Hindustan Earthmovers Pvt.Ltd., Baroda V. The Dy.CIT.,Circle-5, Baroda

ITA 1334/AHD/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8998 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-02-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 24-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: P M MEHTA
• Keywords: Fair market value; Difference of opinion; Valuation report; Change of opinion
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NOS. 1333 & 1334/AHD./2009 ASSESSMENT YEARS : 2000-2001 & 2004-2005 HINDUSTAN EARTHMOVERS PVT. LTD., BARODA -VS.- DEPUTY COMMISSIONER OF INCOME TAX, (PAN : AAACH 8593 A) CIRCLE-5, BARODA (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI P.M. MEHTA RESPONDENT BY : SHRI C.K. MISHRA, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THESE APPEALS BEING ITA NOS. 1333 & 1334/AHD./2009 FILED BY THE ASSESSEE ARE AGAINST THE ORDER BOTH DATED 24.03.2009 OF LEARNED COMMISSI ONER OF INCOME TAX(APPEALS)-V, BARODA FOR THE ASSESSMENT YEARS 2000-01 AND 2004-05 RESPEC TIVELY ON THE FOLLOWING COMMON GROUNDS :- I.T.A. NO. 1333/AHD/2009 (A.Y. 2000-2001) 1. THE LD. C.I.T.(A)-V, BARODA HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THAT THE AO IS HOLDING JURISDICTION U/S. 55A OF THE ACT TO REFER THE MATTER OF VALUATION OF COST AS ON 1/4/1981 TO THE DEPARTMENTAL VALUER IN V IEW OF THE GUJARAT HIGH COURT DECISION IN THE CASE OF M.V. SHAH, OFFICIAL LIQUIDA TOR, ANANT MILLS VS. U.J. MATAIN REPORTED IN 209 ITR 568. THE COST OF THE LAND BEING FMV AS PER THE ESTIMATE MADE BY THE REGISTERED VALUER RS. 23/- PER SQ.FT. IS NOT LESS THEN RS, 19/- PER S Q,FT. AS PER THE OPINION OF THE LD. AO, THE CASE OF THE APPELLANT IS THEREFORE NOT COVE RED BY THE PROVISIONS OF SECTION 55A OF THE ACT, THE REFERENCE MADE TO THE DVO IS TH EREFORE INVALID. 2. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THAT THE AO IS HOLDING JURISDICTION TO ISSUE THE NOTICE U/S. 143 O F THE ACT DT. 10/2/2006 INITIATING PROCEEDINGS U/S 147 OF THE ACT ON THE BASIS OF THE VALUATION REPORT OF THE DVO U/S. 55A OF THE ACT DT. 18/12/2005 WHICH HAS BEEN CLAIME D AS INVALID REFERENCE IN GROUNDS OF APPEAL NO. 1. THE FMV OF THE LAND AS ON 1/4/81 WAS RS. 23/- PER S Q,FT. AS PER REPORT OF THE REGISTERED VALUER DT. 5/4/2000 FILED WITH THE RETUR N OF INCOME. THE REPORT OF THE DVO ESTIMATING FMV OF THE LAND AS ON 1/4/81 RS. 19/ - PER SQ. FT. IS DT.18/12/05. THE VIEW OF THE DVO AS REGARDS FMV OF THE LAND RS. 19/- PER SQ.FT. AS ON 1/4/81 BECOMES THEREFORE THE CHANGE OF OPINION. 