proceedings relevant to the impugned assessment year 2011-12 and whether reference so made by the Assessing officer to DVO as per the amended provisions is sustainable or not. 40. The relevant provisions contained in Section 55A of the Act 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer may refer the valuation of capital asset to a Valuation Officer. In the instant case, for the purposes of this chapter means for the purposes of determining the liability towards the capital gains tax on the sale of the land. There is no dispute that the liability towards the capital gains has arisen during the year as the transfer of the property has happened during the year. The second condition is that where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer. In the instant case, there is no dispute that cost of acquisition as substituted by the assessee with the fair market value as on 1.4.1981 is based on and in accordance with the estimate made by the registered valuer. The third condition is that the Assessing Officer should 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 55A, where in the opinion of the Assessing Officer value of asset as claimed by the assessee is less than its market value, he may refer the valuation of a capital asset to a Valuation Officer. Under section 55 in a case where the capital asset became the property of the assessee before 1st April, 1981, the assessee has the option of substituting the fair market value of the asset as on 1st April, 1981 as the cost of the asset. In such a case the adoption of a higher value for the cost of the asset as the fair market value as on 1st April, 1981, would lead to a lower amount of capital gains being offered for tax. Accordingly, it is proposed to amend the provisions of section 55A of the Income-tax Act to enable the Assessing Officer to make a reference to the Valuation Officer where in his opinion the value 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is an undisputed position that the value adopted by the respondent- assessee of the property at ₹ 35.99 lakhs was much more than the fair market value of ₹ 6.68 lakhs even as determined by the Departmental Valuation Officer. In fact, the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer only because in his view the valuation of the property as on 1981 as made by the respondent-assessee was higher then the fair market value. In the aforesaid circumstances, the invocation of Section 55A(a) of the Act is not justified. 8. The contention of the revenue that in view of the amendment to Section 55A(a) of the Act in 2012 by which the words is less then the fair market value is substituted by the words is at variance with its fair market value is clarifactory and should be given retrospective effect. This submission is in face 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Gujarat High Court decision in case of CIT vs. Gauranginiben S. Shodhan Indl. (Supra) wherein it was held section 55A as it stood at the relevant time, has to be seen and emphasis was laid on the period of the transaction and where the transaction was for the period prior to 1.7.2012, amended provisions were held not applicable. The findings of the Hon ble High Court are as under: 15. Coming to the question of reference to DVO for ascertaining the fair market value as on 1.4.1981 also, we find that such reference was not competent. We have noticed that prior to the amendment in section 55A with effect from 1.7.2012 in a case, the value of the asset claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer was of the opinion that the value so claimed was less than its fair market value as on 1.4.1981. It would not be the case of the Assessing Officer that the value 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 exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the nature of the asset and other relevant circumstances, it is necessary to make such a reference. 47. We now refer to the Co-ordinate Bench decision in case of Late Shantaben P Patel, Ahmedabad vs. ITO, Ward-6(5), Ahmedabad in (ITA No. 781, 784 785/Ahd/2011 dated 2.04.2018) wherein, following the aforesaid decision of Hon ble Gujarat High Court in case of Gauranginiben S. Shodhan (supra), it was held as under:- 8. In light of the above, if facts of the present appeals are examined then it would reveal value shown by the appellants of the property as on 01.04.1981 is considered then it was not less than fair market value and reference cannot be made. As far as the amendment carried out in section 55A is concerned, it is with effect from 01.07.2012 i.e. by finance Act 2012 the transaction taken place in FY 2010-11 relevant to assessment year 2011-12 and the amended provision would not be applicable on this transaction. 48. It is noted that the aforesaid decision of the Coordinate Bench rendered in the context of transaction taken place in FY 2010-11 relevant to assessment year 2011-12 has since been affirmed by the Hon b ..... 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. The Hon'ble High Court thus, held that the law to be applied in the facts of the present case was the section as existing during the period' relevant to assessment year 2006-07. 