AJIT CHAGANLAL SHAH,MUMBAI vs. THE INCOME TAX OFFICER, WARD -34(1)(1), MUMBAI CURRENT JURISDICTION WARD -42(2)(1) MUMBAI, MUMBAI

Rival submission of both the parties have been heard and record perused. The ld. AR of the assessee submits that a very short submissions on legal issue, involved in the present appeal. The assessee along with his two brothers namely Manharlal Chaganlal Shah and Ranjit Chaganlal Shah sold their ancestor property on 26.04.2011 for a sold consideration of Rs. 81.00 lacs. The share of assessee being 1/3rd is of Rs. 27.00 Lacs. Such property was acquired on 24.12.1928 Since, the property was acquired prior to 01.04.1981, the assessee obtained valuation of property on 01.04.1981 from Government registered valuer. Government registered valuer estimated the value of property as of Rs. 10,11,132/-, thereby value of share of assessee is at Rs. 3,37,044/-. On the basis of indexation the indexed cost of acquisition the value of assessees share is arrived at Rs. 26,45,795/-, thus, the net capital gain arrived is Rs. 54,205/-. During assessment, the AO adopted the value of property as on 24.12.1928 at Rs. 6999/- on the basis of report of DVO in case of co-owner namely Ranjitlal Shah. Since, transaction of sale took place prior to 01.07.2012. Therefore, AO was not legally authorised to make a reference to DVO as there is statutory bar to the valuation as on 01.04.1981 prior to A.Y 2013-14. The amendment in section 55A(a) is applicable with effect from 01.07.2012 wherein the word “ is less than” its fair market value was substituted “is at variance”. To support his submission the ld. AR of the assessee relied upon the decision of Jurisdictional High court in Pooja Print 360 ITR 697 (Bom) and Gujarat High Court in Gaurangiben 2 Ajit Chaganlal Shah Sodhan 108 DTR 442(Gujarat) and Ranjit Chaganlal Shah (Co-owner) in dated 15.07.2020.

On the other hand, ld. DR for the revenue supported the order of lower authorities.

I have considered the rival submission on both the parties and perused the orders of lower authorities carefully. I have also deliberated on various case law relied by Ld. AR of the assessee. There is no dispute that property which is the subject matter of sale was acquired prior to 1981. Thus, the AO has to consider the value of asset as on 01.04.1981. The assessee along with this co-owner sold the property 26.04.2011. The assessee and his two brothers have shown the sale consideration of Rs. 81.00 lacs. The assessee was having 1/3rd share in the property. During the assessment the matter was referred to DVO to assess to determine the cost of asset as on 01.04.1981. I find that Hon’ble Gujarat High Court in CIT Vs Gaurangiben S Shodhan (supra) and Hon’ble Bombay High Court in CIT Vs Pooja Prints (supra) held that when the transaction of the land taken place during the financial year 2011-12 relevant the assessment year 2012-13, 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. It was also held that in order to refer the matter to the valuation officer as per under erstwhile provisions of section 55A(a) of the Act would be applicable. Further, the AO should form an opinion that value so claimed by assessee is less than its Fair Market Value (FMV). Only in such a scenario, the value so claimed by assessee is less than its Fair Market Value in the opinion of AO, matter can Ajit Chaganlal Shah be referred to valuation officer. In a scenario, where the value so claimed by the assessee is more than its fair market value, the matter could not be referred to the valuation officer. It was ultimately held that the AO was not empowered to refer the matter to the valuation officer, even as per the erstwhile provisions of section 55A(a) prior to amendment by the Finance Act, 2012. Considering the decision of Hon'ble Gujarat High Court in CIT Vs. Gauranginiben S. Shodhan Ind.(supra) and Hon'ble Bombay High Court in CIT Vs. Puja Prints (supra) and respectfully following the same, I hold that reference made to the DVO by AO Officer for determination of Fair Market Value was not valid, so no reliance can be made on his report. Therefore, the addition based on such report of DVO, which is obtained in co-owners case, is not legally sustainable. Thus, the assessee succeeded on legal plea. No contrary facts or law is brought to my notice to take other view. In the result, the grounds of appeal