TMI Blog2018 (6) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... s registered valuer is more than the value determined by the DVO therefore, valuation determined by DVO cannot be accepted since the assessee’s case under consideration is prior to 1st July 2012 i.e. belonging to Assessment Year 2011-12, whereas the mandated provisions come into effect from Assessment Year 2013-14, therefore, it is against the provisions of section 55A(a) of the Act and hence, the valuation determined by the DVO cannot be accepted. We note that assessee’s case under consideration is squarely falls u/s 55A(a) of the Act. As decided in CIT vs. Pooja Prints [2014 (1) TMI 764 - BOMBAY HIGH COURT] where in it was held that neither section 55(A)(b)(ii) nor the amended section 55(A)(a) can be invoked for referring case of the appellant for valuation of an asset as on 01.04.1981, as the amendment was effective from 01.07.2012 and not retrospectively. - Decided in favour of assessee. - ITA No.203/Kol/2016 - - - Dated:- 13-6-2018 - SHRI S. S. VISWANETHRA RAVI, JM AND DR. A.L.SAINI, AM For The Appellant : Shri A. K. Tiwari, CIT(DR) For The Respondent : Shri R. K. Patodi, FCA ORDER Per Dr. A. L. Saini: By way of this appeal, the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DVO selected the transaction of transfer of residential plots having area measuring less than 10cottahs, whereas in assessee s case, land is 227 cottahs, accordingly, the valuation done by the DVO does not reflect comparable transactions. However, the Assessing Officer rejected the contention of the assessee and noted that he has already referred the matter to the DVO,as per the relevant provisions of section 55A(b)(ii) of the Act, for valuation of property as on 01.04.1981 and the District Valuation Officer (DVO) has estimated the value of property as on 01.04.1981 at ₹ 1,98,53,912/- as against the value determined by the Registered Valuer of the assessee at ₹ 4,31,30,000/-. Therefore, the valuation of property done by DVO was much less than that shown by assessee. The AO noted that assessee has adopted higher fair value as on 01.04.1981 at ₹ 4,31,30,000/- to pay the lesser capital gain. Therefore, the Assessing Officer assessed the longterm capital gain on property sale, by taking into consideration the valuation done by DVO at ₹ 1,98,53,912/-, as follows: Consideration for transfer FMV as on 01.04.81 ₹ 1,98,53,912/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther circumstances, he may always have power to refer the matter to DVO. Therefore, the action of the Assessing Officer is not in violation or contradictions of the provisions of the Act. The ld. DR pointed out that ld. CIT(A) gave relief to the assessee on the ground that Assessing Officer cannot refer the case to DVO for valuation, when he is of the opinion of the value disclosed by assessee was higher than fair market value determined by DVO. Therefore, ld. DR pointed out that ld. CIT(A) was erred in not considering the fact that section u/s 55A(b)(ii) of the Act speaks that Assessing Officer may refer to DVO considering the nature of assets and other relevant circumstances, if it is necessary to do so. Thus, provisions of section u/s 55A(b)(ii) of the Act makes the issue open for Assessing Officer and he may refer the case to DVO even he is of the view that value disclosed of assessee was higher than fair market value. Apart from this, the ld. DR for the Revenue has relied on the judgment of the Hon ble Kolkata High Court in the case of Nirmal Kr. Ravindra Kumar HUF vs. CIT in ITA No.293 of 2008, dated 09.06.2016, wherein it was held as under: The principal contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DVO is without jurisdiction, as prior to the amendment made u/s 55A(a) by the Finance Act, 2012 w.e.f. 1st day of July, 2012, the said reference to the DVO could have been made by him only if in his opinion to the value of property on 1st April 1981 claimed by the assessee, is less than its fair market value. The ld. Counsel also submitted that valuation has been determined by the DVO on the basis of transfer of transactions of land situated in Kolkata at Jatin Bagchi Road, Tollygunj and Rash Behari Avenue. These two transactions are irrelevant in the assessee s case as the property transferred by them, is situated at a different place, which is near Belurmath, Howrah, Kolkata. The ld. counsel submitted that the transaction of transfer of land situated in Kolkata have been made the basis by the DVO for determining the valuation of property situated at Howrah which is separate District, having no common features. The ld. Counsel submitted that in assessee s case under consideration, it was a transaction of land by way of handing over of possession to the developer on a joint development basis, there was no cash consideration for such transfer. Accordingly, the assessee considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as . is at variance with its fair market value . Hence, in the case before us, there is no ambiguity that fair market value as declared by the assessee is not less than the value declared by the DVO. The valuation of property made by the Registered Valuer of assessee as on 1st April, 1981 is to the tune of ₹ 4,31,30,000/- whereas the valuation of the property made by the DVO at the instance of the Assessing Officer, as on 1st April 1981, is to the tune of ₹ 1,98,53,912/-. Therefore, it is evidently clear that valuation of land done by the assessee s registered valuer is more than the value determined by the DVO therefore, valuation determined by DVO cannot be accepted since the assessee s case under consideration is prior to 1st July 2012 i.e. belongingto Assessment Year 2011-12, whereas the mandated provisions come into effect from Assessment Year 2013-14, therefore, it is against the provisions of section 55A(a) of the Act and hence, the valuation determined by the DVO cannot be accepted. We note that assessee s case under consideration is squarely falls u/s 55A(a) of the Act. In the scenario, if the ld. AO resort to refer to the DVO for determination of fair mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset for the purposes of this chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer- ( a) In a case where the value of the asset as claimed by the assesese is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of the opinion that the value so claimed is less than its fair market value, ( b) In any other case, if the Assessing Officer is of the opinion- ( i) That the fair market value of the asset exceeds the value of the asset as claimed by the assesese by more than such amount as may be prescribed in this behalf, or ( ii) That having regard to the nature of the asset and other relevant circumstances, it is necessary so to do. 13. The AO made a reference to the DVO u/s.55A of the Act for determination of FMV as on 1.4.1981. The time limit for passing an order of assessment for the relevant AY was getting barred. The DVO did not furnish his report to the AO. In the circumstances, the AO computed LTCG as follows, ignoring the FMV as on 1.4.1981 given by the Assessee in the Registered Valuer's report: 6.2. At the time of scrutiny assessment, incomplia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. The assessee had claimed the valuation as on 1st April, 1981 at a sum of ₹ 2,01,56,680 before indexation based on the report of a registered valuer. Therefore, the AO was required to form an opinion that the value so claimed is less than the fair market value. The reference by the AO was on the ground the FMV as on 1.4.1981 is more than the FMV as on 1.4.1981. 