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Rajendra Keshavrao Kulkarni Versus ITO, Ward-3 (2) , Nashik

2016 (7) TMI 1321 - ITAT PUNE

Reference u/s.55A made to the DVO - Held that:- The fair market value as on 01-04-1981 claimed by the assessee on the basis of the registered valuer’s report was more than the fair market value sought to be adopted by the AO, therefore, no reference could have been made by the AO u/s.55A of the Act to the DVO. In view of the above discussion, set aside the order of the CIT(A) and direct the AO to delete the addition - Decided in favour of assessee. - ITA No. 1340/PN/2015 - Dated:- 22-7-2016 - R. .....

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ed that the assessee has sold one property named as M/s. Hotel Sachhidanand at Shirdi. The sale consideration which was shown at ₹ 1,30,00,000/- was below the value determined by the stamp valuation authorities at ₹ 2,65,75,000/-. The AO further noted that as per the valuation report dated 20-09-2004 the Government Valuer has determined cost of acquisition at ₹ 1,46,77,000/- in the A.Y. 2003-04 when he acquired the property by inheritance and the long term capital loss has been .....

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377; 74,44,005/- and assessee s share in the same was computed at ₹ 11,91,040/-, the details of which are as under : 6.4 The value adopted by the Stamp Duty Authorities as per the sale deed is of ₹ 2,65,75,000/-. However the assessee has sold for ₹ 1,30,00,000/-. The value determined by the Valuation Officer is of ₹ 2,01,80,000/-. In view of the provision of Section 50C of the I.T. Act, the sale price determined by the DVO is considered as Sale Consideration of the long t .....

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%) Rs.11,91,040/- 3. In appeal the Ld.CIT(A) upheld the action of the AO. The submission of the assessee that the AO has no power to refer the matter to DVO u/s.55A of the Act was also rejected by the CIT(A). 4. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : The following grounds are taken without prejudice to each other - On facts and in law, 1. The learned CIT(A) erred in confirming the addition of ₹ 11,91,040/- made by the A.O. i .....

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ate that the fair market value of hotel property as on 01.04.1981 claimed by the assessee on the basis of registered valuer's report was more than the fair market value sought to be adopted by the A.O. and hence, the reference made to the DVO u/s 55A for the current year was bad in law and therefore, the valuation as on 01.04.1981 claimed by the assessee should have been adopted for the purposes of computing long term capital gains on sale of the hotel property. 4. The learned' CIT(A) ou .....

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ant craves leave to add, alter, amend or delete any of the above grounds of appeal. 5. The Ld. Counsel for the assessee referring to the decision of the Hon ble Bombay High Court in the case of Puja Prints reported in 360 ITR 697 submitted that reference u/s.55A could be made to the DVO only when the value adopted by the assessee was less than the fair market value. Since in the instant case the value adopted by the assessee is more than the fair market value and the amendment to the provisions .....

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the AO can make a reference to the valuation officer and the amendment to the provisions of section 55A(a) should be treated as retrospective being clarificatory in nature. 7. I have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the assessee in the instant case along with other partners has sold the property M/s. Hotel Sai S .....

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f the plot and the indexed cost of improvement at ₹ 1,27,35,995/- the AO determined the long term capital gain at ₹ 74,44,005/-. The share of the assessee in the said capital gain was determined at ₹ 11,91,000/- being 16% share of the assessee in the said property. The above addition has been sustained by the CIT(A). It is the submission of the Ld. Counsel for the assessee that the AO cannot make a reference to the DVO under the provisions of section 55A for determination of th .....

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he assessee is less than the fair market value. Where the value adopted by the assessee is much more than the fair market value, no reference can be made to the valuation officer under the provisions of section 55A. The relevant observation of the Hon ble High Court at page 701 to 703 read as under : 6. We have considered the rival submissions. We find that the impugned order dated 18 February, 2011 allowing the respondent assessee's appeal holding that no reference to the Departmental Valua .....

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ined the same. 7. We find that Section 55A(a) of the Act very clearly at the relevant time provided that a reference could be made to the Departmental Valuation Officer only when the value adopted by the assessee was less than the fair market value. In the present case, it is an undisputed position that the value adopted by the respondentassessee 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 .....

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lue" 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 t .....

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case not covered by Section 55A(a) of the Act. In this case, it is an undisputable position that the issue is covered by Section 55A(a) of the Act. Therefore, resort cannot be had to the residuary clause provided in Section 55A(b)(ii) of the Act. In view of the above, the CBDT Circular dated 25 November 1972 can have no application in the face of the clear position in law. This is so as the understanding of the statutory provisions by the revenue as found in Circular issued by the CBDT is not bi .....

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Guwahati High Court and held that if the power to refer any dispute with regard to the valuation of the property was already available under Sections 131(1), 136(6) and 142(2) of the Act, there was no need to specifically empower the Assessing Officer to do so in circumstances specified under Section 55A of the Act. It further held that when a specific provision under which the reference can be made to the Departmental Valuation Officer is available, there is no occasion for the Assessing Office .....

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