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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI AMARJIT SINGH & SHRI O.P.MEENA
आदेश /O R D E R PER O.P.MEENA, AM: 1. This appeal by the Assessee is directed against the order of Ld.Commissioner of Income Tax (Appeals)-Valsad [the “Ld. CIT(A)”] dated 04.01.2016 for the assessment year 2012-13, which in turn has arisen from the order passed by the Income Tax Officer, Ward- Daman (in short “the AO”) dated 30.01.2015 under section 143 (3) of Income Tax Act,1961 (in short ‘the Act’).
Ground No.1 and 3 states that Ld. CIT (A) has erred in law in confirming the addition of long-term capital gain at Rs.7,73,56,675/- as
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against loss shown by the appellant at Rs.94,68,250/- by taking cost of acquisition as on 01.04.1981 as per data supplied by Sub- Registrar as against valuation made by Government Approved Valuers.
Brief facts are that the assessee had filed return of income on 30.03.2013 declaring total income of Rs.6,00,230/-. The assessee is engaged in the business of manufacturing and sale of salt from salt pans owned by her and running a tempo on hire. She had sold ancestral agricultural land bearing Survey Nos.14/1,14/2,15,16 and 33/1 (Part) at village Varkund Nani Daman admeasuring 1,92,300 sq. meters for sale consideration of Rs. 10,00,00,000 vide sale deed dated 23.06.2011 entered in to between the assessee and Shri Bipinchandra Bavbhai Patel and Mrs. Ritaben Bipinchnadra Patel (purchasers) on which long-term capital loss of Rs. 94,68,250 was shown. The AO noticed that the land was purchased well before 01.04.1981. The assessee has determining the value of land @ 46 per sq. meter as on 01.04.1981 on the basis of Registered Valuer report of Civil engineering and considered the value of land at Rs.88,45,000/- and after claiming cost of clearance of title at Rs.51,00,000/- computed total cost at Rs.1,39,45,000/-. The assessee has arrived at index cost of acquisition at Rs.10,94,68,250/- [1,39,45,000 x 785/100] as on 01.04.1981 and calculated long-term capital loss at Rs.94,68,250/-. In order to confirm the cost of acquisition at Rs.88,45,000/-, the AO made enquiry from Civil Cum Sub Registrar Daman, who vide letter dated 02.12.2014 furnished data regarding sale deed executed on 24.02.1981 situated at Varkund Nani
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Daman for land Survey No. 458/Pts No.4, Plot No. 458 Guathan No.2 , VGGP/404 which was transferred for Rs. 15 per sq. meter.Since there was wide gap between value at Rs. 46 per sq. meter determined by Government Approved Valuer and Rs. 15 per sq. meter given by Sub Registrar.Therefore, the AO issued summon to Shri Gajanand G Patel, Government Approved Valuer, who deposed under section 131 of the Act that he has relied on sale instances of property sold on 06.03.197 of the house @ 48.75 per sq. meter and open plot @ 43.71 per sq. meter at Village Kathira Nani Daman and accordingly, arrived at value at 46 per sq. meter for which property sold by the assessee was valued. For the purpose of working index cost of acquisition, the assessee has considered an amount of Rs.51 lac being amount claimed to have paid to some tenants to clear title of the property sold. However, the AO was of the view that this amount of Rs.51 Lakh can be deducted from sale consideration of Rs. 10 crores as expenditure incurred wholly and exclusively in connection with transfer, but same cannot be taken into account for working out index cost of acquisition. As regards the cost at Rs. 46 per sq. meter, the AO observed that same cannot be accepted as Department is in possession for rate of 15 per sq. meter for land sold in same locality as obtained from Sub Registrar for the property sold in 1981. The sale instances considered by the Government Approved Valuer for cost at 46 per sq. meter was not accepted as the land sold was in 1979 and land so sold was situated 3 km away from the property sold by the assessee. Further, the land sold was used as salt pans for manufacturing
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salt, salt storage and described as waste land. In view of these facts and circumstances, the AO computed long-term capital gain at Rs. 7,73,56,675 by taking cost @ 15 per sq. meter for area of 1,92,300 sq. meter at Rs.28,84,500/-. Accordingly, index cost of acquisition was computed at Rs.2,26,43,325/- [ 1,92,300 sq. meter x Rs.15= 28,84,500 x 785/100]. Thus, the AO has arrived at long-term capital gain at Rs.7,73,56,675/- [ 10,00,00,000- 2,26,43,325] and taxed accordingly. As regards, claim of expenses of Rs.51,00,000/- incurred for clearing title of land ,It was explained that cost of Rs.51 lac was incurred in connection with title of the property under the written agreement with three persons whose name payment has been made . There was a special civil suit no.34/2011 before Hon`ble Civil Court Daman and certain litigation was went up to Hon`ble Bombay High Court. Under these circumstances, the assessee has no alternative but to incur expenses for clear the title of property. Therefore, same is allowable as deduction as cost of property along with index cost of acquisition, as per law. However, the AO observed that Rs. 51 lakhs were paid by Shri Bipinchandra Bavabhai Patel, as per deed of confirmation of sale cum release to Releaser being three persons. Thus, the purchaser of the land have paid the entire amount of Rs. 51 Lakh to above tenants for total clearance. Therefore, the claim of the assessee that she paid Rs. 51 lakhs is totally wrong and hence, same does not qualify for deduction from sale consideration for the purpose of computing long-term capital gain. In
