ANILKUMAR GAMANLAL MODI, HUF,SURAT vs. INCOME TAX OFFICER, WARD-1, BARDOLI

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE: SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA No. 544/SRT/2018 Assessment Year :2012-13 Shri Jigneshkumar S. Modi (HUF) Vs. ITO, Modi Faliya, Kadodara, Tal. Palsana, Ward 1, Dist. Surat-394327, Gujarat Bardoli PAN/GIR No.: AAFHJ9730D Appellant Respondent ITA No. 545/SRT/2018 Assessment Year :2012-13 Shri Vijaykumar Gamanlal Modi Vs. ITO, (HUF) Modi Faliya, Kadodara, Tal. Ward 1, Palsana, Dist. Surat-394327, Bardoli Gujarat PAN/GIR No.: AAHHV4108F Appellant Respondent ITA No. 546/SRT/2018 Assessment Year :2012-13 Shri Gamandbhai Nanubhai Modi Vs. ITO, (HUF) Modi Faliya, Kadodara, Tal. Ward 1, Palsana, Dist. Surat-394327, Bardoli Gujarat PAN/GIR No.: AAFHG8096K Appellant Respondent ITA No. 547/SRT/2018 Assessment Year :2012-13 Madhuben Dilipbhai Modi (HUF) Vs. ITO, Modi Faliya, Kadodara, Tal. Palsana, Ward 1, Dist. Surat-394327, Gujarat Bardoli

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli PAN/GIR No.: ABGPM5762Q Appellant Respondent ITA No. 548/SRT/2018 Assessment Year :2012-13 Shri Anilkumar Gamanlal Modi Vs. ITO, (HUF) Modi Faliya, Kadodara, Tal. Ward 1, Palsana, Dist. Surat-394327, Bardoli Gujarat PAN/GIR No.: AAMHA0492G Appellant Respondent ITA No. 549/SRT/2018 Assessment Year :2012-13 Shri Nikunjkumar D. Modi (HUF) Vs. ITO, Modi Faliya, Kadodara, Tal. Palsana, Ward 1, Dist. Surat-394327, Gujarat Bardoli PAN/GIR No.: AAGHN2820R Appellant Respondent ITA No. 550/SRT/2018 Assessment Year :2012-13 Shri Sanmukhlal Nanubhai Modi Vs. ITO, (HUF) Modi Faliya, Kadodara, Tal. Ward 1, Palsana, Dist. Surat-394327, Bardoli Gujarat PAN/GIR No.: AAWHS3115A Appellant Respondent ITA No. 551/SRT/2018 Assessment Year :2012-13 Shri Nitinkumar Gamanlal Modi Vs. ITO, (HUF) Modi Faliya, Kadodara, Tal. Ward 1, Palsana, Dist. Surat-394327, Bardoli Gujarat PAN/GIR No.: AAGHN2819A Appellant Respondent

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli

Assessee by : Shri Viresh I. Rudalal (CA) & Shri Rushi J. Parekh (CA) Revenue by : Shri B.P.K. Panda (Sr. DR) Date of Hearing : 10/05/2019 Date of Pronouncement: 26/06/2019 ORDER PER: VIKRAM SINGH YADAV, A.M. These are eight appeals filed by the respective assessees against the individual orders of ld. CIT(A)-1, Surat for the Assessment Year 2012-13. Since the common issues are involved, all these appeals were heard together and are disposed off by this consolidated order.

ITA No. 544/SRT/2018

“1. That the CIT(A) erred in not treating the reference to DVO u/s 55A as illegal & uncalled for. 2. That the CIT(A) erred in confirming the reference to DVO as rightly made by AO as per the amended provision u/s 55A w.e.f. 01/07/2012. 3. That the CIT(A) erred in treating the registered valuer’s report as fallacious & erroneous.”

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli 3. Briefly stated, the facts of the case are that the assessment was completed u/s 143(3) r/w section 147 wherein long term capital gain amounting to Rs. 10,92,200/- has been brought to tax in the hands of the assessee for A.Y 2012-13. The assessee, along with co-owners, had sold a piece of land for a total sale consideration of Rs. 97,35,000/-. Given that the Stamp Duty Authority has adopted the Jantri Value of the said piece of land at Rs. 2,43,51,300/-, the notice u/s 148 was issued as assessee’s share of the sale consideration has escaped taxation and provisions of section 50C are attracted.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli 6. During the course of reassessment proceedings, pursuant to the receipt of the DVO report, the Assessing Officer has issued a show cause to the assessee as to why the cost of acquisition as determined by the DVO should not be taken and in response, the assessee has objected to the reference to the DVO u/s 55A of the Act. However, the assessee’s objections didn’t find favour with the Assessing officer. As per the Assessing Officer, Section 55A has been amended w.e.f. 01.07.2012 and as per the amended provisions, he can make the reference to the Valuation Officer for ascertaining the fair market value of a capital asset in case such value is at variance with its FMV. According to the Assessing Officer, the section 55A has been amended w.e.f 01.07.2012 meaning thereby that the AO can make such a reference to the Valuation Officer in respect of any assessment pending before him after 01.07.2012. It was further held by the Assessing Officer that section 55A is not a computational provision and the issue of applicability for a particular assessment year would have been arisen had it been a computational provision. It is an amendment to the existing provisions through which the AO has been empowered to refer the case to the Valuation Officer where, in the opinion of the AO, the value declared by the assessee is at variance from the fair market value. Accordingly, the AO determined the index cost of acquisition by applying the FMV as on 01.04.1981 at Rs. 10.19 per sq.mtr as against Rs 380 per sq.mtrs adopted by the assessee and given the assessee’s share in the property (9.09%), long term capital gains has been determined at Rs 10,92,200 which has been brought to tax in the hands of the assessee.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli correct. It was submitted that the law applicable to the year under consideration is the law prior to the amendment and as per the un- amended law, the AO cannot make a reference to the DVO u/s 55A of the Act.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli the land @ Rs 380 per sq. mt and no comparable cases have been cited wheareas the DVO has considered comparable sale instances in the same vicinity and other relevant factors for determining the fair market value of Rs 10.19 per sq. mt. Against the said findings of the ld. CIT(A), the assessee is now in appeal before us.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli 10. It was further submitted by the ld AR that the contention of AO is that the amended provision w.e.f. 01/07/2012 is applicable with retrospective effect. It was the contention of the AO that the said amendment is clarificatory but that is ill founded, the parliament has not given retrospective effect to the amendment. Thus the law applicable to the year under appeal is the law prior to amendment. 11. It was further submitted that the AO has specifically referred the matter to DVO u/s 55A(a) & not 55A(b)(ii). The assessee relied on the judgment of ITAT Ahmedabad in case of DCIT vs. Vinod Harilal Mehta (ITA No. 2945/Ahd/2013) which has clarified the matter in favour of assessee relying upon the judgment of CIT vs. Gaurangiben S. Shrodhan (2014) 367 ITR 238 (Guj) which is squarely applicable to the assessee. Further the assessee also relies on the judgment of M/s Puja Prints ITA No. 248/2012 Mumbai High Court. Also, the ITAT Pune Bench in case of ACIT vs. Shri Bhima Dada Kharate (ITA NO. 1582/Pune/2015) held that prior to 01/07/2012, the provisions of existing section 55A(a) were applicable and the Parliament has not given retrospective effect. It was submitted that the observation & conclution of CIT(A) is therefore ill conceived & not warranted in view of the jurisdictional High Court Judgment. It was accordingly submitted that in view of the direct judgment of Gujarat High Court, the reference u/s 55A(a) may kindly be adjudged as not in accordance with law & may kindly be set aside & the assessee registered valuer's valuation as on 01/04/1981 may be adopted & the addition of Rs. 10,92,200/- may kindly be deleted. On merits, it was submitted that the rate by DVO @ Rs. 10.19 per Sq. Mt. is very much on lower side compared to registered valuer's rate @ Rs. 380/- per Sq. Mt. Without prejudice to what has been stated above, it is our request to substantially increase the FMV as on 01/04/1981 and delete the addition of Rs. 10,92,200/-.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli 12. The ld Senior DR is heard who has vehemently argued the matter. It was submitted by the ld Senior DR that the assessee has originally filed the return of income on 30.10.2012 and in response to notice u/s 148 issued on on 17.03.2015, the assessee vide submission dated 30.05.2015 has requested to consider the original return as return filed in response to notice u/s 148 and thereafter, notice u/s 143(2) was issued on 13.07.2015. Subsequently, the reference was made to the DVO on 24.11.2015. It was accordingly submitted that right from filing the return of income by the assessee in Oct 2012 to the reference to DVO in Nov 2015, all the events have happened subsequent to 1.07.2012, the date when the amendment was brought-in section 55A of the Act and therefore, it was well within the jurisdiction of the Assessing officer to refer the matter to the DVO for ascertaining the fair market value of the asset as on 1.4.1981 as per amended provisions of section 55A of the Act. He accordingly supported the findings of the lower authorities.

