TMI Blog2016 (5) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant : Shri Dheeraj Kumar Jain For The Respondent by : Shri J.P. Bairagra ORDER PER R.K. PANDA, AM : The above 2 appeals filed by the revenue are directed against the separate orders dated 31-01-2014 passed by the CIT(A), Aurangabad relating to Assessment Year 2010-11. Since identical grounds have been taken by the revenue in both these appeals, therefore these were heard together and are being disposed of by this common order. ITA No.672/PN/2014 (Mr. Dhirendra Mahendraprasad Mehra) : 2. Facts of the case, in brief, are that the assessee is an individual and partner in the firm M/s. Mehra and Company, Jalgaon. He filed his return of income on 18-08-2011 declaring total income of ₹ 12,25,500/-. During the course of assessment proceedings the AO noted that the assessee vide sale deed dated 25-02-2010 executed before the Joint Sub Registrar (Class 2) Jalna-1 has sold the land situated at Survey No.44 to the extent of 1 Hector 23R for ₹ 88,65,000/- to M/s. Om Sai Ram Steel and Alloys Pvt. Ltd., Jalna. The fair market value for the purpose of stamp duty was also determined by the State Govt. authorities at ₹ 88,65,000/-. 2.1 On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2,21,400/-. After deducting the indexed cost of acquisition at ₹ 13,99,248/- from the full value of consideration of ₹ 88,65,000/- the AO determined the long term capital gain at ₹ 74,65,752/-. 4. Before CIT(A) the assessee challenged the power and jurisdiction of the AO in referring the matter to the DVO for determination of the fair market value of the property u/s.55A of the I.T. Act. Relying on various decisions including the decision of Hon ble Bombay High Court in the case Puja Prints Vide ITA No.248/2012 order dated 15-01-2014 it was submitted that the Hon ble High Court in the said decision has held that amendment to section 55A(a) by substituting the words is at variance with its fair market value for the words is less than its fair market value is applicable from 01-07-2012 and cannot be considered as clarificatory having retrospective application. 5. So far as merit of the case is concerned it was argued that the valuation of land as on 01-04-1981 adopted by the assessee is correct and the value of the land arrived at by the DVO is incorrect. It was argued that the comparable sale instance given by the DVO, i.e. property located at Sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the value of the impugned asset claimed by the assessee is less than the Fair Market Value. In the case under appeal, the A.O. is of the opinion that value of the impugned asset as on 01/04/1981 claimed by the assessee is more than its Fair Market Value. The above proposition of law is supported by the following decisions (1) CIT-13, Mumbai Vs. M/s. Puja Prints dated 15/01/2014 in ITA No.248 of 2012 (Bom.) In this case, the assessee has sold land and building for ₹ 2 Crores. The assessee has considered the value of the said property as on 01/04/1981 at ₹ 35.99 Lakhs on the basis of valuation report. The A.O. has noticed that the said property was purchased by the assessee for ₹ 1.45 Lakhs only prior to 15 months of 01/04/1981. The A.O. has referred the impugned property for valuation as on 01/04/1981 to the DVO who has valued the same at ₹ 6.68 Lakhs. The Hon'ble Jurisdictional High Court has held that as the value of the property declared by the assessee was not less than its fair market value, reference to DVO u/s 55A is not permissible. The Hon'ble Court has further held that the amendment in section 55A(a) by substituting the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2010 AY.2006-07 (7) Rubab M. Kazerani Vs. JCIT (2004) 91 ITD 429 (TM) (Mum) (8) Bony Elies Demello Vs. ACIT, ITA No.7870/Mum/2010 dated 05/04/2013, 2013-TIOL-297 ITAT-Mum. 8.2 The contention of the appellant is also fortified in view of the amendment made to section 55A w.e.f. 01/07/2012. In order to remove the , ,above hurdle for referring the property for valuation, where as per the AO. the value of the property is different from the value adopted by the assessee, the legislature has replaced the words is less than its fair market value , by the words is at variance with its fair market value by Finance Act, 2012 w.e.f. 01/07/2012. It is also evident that the amendment is prospective. In view of the above facts and discussion and amendment to section 55A and respectfully following the ratio laid down by the decisions referred to above including the decisions of Hon'ble Jurisdictional ITAT, Pune and Hon'ble Bombay High Court, I hold that the A.O. is not justified in making addition of ₹ 66,68,712/- by referring the property for valuation by DVO u/s.55A of the Act and following the said valuation report of the DVO. The addition of ₹ 66,68,712/- i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e value of the impugned property for stamp duty purposes. 8. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : 1. On the facts and circumstances of the case the CIT(A) erred in deleting the addition made at ₹ 66,68,712/- on account of long term capital gain. 2. Under the facts and circumstances of the case the learned CIT(A) erred in coming to a conclusion that the provisions of section 55A of the IT Act,1961 by way of reference to a DVO by the Assessing Officer is operative with effect from 1.7.2012 and in respect of transaction executed after this date. In this regard attention is drawn to the Memorandum to Finance Bill, 2012 explaining the scope and intent of introduction of provisions of section 55A of the IT Act, 1961. 3. Under the facts and circumstances of the case the view upholding by the learned CIT(A) is not in accordance with the Memorandum to Finance Bill, 2012 explaining the scope and intent of provisions of section 55A of the IT Act, 1961 as it was very clearly stated in section 55A that, in a case where capital asset become property of the assessee before 1.4.1981 and assessee has option of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... term capital gain the assessee has considered the cost of acquisition of the land as on 01-04-1981 at ₹ 12,76,576/-. After reducing the indexed cost of acquisition at ₹ 80,67,960 from the sale consideration of ₹ 80,65,000/- the assessee has declared an amount of ₹ 7,97,040/- as long term capital gain. According to the AO the cost of acquisition adopted by the assessee as on 01-04-1981 at ₹ 12,76,576/- appears to be on the higher side for which he made a reference to the DVO u/s.55A of the I.T. Act for determining the fair market value as on 01-04-1981. The DVO arrived at the fair market value as on 01-04-1981 at ₹ 2,21,040/-. Thus, after deducting the indexed cost of acquisition at ₹ 13,99,248/- on the basis of the report of the DVO from the sale consideration of ₹ 88,65,000/- the AO determined the long term capital gain at ₹ 74,65,752/-. We find the Ld.CIT(A) following the decision of Hon ble Bombay High Court in the case of Puja Prints (Supra) and various other decisions as per para 8 of his order held that the AO was not justified in making addition of ₹ 66,68,712/- by referring the matter for valuation to the DVO u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 than 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 than 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 200607. At the relevant time, very clearly reference c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the respondent assessee acquired the property for the purpose of working out the cost of acquisition. No specific submissions in regard to this issue was made by the revenue during the oral submissions. In any event, an order of remand in these facts does not give rise to any substantial question of law. 12. Accordingly, we see no reason to entertain questions (a), (b) and (c) as formulated by the revenue as they do not raise any substantial questions of law. Accordingly, appeal is dismissed with no order as to costs. 14. Since the Hon ble High Court has already taken a view that the amendment brought in by the Finance Act, 2012 w.e.f. 01-07- 2012 is not clarificatory and retrospective in nature, therefore, in absence of any contrary material brought to our notice against the decision of Hon ble Bombay High Court which has been relied upon by the Ld.CIT(A) we find no infirmity in his order holding that the AO was not justified in referring the matter to the DVO u/s.55A of the Act especially when the value of the capital asset declared by the assessee was more than the fair market value estimated by the AO. It is only when the value adopted by the assessee is less th ..... 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