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view of these facts, the AO disallowed the claim of deduction on account of cost incurred for Rs. 51 Lakh.
Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A). Wherein it was submitted that the fair market value as on 01.04.1981 was taken at Rs. 46 per sq. meter and value was determined at Rs.88,45,000/- by Government Approved Valuer on the basis of three sale instances of Rs.63.95 per sq. meter, Rs.47.04 per sq. meter and Rs.48.08,whereas the AO has taken at Rs.15 per sq. meter on the basis of information received from Sub Registrar of Nani Daman based on one sale instances dated 24.02.1981. It was contended that the AO was not justified in his action by substituting rate when Government Approved Valuer was available as per valuation report.Reliance was placed on the decision of Hon`ble Karnataka High Court in the case of N Govindaraju 377 ITR 243 (Kar.) which followed his own judgement of Smt. Krishna Bajaj 221 Taxman 431 (Kar.) and held that where value was at Rs.225 per sq. meter as per valuation report of Registered Valuer as on 01.04.1981, the AO was not justified in taking value at Rs.84 per sq. meter. Further, reliance was placed on the decision of Ahmedabad Tribunal in the case of Rajendra H. Sheth [I.T.A.No. 1495/Ahd/2007] which also held that when the assessee has supported valuation by valuation report, the AO was not justified in taking different value without obtained valuation report, as the AO was not technical person. This order was followed by Ahmedabad Tribunal in the case of Smt. Pramila M Desai [I.T.A.No.4/Ahd/2012].In Krishna Bajaj (supra), the
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Hon’ble Karnataka High Court has held that even in absence of production of valuation report by the assessee, the duty was cast on authorities to assess the fair market value independent of the evidence adduced by the assessee instead calling particulars from Sub-Registrar’s office. It was submitted that land area of 1,92,300 sq. meter at Varkund cannot be compared with land are 619 sq. meter at Gauthanand said property was away from main road. The land sold by the assessee is under recreational zone since 1980or earlier and it is very well-known as Daman Devka is a tourist place failing under control of Central Government and enjoying tax benefit. The land was facing on wider road as compared to land mentioned by Sub Registrar. The land was used as salt harvesting; hence, it was commercial land. With regard to payment of Rs.51 lakhs to Dadyshetha family, it was submitted that the appellant had purchased long back this land from one Burjor Dadyshethna, who died as he was a bachelor. He had his brother Shri Feroze who also died. Son of Feroze Minoo had challenged the title of the land had written to Collector to prevent sale. Apart from this, there were various civil suits and criminal proceedings pending between the Dadyshethna family, and Appellant as well as the purchasers and dispute was reached up to Hon`ble Bombay High Court. To subject to limit the litigation, the assessee paid Rs. 51 lacsto litigant in dispute for giving proper title to purchasers. Hence, same is allowable as improvement cost. This claim was supported by decision in the case of Piroza C Patel 242 ITR 582 (Bombay) wherein it was held that expenditure incurred for
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vacating land amounted to cost of improvement under section 48(ii) as held by the Mumbai Tribunal in the case of Nita A Patel 132 TTJ 468 (Mum-Trib). The assessee has also relied on the case of Hiraben Govindbhai Patel [ITAT- Ahmedabad]. However, the CIT (A) held that rate adopted by the AO was of same locality, hence, submissions of the assessee are without any basis. The AO had not referred the property for valuation as the assessee has not requested to him for reference despite the fact that she was disputing the rate of valuation. As regards payment of Rs.51 lac paid to legal heirs of erstwhile seller of land to the appellant. The CIT (A) observed that initially the AO was of the view that it is to be allowed from sale consideration. However, later found that this amount was not paid by the appellant but was paid by the purchaser of land and payment was made subsequent to date of execution of sale deed. It was submitted by the appellant that payment of Rs.51 lacs was made by the purchaser on behalf of the assessee, hence, it amounted cost of improvement under section 48(ii) of the Act. However, Ld. CIT (A) did not convince that the amount for clearing title could be paid after execution of sale deed. The appellant has not produced any evidence that this amount was reimbursed to purchaser later on. Hence, disallowance made by the AO was confirmed.
Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that the assessee has taken valuation at Rs.88,45,000/- by taking rate of Rs. 46 per sq. meter. This was taken as per Government Approved Valuer report (PB-54), which was based
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on three sale instances of the locality, whereas the AO has taken rate of Rs. 15 per sq. meter based on report from Sub Registrar Nani Daman which was based on one sale instance. Hence, same is not comparable. Further, the land in question was l falling under recreation Zone of Daman and same being commercial land. Therefore, the action of the AO was not justified. The learned counsel for the assessee further referred the report of Departmental Valuation Officer(PB-58 to 65)obtained by the AO in respect of land Survey No. 13, which is adjoining to impugned land of the assessee in same locality in the case of her brother Shri Hitesh Ramanlal Patel where the DVO on a reference by the AO has valued the said land at Rs.51 per sq. meter as on 01.04.1981 as against the value taken by the assessee at Rs.46 per sq. meter as on 01.04.1981.Therefore, it was contended that the value taken by the assessee was correct. The learned counsel for the assessee submitted that where no reference is made to DVO, then the guidance value based on Sub Registrar report is not valid. Therefore, the valuation adopted by the DVO in the case of Shri Hiteshbhai R Patel (brother of the assessee) was to be considered for comparison. The learned counsel for the assessee supported his view by placing reliance in the case of CIT v. Smt. Rajkumari Vimla Devi [2005] 279 ITR 360 (Allahabad) (PB-33) wherein following decision of Hon`ble Apex Court in the case of Jawajee Nagatham v. Revenue Divisional Officer (1994) 4 SCC 595 has held that the basic valuation register prepared and maintained for the purpose of collecting stamp duty cannot form the foundation to determine the market
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value mentioned thereunder in the instruments brought for registration. Equally it would not be a basis to determine the market value under section 23 of the Land Acquisition Act, for the lands acquired in the area or locality or the taluka etc. He Further, relied on the decision of Hon'ble Karnataka High Court in the case of Smt. Krishna Bajaj v. ACIT [2014] 221 Taxman 431 (Karnataka) wherein it was held that in determining fair market value under the Act, neither guideline value prescribed for purpose of stamp duty and registration under Karnataka Stamp Act and Indian Registration Act nor net wealth value arrived at under provisions of Wealth Tax Act, cannot be a guiding factor.
The learned counsel for the assessee submitted that the action of the AO in rejecting the report of Valuer who is Government Registered Valuer and replacing the same with the value of the property on the basis of sale deed executed after lapse of time suffers from factual and legal infirmities inasmuch as the AO is not competent to sit on the judgement of Registered Valuer. As such the AO cannot reduce the fair market value as on 01.04.1981 as held by the Hon`ble Jurisdictional High Court of Gujarat in the case of Hiaben Jayantilal Shah v ITO [2009] 310 ITR 31 (Guj)/ 181 Taxman 191 (Gujarat) wherein it has been held as under: “Under clause (a) of section 55A, the Assessing Officer is entitled to make the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the registered valuer and 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 section 55A, 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
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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. [Para 10] In the instant case, the assessee had claimed the value of property as per the registered valuer’s report. Therefore, under clause (a) of section 55A, the Assessing Officer was required to form an opinion that the value claimed by the assessee as per the registered valuer’s report was less than the fair market value. The estimated value proposed by the DVO was less than the fair market value shown by the assessee as on 1-4-1981. Therefore, clause (a) of section 55A could not be made applicable. Clause (b) of section 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 instant case, clause (b) of section 55A also could not be invoked. Therefore, there was no question of having recourse to sub-clause (ii) of clause (b) of section 55A. [Para 11]” 7. Since in this case, the assessee has submitted a valuation report of fair market value as on 01.04.1981, from Government Approved Valuer, hence, the AO can make a reference to the Valuation Officer under section 55A(a), and reference u/s. 55A(b)can be made only in a case where the assessee has not furnished a valuation report. The AO cannot ignore the value adopted by the assessee on the basis of government Registered Valuer. In the instant case, since the value as on 1 April 1981 was taken by the assessee on the basis of the report of a registered valuer, the AO did not have the power to make a reference under section 55A(b) of the Act or call a report from Sub Registrar of the locality. Accordingly, the action of the AO is invalid even under section 55A(b) of the Act.
The learned counsel for the assessee further, placed reliance in the case of Gaurangiben S. Shodhan Indl [2014] 367 ITR 238 (Gujarat) /[2014] 45 taxmann.com 356 (Gujarat) , Hiaben Jayantilal Shah v ITO [2009]310 ITR 31 (Guj)/ 181 Taxman 191 (Gujarat) , CIT v. Hiraben Govindbhai Patel [2015] 362 ITR 59 (Guj.)/229 Taxman 17 (Gujarat), ACIT v. Hiraben
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Govindbhai Patel [2013] 36 CCH 341 (Ahmedabad-Trib.), Premjibhai Kanjibhai v. ITO [2016] 47 CCH 724 (Ahmedabad-Trib), CIT v. RangaSety 159 ITR 797 (Kar.) etc. as per his case laws submissions.
The learned counsel for the assessee further, relied on the decision of Kolkata Tribunal in the case of Neville De Noranha v. ACIT [2008] 115 TTJ (Kol) 390/ 5 DTR 389, Kalpakbhai A Maniar v. ACIT [I.T.A.No. 55/Rjt10 A.Y. 2005-06, Sajjankumar M. Harlalka v. JCIT 100 ITD 18 (Mumbai), Mrs. Sosamma Paulose v. JCIT 79 TTJ (Coch) 573 and ITO v. P.C Ramakrishna HUF 107 TTJ (Chennai) 351, Shri Devendra Rasiklal Shah v. DCIT Circle 9, Ahmedabad [I.T.A.No. 2027/Ahd/2015 A.Y. 08-09 dtd. 01.06.2018] in support of his contentions. The learned counsel for the assessee submitted that the AO has totally ignored the facts that value of land depend on many factors.
With regard to payment of Rs. 51 lakhs to Dadyshetha family, it was submitted that the appellant had purchased long back this land from one Burjor Dadyshethna, who died as a bachelor. He had his brother Shri Feroze who also died. Sonof Feroze Minoo had challenged the title of the land had written to Collector to prevent sale. Apart from this, there were various civil suits and criminal proceedings pending between the Dadyshethna family, and appellant as well as the purchasers and dispute was reached up to Hon`ble Bombay High Court. To subject to limitation and the litigation, the agreed to pay Rs.51 lacs for giving proper title to purchasers. Hence,
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same is allowable as improvement cost. The learned counsel relied in the case of Paper Book Page No.8 to 48 which is copy of agreement for settlement dated 17.03.2012 by which an agreement was reached between Dadyshtehna family and that seller of land by which title of disputed land sold asper sale deed dated 23.06.2011, was agreed to be cleared on payment of Rs.51 Lakhs. It was submitted that initially payment of Rs. 51 Lakh was made by the purchaser of land Shri Bipinchandra to Dadyshethna family, which later on reimbursed by the on 11.02.2013 reimbursed which is duly reflected on their bank account with DCB Bank appearing at Paper Book Page No. 49.This claim was supported by decision in the case of Piroza C Patel 242 ITR 582 (Bombay) wherein it was held that expenditure incurred for vacating land amounted to cost of improvement under section 48(ii) which was filed by the mum tribunal in the case of Nita A Patel 132 TTJ 468 (Mum-Trib).