“55A. With a view to ascertaining the fair market value of a 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 assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is at variance with its fair market value; (b) in any other case, if the Assessing Officer is of opinion—

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such percentage of the value of the asset as 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, and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation.—In this section, "Valuation Officer" has the same meaning, as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).”

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer. In the instant case, for the purposes of this chapter means for the purposes of determining the liability towards the capital gains tax on the sale of the land. There is no dispute that the liability towards the capital gains has arisen during the year as the transfer of the land has happened during the year. The second condition is that where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer. In the instant case, there is no dispute that cost of acquisition as substituted by the assessee with the fair market value as on 1.4.1981 is based on and in accordance with the estimate made by the registered valuer. The third condition is that the Assessing Officer should form an opinion that the value so claimed by the assessee is less than its fair market value (as per unamended provisions) or is at variance with its fair market value (as per the amended provisions). The formation of the opinion by the Assessing officer therefore has to be seen and examined in the context of determining the liability towards the capital gains and the liability towards the capital gains can be examined during the course of assessment proceedings. Therefore, the formation of the opinion by the Assessing officer has to be during the course of assessment proceedings and not prior or subsequent to the completion of the assessment proceedings. As per the unamended provisions, the Assessing officer has to form an opinion that the value so claimed by the assessee is less than its fair market value. Therefore, only in a scenario, the value so claimed by the assessee of the capital asset is less than its fair market value in the opinion of the Assessing officer, the matter can be referred to the valuation officer. In a scenario, where the value so claimed by the assessee is more than its fair market value, the matter couldn’t be referred to the valuation officer. However, the amended provisions takes care of both the

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli scenarios and has provided that where the value so claimed by the assessee is at variance with its fair market value, the matter can be referred to the valuation officer. In the instant case, the Assessing officer has invoked the amended provisions and has held that the value so claimed by the assessee is at variance with its fair market value. The contention of the assessee is that the amended provisions have only been brought on the statue books w.e.f 1.07.2012 and the same cannot be invoked in the instant case and therefore, the AO lacks the necessary jurisdiction to refer the matter to the valuation officer.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli the adoption of a higher value for the cost of the asset as the fair market value as on 1st April, 1981, would lead to a lower amount of capital gains being offered for tax.

Accordingly, it is proposed to amend the provisions of section 55A of the Income-tax Act to enable the Assessing Officer to make a reference to the Valuation Officer where in his opinion the value declared by the assessee is at variance from the fair market value. Therefore, in case where the Assessing Officer is of the opinion that the value taken by the assessee as on 1-4-1981 is higher than the fair market value of the asset as on that date, the Assessing Officer would be enabled to make a reference to the Valuation Officer for determining the fair market value of the property. This amendment will take effect from 1st day of July, 2012.”