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 made by a registered valuer. The assessees thus submitted that on the facts of the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of property is taken at ₹ 20,60,244/- as determined by DVO as on 1.4.81 instead of ₹ 2,05,56,680/- as taken by appellant based on sales instances. This ground of appeal is therefore dismissed. 17. Aggrieved by the order of the CIT(A), the Assessee has raised Gr.No.4 to 8 and additional ground before the Tribunal. 18. The learned counsel for the Assessee submitted before us that what is applicable in the present case is clause (a) of Sec.55A(2) of the Act. Hence to make a reference under section 55A of the Act, Assessing Officer has to form an opinion that the FMV as on 1.4.1981 claimed in the registered valuer's report is less than the fair market value. On the other hand, the opinion of the Assessing Officer here is that the value shown was very high or in other words, more than the fair market value. This being the case, a reference under section 55A could not have been made. He placed reliance on the decision of the Hon'ble Calcutta High Court in the case of CIT -vs.- Umedbhai International (P) Ltd. (2011) 338 ITR 506, in a similar situation, where there was a substitution of the cost as on 1.4.1981, by value based by DVO on a reference under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the parameters of the spirit of the section which empowers the Assessing Officer to make a reference to DVO i.e. in any other circumstances which he thinks that it is necessary to refer the matter to the DVO and, therefore, in the present case, the action of Assessing Officer in making reference to DVO while not accepting the valuation shown by the assessee on the basis of the registered valuer's report was well permissible under the law. In a decision rendered by the ITAT Kolkata Bench in the case of ITO, Ward 23(3), Kolkata Vs. Sudip Roy ITA No.2864/Kol/2013 order dated 19.10.2016,(which is authored by the Hon'ble Accountant Member of the present Bench) this Tribunal followed the view of the Calcutta High Court in the case of Nirmal Kumar Ravindrakumar HUF (supra) for the reason that the latter decision has to be followed than the earlier decision of the Hon'ble Calcutta High Court . 19. The learned counsel for the Assessee submitted that out of the three decisions of the Calcutta High Court on the same issue, two earlier Division Bench Judgments are in favour of the Assessee, accepting the view canvassed by the Assessee before CIT(A) but the later judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e earlier view of the two Division Benches should be followed in preference to the later view of the Division Bench as in the later decision, the two earlier decisions were neither noticed nor referred to. Our attention was also drawn to the view of the other High Courts on the issue of validity of reference u/s.55A(2)(a) of the Act when the FMV as on 1.4.1981 adopted by an Assessee in support of his computation of LTCG is supported by a registered valuer's report. The Hon'ble Bombay High Court in the case of DaulalMohata HUF (supra) dealt with following substantial question of law : ( B) Whether on the facts and in the circumstances of the case the Hon'ble Tribunal was right in law to observe that the AO was not justified in making a reference under s. 55A of the Act to the DVO for determination of the fair market value of the property ? In para Nos. 4 and 5 of its judgment Hon'ble High Court held as follows : 4. The Tribunal in its order dt. 23rd July, 2004 has categorically observed thus : 'The first issue that arises for our consideration is whether the reference made by the AO to the DVO under s. 55A is bad in law under the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VO to the petitioner insofar as the fair market value of the property as on 1st April, 1981 is concerned, the petitioner had claimed the same at a sum of ₹ 6,25,000 as per registered valuer's report. 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 cannot be made applicable. Clause (b) of s. 55A 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 made by a registered valuer. In the facts of the present case, cl. (b) of s. 55A also cannot be invoked. Therefore there is no question of having recourse to sub-cl. (ii) of cl. (b) of s. 55A of the Act. 22. The learned DR placed reliance on the later decision of the Hon'ble Calcutta High Court referred to above in the case of Nirmal Kumar Ravichandra Kumar-HUF (supra) and submitted that if the interpretation adopted in the earlier decision is followed then that would result in policy of the law not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port the view that the earlier decisions have to be followed. In that view of the matter, we are of the view that the reference made in the present case to the DVO by the AO has to be regarded as invalid. We therefore hold that reference by the AO to the DVO under s. 55A for valuation of fair market value of the property as on 1st April, 1981 is not valid for the reason that the AO was of the view that fair market value declared by the assessee as per Government registered valuer's report was more than the fair market value whereas in law the AO could make a reference only when he is of the opinion that the value so claimed is less than the fair market value as on 1.4.1981. Since determination of the fair market value as on 1st April, 1981 was based on the report of the DVO, the same is held invalid. Consequently, estimation of the fair market value of the property as on 1st April, 1981 as made by the assessee is directed to be accepted. Ground No.4, 5 and 8 are allowed. Gr.No.6 7 and the additional ground of appeal raised by the Assessee does not call for any adjudication in view of the decision that the reference to the DVO is invalid and hence the LTCG computed by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