We have heard the rival submissions and perused the relevant material on record. We find that the conclusion arrived at by the AO for estimating fair market value as on 01.04.1981 is not based on sound footings as the fair market value of land as on 01.04.1981 estimated by the Registered Valuer is based on sound factual basis and the phenomenal development in that area which could not be rejected by the AO without any valid reason. As per provisions of section 55A, the AO can make reference to DVO only when he is of the opinion that the fair market value estimated by the Registered Valuer is less than
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the market value. In this case, the fair market value estimated by the Registered Valuer was more than the estimate made by the AO. The AO is not competent person to adopt the fair market value as on 01.04.1981. In support of our contention, we rely on the decision of Co-ordinate Bench of Kolkata Tribunal in the case of Neville De Noranha v. ACIT [2008] 115 TTJ 390 (Kol) in which it was observed as under: “We have examined the facts of the case and also considered the legal position. We find that actually the Assessing Officer considered the valuation as made by the registered valuer of the asset (land) transferred, as on 1-4-1981 to be exaggerated and that is why he referred the valuation to the DVO, who actually made a lower valuation, which was again accepted by the Assessing Officer and acted upon in the matter of computation of the capital gains on the transfer of the asset (land) under consideration. Hence, the provisions of section 55A in the matter of making reference to DVO were not satisfied. The learned Departmental Representative has argued that the reference was made under section 50C and not under section 55A. His argument, however, cannot be accepted. A reference under section 50C can be made only in respect of the valuation of the asset at the time of its transfer which has given rise to the occasion for levy of capital gains tax. Such reference cannot be made for the purpose of evaluating the asset as on 1-4-1981. The stamp duty valuation authority is, in no way concerned with valuation of the property on such date. Hence, we are of the considered opinion that there is no provision in the Income-tax Act, 1961, which can justify reference of the valuation as on 1-4-1981 in the instant case, especially when a valuation report prepared by a registered valuer had already been filed by the assessee. Hence, ultimately, we hold the reference to the DVO as made by the Assessing Officer on this matter to be illegal which cannot be taken into account in computing the capital gains on the transfer of the asset (land) under consideration. We, therefore, direct that as the assessee actually filed a valuation report duly prepared by a registered valuer, which could not be disputed by the Assessing Officer in a proper manner, the valuation of the asset (land) as on 1-4-1981, as done by the registered valuer, is alone required to be taken into consideration in computation of the capital gains on the transfer of the asset (land) under consideration. We order accordingly.” 12. In the light of above decision, we find that the assessee had filed a valuation report duly prepared by a registered valuer, which could not be disputed by the Assessing Officer in a proper manner, the valuation of the asset (land) as on 01-04-1981, as done by the registered valuer, is alone
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required to be taken into consideration in computation of the capital gains on the transfer of the asset (land) under consideration.
The learned counsel for the assessee has placed reliance in the case of judgement of Jurisdictional High Court of Hon`ble Gujarat High Court in the case of Hiaben Jayantilal Shah v ITO [2009]310 ITR 31 (Guj)/ 181 Taxman 191 (Gujarat) has held as under: “9. The concept of fair market value for the purpose of Chapter IV of the Act pertaining to computation of income from capital gain can be found under section 55(2)(b) of the Act, where under an assessee has the option to take the actual cost of the acquisition of the asset or the fair market value of the asset on 1-4-1981, for the purpose of sections 48 and 49 of the Act. In other words, for arriving at the taxable figure of capital gain while deducting the cost of acquisition an assessee may adopt the figure of cost of acquisition actually incurred or the fair market value of the property as on 1-4-1981. It is only in this fact situation that, with a view to ascertain the fair market value of the capital asset, the Assessing Officer may refer the valuation of the capital asset to a valuation officer. 10. Under clause (a ) of section 55A of the Act, the Assessing Officer is entitled to make the reference to the valuation officer in a case 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 section 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. 11. As can be seen from the communication dated nil (annexure D) from respondent No. 2-DVO to the petitioner insofar as the fair market value of the property as on 1-4-1981, is concerned, the petitioner had claimed the same at a sum of Rs. 6,25,000 as per the registered valuer’s report. Therefore, the Assessing Officer 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 Rs.3,97,000, which is less than the fair market value shown by the assessee as on 1-4-1981. Therefore, clause (a) of section 55A of the Act cannot be made applicable. Clause (b) of section 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. In the facts of the present case, clause (b) of section 55A of the Act also cannot be invoked. Therefore, there is no question of having recourse to sub-clause (ii) of clause (b) of section 55A of the Act.