Therefore, the intent and purpose behind the amendment is to enable the Assessing officer to make a reference to the Valuation officer where he is of the opinion that the value adopted by the assessee as on 1-4-1981 is higher than the fair market value of the asset as on that date and in order to check whether the adoption of a higher value for the cost of the asset as the fair market value as on 1st April, 1981, has lead to a lower amount of capital gains being offered for tax. It is therefore an empowering provision wherein the Assessing officer has been given requisite power and authority w.e.f 1.07.2012 to refer the matter relating to valuation of a capital asset to the valuation officer. The question however remains in respect of which all transactions, the Assessing officer is empowered to make a reference to the valuation officer with effect from 1.07.2012.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli 17. In this regard, we refer to the decision of the Hon’ble Bombay High Court in case of CIT vs. Puja Prints [2014] 224 Taxman 22 (Bom) wherein it was held that the Parliament has not given retrospective effect to the amendment and the law to be applied is as existing during the period relevant to the Assessment Year 2006-07. The findings of the Hon’ble High Court are 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

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli 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 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 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 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.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli 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.”

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli 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 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

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli 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."

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli from 01.07.2012 i.e. by finance Act 2012 the transaction taken place in FY 2010-11 relevant to assessment year 2011-12 and the amended provision would not be applicable on this transaction.”

It is noted that the aforesaid decision of the Coordinate Bench has since been affirmed by the Hon’ble Gujarat High Court in Tax Appeal No. 1204 of 2018 dated 8.10.2018.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli 01.04.1981 at Rs.64,675/- and worked out the indexed cost of acquisition at Rs.3,76,409/-. The CIT(A) on the other hand, has relied on the ratio laid down by the Hon'ble Bombay High Court in CIT Vs. Puja Prints (supra). The dictate of the Hon'ble Bombay High Court is that 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 case the value adopted by the assessee of any property was more than the fair market value as determined by the DVO, then such invocation of provisions of section 55A(a) of the Act was held to be not justified. Reference was also made to the amendment to section 55A(a) of the Act in 2012, wherein for the words "is less than the fair market value" was substituted by the words "is at variance with its fair market value", was held to be clarificatory and it was categorically held that where the amendment was made effective only from 01.07.2012; the Parliament has not given retrospective effect to the amendment. The Hon'ble High Court thus, held that the law to be applied in the facts of the present case was the section as existing during the period' relevant to assessment year 2006-07.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli approved valuer. Accordingly, we uphold the order of CIT(A) and dismiss the grounds of appeal raised by the Revenue.”

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli the case laws relied upon by the assessee. In the instant case, assessee has declared the value for the cost of acquisition for the property at a higher value than the value determined by the DVO. The first technical issue arose before us is whether the reference made by the AO to the DVO for the valuation of the property is valid for the year under consideration. In this regard we note there was an amendment u/s 55A of the Act which was effective from 01.07.2012. Prior to the amendment u/s 55A of the Act, the provision of said section reads as under:- "[Reference to Valuation Officer. 55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the 60[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 assessee is in accordance with the estimate made by a registered valuer, if the 60[Assessing] Officer is of opinion that the value so claimed is less than its fair market value"

From the above provision we note that the Assessing Officer can refer the valuation of capital asset to a Valuation Officer in a case where the value claimed by the assessee based on the registered valuation report is less than its fair market value. However in the case before us there is no ambiguity that the fair market value as declared by assessee is not less

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli than the value determined by the DVO. Thus, the valuation determined by the DVO cannot be accepted as it is against the provision of Section 55A of the Act as applicable prior to the amendment.

However, there was amendment u/s 55A of the Act with effect from 01.07.2012 which reads as under:- [Reference to Valuation Officer. 55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter12, the 8°[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 assessee is in accordance with the estimate made by a registered valuer, if the 80[Assessing] Officer is of opinion that the value so claimedat variance with its fair market value];

There is no doubt that the amendment in section 55A of the Act was effective from 01.07.2012. Now, the issue arises whether amendment u/s 55A of the Act is applicable from the Assessment Year 2012-13 i.e. the year under consideration. It is well settled law that if the amendments are applicable from the first day of assessment year then it would be applicable from the relevant assessment year. For example if the amendment under the statute is brought 1.4.2009 then it would be applicable from the AY 2009-10.

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli Similarly if the amendments are brought on any date other than the 1st day of April then it would be applicable to the subsequent assessment year. For example if the amendment under the statute is brought 30.9.2009 then it would be applicable from the AY 2010-11. In holding so, we find support & guidance from the judgment of Hon'ble Supreme Court in the case of Karimtharuvi Tea Estate Ltd. Vs. State of Kerela reported in 60 ITR 262 where it was held as under: "10. Now, it is well-settled that the Income-tax Act, as it stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into, force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force."

From the above proposition of law, it is clear that the amendments which are being applicable from any date other than first April of assessment year would be applied from the next Assessment Year. For example, in the instant case, the amendment was brought with effect from 01.07.2012. Thus, the amendment would be applicable from the Assessment Year beginning from first April, 2013 i.e. Assessment Year 2013-14. Thus, it is clear that the amendment brought under the statutory provisions of Section 55A of the Act is not applicable in the year under consideration. As the value adopted by assessee is more than the fair market value then no reference to Valuation Officer would have been made as per the

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli provision of Section 55A(a) of the Act as it is administered at the relevant time. Once, we have reached to the conclusion no reference can be made to the DVO for the year under consideration in the given facts and circumstances. Thus on the same basis, the assessment order cannot be held as erroneous in so far as prejudicial to the interest of revenue. Keeping in view all these discussion, as also bearing in mind entirety of the case, we deem it fit and proper to uphold the grievance of the assessee and quash the impugned revision order as devoid of jurisdiction. The assessee gets the relief accordingly.” 23. As we have noted above, the Hon’ble Bombay High Court in case of CIT vs. Puja Prints (supra) has held that the Parliament has not given retrospective effect to the amendment and the law to be applied is as existing during the period relevant to the Assessment Year 2006-07. Similarly, the Hon’ble Gujarat High Court in case of CIT vs. Gauranginiben S. Shodhan Indl. (supra) has held that section 55A as it stood at the relevant time, has to be seen and emphasis was laid on the period of the transaction and where the transaction was for the period prior to 1.7.2012, amended provisions were held not applicable. Similarly, in case of Late Shantaben P Patel, Ahmedabad (supra), the Hon’ble Gujarat High Court has reiterated the legal position that for the transaction falling in financial year 2010-11 relevant to AY 2011-12, the matter is covered by the earlier decision in case of Gauranginiben S. Shodhan Indl. (supra). We therefore find that there is convergence of view as evident from these decisions of Hon’ble Bombay and Hon’ble Gujarat High Court that the amendment brought in by the Finance Act, 2012 in section 55A(a) has to be read prospectively and not retrospectively. Secondly, such amendment shall apply to transactions (subject matter of determination of capital gains) which are effected during the period starting on or after 1.07.2012. No contrary High

