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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
This appeal by the assessee is arising out of the order of CIT(A)-I, Mumbai, in appeal No. 545/12-11 dated 18-07-2013. The Assessment was framed by ITO ward 3(4), Mumbai for the A.Y. 2006-07 vide order dated 28-12-2011 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’).
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO. In assessing long term capital gain for transfer of share in development rights of land, which has already been transferred on 11-11-1999 and further challenging the valuation of DVO adopting fair market value as on 01-04-1981. For this assessee has raised following grounds: - Nirmala Ravikant Wayale (A.Y:2006-07) “1A. The Hon. CIT (A) erred in confirming addition of Rs. 20,35,090/- as long term capital gains from transfer of share in development rights of land admeasuring 1110 sq...mtrs at survey no. 54(P) village Gandhare, Taluka Kalyan, Dist. Thane in there under appeal, not appreciating that such "transfer" had actually taken place by way of registered agreement dt. 11.11.1999 falling in asst. yr. 2000-01 and accordingly the long term capital gains arose in asst. yr. 2000-01 and not in asst. yr. 2006-07.
1B. The Hon. CIT (A) erred in confirming addition of 20,35,090/- as long term capital gains from transfer of share in development rights of land in the hands of the appellant on the basis of agreement recording subsequent transfer of such development rights by the purchaser/s, whereas the "transfer" by the appellant as per see. 2(47)(v) of the I.T. Act 1961 had already occurredj1.
Without prejudice, the Hon. CIT (A) erred in confirming the working of capital gains by adopting the F.M.V. of land as on 01.04.1981 at Z 6,000/- (0.50 paise per sq. feet) on the basis of tentative valuation report of Department Valuation Officer (DVO), Thane in place of 6,69,088/- claimed by the assessee (56/- per sq. feet).
3. The Hon. CIT (A) erred in relying upon the tentative valuation report of DVO, Thane for determining the F.M.V. as on 01.04.1981 not appreciating that the reference to the DVO by the Id Nirmala Ravikant Wayale (A.Y:2006-07) AO was not justified as per 55A of the I.T. Act 1961.”
At the outset, the learned counsel for the assessee stated that the issue is covered in favour of assessee in assessee’s own case for AY 2004-05 in vide order dated 09-01-2017, wherein Tribunal exactly identical issue was considered following Hon’ble Bombay High Court in the case of CIT vs. Puja Prints (2014) 360 ITR 697 (Bom) and observed as under: - “6. We had carefully gone through the order of the Tribunal. Precise observation was as under: -
3. The common grievance of the assesses in all the appeals pertains to addition made by the AO by disregarding the valuation made by the assessee on the basis of government approved valuer’s report as on 1-4-1981.
4. Rival contentions have been heard and record perused. Facts in brief are that all the above assesses are co-owners of land situated at Village Gandhara Taluka Kalyan. The above co-owners under development agreement dt. 19.03.2004 have transferred their respective rights in 3 parcels of land at village Gandhare, Taluka Kalyan to M/s.Madhav Construction for the total consideration of Rs. 2,35,00,000/-. While working out long term capital gains, the co- owners adopted the F.M.V. of land as on 01.04.1981 at Rs.200/- per sq. mtr (i.e. Rs. 20/- per sq. feet) by relying upon the valuation report of Registered Valuer. The Nirmala Ravikant Wayale (A.Y:2006-07) AO holding a belief that the FMV adopted by the assessee was higher than the actual value, referred the determination of FMV as on 01.040.1981 to the DVO, Thane, who valued the land @ Rs.5/- per sq. mtr. In appellate proceedings, the CIT (A) upheld the reference to the DVO made u/s 55A but allowed FMV of Rs. 30/- per sq. mtr on the basis of certain non-comparable sale instances.
5. Against the above order of CIT(A), the assesses are in further appeal before us.
6. It was contended by ld. AR that the assessment year in question is A.Y. 2004-05. The Id. AO prior to 01.07.2012 could not make a reference to the DVO u/s 55A when the value adopted by the assessee based on report of registered valuer was higher than FMV of land. Ld. AR placed reliance on the following decisions :-
CIT -Vs- Puja Prints, 360 ITR 697 (Bom) (2014) 2. CIT -Vs- Daulal Mohta HUF, of2008 dt. 22.09.2008 - Bombay High Court 3. ITA -Vs- Jyoti Construction Co., ITA No.2393/Muml2014 dt. 27.04.2016 - Hon. Members, "J" Bench, IT AT Mumbai 4. ITA - Vs- Rabinder H. Chhabra (HUF), ITA No.5511/Mum/2012 dt. 23.05.2014 - Hon. Members, "0" Bench, IT A T Mumbai 5. Hiaben Jayantilal Shah -Vs- ITA & Anr. 310 Nirmala Ravikant Wayale (A.Y:2006-07) ITR 31 (Guj) (2009) 6. The Finance Bill 2012, Bill No. 11 of2012.
7. On the other hand, ld. DR relied on the order of lower authorities and contended that the CIT(A) has relied on the sale instances of village Chikanghar, Kalyan, the land of the assessee was located at village Gandhare, Kalyan and the location and other factors were comparable.
8. I have considered rival contentions and carefully gone through the orders of authorities below. The issue under consideration is squarely covered by the decision of Hon’ble Bombay High Court in the case of Puja Prints, 360 ITR 697, wherein the Hon’ble High Court held as under :-
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)
Nirmala Ravikant Wayale (A.Y:2006-07) 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.3S.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 respondentassessee was higher than 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 Nirmala Ravikant Wayale (A.Y:2006-07) words "is less than 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 Nirmala Ravikant Wayale (A.Y:2006-07) 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.”
As the year under consideration is 2004-05 much prior to the amendment so brought in Section 55A(a) by 2012 Act w.e.f. 1 st July, 2012, we do not find any merit in the reference so made by the AO to the DVO when the fair market value offered by the assessee was more than the value determined by DVO.
We had also carefully gone through the order of the Bombay High Court in case of Puja Prints (supra), wherein the facts are exactly similar and reference so made by the AO was held to be invalid for the assessment year falling prior to the amendment so brought in by Finance Act 2012. Undisputedly, relevant assessment year under consideration is assessment year 2004-05, which is prior to the amendment brought in Section 55A(a) by Finance Act 2012 w.e.f. 01/07/2012.
Facts and circumstances in all the appeals before us are same, respectfully following the decision of Nirmala Ravikant Wayale (A.Y:2006-07) Bombay High Court, we do not find any merit for the reference so made by the AO to the DVO, when the value offered by assessee was more than the value determined by the AO in respect of assessment year falling prior to introduction of amendment brought in Section 55A(a) by Finance Act 2012 w.e.f. 1/7/2012.”
The facts and circumstances are exactly identical, respectfully following this Tribunal decision in assessee’s own case, wherein the same property sold and computation of long term capital gain was under dispute, we allow the appeal of the assessee partly.
In the result, the appeal of assessee is partly allowed.