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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Shri Waseem Ahmed
आदेश/ORDER PER : MADHUMITA ROY, JUDICIAL MEMBER:-
The appeal filed by the assessee is directed against the order dated 30-05-2016 passed by ld. CIT(A), Gandhinagar, Ahmedabad for Assessment Year 2012-13.
The grounds of appeal raised by the assessee are as under:-
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“1. The learned CIT (A) has erred in law and on facts in confirming the assessment order passed by the Assessing Officer u/s. 143(3) of the Act.
The Ld. CIT (A) has erred by confirming the valuation adopted by the Ld. Assessing Officer as on 01. 1.04.1981 he further erred by mentioning in the Appellate Order that the value of land adopted by the registered valuer appointed by the appellant is without any basis just because he has not given any comparative sale instances. The Ld. CIT (A) has conveniently misstated the facts of the case of Nellore Straw Brothers relied upon by the appellant stating that the same are different from the case of the appellant. The Ld. CIT (A) further erred by not accepting the plea of reverse indexation method upheld by judicial precedent. Hence the fair market value as ascertained by the registered valuer is prayed for restoration. 3. The Ld. CIT (A) has erred in not allowing the cost of improvement as claimed by the appellant. The Ld. CIT (A) has wrongly differentiated the case of ITO v. Anilkumar 56 Taxmann.com 320 with the case of appellant even though it is held that the cost of improvement cannot be declined only for the want of evidence. He disregards the fact that for a property worth Rs.3 cr. Improvement cost of Rs. 9L is a meager amount and should not be denied. Thus the disallowance sustained by the Ld. CIT (A) suffers from legal infirmity. The same may kindly be deleted.
The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of appeal.”
The case made out by the assessee is this that the valuation of the property sold by the assessee during the year under consideration referred to the DVO by the Assessing Officer for determination of the valuation of the property as on 01-04-1981 was not in terms of the provision of section 55A of the Act. As such reference though made due to the amendment in section 55A(a) w.e.f. 01-07-2012 allowing reference for determination of fair market value of cost of land,
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such amendment is prospective in nature applicable from Assessment Year 2013-14 and in regard to the transaction entered into after 01-07-2012. Under these circumstances, the reference made u/s. 55A of the Act made by the ld. A.O. is not sustainable in the eyes of law and thus liable to be quashed, as the crux of the submission made by the A.R. In support of the case, he has relied upon a judgment passed by the ITAT Kolkata Bench in the case of Sonali Roy vs. PCIT in ITA No. 139/Kol/2007 dated 28-02-2018, a copy whereof has also been submitted before us by the ld. A.R. Such submission made by the Ld. A.R. has not been able to be controverted by the ld. D.R.
3.1 Keeping in view this particular facts and circumstances of the case before us, we have considered the judgment passed by the ITAT Kolkata Bench in the case of Sonali Roy (supra). We find that while dealing with this particular aspect of the matter, the Kolkata Bench has been pleased to observe as follows:- “4 Before us Ld. AR for the assessee submitted that Assessing Officer has passed assessment order after considering the valuation reported filed by assessee. There is no mentioned in the assessment order for making the reference to DVO for the determination of the value of the cost of suggestion declared by assessee. Therefore, no reference to the valuation report received subsequent to the assessment order should be referred for holding the order of AO as erroneous in so far as prejudicial to the interest of revenue. Ld. AR further stated that the AO has not pointed out any defect in the valuation report filed by the assessee. Therefore, the valuation report of DVO canned be accepted. The AO referred the matter to
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DVO vide letter dated 25.03.2015 whereas the assessment order passed by AO on the same date 16. 25.03.2015.
Ld. AR also submitted that the amendment u/s 66A of the Act for referring the matter to the DVO was not applicable to the year under consideration. On the other hand Ld. DR submitted that the AO was not agreed to the valuation report filed by the assessee therefore the same was referred to DVO. The report obtained from DVO is part of assessment records. Therefore the reference made by Ld. Pr. CIT u/s 263 of the Act is within the provision of law. He vehemently relied on the order of Ld. Pr. CIT.
We have heard the rival contentions of both the parties and also gone through the orders of the lower authorities and the case laws relied upon by the assessee. In the instant case, assessee has declared the value for the cost of acquisition for the property at a higher value than the value determined by the DVO.
