TMI Blog2012 (10) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... full value of consideration as discussed above cannot be construed to the fair market value. The A.O. has also taken the value as on 1.4.81 at Rs.94 lacs in place of Rs.1.03 crore value declared by the assessee on the basis of registered approved valuer report. As per Section 55A, the A.O. can made the reference if estimated value made by the registered valuer is less than fair market value. In this case, the value estimated by the registered valuer was Rs.1.03 crore whereas the DVO had given fair market value at Rs.94 lacs. Therefore, clause (a) of section 55A of the Act could not be made applicable. Clause (b) of section 55A can be invoked only in any other case when value of the asset claimed by the assessee was not supported by an estimate made by a registered valuer. Value estimated by the DVO is less than valued estimated by the Government approved valuer. Further, the difference between value estimated by the DVO and adopted on the basis of registered valuer’s report, the difference is less than 15%. The A.O. has not brought on record any material to prove that the assessee had received much more whatever disclosed in the sale deed. Therefore, CIT(A) has rightly deleted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le opportunity of being heard during course of assessment proceeding. The assessee filed reply before the A.O., the same was not convincing to the A.O. Therefore, he made addition under the head of long term capital gain as under:- (i) Shri Sanatkumar J. Sodhan HUF Rs.3,18,49,604/- (ii) Shri Sanat Kumar J. Shodhan Individual Rs. 76,88,676/- (iii) Gaurangini Behan S.Shodhan Rs.81,57,643/- (iv) Kartikey S. Sohan Rs. 33,52,282/- (v) Kartikey S. Shodhan HUF Rs.40,70,528/- 5. Being aggrieved by the order of the A.O., the assessees filed appeal before ld. CIT (A), who has deleted the addition in all the cases after giving detailed findings in his appeal order. The relevant findings in paragraph nos. 5, 5.1, 5.1.2, 5.1.3. 5.1.4, 5.1.5. 5.1.6 are reproduced as under: 5. I have carefully considered the submissions made b y the A.R. of the appellant. I have also gone through the decisions, referred to above, which are relied upon by the A.R. of the appellant and the observations of the assessing officer in the assessment order. 5.1. A reference to the DVO can be made by the A.O. under the provisions of section 142A or section 55A or section 50C of the Incometax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation, consider the objections and come to a finding after application of mind. No such exercise was done in the instant case. A.O. adopted the value arrived at by the DVO, stating it to be binding. Therefore, the action of A. O. in adopting DVO's value as on 01-04-1981 is not in accordance with the provisions of the Act. 5.1.4. Similarly section 55A empowers the A. O.; to make a reference to the DVO with a view to ascertain the fair market value and take it as the full value of the consideration received for the purposes of section 48. However, this can be resorted to only in the instances enumerated u/s. 45(IA), 45(2) and 45(4). Going by the facts of the case, the instant case is not covered under any of three sub-sections of section 45 mentioned above. 5.1.5. Section 55A empowers the A.O. to make a reference to the DVO for the purposes of section 50C also. A plain reading of subITA section 50C makes it clear that making such a reference is possible only when the sale consideration admitted by an assessee is less than the value assessed by the Stamp Valuation Authority. In the instant case, the sale consideration admitted by the appellant is much higher than the value ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration has to be provideded for computing income under chapter (vi) computation of income from capital gain. The A.O. referred these cases u/s 142A, prescribed Performa in 55A read with u/s 16A of the Wealth Tax Act. Under Section 142A, estimate of the value of any investment referred to in Section 69 or Section69B or the value of any bullion, jewellery or other valuable articles referred to in Section 69A or Section 69B can be made reference to DVO. Section 55A is also reproduced 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of consideration cannot be construed at the market value. The interpretation of Full Value of Consideration is very clearly made by Hon. Courts and I rely upon the following decisions on this issue :- (a) In the case of CIT vs. George Henderson Co. Ltd., 66 ITR Pg.622, Hon S.C. have held that The expression full consideration in the main part of section 12B(2) cannot be construed as having a reference to the market value of the asset transferred but the expression only menas the full value of the thing received by the transferor in exchange for the capital asset transferred by him. (b) This view is endorsed once again by Hon. S.C. in the case of CIT vs. Gillanders Arbuthnot Co., 87ITR page-407 it is held that - "What exactly is the meaning of the expression "full value of the consideration for which sale is made? Is it the consideration agreed to be paid or is it the market value of the consideration? In the case of sale for a price, there is no question of any market value unlike in the case of an exchange. Therefore, in cases of sales to which the first proviso to subsection (2) of section 12B is not attracted, all that we have to see is what is the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... full value of consideration. 