TMI Blog2014 (6) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 1981 as made by the assessee was higher than the fair market value - the invocation of Section 55A(a) of the Act is not justified. The Parliament has not given retrospective effect to the amendment - Section 55A(a) of the Act as existing during the period relevant to the AY 2006-07 - reference could be made to DVO only if the value declared by the assessee is in the opinion of AO less than its fair market value – thus, the order of CIT(A) is upheld in deleting the addition made by the AO on account of LTCG relying on the report of DVO by holding that the reference made by AO to the DVO u/s 55A of the Act itself was bad in law – Decided against Revenue. - I.T.A.No.5511/Mum/2012, Cross-Objection No. 235/Mum/2013 - - - Dated:- 23- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.99,20,600/- (As per Registered Valuer s report) Indexed cost of acquisition = 99,20,600/- x 519 = 5,14,87,940/- 100 Long term capital loss Rs.39,87,914/- Assessee s share at 20% Rs.7,97,583/- 4. During the course of assessment proceedings, a reference was made by the AO to the DVO for the purpose of determining the FMV of the assessee s property as on 1.4.1981 and in its report dated 21.12.2009 submitted to the AO, the DVO estimated the FMV of the assessee s property as on 1.4.1981 at Rs.14,21,424/-. The AO also noted that the value of the property viz Alfa Engineering Works was adopted and assessed for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is that under clause (a) of section 55A, the AO is entitled to make the reference in a case where the value of the asset as claimed by the appellant is in accordance with the estimate made by the registered valuer and the AO is of the opinion that the value of so claimed is less than the fair market value. While in clause (b), the AO has to record an opinion that the fair market value of the asset exceeds the value of the asset by more than such percentage or by more than such an amount as may be prescribed or having regard to the nature of the asset and other relevant circumstances, it is necessary to make such a reference. The appellant had claimed the value of the property as per the registered valuer s report. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve decisions, the reference u/s 55A to the DVO is itself bad in law. The appellant prayed that hence the valuation adopted by the DVO be deleted and the addition made by the AO should be deleted 6. The above submissions made by the assessee on the issue raised in additional ground were forwarded by the ld.CIT(A) to the AO for the latter s comments and after taking into consideration the comments offered by the AO in the remand report as well as submissions made on behalf of the assessee, the ld CIT(A) proceeded to decide the issue raised by the assessee in the additional ground challenging the validity of reference made by AO to DVO u/s 55A of the Act. In this regard, he took note of the specific provisions contained in section 55A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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? 8. The Hon ble Bombay High Court decided the issue involved in the above question in favour of the assessee by observing as under : 6. We have considered the rival submissions. We find that the impugned order dated 18 February, 2011 al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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