BHARAT HIMATLAL MEHTA,AHMEDABAD vs. ITO, WARD-5(3)(4), AHMEDABAD

PDF · subscribers
ITA 355/AHD/2019Status: DisposedITAT Ahmedabad09 November 2022AY 2014-154 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the DVO's report did not consider the commercial nature of the property. Therefore, the matter was remitted back to the Assessing Officer for proper adjudication, considering both the DVO's report and the assessee's registered valuer's report.

What were the facts?

The assessee sold a property and declared a long-term capital loss. The Assessing Officer referred the property's fair market value as of April 1, 1981, to the District Valuation Officer (DVO), who determined it to be Rs. 1,66,000/-. The assessee had claimed a higher value based on a registered valuer's report.

What were the issues?

The primary issue was the determination of the fair market value of the property as of April 1, 1981, for capital gains calculation. A secondary issue was the eligibility for exemption under Section 54F.

Which sections of the Income-tax Act were involved?

Section 55A,Section 54F

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: MS. SUCHITRA KAMBLE & SHRI WASEEM AHMED

For Appellant: Shri S. N. Divatia, Adv. & Shri
For Respondent: Shri V. K. Mangla, JCIT
Hearing: 01.11.2022Pronounced: 09.11.2022

This appeal is filed by the assessee against the order dated 28.12.2018 passed by the Ld. CIT(Appeals)-5, Ahmedabad for A.Y. 2014-15.

2.

The grounds of appeal

raised by the assessee read as under: “1.1 The order passed u/s.250 on 28-12-2018 for A.Y.2014-15 by CIT(A)

5. A’bad confirming the FMV as on 1-4-1981 at Rs. 1,66,000/- as per DVO as against value as per Regd Valuer at Rs.4,10,700/- is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the explanations furnished and the evidence produced by the appellant in respect of FMV as on 1-4-1981.

Bharat Himatlal Mehta vs. ITO Asst.Year –2014-15 - 2 - 2.1 The ld. CIT(A) has grievously erred in law and or on facts in confirming the FMV as on 1-4-1981 at Rs. 1,66,000/- as per DVO as against value as per Regd valuer at Rs.4,10,700/-. 2.2 That in the facts and circumstances of the case as well as n law, the ld. CIT(A) ought not to have confirming the FMV as on 1-4-1981 at Rs. 1,66,000/- as per DVO as against value as per Regd valuer at Rs.4,10,700/-. 2.3 The learned A.O. ought to have allowed exemption U/s 54F in respect of new Residential house property purchased which was not claimed due to long term capital loss declared in the return. It is therefore prayed that the LTCG be assessed as per Regd valuer’s report instead of DVO and addition may be deleted.”

3.

The assessee filed return of income on 05.08.2014 declaring total income of Rs. 31,340/-. The assessee derives income from dividend and interest. During the year under consideration the assessee has sold property at Rajpur-Hirpur, TP Scheme No.

4.

On sale of this property the Long Term Capital Loss (LTCL) was worked out at (-)Rs. 87,45,388/-. The assessee submitted the working of the land rate of Ahmedabad Stamp Duty city division-1 (ready reckoner). The Assessing Officer observed that the cast of property of Rs. 15,22,299/- determined by the assessee appeared to be very high for the year 1981-82 and therefore, the matter was referred to District Valuation Officer (DVO) to work out the cost of the property at Rs. 1,66,000/- as on 01.04.1981. The assessee claim indexation of Rs. 15,22,299/-. The Assessing Officer observed that the assessee did not produce any documentary evidence of the creation of the Banakhat and the repayment for the cancellation of the Banakhat. The Assessing Officer made addition of Rs. 51,90,000/- as Long Term Capital Gain (LTCG).

Bharat Himatlal Mehta vs. ITO Asst.Year –2014-15 - 3 - 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

5.

As regards, Ground No. 1.1 and 1.2 as well as 2.1 and 2.2 the Ld. A.R. submitted that the entire reference made under Section 55A(2)(b)(i) was illegal because Assessing Officer had not pointed out any reasons or justifying circumstances for making the reference to District Valuation Officer (DVO) and not accepting the ready reckoner rate. The Ld. A.R. further submitted that he has obtained a fresh valuation report dated 11.10.2017 who has estimated fair market value as on 01.04.1981 at Rs. 4,10,700/-. The registered valuer’s report submitted as additional evidence and remand report was called for, however, CIT(A) has not fully considered the objection of the assessee related to DVO. As regards, Ground No. 2.3 which is an alternative plea wherein the assessee should be allowed exemption under Section 54F of the Act in respect of new residential house property purchase which was not claimed due to Long Term Capital Loss declared in the return.

6.

The Ld. D.R. relied upon the assessment order and the order of the CIT(A).

7.

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the DVO’s report has not taken cognizance of the commercial property and therefore, the matter needs appropriate adjudication and verification, therefore, it will

Bharat Himatlal Mehta vs. ITO Asst.Year –2014-15 - 4 - be appropriate to remit back this issue to the file of the Assessing Officer for proper adjudication and taking cognizance of the DVO’s report along with registered valuer’s report. Needless to say the assessee be given opportunity of hearing by following principles of natural justice.

8.

In result, appeal of the assessee is partly allowed for statistical purposes.

This Order pronounced in Open Court on 09/11/2022

More judgments on Section 55A

All 409 judgments and leading authorities on Section 55A →

Recent GST High Court judgments

Search GST case law →