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There is one more aspect of the matter. For invoking section 55A of the Act, there has to be a claim made by the assessee, before the Assessing Officer can record opinion either under clause (a) or clause (b) of section 55A of the Act to make a reference to the Valuation Officer. The facts of the present case go to show that the reference was made on 26-4-1996, whereas the return of income had been filed by the assessee only on 27-8-1996. Hence, on the date of making the reference by the Assessing Officer, no claim was made by the assessee and the Assessing Officer could not have formed any opinion as to existence of prescribed difference between the value of the asset as claimed by the assessee and the fair market value. Therefore also, the provisions of section 55A of the Act could not have been resorted to by the Assessing Officer. 13. The record of the petition does not indicate as to what was the opinion formed by the Assessing Officer before making reference to the DVO. It is only from the undated communication of the DVO that one gathers that the valuer has undertaken estimation of the fair market value of the property as on 1-4-1981 and 28-12-1995. However, in the affidavit-in-reply the Assessing Officer himself states to ascertain the fair market value of the property, a reference was made by this office to the valuation officer on 26-4-1996, since, according to this office, the value declared by the assessee as on the date of execution and registration of the sale deed was lower by more than 25 per cent. The petitioner filed a return on 27-8-1996, for the assessment year 1996-97 and the fair market value as on 1-4-1981, was shown at Rs.6,25,000. The capital gain was worked out at Rs.17,43,750 taking the sale value of the property at Rs. 17,50,000 as per the banakhat dated 29-11-1994. In the above background of facts it is humbly submitted that since the capital gain is required to be worked out on the fair market value of the property on the date of the sale deed, respondent No. 1 has acted within jurisdiction for making reference to the valuation officer under the provisions of section 55A of the Act. 14. Therefore, it is apparent that the Assessing Officer had, at no point of time, formed an opinion that the fair market value, in substitution of the cost of acquisition, as claimed by the assessee was required to be disturbed because prescribed parameters were fulfilled. In fact, as can be seen from the affidavit-in-reply the only ground on which reference was made to the valuation officer was that the value declared by the assessee as on the date of the execution and registration of the sale deed was lower by more than 25 per cent. There is no provision in the Act which permits the Assessing Officer to disturb the sale consideration; at least section 55A of the Act cannot be invoked for the said purpose. 15. In the aforesaid set of facts and circumstances of the case, no case is made out by the revenue for upholding the reference made on 26-4-1996, under section 55A of the Act. The reference made on 26-4-1996, by respondent No. 1 is without jurisdiction and de hors the provisions of the Act. 16. The petition is accordingly allowed and the reference made to the DVO vide communication dated 26-4-1996, is quashed and set aside. Rule is made absolute. There shall be no order as to costs.
