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2016 (2) TMI 696 - ITAT PUNE

2016 (2) TMI 696 - ITAT PUNE - TMI - Reference of matter to DVO - AO authority - Held that:- AO has no jurisdiction to refer the matter to the DVO for determination of the value since the value declared by the assessee is more than the fair market value. We hold and direct accordingly. The ground raised by the assessee is accordingly allowed. - Decided in faovur of the assessee - ITA No.530/PN/2014, ITA No.531/PN/2014, ITA No.1173/PN/2014 - Dated:- 15-1-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS .....

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litigation before the Tribunal. Facts of the case, in brief, are that the assessee filed his return of income on 08-11-2006 declared long term capital loss of ₹ 1,04,12,335/-. During the course of assessment proceedings the AO noted that the assessee after deducting the cost of selling and indexed cost of acquisition determined the net sale consideration at ₹ 1,87,085/-. After claiming deduction u/s.54B and 54F on account of investment in agricultural land and purchase of residential .....

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instance pertains to a plot admeasuring 1091 sq.mtrs located at Hadapsar which has been registered in Pune during 1984 @ 298/- per sq.mtr. Following the regression method based on the circular of Town Planning and Valuation department, Pune and various circulars issued from time to time the approved valuer has assumed reduction of price from 1984 to 1981. He further noted that the first instance is a developed property within the range of 6 to 8 kms from the centre if Pune Railway station and GP .....

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er considered the cost of acquisition at ₹ 80/- per sq.ft. at FSI one and has derived land rate @ ₹ 30/- per sq.ft.i.e. ₹ 322.92 sq.mtr or say ₹ 325.00 per sq.mtr. Here also he noted that the value arrived at by the approved valuer is of developed land. The AO noted from the documents and other details filed by the assessee that the land transferred by him to the Developer/Builder is agricultural land and not a developed land like the ones cited by the approved valuer. Th .....

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village Dhanori bearing various Survey Nos. 1985/1986 and recorded the sale price per sq.mtr at ₹ 10/- to ₹ 20/-. The AO noted that even if the price rate per sq.mtr at ₹ 20/- is taken and after applying the same regression method as done by the approved valuer the value per sq.mtr would be ₹ 15/- per sq.mtr as on 01-04-1981. He, therefore, rejected the rate of ₹ 350/- per sq.mtr adopted by the registered valuer of the assessee. Applying the rate of ₹ 15/- per .....

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(A) with a direction to decide the issue afresh by observing as under : 3. We have examined the grounds and the facts available on records and find that the information furnished now will help bringing new primary evidences required for the administration of justice. Ld DR for the revenue find merits in the above argument of the assessee s counsel. Considering the importance of the said additional evidence, we are of the opinion the same should be admitted and the matter should be restored to th .....

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opt the value @ ₹ 75/- per sq. mtr which was the value determined by the DVO. It may be pertinent to mention here that while passing the assessment order the report of the DVO was not available although the matter was referred to the DVO by the AO. 6. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. Although the assessee has taken a number of grounds, the Ld. Counsel for the assessee confined his arguments to Ground of appeal No.5 only and did not press the othe .....

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s fair market value as on 01-04-1981. 8. The Ld. Counsel for the assessee referring to the decision of Hon ble Bombay High Court in the case of CIT Vs. Puja Prints reported in 360 ITR 697 submitted that the Hon ble High Court in the said decision has held that amendment to section 55A(a) of the Act in 2012 by which the words is less than its fair market value were substituted by the words is at variance with its fair market value was made effective only from July 1st, 2012. Parliament has not gi .....

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arlier decision in the case of CIT Vs. Daulal Mohta (HUF) reported in 360 ITR 680. 9. Referring to the decision of the Pune Bench of the Tribunal in the case of ITO Vs. Smt. Vijaya Chandrakant Tupe and other connected appeals vide ITA No.1129/PN/2013 to 1131/PN/2013 order dated 27-08-2014 he submitted that the Tribunal in the said decision has dismissed the appeal filed by the Revenue and upheld the order of the CIT(A) wherein the CIT(A) had deleted the addition made by the AO by accepting the a .....

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e assessee should be allowed. 10. The Ld. Departmental Representative on the other hand heavily relied on the order of the AO and the CIT(A). He submitted that the assessee by adopting higher value as on 01-04-1981 is trying to inflate the indexed cost of acquisition and thereby reducing the taxable capital gain. The DVO had determined the value of the land at ₹ 75/- per sq. mtr whereas the registered valuer of the assessee has determined the same at ₹ 310/- per sq. mtr which is very .....

