The Tax Publishers2020 TaxPub(DT) 3174 (Pune-Trib)

INCOME TAX ACT, 1961

Section 55A

Where AO referred matter to DVO to verify the correctness of the value adopted by the Valuer's report as on 1-4-1981, action of AO was not in line with the provisions of section 55A as section implies that AO should be of considered opinion that value of asset claimed by assessee is less than its FMV and not for any verification purpose, thus, in light of the existing provisions of section 55A, relevant for assessment year under consideration, AO did not have the mandate to refer the matter for valuation of FMV as on 1-4-1981 to DVO under section 55A.

Capital gains - AO referred matter to DVO to verify correctness of value adopted by the Valuer's report as on 1-4-1981 - Action of AO, whether in line with then existing provisions of section 55A -

Revenue challenged order of CIT(A) deleting addition made by AO under head Long Term Capital Gain on sale of land on basis of the report received from DVO. Revenue contended that CIT(A) incorrectly held that AO did not have mandate to refer matter to DVO for fair market value, whereas reference made to DVO by AO was covered in sub-clause (ii) of clause (b) to section 55A. Therefore, according to revenue, AO was justified in referring matter to DVO for valuation of capital asset as on 1-4-1981 and adopting cost of acquisition as per report of DVO. Held: As per provisions of section 55A for relevant year, reference can be made by AO to Valuation Officer for ascertaining FMV of a capital asset where AO is of opinion that the value of the asset as claimed by the appellant, is less than its FMV. However, in instant case, AO referred matter to DVO to verify the correctness of the value adopted by the Valuer's report as on 1-4-1981. This was not in line with the provisions of section 55A as section implies that AO should be of considered opinion that value of asset claimed by assessee is less than its FMV and not for any verification purpose. In DVO's report, FMV as on 1-4-1981 was determined, which was much lower than the valuation of the Approved Valuer. Therefore, in light of the existing provisions of section 55A, relevant for assessment year under consideration, AO did not have the mandate to refer the matter for valuation of FMV as on 1-4-1981 to the DVO under section 55A.

REFERRED : CIT v. Puja Prints (2014) 360 ITR 697 (Bom) : 2014 TaxPub(DT) 1350 (Bom-HC), CIT v. Daulal Mohta (HUF) (2014) 360 ITR 680 (Bom) : 2014 TaxPub(DT) 543 (Bom-HC), Smt. Bhudevi Kishanrao Gorantyal v. ITO [ITA No.1036/PUN/2015 Assessment Year : 2008-09 , dt. 12-3-2019], Mrs. Anjali Bharat Kabra v. ITO (2016) 75 Taxmann.com 5 (Pune) : 2016 TaxPub(DT) 4680 (Pune-Trib). Arjun Dada Kharate v. Asstt. CIT [ITA No.185/PN/2016 And ITA No.186/PN/2016, dt. 19-8-2016].

FAVOUR : In assessee's favour.

A.Y. : 2009-10

IN THE ITAT, PUNE BENCH

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