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Income Tax Appellate Tribunal, “C”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI, JM Shri Rajaram S.Wayale Smt. Nirmala R Wayale Shri Ravikant R Wayale Smt. Shalini S. Wayale Shri Sunil R. Wayale
4 & 4299&4250/Mum/2015 आदेश / O R D E R PER BENCH These are the appeals filed by the assessee against the order of CIT(A) for the assessment year 2004-2005 in the matter of order passed u/s.143(3) r.w.s.147 of the IT Act.
Common grievance of all the assessee pertains to validity of reference made by the AO to the DVO in the A.Y.2004-05, in respect of Fair Market Value as on 01/04/1981, alleged by the AO as higher than value adopted by assessee.
We have heard rival contentions and gone through the orders of the authorities below. In case of ITA No.4233-4237/Mum/2015, the facts are that these co-owners under 3 development agreements have transferred their respective rights in 3 parcels of land at village Gandhare, Taluka Kalyan to Mls. Madhav Construction & 2 others for the total consideration mentioned in the respective agreements. Each of the co-owner had specific share in the said land and long term capital gain has been accordingly offered to tax in the A.Y.2004-05 under consideration. In working of 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. 201- per sq. feet) by relying upon the valuation report of Registered Valuer, Shri. S.V. Ratnakar, in respect of the 3 parcels of land covered by the respective development agreements.
4. The Id. AO holding a belief that the FMV adopted by the assessee was higher than the actual value, referred the determination of FMV as on 5 & 4299&4250/Mum/2015 01.04.1981 to the DVO, Thane who valued the land @ Rs.5/- per sq. mtr. In appeal proceedings, the Hon. CIT (A) upheld the reference to the DVO made u/s 55A but allowed FMV of Rs. 301- per sq. mtr on the basis of certain non-comparable sale instances. The Hon. CIT(A) has relied upon sale instances of village Chikanghar, Kalyan not appreciating that the land under consideration was located at village Gandhare, Kalyan and the location and other factors were not comparable.
Before us assessee had disputed the validity of reference made by AO to the DVO. It was argued by learned AR that issue under consideration is squarely covered by the decision of Jurisdictional High Court in case of Puja Prints 360 ITR 697. Reliance was also placed on the decision of Pandurang G. Mhatre in ITA No.4226/Mum/2015 order of ITAT dated 10/08/2016, wherein under similar facts and circumstances, the Tribunal held that 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. 1st 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.
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.
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 6 & 4299&4250/Mum/2015 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 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.
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 :-
1. 1. CIT -Vs- Puja Prints, 360 ITR 697 (Bom) (2014) 2. CIT -Vs- Daulal Mohta HUF, ITA No. 1031 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 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 :-
7 & 4299&4250/Mum/2015 6. 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) 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 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 8 & 4299&4250/Mum/2015 the residuary clause provided in 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. 1st 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 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.