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e has determined the cost of acquisition of agricultural land as on 01-04- 1981 at ₹ 310/- per sq. mtr as determined by the registered valuer. We find the DVO in the instant case has determined the value of the land at ₹ 75/- per sq. mtr as on 01-04-1981. It is the case of the Ld. Counsel for the assessee that since the value adopted by the assessee is more than the fair market value, therefore, the AO has no authority to refer the matter to the Departmental Valuation Officer. We fin .....

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al on record, we find that the issue before us is with regard to valuation adopted by the assessee as on 01.04.1981 on the basis of report of Govt. approved Valuer and deletion of addition by the CIT(A) by accepting the contention of the assessee that no reference could be made by the Assessing Officer if value declared by the assessee as on 01.04.1981 on the basis of Report of the Government Approved Valuer is more than F.M.V. The assessee is an individual and during the year under consideratio .....

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2,471/- and e) Capital Gain assessed by the Assessing Officer at ₹ 1,39,25,210/- 2.4 The assessee sold the ancestral property situated Hadpasar at ₹ 159,29,250/-. Since the property was held prior to 01.04.1981, the assessee got the valuation as on 01.04.1981 from the Government Approved Valuer, who has certified the valuation as on 01.04.1981 at ₹ 32,85,000/-. Accordingly the assessee computed the long term capital gain at ₹ 173,44,985/- and claimed exemption u/s.54B &am .....

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210/- after taking into account exemption at ₹ 173,94,000/- and made the addition of ₹ 139,25,210/-. While doing so, the Assessing Officer has not given the copy of the report of the DVO to the assessee and therefore he relied upon the report of the DVO unilaterally. Moreover, the DVO report was obtained in the case of Gorakh Maruti Tupe & others and is in respect of the property which is altogether different from the property sold by the assessee. The first appellate authority o .....

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unless and until the valuation adopted by the assessee was lesser than the value what Assessing Officer believes to be. A similar view has been taken in the following cases:- a) CIT vs. Daulal Mohta HUF (2014) 360 ITR 680 (Bom). b) CIT Vs. Ramankumar Suri (255 CTR 257) c) CIT v Puja Prints (2014) 360 ITR 697 (Bom). d) M.V. Shah, Official Liquidator, Anant Mills Ltd vs. U. J. Matain & Anr. (1994) 209 ITR 568 (Guj). e) ITAT Pune Bench in the case of Krishnabai Tingre vs. ITO 101 ITD 317 2.6 In .....

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d valuer. The value adopted by the assessee is not less than the Valuation adopted by the Assessing Officer. We find that ITAT, Pune in the case of ITO Vs. Sangeeta Jeevan Bhosale in ITA No.1125/PN/2012 dated 30.05.2014 and in the case of Ramdas Sonba Tupe Vs. ITO in ITA No.534/PN/2013 dated 08.07.2014 has held as under: 6. In the case of Puja Prints (supra) the Hon'ble High Court has examined the powers of the Assessing Officer for making the reference u/s. 55A of the Act as well as the ame .....

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ferred the issue of valuation to the DVO only because in his view the valuation of the property as on 1981 as made by the respondent-assessee was higher than the fair market value. In the aforesaid circumstances, the invocation of s. 55A(a) of the Act is not justified. 8. The contention of the Revenue that in view of the amendment to s. 55A(a) of the Act in 2012 by which the words is less than the fair market value are substituted by the words is at variance with its fair market value is clarifi .....

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less than its fair market value. 9. The contention of the Revenue that the reference to the DVO by the AO is sustainable in view of s. 55A(a)(ii) [55A(b)(ii)] of the Act is not acceptable. This is for the reason that s. 55A(b) of the Act very clearly states that it would apply in any other case i.e. a case not covered by s. 55A(a) of the Act. In this case, it is an undisputable position that the issue is covered by s. 55A(a) of the Act. Therefore, resort cannot be had to the residuary clause pro .....

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f the Act the AO 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 AO is of the opinion that the value so claimed is less than the fair market value. In any other case, as provided under cl. (b) of s. 55A of the Act, the AO 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 b .....

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rt. Therefore, the AO was required to form an opinion that the value so claimed is less than the fair market value. The estimated value proposed by the DVO is shown at ₹ 3,97,000, which is less than the fair market value shown by the assessee as on 1st April, 1981. Therefore, cl. (a) of s. 55A of the Act cannot be made applicable. Clause (b) of s. 55A of the Act can be invoked only in any other case, namely when the value of the asset claimed by the assessee is not supported by an estimate .....

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e go to show that the reference was made on 26th April, 1996, whereas, the return of income had been filed by the assessee only on 27th Aug., 1996. Hence, on the date of making the reference by the AO, no claim was made by the assessee and the AO could not have formed any opinion as to existence of prescribed difference between the value of the asset as claimed by the assessee and the fair market value. Therefore also, provisions of s. 55A of the Act could not have been resorted to by the AO. 8. .....

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