ALLO N DAVAR,MUMBAI vs. ITO WD 16(2)1, MUMBAI

order dated 29/09/2011 of the CIT (A)-28,Mumbai, the assessee has filed the present appeal.Assessee,an individual,filed a return of income on 22/03/200, declaring total income at Rs.6.2 lakhs.The Assessing Officer(AO)completed the assessment on 26/03/ 2004, u/s.143 (3) of the Act, determining her income at Rs. 36.10 lakhs. During the course of hearing before us,the Authorised Representative (AR) did not press grounds 1.2, 1.3 and 2. Hence,same stand dismissed as not pressed. 2.Before proceeding further we would like to narrate the brief history of the case.During the assessment proceedings,the AO found that the assessee,having one third share in a property,had sold it for a total consideration of Rs.7.41 crores,that after claiming the expenses of Rs. 2.74 lakhs on account of transfer the net consideration was taken at Rs. 7.38 crores she adopted the cost of property at value as on 01/04/1981 based on the valuation report of an architect at Rs. 28.11 lakhs,that after indexation the cost of purchase was taken at Rs. 1.14 crores,that the long-term capital gain (LTCG) was determined at Rs. 6.24 crores, that she had claimed exemption under section 54 of the Act on account of investment in a new flat for a total consideration of Rs. 6.12 crores, that accordingly she had shown a total capital gain of Rs. 3.71 crores (one third share of Rs. 11.15 lakhs). The matter travelled up to the Tribunal. Vide order dated 02/11/2006, it referred back matter to the file of the First Appellate Authority (FAA). He was directed to examine as to whether the AO had given cogent reasons for rejecting the valuation report submitted by the assessee and to verify the correctness of estimate of market value made by the AO as on 01/04/1981. He was allowed to refer to the

8377/M/11(01-02) Mrs. Aloo N. Davar ready reckoner published by the Architects Publishing Corporation of India. The assessee was also directed to provide certain details to the FAA. In pursuance of the directions of the Tribunal the FAA heard the case and considered the submissions made by the assessee. He held that the reviewer had given basis of adopting particular value and had duly followed the process of natural justice, that he had given opportunity to the approved valuer of the assessee to raise the objections against the proposed valuation, that he had dealt with the objections and had made it clear as to how he had arrived at the value. The FAA reproduced the various objections raised by the approved valuer of the assessee and the reply of the DVO and observed that the departmental valuer had determined the value of share of the assessee at Rs. 5.30 lakhs, as on 01/04/1981. He observed that the DVO had taken into account separate value for land and building, that while valuing the land he had considered the FSI available and FSI utilised as well as the unutilised FSI available, that he had valued the land after considering all these factors, that the AO had not considered the un-utilised FSI available with the assessee, that he had valued the property (land and building),that the DVO had taken into account the special features/exclusiveness of the property and had given 5% additional weightage for it while valuing the impugned property, that he had also considered the appreciated value of the building taking into account the fact that building was constructed in 1950, that the TPO had also taken the separate value for store and garage, that he had also taken into account of portion of the building under rent separately, that the AO had adopted wrong area for working out the value of the property,that the value adopted by him was not correct, that the reasons given by him to reject the valuation given by the approved valuer were not cogent, that the basis for rejection of report of the valuer was not properly reasoned out. Finally, he held that estimate given by the DVO in respect of the impugned property was reasonable and that same was based on proper logic and reasoning, that valuation even by the DVO was better than the valuation of the valuer. With regard to cost of the property of other two co-owners, he mentioned that their assessments were not subject to scrutiny, that whatever value was accepted by the assessee was accepted by the Department. Accordingly, he directed the AO to adopt the value given by DVO for competition of fair market value of the property.

3.During the course of hearing before us,the Authorised Representative (AR) argued that amendment to section 55A was effective from July,2012, that the value adopted in cases of two other co-owners should be adopted.He relied upon the cases of Pooja Prints (360ITR697)

8377/M/11(01-02) Mrs. Aloo N. Davar and Pradip Vora(154 ITD 118).The Departmental Representative(DR)supported the order of the FAA.

4.We have heard the rival submissions and perused the material before us. We find that the assessee had sold its one third share of the property during the year under consideration,that the AO had made a reference to the DVO,that the report was not received by the AO before completion of the assessment, that the AO made certain additions to the income of the assessee,that matter was restored back to the file of the FAA by the Tribunal, that the FAA after considering the relevant material held that value adopted by the reviewer was to be taken as fair market value. We have gone through the cases referred to by the assessee.In those cases it has been held that a reference could be made to the DVO only when the value adopted by the assessee was less than the fair market value and not more than the FMV. In the case under consideration the AO had not brought on record as to whether the value adopted by the assessee was less than FMV.The amendment to section 55A is applicable from July,2012, whereas we are dealing with the appeal for the assessment year 2001- 02. Therefore,respectfully following the judgment/order of the Hon’ble Bombay High Court/Tribunal,we decide the effective ground of appeal in favour of the assessee.