10. Now, coming to the facts of the present case, the year under reference is assessment year 2009-10 and since the amendment was made effective from 01.07.2012 and the Hon'ble High Court has held that law which is to be applied in such cases is as existing during assessment year 2009-10, then the pre-amended provisions of section 55A(a) of the Act are to be applied. In such scenario, there is no merit in the order of Assessing Officer in adopting the cost of acquisition as on 01.04.1981 at the value less than the value shown by the assessee, which in turn, is based on the report of the approved valuer. Accordingly, we uphold the order of CIT(A) and dismiss the grounds of appeal raised by the Revenue. 50. We also refer to the decision of the Co-ordinate Bench in case of Shri Mahdevbhai Mohanbhai Naik, Surat vs. ITO, Ward-3(1)(1), Surat (in ITA No. 820/Ahd/2016 dated 11.07.2018) wherein it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer 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 60[Assessing] Officer is of opinion that the value so claimed is less than its fair market value From the above provision we note that the Assessing Officer can refer the valuation of capital asset to a Valuation Officer in a case where the value claimed by the assessee based on the registered valuation report is less than its fair market value. However in the case before us there is no ambiguity that the fair market value as declared by assessee is not less than the value determined by the DVO. Thus, the valuation determined by the DVO cannot be accepted as it is against the provision of Section 55A of the Act as applicable prior to the amendment. However , there was amendment u/ s 55A of the Act wi th ef fect f rom 01.07.2012 which reads as under:- [Reference to Valuation Officer. 55A . With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter 12 , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable in the year under consideration. As the value adopted by assessee is more than the fair market value then no reference to Valuation Officer would have been made as per the provision of Section 55A(a) of the Act as it is administered at the relevant time. Once, we have reached to the conclusion no reference can be made to the DVO for the year under consideration in the given facts and circumstances. Thus on the same basis, the assessment order cannot be held as erroneous in so far as prejudicial to the interest of revenue. Keeping in view all these discussion, as also bearing in mind entirety of the case, we deem it fit and proper to uphold the grievance of the assessee and quash the impugned revision order as devoid of jurisdiction. The assessee gets the relief accordingly. 52. As we have noted above, the Hon ble Bombay High Court in case of CIT vs. Puja Prints (supra) has held that the Parliament has not given retrospective effect to the amendment and the law to be applied is as existing during the period relevant to the Assessment Year 2006-07. Similarly, the Hon ble Gujarat High Court in case of CIT vs. Gauranginiben S. Shodhan Indl. (supra) has held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded provisions are applicable in the instant case and therefore, reference to the valuation officer under the amended provisions of section 55A(a) cannot be sustained in the eyes of law. 55. A related question that arises for consideration is given that the reference has been made under section 55A of the Act, can the same be sustained in terms of un-amended provisions of section 55A of the Act as there is no dispute that the un-amended provisions are applicable in the instant case. 56. In order to refer the matter to the valuation officer as per erstwhile provisions of section 55A(a), in the instant case, there is no dispute that the liability towards the capital gains has arisen during the year as the transfer of the property has happened during the year. There is also no dispute that cost of acquisition as substituted by the assessee with fair market value as on 1.4.1981 is based on and in accordance with the estimate made by a registered valuer. The third condition which is required to be fulfilled is that the Assessing Officer should form an opinion that the value so claimed by the assessee is less than its fair market value. Therefore, only in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enabling section for referring the matter of valuation for computation of capital gain is section 55A of the IT Act, 1961. In the instant case the AO has clearly mentioned in the reference itself that During the course of assessment proceedings, the assessee has filed a copy of the valuation report of the register valuer, Shri G.S. Bapna (copy enclosed for ready reference), in which the value of the land as on 1/4/81 has been taken at ₹ 90,98,000/- if it is considered as residential and ₹ 27294000/- if it is taken as commercial. For the purpose of computation of long term capital gain, it is necessary to arrive at the value of the land as on 1/4/1981. I am of the opinion that the value estimated by the register valuer is at variance with the fair market value of the asset having regard to the nature of the asset and its use at the relevant time. Therefore, I consider it necessary to refer the below-mentioned case for determination of the fair market value of the case on the relevant date as indicated below. This is also in consonance with Sec. 55A(b)(ii) as the AO found that it was necessary to refer the matter having regard to the nature of the asset and other rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Assessing