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Director of Income Tax, International Taxation, Asst. Commissioner of Income Tax International Taxation - Circle 19 (1) Versus Mr. Shahrooq Ali Khan

2015 (8) TMI 770 - KARNATAKA HIGH COURT

Under valuation of property - Whether Tribunal was correct in holding that AO has to form an opinion that the property is under valued before sending it to the valuation officer which had not been done in the facts of the present case when the assessee himself had raised no objection for referring to the Valuation Officer? - Held that:- What is to be primarily considered is that whether the valuation report was required in the facts of the present case or not. Admittedly, there was no valuation .....

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have been recorded by the Assessing Officer.

Assessing Officer has the power to call for a valuation report when he is of the opinion that the valuation of the asset given by the assessee is undervalued and technically such opinion has not been recorded by the Assessing Officer in the present case, though we answer the first question in favour of the assessee and against the Revenue, but we provide that in the facts and circumstances of the case, the matter may be reconsidered by the .....

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he builder and consequently recorded a perverse finding? - Held that:- The agreement and the memorandum of understanding, as had been entered into between the parties, was for 12,377 sq.ft. being the share of contribution of the assessee in the total land given for development to the developer. The Tribunal, without assigning any cogent reason in this regard, has come to the conclusion that the assessee had transferred only 8,434 sq.ft. of undivided interested in exchange of three flats measurin .....

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JUDGMENT This is an appeal filed by the Revenue challenging the order of the Tribunal. Brief facts relevant for the purpose of this case are: A joint development agreement (JDA) was entered into between the assessee, Sri Sharooq Ali Khan; his brother, Sri Sameer A Khan; and M/s Ashed Properties and Investment Private Limited, represented by its Director, Sri Sameer A Khan. The property to be developed was comprising of a total area of 35,887 sq.ft., out of which, 12,377 sq.ft. was the share of a .....

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Officer, after obtaining the valuation report of three flats and other undivided interest in the property, arrived at the value of the share of the assessee at ₹ 2,00,45,265/- instead of ₹ 1,18,66,871/- as claimed by the assessee. The cost of acquisition as claimed by the assessee at ₹ 1,11,71,425/-, was recomputed by the Assessing Officer at ₹ 92,67,192/- and thus arrived at net capital gain at ₹ 1,07,78,073/- (being ₹ 2,00,45,625/- minus ₹ 92,67,192/- .....

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st. To this extent, the appellate Commissioner directed the Assessing Officer to rework the capital gains taking the fair market value based on the report of the Valuation Officer and the indexed cost of acquisition based on 12,377 sq.ft. of undivided interest. Challenging the said order, the assessee filed further appeal before the Tribunal, which has been allowed after holding that the valuation report was obtained under section 142-A of the Act, whereas it ought to have been called for under .....

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ng the said order, this appeal has been filed by the Revenue, which has been admitted on following questions of law: 1. Whether the Tribunal was correct in holding that the Assessing Officer has to form an opinion that the property is under valued before sending it to the valuation officer which had not been done in the facts of the present case when the assessee himself had raised no objection for referring to the Valuation Officer? 2. Whether the Tribunal was correct in holding that only 8,434 .....

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h technically the valuation report should have been called for under section 55-A of the Act and in the present case, the Assessing Officer had called for such report under S.142-A of the Act, but the same would not be a mistake which could not be rectified as, substantially the intention was to get the correct valuation of the three flats, as the Assessing Officer did not agree with the valuation submitted by the assessee. Learned counsel for respondent assessee has, however, submitted that und .....

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t. Admittedly, there was no valuation report of a registered Valuer submitted by the assessee with regard to the valuation of the three flats in question. It is correct that the Assessing Officer had wrongly sought the report under section 142-A of the Act, whereas it ought to have been called under section 55-A of the Act which provides for the Assessing Officer to be first of the opinion that the fair market value of the asset exceeds by more than 15% of the value of the asset as claimed by th .....

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