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We further observed that the Hon`ble Bombay High Court gave similar finding in the case of CIT-13 v. Puja Prints [2014] 360 ITR 697 (Bombay)/ 43 taxmann.com 247(Bombay) wherein the Hon`ble High Court has 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 the Act, only follows the decision of this Court in the matter of Daulal Mohta HUF (supra). The revenue has not been able to point out how the aforesaid decision is inapplicable to the present facts nor has the revenue pointed out that the decision in Daulal Mohta HUF (supra) has not been accepted by the revenue. On the aforesaid ground alone, this appeal need not be entertained. However, as submissions were made on merits, we have independently examined 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 then the fair market value. In the present case, it is an undisputed position that the value adopted by the respondent-assessee of the property at Rs.35.99 lakhs was much more than the fair market value of Rs.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 then 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 then the fair market value" is substituted by the words " "is at variance with its fair market value" is clarificatory 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 time, very clearly reference could be made to Departmental Valuation Officer only if the value declared by the assessee is in the opinion of Assessing Officer less than its fair market value. 9. The contention of the revenue that the reference to the Departmental Valuation Officer by the Assessing Officer is sustainable in view of Section 55A(a) (ii) of the Act is not acceptable. This is for the reason that Section 55A(b)of the 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
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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. 10. The contention of the revenue that the Assessing Officer is entitled to refer the issue of valuation of the property to the Departmental Valuation Officer in exercise of its power under Sections 131, 133(6) and 142(2) of the Act is entirely based upon the decision of the Guwahati High Court in Smt. Amiya Bala Paul (supra). However, the Apex Court in Smt. Amiya Bala Paul(supra) has reversed the decision of the 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 Officer to invoke the general powers of enquiry. In view of the above and particularly in view of clear provisions of law as existing during the period relevant to Assessment Year 2006-07, we are of the view that questions (a) and (b) do not raise any substantial question of law. 15. Further, the Hon’ble Jurisdictional High Court in the case of Gaurangiben S. Shodhan Indl [2014] 367 ITR 238 (Gujarat) /[2014] 45 taxmann.com 356 (Gujarat) observed 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 market value". The situation may, therefore, be different after 1.7.2012. We are, however, concerned with the period prior thereto. Clause (b) of section 55A is in two parts and permits a reference to DVO if the Assessing Officer is of the opinion that (i) the fair market value of the asset exceeds the value of the asset so claimed by the assessee by more than such percentage of the value of the asset so claimed or 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. Sub-clause(i) of clause (b) also for the same reasons recorded above, would have no bearing on the fair market value as on 1.4.1981. The Assessing Officer had not resorted to sub-clause(ii) of clause (b). In any case, clause (b) would apply where clause(a) does not apply since it
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starts with the expression "in any other case". In other words if assessee has relied upon a Registered Valuer's Report, Assessing Officer can proceed only under clause (a) and clause (b) would not be applicable. 16. In the present case, admittedly the assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset. Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) thereof as held by the Division Bench of this Court in the case of Hiaben Jayantilal Shah v. ITO [2009] 310 ITR 31/181 Taxman 191 (Guj.). In the said decision, it was held and observed as under:— "10. Under clause(a) of sec. 55A of the Act under the Assessing Officer is entitled to make the reference to the Valuation Officer in a case 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 reasonings adopted by the Tribunal in the impugned judgment. Tax Appeal is dismissed. 16. Similar findings were recorded by the Co-ordinate Bench of Rajkot Tribunal in the case of Shri Kapakbhai A. Maniar v. ACIT-2 Rjt [I.T.(S.S.A) No. 55/RJT/10 A.Y. 05-06 dtd. 7.072010] by ruling on the decision f ITAT Cochin Bench in the case of Mrs. SoammaPaulose v. JCIT 79 TTJ 573 in this regard. The Hon`ble High Court in Gaurangiben S. Shodhan Indl [2014] 367 ITR 238 (Gujarat) /[2014] 45 taxmann.com 356 (Gujarat) has specifically held that amendment in section 55A with effect from 01.07.2012 in a case , the value of assets claimed by the assessee is in accordance with the estimate made by the Registered Valuer , if the AO was of the opinion that the value so claimed was less than the fair market value as on 01.04.1981 then reference can be made. In view of these facts, the value adopted by