The first technical issue arose before us is whether the reference made by the AO to the DVO for the valuation of the property is valid for the year under consideration. In this regard we note there was an amendment u/s 55A of the Act which was effective from 01.07.2012. Prior to the amendment u/s 55A of the Act, the provision of said section reads as under-
Reference to Valuation Officer.
55A. With a view to ascertaining the fair market value of a capital asset for the purpose of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer-
(a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is less than its fair market value”
From the above provision we note that the Assessing Officer can refer the valuation of capital asset to a Valuation Officer in a case where the value claimed by the assessee based on the registered valuation report is less than its fair market value. However in the case before us there is no ambiguity that the fair market value as declared by assessee is not less than the value determined by the DVO. Thus, the valuation determined by the DVO cannot be
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accepted as it is against the provision of Section 55A of the Act as applicable prior to the amendment.
However, there was amendment u/s 55A of the Act with effect from 01.07.2012 which reads as under:-
Reference to Valuation Officer.
55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the [Assessing] Officer may refer the valuation of capital asset to a Valuation Officer-
(a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the [Assessing] Officer is of opinion that the value so claimed [is at variance with its fair market value);
There is no doubt that the amendment in section 55A of the Act was effective from 01.07.2012. Now, the issue arises whether amendment u/s 55A of the Act is applicable from the Assessment Year 2012-13 i.e. the year under consideration. It is well settled law that if the amendments are applicable from the first day of assessment year then it would be applicable from the relevant assessment year
For example if the amendment under the statute is brought 1.4.2009 then would be applicable from the AY 2009-10
Similarly if the amendments are brought on any date other than the 1 day of April then it would be applicable to the subsequent assessment year.
For example if the amendment under the statute is brought 30.9.2009 then it would be applicable from the AY 2010-11.
In holding so, we find support & guidance from the judgment of Hon'ble Supreme Court in the case of Karimthruvi Tea Estate Vs. State of Karela reported in 60 ITR 262 where it was hold as urshor
"10 Now, it is well settled that the Income Tax Act as stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into force after the first day of April of a
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financial year, would not apply the assessment by that year, even if the assessment is actually made after the amendments come into force.”
From the above proposition of law, it is clear that the amendments which are being applicable from any date other than first April of assessment year would be applied from the next Assessment Year. For example, in the instant case, the amendment was brought with effect from 01.07.2012. Thus, the amendment would be applicable from the Assessment Year beginning from first April, 2013 i.e. Assessment Year 2013-14. Thus, it is clear that the amendment brought under the statutory provisions of Section 55A of the Act is not applicable in the year under consideration. As the value adopted by assessee is more than the fair market value then no reference to Valuation Officer would have been made as per the provision of Section 55A(a) of the Act as it is administered at the relevant time. Once, we have reached to the conclusion no reference can be made to the DVD for the year under consideration in the given facts and circumstances. Thus on the same basis, the assessment order cannot be held as erroneous in so far as prejudicial to the interest of revenue. Keeping in view all these discussion, as also bearing in mind entirety of the case, we deem it fit and proper to uphold the grievance of the assessee and quash the impugned revision order as devoid of jurisdiction. The assessee gets the relief accordingly. 6. In the result, assessee's appeal stands allowed.”
3.2 From the above, it appears that the Bench on identical facts of the matter observed that the amendment brought w.e.f. 01-07-2012 would be applicable from Assessment Year 2013-14 and therefore the submission made by the ld. A.R. that such reference cannot be made u/s. 55A of the Act for the year under consideration i.e. Assessment Year 2012-13 is found to be acceptable. Therefore, having regard to the facts and circumstances of the case, the argument advanced by the ld. senior counsel on the merit of the matter and the order passed by the Kolkata Bench, we do not hesitate to hold that
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the reference made by the ld. A.R. in the instant case u/s. 55A of the Act is not found to be sustainable in view of the amendment in section 55A(a) w.e.f. 01-07-2022 applicable from Assessment Year 2013-14 and not to the instant case for Assessment Year 2012-13. With these observations, we, therefore, delete the addition made by the authorities below.
In the result, the appeal of the assessee is therefore allowed.
Order pronounced in the open court on 15-03-2024
Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 15/03/2024 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद