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2017 (9) TMI 1221

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..... i) in accordance with the decision of the Special Bench (supra) Referring the matter to the Valuation Officer u/s 55A(b)(ii) - addition on account understatement of capital gains - value adopted by the assessee is more than the fair market value adopted by the DVO - Held that:- In the case on hand also the case is covered by section 55A(a) since value of the asset claimed by the assessee is on the basis of the estimation made by the Registered Valuer. Therefore, in our opinion the issue is squarely stands covered by the decision in the case of CIT v. Puja Prints [2014 (1) TMI 764 - BOMBAY HIGH COURT]. Thus, respectfully following the said decision we uphold the order of the Ld.CIT(A) in holding that the reference to DVO is bad in law. We sustain the order of the Ld.CIT(A) on this issue. - ITA.No.767/MUM/2014 And CO.No.133/MUM/2017 - - - Dated:- 13-9-2017 - SHRI RAJENDRA, HON'BLE ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER For The Assessee : Shri Manish V. Shah, C.A. Shri Ikshu shah For The Revenue : Shri Vidusha Kalra ORDER PER C.N. PRASAD (JM) 1. The appeal and Cross Objection are filed by the Revenue and the assessee .....

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..... nvestments from out of the sale of land and no borrowed funds were utilized for such investments. Thus, the order of the Ld.CIT(A) in deleting the interest under Rule 8D2(ii) is sustained. 7. Coming to the Cross objection filed by the assessee in respect of the disallowance under Section 14A, assessee contends that the investments not yielded income during the year should be excluded for the purpose of computing the average investments under Rule 8D2(iii). Ld. DR supported the orders of the lower authorities. 8. We have heard the rival submissions, perused the orders of the authorities below. Coming to the submissions made under Rule 8D2(iii) towards administrative expenses the assessee contended before the Ld.CIT(A) that section 14A cannot be applied to those investments from which no dividend is received. The assessee also placed reliance on the Hon ble Bombay High Court in the case of Delite enterprises (ITA.No. 110 of 2009). and also the Coordinate Bench in the case of Avshesh Mercantile P. Ltd. v. DCIT in ITA.No. 5779/MUM/2006 dated 13.06.2012. This issued stands covered by the recent decision of the Special Bench in the case of ACIT v. Vireet Investments Private Lim .....

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..... is much more than the fair market value as determined by the DVO and therefore, the reference is bad in law by placing reliance on various decisions in support of its contentions. It was also contended that there are no special circumstances for referring the matter for valuation as contemplated in section 55A(b)(ii) of the Act. Considering the submissions and the case laws relied on the Ld.CIT(A) held that the reference made by the Assessing Officer to DVO u/s 55A(b)(ii) is bad in law and the addition made on account of understatement of capital gains is deleted. 12. Before us, the Ld. DR vehemently supported the orders of the Assessing Officer. The Ld. DR submits that the Assessing Officer has absolute power for making reference u/s 55 to find out fair market value of the property. Ld. DR further submits that land in question is industrial as well as residential but Registered Valuer has taken only one rate. Therefore, the Ld. DR submits that the reference made by the Assessing Officer is in accordance with the provisions of the section 55A(b)(ii). 13. The Learned Counsel for the assessee vehemently supported the orders of the Ld.CIT(A). Learned Counsel for the assessee fu .....

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..... ssessee based on a Registered Valuer s report is more than the fair market value arrived at by the DVO, whether in such circumstances the reference can be made u/s 55A(a) or even u/s 55A(b)(ii) and the Hon'ble Jurisdictional High Court dismissed the appeal of the Revenue holding that there is no substantial question of law and affirmed the order of the Tribunal in holding that the reference u/s 55A(a) is bad is law when the value adopted by the assessee is more than the fair market value adopted by the DVO. The Hon'ble Jurisdictional High Court also held that the contention of the Revenue that the reference to the Departmental Valuation Officer by the Assessing Officer is sustainable in view of section 55A(b)(ii) of the Act is not acceptable for the reason that it clearly stated in section 55A(b) that it would apply in any other case i.e. case not covered by section 55A(a) of the Act. The Hon'ble High Court held 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 Valuation Officer can be made under Section 55A of .....

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..... A(a) (ii) of the Act is not acceptable. This is for the reason that Section 55A(b)of the 11 ITA.No.767/MUM/2014 (A.Y: Act very clearly states that it would apply in any other case i.e. a 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 binding upon the assessee and it is open to an assessee to contend to the contrary. 16. In the case on hand also the case is covered by section 55A(a) since value of the asset claimed by the assessee is on the basis of the estimation made by the Registered Valuer. Therefore, in our opinion the issue is squarely stands covered by the decision of the Hon'ble Jurisdictional High Court. Thus, respectfully following the said decision we uphold the order of the Ld.CIT(A) in holding that the reference to .....

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