9. The report of the DVO determining FMV of the property as on date of sale is neither a report u/s. 16 A(5) nor an Order received on reference validly made by the AO. The report of the DVO dt.29.12.2008 (Pages 54 to57) is by way of a letter addressed to the AO. The letter is in the formate of valuation/estimation of cost of investment disclosed at the time of search and survey where assessee may have made unexplained investments. This has no relevance to the facts of my case. In the letter, it is further stated that "if revenue investigation of purchaser and seller shows more market rate then same be considered as hard evidence and utilize the same in assessment." This is mentioned in bold fonts. The letter further states that - "FMV of the property is worked out in advisory capacity and actual addition be made as per evidences already gathered during search/survey or are gathered during revenue investigation as deemed necessary." These aspects are not relevant/applicable on the facts of my case. 10. On validity of this letter of the DVO, 1 invite your kind attention to my letter dt.31.12.08 addressed to the AO in the course of assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being deleted from the Statute book and since the A.O. has not established with evidence, any consideration which is not reflected in the full value of consideration as per the Registered sale deed, the same can not be estimated by the DVO and as proposed to be taken by your goodself. The AO has not taken into consideration any of the above submissions nor has he rebutted any of the same. 11. I may mention in passing that there is no other section under which the full value of consideration can be adjusted/estimated. The only section under which full value of consideration cab be deemed to be at a higher figure than the full of consideration is section 50C. Section 50C applies only in the cases where the value as per the Jantri is more than the full value of consideration. As a matter of fact, the sale consideration per sq.mt. is at the rate which is much higher than the rate prevailing in the Jantri. As per copy of Jantri enclosed. (Page 33) the rate per Sq. Mt. is Rs. 14,500 as against which, the full value of consideration received by me per sq. mt. is Rs.18,686.86 as per the Registered Sale Deed (pages 6 to 32). Under the circumstances, provisions of sec. 50C are also, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Report furnished by the DVO, the purchase value as on 1.4.81 was determined at Rs.94,00,000/- as against that shown by the assessee at Rs.1,03,00,000/-. 5. At the outset, I state that provisions of section 55A(a)/(b) - as the case may be, are wrongly resorted to by the AO while making reference to the DVO. Provisions of section 55A(a) can be resorted to only where the value of the asset claimed by the assessee in accordance with the estimate made by a Registered Valuer is, in the opinion of the AO, less than the fair market value. Putting it differently, this section applies only where the AO is of the opinion that the fair market value of the property is more than the value estimated by the Registered Valuer. In my case, the value estimated by the registered valuer is Rs.1,03,00,000/- whereas, the value estimated by the DVO/AO is Rs.94,00,000/- which is less (and not more) than the value of the registered valuer, 6. Similarly, provisions of section 55A(b) are also not applicable in my case, as these sections can be applied only if the AO is of the opinion that the fair market value of the asset exceeds the value claimed by the assessee by more than 15% or having regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 55A. The reference to the DVO was not in accordance with law and had to be quashed (see pp. 571G,H, 572c). (c) In the case of Sajjankumar M. Harlalka vs. Jt.C.I.T., reported in 284 ITR page-156 (AT) Mumbai Bench has held that - "Held, allowing the appeals, that the AO could not have formed such an opinion in this case as the whole basis of the reference was that the fair market value estimated by the registered valuer as on April 1, 1981,was higher than its actual fair market value. The reference could be made under section 55A(b)(ii) by the AO if he was of the opinion that it was necessary to do so. Nothing had been shown to state that the reference was made under section 55A(a) or 55A(b)(ii) and if it was made under section 55A(b)(ii) then what circumstances were in existence on the basis of which the AO had formed his opinion to make such reference. Therefore, the reference made to the Valuation Officer was invalid." (d) In the case of Ms. Rubab M.Kazerani vs. Jt.CIT reported in 97 TTJ page-698 (AT) (Third Member) Mumbai has held that- "Power under section 55A for reference to DVO could be invoked only when in the opinion of AO, the fair market value disclosed by as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Rashid S.Medora vs. ACIT., Hon. ITAT Ahmedabad Bench-D has held that - "We have carefully considered the rival submissions in the light of material placed before us. According to the decisions cited by Ld. AR the reference under section 55A can be made by Assessing Officer only in the case where fair market value disclosed by the assessee is less and in the case where fair market value disclosed by assessee is more reference cannot be made validly." Since this is an unreported decision, the text of the whole judgement is enclosed (pages 65 to 68). 10. I further state that even on merits, the order of the DVO is not acceptable and does not have any evidentiary value. In support of my above contentions I state that :- (a) The assessment proceedings in respect of return of income filed on 12.10.2006 was taken up at the fag end of the year i.e. in December, 2008 when the assessment was getting time barred on 31.12.2008. (b) The assessment order is passed in haste and hurry without application of mind and without giving proper and reasonable opportunity to the appellant. (c) There are several mistakes committed in the order against which application u/s. 154 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. referred the case u/s 55A of IT Act for fair market value of the capital assets transfer and substituted the value of the DVO in computing the capital gain tax but the full value of consideration as discussed above cannot be construed to the fair market value. The A.O. has also taken the value as on 1.4.81 at Rs.94 lacs in place of Rs.1.03 crore value declared by the assessee on the basis of registered approved valuer report. As per Section 55A, the A.O. can made the reference if estimated value made by the registered valuer is less than fair market value. In this case, the value estimated by the registered valuer was Rs.1.03 crore whereas the DVO had given fair market value at Rs.94 lacs. The Hon ble Gujarat High Court in the case of Hiraben Jayantilal Shah vs. ITO(supra) as held that estimated value as on 1.4.81 as per registered valuer s report was Rs.6,25,000/- whereas the Valuation Officer had shown value at Rs.3,97,000/- which was less than the fair market value shown by the assessee as on Aprial1, 1981. Therefore, clause (a) of section 55A of the Act could not be made applicable. Clause (b) of section 55A of the Act can be invoked only in any other case when value of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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