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the assessee on the basis of Registered Valuer was not less than fair market value rather it was on higher side. The AO wants to reduce the value i.e. cost of acquisition as on 01.04.1981. It is not permissible prior to amendment carried out in section 55A of the Act. Whether this amendment can be taken into consideration for the assessment year under consideration, it has been covered by decision of Hon`ble Bombay High Court. Further, the land in question was falling under recreation Zone of Daman and same being commercial land. Therefore, the action of the AO was not justified. The learned counsel referred a Departmental Valuation Officer (DVO) report placed at Paper Book Page No. 58 to 65 obtained by the AO in respect of land Survey No. 13 which is adjoining to impugned land of the assessee in same locality in the case of her brother Shri Hitesh Ramanlal Patel where the DVO on a reference by the AO has valued the land at Rs.51 per sq. meter as on 01.04.1981 as against the value taken by the assessee at Rs.46 per sq. meter as on 01.04.1981. Therefore, when DVO itself valued the adjoining land at Rs. 51 per sq. meter then the value adopted by the Government Approved Valuer at Rs. 46 per sq. meter was quite justified. We are also of the view that no reference is made to DVO, then the guidance value based on Sub Registrar report is not valid. The learned counsel for the assessee supported his view by placing reliance in the case of CIT v. Smt. Rajkumari Vimla Devi [2005] 279 ITR 360 (Allahabad) (PB-33) wherein following decision of Hon`ble Apex Court in the case of Jawajee Nagatham v. Revenue Divisional Officer (1994) 4 SCC 595 has held
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that the basic valuation register prepared and maintained for the purpose of collecting stamp duty cannot form the foundation to determine the market value mentioned thereunder in the instruments brought for registration. Equally it would not be a basis to determine the market value under s.23 of the Land Acquisition Act, of the lands acquired in the area or locality or the taluka , etc. he Further, relied on the decision of Hon`ble Karnataka High Court in the case of Smt. Krishna Bajaj v. ACIT [2014] 221 Taxman 431 (Karnataka) wherein it was held that in determining fair market value under Act, neither guideline value prescribed for purpose of stamp duty and registration under Karnataka Stamp Act and Indian Registration Act nor net wealth value arrived at under provisions of Wealth Tax Act, cannot be guiding factor. Therefore, considering the ratio as laid down in aforesaid judicial pronouncements, we are of the opinion that the AO cannot brush aside the report of the Registered Valuer. The report of Registered Valuer is a valid piece of evidence in deciding the matter of valuation. Such report cannot be modified or questioned or rebutted by the AO. In view of these facts and circumstances, respectfully following the aforesaid judicial decision of Hon`ble High Court and Co-ordinate Bench as discussed above, we hold that the findings recorded by the AO are not sustainable in law. Therefore, the AO is directed to adopt the rate of Rs.46 per sq. meter for computation of fair market value as on 01.04.1981, as estimated by the Government Registered Valuer and worked out long- term capital gain accordingly.
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With regard to payment of Rs. 51 lakhs to Dadyshetha family, we find that there was dispute of total of impugned land sold with Dadyshethna family, who had challenged the title of the land had written to Collector to prevent sale. Apart from this, there were various civil suits and criminal proceedings pending between the Dadyshethna family, and the assessee as well as the purchasers and dispute was reached up to Hon’ble Bombay High Court. To subject to limitation the litigation, payment of Rs.51 lacs was made for giving proper title to purchasers. It is discernible from Paper Book Page No. 8 to 48 which is copy of agreement for settlement dated 17.03.2012 by which an agreement was reached between Dadyshtehna family and that seller of land by which title of disputed land sold asper sale deed dated 23.06.2011. It is noticed that initial payment of Rs.51 Lakh was made by the purchaser of land. However, letter this amount has been reimbursed to Shri Bipinchandra to on 11.02.2013 by the assessee which is duly reflected on their bank account with DCB Bank appearing at Paper Book Page No. 49. Therefore, this amount is allowable as deduction from sale consideration as the assessee has received less sale consideration to that extent. Therefore, the AO is directed to allow deduction from sale consideration of Rs.10 crores and compute long-term capital gain accordingly. The claim as cost of improvement is not allowable as the amount has been paid after execution of sale deed. Therefore, this ground no. 4 of appeal is partly allowed.
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In view of these facts and law, the Ground No. 1 to 3 of appeal of the assessee are party allowed.
Ground No.4 is not pressed before us, hence, same is dismissed as not pressed.
In the result, the appeal of the assessee is partly allowed.
The order is pronounced by listing the case on the Notice Board under Rule 34(4) of Income Tax Appellate Tribunal Rules 1963.
Sd/- Sd/- (AMARJIT SINGH) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat: Dated: 10th December, 2019/opm Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat