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Facts
The assessee along with other co-owners sold a piece of land. The dispute concerns the cost of acquisition, with the Assessing Officer referring the issue to the DVO. The DVO determined the cost at Rs.15 per square meter as of 01.04.1981. The assessee argued that in similar cases involving other co-owners, the CIT(A) and ITAT have ruled in favour of the assessee.
Held
The Tribunal held that the AO's reference to the DVO for determination of FMV as on 01.04.1981 was not valid, following the decision of the jurisdictional High Court and previous ITAT orders. The cost of acquisition claimed by the assessee, as per the registered valuer's report, should be accepted.
Key Issues
Whether the Assessing Officer's reference to the DVO for determining the fair market value for cost of acquisition was valid, considering the amendment to Section 55A of the Income Tax Act.
Sections Cited
55A, 143(3), 250
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)[NFAC] passed under section 250 of the Income Tax Act, 1961, dated 05.03.2025. Though ld.CIT(A) has mentioned A.Y.2010-11 in the heading, but in the body of the order A.Y.2011-12 is mentioned which is correct assessment year.
Submission of ld.AR : 2. Ld.AR for the Assessee filed a paper book containing 180 pages. Ld.AR submitted that Assessee along with other co-owners has sold piece of land. The only dispute is regarding cost of acquisition. The Assessing Officer referred the issue u/s.55A of the Act to the Departmental Valuation Officer(DVO) to arrive at the cost of acquisition. The Assistant Valuation Officer, Solapur passed an order u/s.55A of the Act and determined the cost of acquisition at Rs.15 per square metre as on 01.04.1981.The Assessing Officer adopted cost of acquisition at Rs.15 per sq.metre as on 01.04.1981. However, ld.AR further submitted that the other co-owner had also filed appeal before ld.CIT(A). One of the other Co-owner’s Appeal in the case of Asha Vinayak Patole was decided by ld.CIT(A) vide DIN & Order No.ITBA/APL/S/250/2020-21/102805324(1) vide order dated 24.09.2020 for A.Y.2011-12 in favour of assessee. Ld.AR for the Assessee took us through the order of ld.CIT(A). Similarly, ld.AR for the Assessee relied on one of the Co-owner’s Appeal in ITAT Pune’s order in in the case of Mr.Bharat Jalandar Patole, in favour of Assessee.
2.1 Ld.AR filed copy of the ITAT Pune order. Ld.AR for the Assessee also filed the copies of the orders of ld.CIT(A) allowing appeals in the case of other co-owners like : Asha Vs. Patole – CIT(A) Order A.Y.2011-12 Rajendra Sadashiv Patole – CIT(A) Order A.Y.2011-12 Rukmini Patole – CIT(A) Order A.Y.2011-12 dated 31.01.2020 Sachin Jaysing Patole – Appellate Order – 143(3) r.w.s. A.Y.2011-12 Shambhuraje Jaysing Patole – Appellate Order – 143(3) r.w.s. A.Y.2011-12 Tanaji Baburao Patole – Appellate order – 143(3) r.w.s. A.Y.2011-12 Bharat Patole –ITAT Order A.Y.2011-12 – 394-PUN- 2024 Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of the Assessing Officer(AO) and ld.CIT(A).
Findings & Analysis : 4. We have heard both the parties and perused the records. It is observed that Assessee entered into sale deed on 10.06.2010 with [A] other co-owners. The list of co-owners appearing in the said sale deed as under : o Vijay Jagdev Patole o Dhanshree Vijay Patole o Samruddhi Vijay Patole o Viswajit Vijay Patole o Prasanth Jagdev Patole o Smt.Sushila Jalandhar Patole o Tanaji Baburao Patole o Ranjan Tanaji Patole o Sadanand Tanaji Patole o Medha Jalandhar Indulkar o Smt. Rukmini Jayasingh Patole o Sambhiraje Jayasingh Patole o Rupmati Sambhuraje Patole o Sachin Jayasingh Patole o Varsh Sachin Patole o Vedanth Sachin Patole o Rajendra Sadashiv Patole o Sharada Rajendra Patole o Jnathuraj Rajendra Patole o Renu Rajendra Patole o Smt. Asha UrfChabuthayee Patole o Yogesh Vinayak Patole o Sachin Vinayak Patole o GuduMahoday Patole o Usha Gudu Patole o Hema Bhagwan Patole o Seesha Vikas Yadav o Madhukar Mahadev Patole o Kalpana Madhukar Patole o Pooja Madhukar Patole o Smt. Sangeetha Anil Patole o Atul Anil Patole o Kalyani Anil Patole o Khanderav Narayan Patole o Usha Khanderav Patole o Nagesh Khanderav Patole o Neelam Khanderav Patole o Chandrakanth Narayan Patole o Alka Chandrakanth Patole o Vasu Chandrakanth Patole o Karishma Chandrakanth Patole o Babaso Narayan Patole o Chaya Babaso Patole 4.1 It is observed that in the case of Asha Vinayak Patole for the A.Y.2011-12 Ld.CIT(A) vide order dated 24.09.2020 has held as under : I have also taken this view on identical facts in other cases, one such being in the case of Veena Joshi (Appeal No. CIT-2/10377/2018-19) vide order dated 09.09.2020 wherein it was held that the AO has no power u/s 55A as then prevailing, to refer the matter to DVO for determination of FMV as on 01.04 1981 bil 01.07.2012 le the date with effect from which Section 55A is amended. In the present case, the appellant has sold the lands on 03.06.2010 and on 10.06.2010 much before the amendment and hence the ratio of the above decisions squarely applies to the case of the appellant. Respectfully following the decision of the jurisdictional High Court, I hold that the AO's reference to the DVO for determination of FMV as on 01.04.1981 is not valid. The cost of acquisition as claimed by the appellant as per the report of the registered valuer needs to be accepted in this case. If computed so, there actually is long Term Capital Loss. However as I have dismissed ground 1, the entire amount of Rs 25,35,983 is the gross sale consideration in the hands of the appellant. After deducting the selling expenses of Rs 19,467, the net sale consideration is Rs 25,16,516. The cost of acquisition for the entire share of the appellant being the FMV as determined by the registered valuer is Rs 3,74,190 being @ Rs 290 per sqm for the appellant's share of 1288 sqm. After indexation there is a LTCL of Rs 1,43,975. This is as per the table in the submissions of the appellant. In the circumstances, the addition made by the AO is of Rs 23,79,151 is deleted & ground 2 is allowed.
4.2 Similarly, ITAT in the case Bharat Patole – vide ITAT Order dated 15.05.2024 for A.Y.2011-12 – held as under : “2. It emerges at the outset that the assessee's instant appeal raises first and foremost legal issue of applicability of Sec.55(a) amendment/substituted by way of Finance Act, 2012 w.e.f. 01.07.2012 that value of a capital asset claimed "is at variance with it's fair market value". It is in this statutory backdrop the assessee's instant appeal and pleadings herein make it evident that his registered valuer's report had claimed cost of acquisition as on 01.04.1981@ Rs.240/- per sq. feet as reduced by the DVO's valuation report to Rs.15/- per sq. metre. It is indeed very much relevant to pinpoint here that the earlier legislative expression used in sec.55A(a) would be applicable in case the FMV "is less than it's fair value" up to 01.07.2012 before the foregoing amendment. That being the case, this tribunal is of the considered view that both the learned lower authorities have erred in law and on facts in going by the DVO's report not having considered the earlier statutory provision in above terms. Case law Pooja Prints (2014) 360 ITR 697 (Bom.) has already settled the issue in assessee's favour and against the department that the foregoing statutory amendment does not carry any [A] retrospective effect. I accordingly accept the assessee's foregoing sole substantive ground in very terms. Ordered accordingly.”
Mr.Bharat Patole and Asha B. Patole are one of the co-owners of the impugned land wherein assessee is also one of the co-owners. In the case of Assessee, the Assessing Officer had made a reference u/s.55A of the Act to determine the cost of acquisition. Based on the DVO’s report, Assessing Officer calculated the cost of acquisition. Thus, the facts mentioned in the case of Bharat Patole and Asha B. Patole are identical. Therefore, respectfully following the judicial precedence, the Assessing Officer is directed to consider the cost of acquisition, shown by the assessee at Rs.24 per square metre, and calculate the capital gain as per provisions of law after providing benefit of indexation.