TMI Blog2018 (4) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Addition u/s 40A - assessee has borrowed loan @ 12% and he has given loans @ 6% to the persons covered under section 40A(2)(b) - Held that:- Section 40A(2)(b) contemplates that if an assessee incurred expenditure for availing the services or purchase of a goods from the persons mentioned in sub-clause-(b) and make them payments over and above the market price then the expenditure incurred over and above the market price would be disallowed. The assessee has given interest bearing loan funds to the HUF where he is the Karta. Therefore section 40A(2)(b) has rightly been applied by the Assessing Officer and he has rightly made the disallowance. This ground of appeal is rejected. - ITA No. 781,784 & 785/Ahd/2011 - - - Dated:- 2-4-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER Assessee by : Hemanshu Shah, A.R. Revenue by : Aditya Shukla, Sr. D.R O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: The present three appeals are directed at the instance of assessee s against the orders of Ld. CIT(A) dated 05.02.2015, 18.02.2015 05.02.2015 passed on the respective appeals of Ilaben K. Patel, Babubhai Ramanlal Patel Late Shantaben P Patel in A.Y 2011-12. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the order of Revenue authorities. 7. We have duly considered the rival contentions and gone through the record carefully. The dispute before me is, whether Assessing Officer could make a reference to the DVO for determining the fair market value of the assets as on 01.04.1981. According to the Ld. Counsel for the assessee a reference under sub-clause A of section 55A could be made, if value shown by the assessee as on 01.04.1981 is less than the fair market value. In other words assessee has shown the value at ₹ 67,98,400/- which is higher than the market value otherwise determined by the DVO after the reference. He adopted value at ₹ 36,44,000/-. Hon ble Gujarat High Court has considered this aspect in the case of Gauranginiben S. Shodhan and held that the Assessing Officer has no power to make a reference if the value shown by assessee is not less than fair market value. The discussion made by the Hon ble High Court in paragraph 15 to 17 read as under:- 15. Coming to the question of reference to DVO for ascertaining the fair market value as on 1.4.1981 also, we find that such reference was not competent. We have noticed that prior to the amendment in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so claimed is less than the fair market value. In any other case, as provided under clause(b) of Sec. 55A of the Act, the Assessing Officer 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 by more than such percentage or by more than such an amount as may be prescribed; or (ii) having regard to the nature of the asset and other relevant circumstances, it is necessary to make such a reference. 17. In the result, we see no reason to interfere. However, we have given our independent reasons and should not be seen to have confirmed the reasoning adopted by the Tribunal in the impugned judgment. Tax Appeal is dismissed. 8. In light of the above, if facts of the present appeals are examined then it would reveal value shown by the appellants of the property as on 01.04.1981 is considered then it was not less than fair market value and reference cannot be made. As far as the amendment carried out in section 55A is concerned, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el Versus Dy. Commissioner of Incometax, Circle-1, Ahmedabad Income-tax Officer, Ward-6(5), Ahmedabad Assessee by : Hemanshu Shah, A.R. Revenue by : Aditya Shukla, Sr. D.R 02/04/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: The present three appeals are directed at the instance of assessee s against the orders of Ld. CIT(A) dated 05.02.2015, 18.02.2015 05.02.2015 passed on the respective appeals of Ilaben K. Patel, Babubhai Ramanlal Patel Late Shantaben P Patel in A.Y 2011-12. 2. The solitary substantial ground of appeal taken by Ilaben K. Patel and Shantaben P Patel are interconnected with ground No.3 in the case of Babubhai Ramanlal Patel. Therefore we heard all these appeals together and deemed it appropriate to disposed of them by this common order. The grievance of the assessee s relates to determination of long term capital gain on sale of a plot. All these three assessee s are challenging the additions of ₹ 6,98,630/-, 1,74,650/- 13,97,290/- in their respective heads i.e Ilaben K. Patel, Babubhai Ramanlal Patel Shantaben P Patel under the head long term capital gain. 3. Brief facts of the case are that assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/-. Hon ble Gujarat High Court has considered this aspect in the case of Gauranginiben S. Shodhan and held that the Assessing Officer has no power to make a reference if the value shown by assessee is not less than fair market value. The discussion made by the Hon ble High Court in paragraph 15 to 17 read as under:- 15. Coming to the question of reference to DVO for ascertaining the fair market value as on 1.4.1981 also, we find that such reference was not competent. We have noticed that prior to the amendment in section 55A with effect from 1.7.2012 in a case, the value of the asset claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer was of the opinion that the value so claimed was less than its fair market value as on 1.4.1981. It would not be the case of the Assessing Officer that the value of the asset shown as on 1.4.1981 was less than the fair market value. Such clause, 'therefore, as it stood at the relevant time, had no application to the valuation as on 1.4.1981. We are conscious that with effect from 1.7.2012, the expression now used in clause (a) of section 55A is is at variance with its fair mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the result, we see no reason to interfere. However, we have given our independent reasons and should not be seen to have confirmed the reasoning adopted by the Tribunal in the impugned judgment. Tax Appeal is dismissed. 8. In light of the above, if facts of the present appeals are examined then it would reveal value shown by the appellants of the property as on 01.04.1981 is considered then it was not less than fair market value and reference cannot be made. As far as the amendment carried out in section 55A is concerned, it is with effect from 01.07.2012 i.e. by finance Act 2012 the transaction taken place in F.Y. 2010-11 relevant to assessment year 2011-12 and the amended provision would not be applicable on this transaction. 9. Respectfully following the decision of Hon ble Gujarat High Court. I allow these grounds of appeal in the case of all the three appellants and delete the additions made under the head long term capital gain. 10. In the case of Babubhai Ramanlal Patel there is one more ground of appeal whereby assessee has challenged disallowance of interest expense of ₹ 2,02,376/-. The brief facts of the case are that on scrutiny of the account it reveal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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