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli Court decision has been cited before us and in any case, the decision of the Hon’ble Gujarat High Court, being the jurisdictional High Court is binding on us. 24. Further, we find that the Coordinate Benches are also of the consistent view and having been following the legal proposition so laid down by the Hon’ble Bombay and Gujarat High Court. The Coordinate Bench in case of Sonali Roy (supra) drawing support from the decision of the Hon’ble Supreme Court in case of Karimtharuvi Tea Estate (supra) has further clarified that the amendments which are being applicable from any date other than first April of assessment year would be applied from the next Assessment Year. The amendment brought with effect from 01.07.2012 in section 55A would be applicable from the Assessment Year beginning from first April, 2013 i.e. Assessment Year 2013-14 and not applicable to Assessment Year 2012-13. 25. In light of above discussions, if the facts of the present case are examined, the transaction of sale of land has taken place during the financial year 2011- 12 relevant to Assessment year 2012-13, therefore, the amended provisions of section 55A(a) would not be applicable and one shall be guided by the erstwhile provisions of section 55A(a) of the Act. 26. In order to refer the matter to the valuation officer as per erstwhile provisions of section 55A(a), in the instant case, there is no dispute that the liability towards the capital gains has arisen during the year as the transfer of the land has happened during the year. There is also no dispute that cost of acquisition as substituted by the assessee with fair market value as on 1.4.1981 is based on and in accordance with the estimate made by the registered valuer. The third condition is that the Assessing Officer should form an opinion that the value so claimed by the assessee is less than its fair market value. Therefore, only in a scenario, the value so claimed by the assessee is

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli less than its fair market value in the opinion of the Assessing officer, the matter can be referred to the valuation officer. In a scenario, where the value so claimed by the assessee is more than its fair market value, the matter couldn’t be referred to the valuation officer. In the instant case, the value of the land shown by the assessee as on 1.4.1981 based on the registered valuer report is considered, it would reveal that the same was in fact even higher than the value subsequently determined by the valuation officer and therefore, the Assessing Officer was not empowered to refer the matter to the valuation officer even as per erstwhile provisions of section 55A(a) prior to amendment by the Finance Act, 2012. 27. Therefore, without going into the merits of the basis of valuation so adopted by the registered valuer and subsequently by the department’s valuation officer, in absence of a valid reference to the valuation officer, the addition so made under the head “long term capital gains” so far as it relates to cost of acquisition as substituted by fair market value as on 1.4.1981 is directed to be deleted. In the result, the appeal of the assessee is allowed. ITA No. 545/SRT/2018, 546/SRT/2018, 540/SRT/2018, 548/SRT/2018, 549/SRT/2018, 550/SRT/2018 & 551/SRT/2018 28. In all these appeals for AY 2012-13, both the parties fairly submitted that facts and circumstances of the case are exactly identical to facts and circumstances of the case as in ITA No. 544/SRT/2018 and similar contentions have been advanced by both the parties. We find that all these cases are of the co-owners of the same piece of land which has been transferred during the financial year 2011-12 wherein proportionate long term capital gains have been brought to tax in their respective hands in A.Y 2012-13 relying on the report of the DVO for determination of fair market value as on 1.4.1981 and such reference to DVO has been challenged by the respective assessees. Given the

ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli identical set of facts and circumstances of the case as in ITA No. 544/SRT/2018, our findings and directions contained therein shall apply mutatis mutandis to these appeals. In the result, all these matters are decided in favour of the respective assessees and against the Revenue.

In the result, appeals of the respective assessees are allowed.

Order pronounced in the Open Court on 26/06/2019.

Sd/- Sd/- (Sudhanshu Srivastava) (Vikram Singh Yadav) Accountant Member Judicial Member

Dated:- 26/06/2019 Copy of the order forwarded to: 1. The Appellant-Shri Jigneshkumar S. Modi (HUF), Surat Shri Vijaykumar Gamanlal Modi (HUF), Surat Shri Gamandbhai Nanubhai Modi (HUF), Surat Madhuben Dilipbhai Modi (HUF), Surat Shri Anilkumar Gamanlal Modi (HUF), Surat Shri Nikunjkumar D. Modi (HUF), Surat Shri Sanmukhlal Nanubhai Modi (HUF), Surat Shri Nitinkumar Gamanlal Modi (HUF), Surat N 2. The Respondent- ITO, Ward-1, Bardoli 3. CIT 4. CIT(A) 5. DR, ITAT, 6. Guard File {ITA No. 544-551/SRT/2018} By order, / / TRUE COPY / / Asst. Registrar