Officer is entitled to make the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so claimed is less than the fair market value. In any other case, as provided under clause (b) of Sec. 55A of the Act, the Assessing Officer has to record an opinion that (i) the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage or by more than such an amount as may be prescribed; or (ii) having regard to the nature of the asset and other relevant circumstances, it is necessary to make such a reference. (c) In the case of Smt. Krishnabai Tingre 101 ITD 317 (Pune), it was held as under: The applicability of section 55A in such cases where the value claimed by the assessee is higher than the fair market value had been dealt with in detail by the Third Member decision in the case of Ms. Rubab M. Kazerani v. Joint CIT [2004] 91 ITD 429 (Mum.) (TM) wherein it was held that the Commissioner or the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imated by the registered valuer is at variance with the fair market value of the asset having regard to the nature of the asset and its use at relevant time, the Assessing officer has invoked the provisions of section 55A(a) of the Act. In fact, as we have discussed above, the main argument of the Revenue is regarding the amendment brought in by the Finance Act 2012 in section 55A(a) and which has been claimed as applicable for the impugned assessment year. Further, the Hon ble High Courts referred supra have also held that where the issue is covered by Section 55A(a) of the Act, resort cannot be had to the residuary clause provided in Section 55A(b)(ii) of the Act. Therefore, the contention so advanced by the ld CIT DR cannot be accepted. 61. The next question that arises for consideration is where the reference made to DVO is held as invalid, can the Assessing Officer still rely on the valuation report issued by the DVO as a reliable and admissible piece of evidence. 62. In this regard, ld. CIT DR referred to the findings of the Assessing Officer and which have been confirmed by the ld. Addl. CIT while passing directions u/s 144A wherein he has hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue under consideration in the instant case, is related to the reference to the DVO and use of the report given, in response to such reference. The DVO is a Technical Expert and there is another report of the Registered Valuer who is also a Technical Expert. It is pertinent to note that a report of Technical Expert, the DVO, has legal value only because of the provision contained in section 55A of the Act for the proceedings under consideration. Without such provision, the report of the DVO does not have any legal relevance. Whereas, the evidence seized during the search does not require or has no such provision to create their legal relevance, meaning thereby, the report of the DVO has evidentiary value only because of the specific legal provision, whereas, the evidence seized during the search have their own evidentiary value independently. Therefore, under these circumstances when admittedly the Reference is illegal and whereas, the legality of the Reference is back bone of the report of the DVO to make it legally relevant and in absence of such legal relevance, the report of the DVO cannot find any place under the scheme of section 55A of the Act as in the case of evidence s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held as under: 11. Even otherwise, for the sake of argument, if it is presumed that the reference made by the Assessing Officer is not as per the provisions of section 55A, the valuation report of the DVO will not loose/reduce its relevancy being a good piece of evidence on the issue of FMV of the capital assets as on 1-4-1981. The admissibility of evidence is depends upon its relevance to the matter in issue and not in the manner how it has obtained. If there is any irregularity in obtaining the evidence the same will not render evidence as it is not admissible. In the case in hand, there is no doubt that the Assessing Officer is having the jurisdiction over the subject-matter, i.e., the valuation of the capital assets and the valuation officer is also having authority and jurisdiction to value the property and submit the valuation report. Thus, the valuation report of the DVO is a relevant and admissible evidence irrespective of a question whether the reference was valid or not. The Hon'ble Supreme Court in the case of Pooran Mal. v. Director of Inspection (Inv.) [1974] 93 ITR 505 has observed that even if the search is held as illegal search nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he search, some ammunition was found in the unlawful possession of Kuruma. The question was whether the evidence with regard to the finding of the ammunition on the person of Kuruma could be shut out on the ground that the evidence had been obtained by an unlawful search. It was held it could not be so shut out because the finding of ammunition was a relevant piece of evidence on a charge for unlawful possession. In a later case before the Privy Council in Herman King v. The Queen (3) which came on appeal from a Court of Appeal of Jamaica, the law as laid down in Kuruma's case was applied although the Jamaican Constitution guaranteed the constitutional right against (1) 35 Allahabad, 358. (2) [1955] A.C. 197. (3) [1969] (1) A.C. 304. search and seizure in the following provision of the Jamaica (Constitution) Order in Council 1962, Sch. 2, section 19 : (1) Except with his own consent, no person shall be subjected to the search of his person or his property or the entry by others on his premises. (2) Nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as become purely academic in nature. 69. In case of Vijay P. Karnik vs.Income-tax Officer, Ward -19 (2)(2) [2013] 37 taxmann.com 48 (Mumbai - Trib.), it was held as under: 7. We may also point out here that even if the reference made by the AO to the DVO was not in accordance with law or illegal the valuation report obtained in pursuance of such a reference will be relevant and admissible evidence which can be used by the revenue authorities in the income tax proceedings. This view is supported by the decision of Hon'ble Supreme Court in case of Pooran Mal v. Director of Inspection [1974] 93 ITR 505 in which it was held that even though the search and seizure had been conducted in contravention of the provisions of section 132 of the IT Act material obtained can be used by the Income Tax authorities. Thus even if the reference made by AO is considered not valid the valuation report can always be used in the income tax proceedings for the purposes of the Act. The same view has been taken by the decision of Tribunal in case of Chaturbhuj Vallabhdas HUF (supra) in which the Tribunal held that the valuation report having already been obtained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition filed by the assessee, Hon'ble Gujarat High Court held that reference could have been made, if the AO was of the opinion that having regard to the nature of the asset and other relevant circumstances, it was necessary so to do, that there was nothing special about the nature of the asset which would have justified the AO to make a reference to the VO. No other relevant circumstances could be pointed out, that no attempt was made to justify the action of the AO under any other provision of section 55A. Finally, it was held by the Hon'ble Court that the reference to the DVO was not in accordance with law and it had to be quashed. MV. Shah, Official Liquidator, Anant Mills Ltd. v. U.J. Matain [1994] 209 ITR 568 (Guj.) (v) The purpose of section 55A of the Act is not to enable the AO to make a roving and fishing inquiry for finding out materials for reopening or revising a completed assessment. Pendency of an assessment including reassessment is a sine qua non for giving jurisdiction to the AO to make a reference under the said section of the Act. It has no relevance and cannot be applied after the assessment is completed and before the reassessment has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that situation it would not be a reference u/s. 55A of the Act. (x) For invoking the provisions of section 55A of the Act formation of opinion of the AO that the value claimed by the assessee is less than its FMV is a sine qua non. Recording reasons after the order of reference, for valuation of the registered valuer, is not a substitute for predecisional formation of opinion. CIT v. Umedbhai International (P.) Ltd. [2011] 330 ITR 506/[2014] 223 Taxman 152 (Mag.)/45 taxmann.com 306 (Cal.). (xi) A reference can be made to VO, under section 55A, clause (b) sub-clause (ii), only if AO records existence of 'such other relevant circumstances' on the basis of which he forms such opinion. In other words, a reference can be made if certain pre-conditions exit. In the matter of Hotel Joshi, Hon'ble Rajasthan High Court has held that for invoking sub-clause (ii)of clause (b) of section 55A of the Act, AO is required to form an opinion on the basis of the material on record that reference to the DVO for ascertaining the FMV of an asset, is necessary having regard to the nature of the asset and other relevant circumstances CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a report of a Valuation Officer under section 55A may be considered by the Assessing Officer as a piece of evidence if it is relevant. (See CIT v. East Coast Commercial Co. Ltd. [1967] 63 ITR 449 , 457 (SC). However, the power of inquiry granted to an Assessing Officer under sections 133(6) and 142(2) does not include the power to refer the matter to the Valuation Officer for an enquiry by him. 72. In light of above discussions, we find that even where the reference to DVO has been held as invalid in the eyes of law, the valuation report so submitted by the DVO can be considered by the Assessing officer as a reliable piece of evidence as the Assessing officer is not bound by strict rules of evidence and where the report is found to be relevant, the same can be considered by the Assessing officer. However, whether the valuation report issued by the DVO is found to be relevant in the facts and circumstances of the present case, we shall be dealing with the same in the subsequent paragraphs. 73. Now coming to the cross objection (No. 2) filed by the assessee wherein the assessee has challenged the reference of the matter to DVO u/s 55A on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st point, it was observed by the AO that there is a huge difference between the valuation arrived at by the Registered Valuer of the property as residential at ₹ 90,98,000/- and as commercial at ₹ 2,72,94,000/-. It was submitted that Registered Valuer has simply tripled the value of residential property to arrive value of commercial property. It is an established practice and also has been adopted for Stamp Duty purposes by Stamp Duty Authorities. Secondly, he himself has reported in Para 9 of his report about the locality, wherein, it is mentioned that Property is situated in mixed area, therefore, by applying the principle that for the purpose of ascertaining the FMV, one has to take the value which is most advantageous and accordingly, he adopted the value as commercial property. Therefore, in this regard, the approach of the Registered Valuer was supported with the substantiating material and guidelines for determining FMV. On the other hand, the presumption of the Ld. A.O. is arbitrary and based on mere suspicion, hence, should not hold good. (b) In the Point No. 2, it was mentioned by the AO that in S. No. 6, Registered Valuer has himself given the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 55A(a) shows that there must be a situation, wherein, the A.O. should form an opinion. The word opinion has been used in the section to restrict the use of such reference in a discretionary manner, otherwise, a blanket power could be given to the A.O. and which is not the intent of the legislature. Therefore, they have used the word opinion which demands an application of mind in objective manner on the facts and circumstances of any given case. Hence, for invoking the provisions of section 55A of the Act formation of opinion of the AO that the value claimed by the assessee is less than its FMV is a sine qua non. In support, reliance was placed on following decisions: (a) It has been observed by the Supreme Court in AMRIT BANASPATI CO LTD (2014-TIOL-64-SC-WT) that It is true that the invocation of Rule 8(a) cannot be based on ipsi dipsi of the AO. The discretion vested in the AO to discard the value determined as per Rules 3 has to be judicially exercised. It must be reasonable, based on subjective satisfaction; the power must be shown to be objectively exercised and is open to judicial scrutiny. (b) In the matter of Hotel Joshi (242 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly then one can say at variance . The AO has failed to form an opinion as required by the law hence, subsequent actions deserves to be deleted. 77. It was accordingly submitted that in the instant case, on the basis of discussion made about the reason for arriving at such an opinion, it is clear that before making the Reference, neither mind was applied objectively nor the requirement of the law has met and nor a proper opportunity was provided to the assessee to represent his version on those reasons. However, in this regard, it can be said that there is no express provision in the Act for providing an opportunity to the assessee before arriving such an opinion, even though, it is a settled principle of natural justice considering the nature of work and duty to be performed, there can be implied practices to secure justice. In the instant case, calling the assessee s view on the reasons for framing the opinion could not have affected the work of the Ld. A.O. in any way, rather could only assist him to form an opinion based upon the correct facts and the circumstances. In the instant case, looking to the reasons and explanations brought on record hereinbefore, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intained as per guidelines has not been maintained and even the inspection note has not been maintained. It was further submitted that on the alleged date of inspection, the property was under the possession of the buyer and it was closed, therefore, the DVO was required to take permission and keys from the buyer however, no such permission or keys were given by the buyer and therefore, claim of the DVO towards inspection is wrong. It was further submitted that the notice for inspection was served only in the month of January 2014 wherein there was no specific date of inspection and thereafter in the DVO s report, it has been claimed that the inspection was carried out on 7.3.2014 which means that there must have been a separate notice for inspection and which the assessee denies to have received any such notice either in writing or verbally. It was further submitted that the assessee has filed his objection to the proposed DVO s report. However, the same has not been considered by the DVO which effectively means that assessee has not heard and his objections to the draft valuation report has not been considered which is a gross valuation principle of natural justice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing and trading and a location which was near to the residential area. Such plots which could be used for such activities were having the highest value since in that time, people were not having much of transports, therefore, proximity to the residential area were considered to be the best commercial location. Further, the activity of manufacturing and trading is very well included in the term commercial activity. Therefore, while concluding that there was no commercial working, the DVO acted unfairly, unreasonably and prejudice on evidence and for this reason alone, the order is against the principle of natural justice, since the natural justice demands fair play, reasonableness and without prejudice on evidence, which is absent in the instant case. 86. It was further submitted that a perusal of the report of the DVO shows that while deriving the FMV of the Property, he only took the value of the land, whereas, there was a structure of building which did not find place in the final valuation. On raising the objection on the issue subsequent to the valuation, it was clarified by the DVO that the registered Valuer also did not take the said value in consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the local laws, there was no restriction as far as the use was concerned. Hence, it could and can be used according to the potential possibilities in its most advantageous manner; The land in the locality wherein the Property is situated was in mixed use in 1981 and which has not been denied by the DVO 88. It was further submitted that the factor wise analysis for which adjustment should be taken according to the GVIP, 2009 and the valuation report of the DVO is as under:- Factors to be taken according to the GVIP, 2009 Facts of the Sale Instance Of the instant case Adjustment taken by DVO Size 372.5 Sq. Mtrs. 82 X50 2750.77 Sq. Mt₹ 120 X246 9 (-) 20% Comments:- The comparable is of very small size in comparison to the size of the case under consideration. The GVIP, 2009 has provided three different situations, wherein, according to the situation, adjustment should be made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident. Frontage 82 120 NIL Comments:- (i) Both the properties are corner property, however, it is pertinent to note that Property is situated on main National Highway Road having good frontage that will definitely have higher value even compared to a property having same frontage but situated in inner colony lane. (ii) It is further important that in both the cases, two sides can be used as frontage and while comparing the road width of these two sides with corresponding frontage, it is clear that Property is having much more effective frontage on both side independently, hence, having advantage over the Sale Instance. The Ld. DVO has failed to take into account the factor of adjustment on this account. Locality and Surroundings Residential and Graveyard On main Tonk Road Shops, Petrol Pump and in close proximity to Gandhi Nagar Railway Station and Residences in the inner lanes of the locality. 35% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structed property having ground and first floor. Perusal further shows that the map was already approved and the construction made even till first floor was found excess and regularized by paying compounding fees which shows that limited FAR was available with the Sale Instance, whereas, the Property is situated on National Highway and on 128 Feet wide road on one side and average 85 Feet wide road on the other side since the FAR are broadly governed by the width of the road, hence, the Property was having much more FAR. Further, the FAR of the Sale Instance was exhausted till the construction of first floor only because the availability of FAR was very less due to narrow width of the road. (ii) The Ld. DVO has failed to consider the said factors for adjustment. Connectivity Property is situated approx 1025 far from Bhawani Singh Road through indirect approach road. From main Railway Station approx 3 Kms. and from Airport 14-15 Kms. On N.H. 12, Railway Station is only 270 far from site and on the way to Airport approx 7 Kms. NIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/- Sq. Mtr. It is claimed in the Annexure A attached to the DVO s report dated 7.3.2014 that rate of the land per Sq. Mtr. as per the sale reference submitted by the Assessee . A perusal of the Sale instance shows that there was a constructed property and land was 372.50 Sq. Mtrs. and the total consideration was ₹ 5,50,000/-. The Ld. DVO has not provided the bifurcation of the sale consideration between the constructed area and of the land either in his valuation report or during the valuation proceedings to the assessee. Therefore, the working of base rate itself requires a proper examination and opportunity to the assessee to submit his own view on the bifurcation of the sale consideration. 90. It was further submitted that the registered Valuer while making his report considered the factor of adjustment of the locality and surrounding (Corner Plot, location near Gandhi Nagar Railway Station and good location on N.H. Tonk Road) and remaining factors have been considered on lump sum basis while doubling the base rate from ₹ 1,093/- to ₹ 2,186/- and, therefore, have not been addressed separately. The same is available in Part II of his Valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By taking the Ummaid Mills case as a base in our case, the adjustment on this account should be (+) 57% instead of (-) 20% {19,134.81 Sq. Mtrs. Ummaid Mills area 2,750.77 Sq. Mtrs. in our case = (16,384.04 Sq. Mtrs./100)*0.5= (81.92%-25%) = approx 57%}. Perusal of the same shows that in this case, the Ld. DVO did not take the judicious view or might has not considered the facts correctly. Even according to this report which is identical, the appellant deserves to have adjustment factor of +57% instead of (-) 20% on this account alone if compared to the Ummaid Mills case. (iii) The Ld. DVO in that case has taken (+)70% as factor of adjustment on account of commercial potential as against in the case of Appellant, he has not even considered the concept of commercial potential and ascertained the FMV based on the land used reported by him. Furthermore, while making the comments in Para 7.3 of the report, the Ld. DVO mentioned the details of surroundings which are in the nature of institutional activity rather than commercial, whereas, in the case of the appellant, commercial activities in the surroundings areas were going on. This fact shows that in the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permissible. The reason is this. The valuation by the stamp valuation authority is based on the circle rates. These circle rates adopt uniform rate of land for an entire locality, which inherently disregards peculiar features of a particular property. Even in a particular area, on account of location features and possibilities of commercial use, there can be wide variations in the prices of land. However, circle rates disregard all these factors and adopt a uniform rate for all properties in that particular area. If the circle rate fixed by the stamp valuation authorities was to be adopted in all situations, there was no need of reference to the DVO under Section 50C(2). The sweeping generalizations inherent in the circle rates can not hold good in all situations. It is, therefore, not uncommon that while fixing the circle rates, authorities do err on the side of excessive caution by adopting higher rates of the land in a particular area as the circle rate. In such circumstances, the DVO s blind reliance on circle rates is unjustified. The DVO has simply adopted the average circle rate of residential and commercial area, on the ground that interior area of the locality, where the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation authority, the same should be ignored by the Assessing Officer. From the conjoined reading of sub-section (1), (2) and (3) of section 50C along with the relevant provisions of Wealth Tax Act as have been referred to in sub-section (2), it is evident that though the Assessing Officer is bound by the V.O's report in case it is lower than the value assessed by the stamp valuation authority, however, the same is not binding upon the learned Commissioner (Appeals) or the Tribunal wherein the assessee can further raise objection to such valuation. 94. Per contra, the ld CIT DR has submitted that the contentions so raised by the ld AR has no merit as all the objections raised by the assessee firm has been duly considered and disposed off by the DVO. In this regard, our reference was drawn to the assessment order where the findings of the DVO disposing off the assessee s objections have been clearly stated and taken note of by the Add. CIT as well before issuing directions u/s 144A of the Act and the same reads as under: Now regarding the objections raised against the valuation report of the DVO by the assessee, I find that the same have duly b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hy factor for corner plot taken, please refer to reply given as per para 1 above. (4) Your plot under reference is sale reference plot around 3.5 times the area of the plot No. S-6 (sale reference). So the factor of -20% has been judiciously adopted against large plot area. (5) The evidence submitted by you is for industrial use and not commercial use. The similar certificate dated 06/07/1981 was also submitted earlier by your good-self which is for industrial usage only and not commercial use. In this regard, refer to the observations of DVO under para 7.3 of the valuation report. It is to reiterat again that the industrial DLC rates are always much lesser than residential DLC rates of a particular area at any given time. Still adopting a more conservative approach in favour of the assessee, DVO has not adopted any factor for lowering the FMV further below the residential rates. There cannot be a more judicious approach than this. (6) You are actually stating the status of the property at the point of sale and not as on 1/4/1981. So your submission cannot be accepted considering the status of the land existing on 1/4/1981; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. However, what needs to be examined is whether there was any commercial activitiy carried out as on the valuation date i.e. 01.04.1981. In this regard, we find that there is registration certificate issued by the office of the Joint Director District Industry Centre, Jaipur dated 21.10.1980 which provides the provisional registration number allotted to the assessee s firm factory situated at Tonk Road, Jaipur for carrying out the manufacturing activities relating to ferrous, non ferrous wire, and wire products etc. Thereafter, there is a registration certificate issued by the appropriate authority under the Central Sales Tax Act, 1956 wherein the assessee has been registered as a dealer u/s 7(1)/7(2) of CST Act, 1956 in respect of manufacturing, trading and commission agency in the line of copper wire products etc and this certificate is effective from 16.03.1981. We therefore, find at the relevant point in time i.e. on 01.04.1981, the assessee was carrying out commercial activities from the premises located at Tonk Road, Jaipur which is subject matter of present proceedings. Therefore, the findings of the Valuation Officer that there were no commercial activities in the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X
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