2 ITA NO. 1333-1334/AHD/2 009 3. THE LD, CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THAT THE FAIR MARKET VALUE OF LAND AS ON 1/4/1981 IS RS. 19/- INS TEAD OF RS. 23/- AS PER REPORT OF THE REGISTERED VALUER FOR THE PURPOSE OF COMPUTATIO N OF LONG TERM CAPITAL GAIN. THE FINDING OF THE LD. CIT(A) IS WITHOUT ANY BASIS AND IS BASED ON COMPARISON OF UNRELATED TRANSACTIONS AND THUS, THE FINDING OF THE LD. C1T(A) BEING IRRELEVANT FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAI N, HE BE DIRECTED TO HOLD THE LONG TERM CAPITAL GAIN AT RS, 1,90,491/- AS AGAINST RS.9,89,228/- DETERMINED BY THE LD. AO. I.T.A. NO. 1334/AHD/2009 (A.Y. 2004-2005) 1. THE LD. CIT(A)-V, BARODA HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THAT THE AO IS HOLDING JURISDICTION U/S. 55A OF THE ACT TO R EFER THE MATTER OF VALUATION OF COST AS ON 1/4/1981 TO THE DEPARTMENTAL VALUER IN V IEW OF THE GUJARAT HIGH COURT DECISION IN THE CASE OF M,V, SHAH, OFFICIAL LIQUIDA TOR, ANANT MILLS VS. U. J. MATAIN REPORTED IN 209 TTR 568. THE COST OF THE LAND BEING FMV AS PER THE ESTIMATE MADE BY THE REGISTERED VALUER RS. 23/- PER SQ.FT. IS NOT LESS THEN RS. 19/- PER S Q.FT AS PER THE OPINION OF THE LD. AO. THE CASE OF THE APPELLANT IS THEREFORE NOT COVE RED BY THE PROVISIONS OF SECTION 55A OF THE ACT. THE REFERENCE MADE TO THE DVO IS TH EREFORE INVALID. 2. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS I N CONFIRMING THAT THE FAIR MARKET VALUE OF LAND AS ON 1/4/1981 IS RS. 19/- INSTEAD OF RS. 23/- AS PER REPORT OF THE REGISTERED VALUER FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN. THE FINDING OF THE LD. CIT(A) IS WITHOUT ANY BASIS AND IS BASED ON COMPARISON OF UNRELATED TRANSACTIONS AND THUS, THE FINDING OF THE LD. CIT(A) BEING IRRELEVANT FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAI N, HE BE DIRECTED TO HOLD THE LONG TERM CAPITAL GAIN AT RS. 2,56,440/- AS AGAINST RS.13,31,704/- DETERMINED BY THE LD. AO. 2. WE HAVE HEARD BOTH THE SIDES. THE CONTROVERSIES INVOLVED IN BOTH THE APPEALS ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION DATED 06. 11.2009 OF THE HON'BLE ITAT, C BENCH, AHMEDABAD IN ASSESSEES OWN CASE IN ITA NOS. 1744 & 2694/AHD/2005 AND 436/AHD/2007 FOR THE ASSESSMENT YEARS 2001-02 TO 2003-04 RESPECTIVEL Y, WHEREIN THE HON'BLE ITAT HAS HELD IN PARA 8 TO 14 AS UNDER :- 8. WE NOTICED THAT ID. CIT(A) IN THE IMPUGNED ORDER HAD DIRECTED THE AO TO REFER THE PROPERTY TO THE DVO UNDER SECTION 55A ON THE BA SIS OF DECISION OF ITAT, AHMEDABAD IN THE CASE OF RAMABEN M PATEL (SUPRA), O BTAINED REMAND REPORT FROM HIM ON THE BASIS OF THE DVO, THEREFORE, THE ID . AR IS JUSTIFIED IN RAISING ADDITIONAL GROUND AS TO THE POWER OF ID. CIT(A) IN DIRECTING THE AO TO MAKE REFERENCE TO DVO. THE DECISION OF THE TRIBUNAL IN R AMABEN M PATEL (SUPRA) IS NO LONGER A GOOD LAW IN THE VIEW OF THE SUBSEQUENT DEV ELOPMENT IN THIS FIELD. THE LEAD AUTHORITY IS THE DECISION OF HON'BLE GUJARAT HIGH C OURT IN THE CASE OF HIABEN JAYANTILAL SHAH VS, ITO (SUPRA) WHEREIN THE FACTS W ERE SIMILAR, A REFERENCE WAS 3 ITA NO. 1333-1334/AHD/2 009 MADE TO DVO TO DETERMINE THE FAIR MARKET VALUE OF T HE PROPERTY AS ON 1,4.1981. IT WAS HELD BY THE HON'BLE HIGH COURT THAT REFERENCE U NDER SECTION 55A COULD BE MADE BY THE AO UNDER TWO CIRCUMSTANCES DESCRIBED IN CLAUSE (A) AND CLAUSE (B) THEREOF. FOR THE SAKE OF CONVENIENCE WE REFER TO SE CTION 55A AS UNDER:- 9. THE REQUIREMENT TO DETERMINE THE FAIR MARKET VAL UE OF THE ASSET AS ON 1,4.81 IS FOR THE PURPOSE OF SECTION 48 AND 49 UNDER CLAUSE ( A) OF SECTION 55A. A REFERENCE TO THE D.V,O. CAN BE MADE IF AO IS OF THE OPINION T HAT VALUE CLAIMED BY THE ASSESSEE AS PER ESTIMATE MADE BY THE REGISTERED VAL UER IS LESS THAN ITS FAIR MARKET VALUE. AS PER CLAUSE (B) A REFERENCE CAN BE MADE TO DVO IF FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY SUCH PERCENTAGE AS PRESCRIBED IN THIS BEHALF AND ALSO AS PER SUB-CLAUSE (II) IT CAN BE REFERRED HAVING REGARD TO THE NATURE OF THE ASSET A ND OTHER RELEVANT CIRCUMSTANCES. THE HON'BLE GUJARAT HIGH COURT UNDER THESE CIRCUMSTANCES HAS HELD AS UNDER ;- '11. AS CAN BE SEEN FROM THE COMMUNICATION DATED NIL (ANNEXURE D) FROM RESPONDENT NO. 2-DVO TO THE PETITIONER INSOFAR AS THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.81 IS CONCERNED, TH E PETITIONER HAD CLAIMED THE SAME AT A SUM OF RS.6,25,000/- AS PER T HE REGISTERED VALUER'S REPORT. THEREFORE, THE AO WAS REQUIRED TO FORM AN OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MAR KET VALUE. THE ESTIMATED VALUE PROPOSED BY THE DVO IS SHOWN AT RS. 3,97,000/- WHICH IS LESS THAN THE FAIR MARKET VALUE .SHOWN BY THE AS SESSEE SO ON 1.4.81. THEREFORE, CLAUSE (A) OF SECTION 55A OF THE ACT CAN NOT BE MADE APPLICABLE. CLAUSE (B) OF SECTION 55A OF THE ACT CA N BE INVOKED ONLY IN ANY OTHER CASE, NAMELY, WHEN THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS NOT SUPPORTED BY AN ESTIMATE MADE BY A REGISTERED VALUER. IN THE FACTS OF THE PRESENT CASE CLAUSE (B) OF SECT ION 55A OF THE ACT ALSO CANNOT BE INVOKED. THEREFORE THERE IS NO QUESTION O F HAVING RECOURSE TO SUB-CLAUSE (II) OF CLAUSE (B) OF SECTION 55A OF THE ACT. 12. THERE IS ONE MORE ASPECT OF THE MATTER. FOR INV OKING SECTION 55A OF THE ACT, THERE HAS TO BE A CLAIM MADE BY THE ASSESSEE, BEFORE THE AO CAN RECORD OPINION EITHER UNDER CLAUSE (A) OR CLAUSE (B) OF SE CTION 55A OF THE ACT TO MAKE A REFERENCE TO THE VALUATION OFFICER, THE FACT S OF THE PRESENT CASE GO TO SHOW THAT THE REFERENCE WAS MADE ON 26.4.1996, W HEREAS THE RETURN OF INCOME HAD BEEN FILED BY THE ASSESSEE ONLY ON 27.8. 1996. HENCE ON THE DATE OF MAKING THE REFERENCE BY THE AO NO CLAIM WAS MADE BY THE ASSESSEE AND THE AO COULD NOT HAVE FORMED ANY OPINION AS TO EXIS TENCE OF PRESCRIBED DIFFERENCE BETWEEN THE VALUE OF THE ASSET AS CLAIME D BY THE ASSESSEE AND THE FAIR MARKET VALUE. THEREFORE ALSO, THE PROVISIONS O F SECTION 55A OF THE ACT COULD NOT HAVE BEEN RESORTED TO BY THE ASSESSING OF FICER.' 10. THUS PROVISION OF SECTION 55A(A) PROVIDES REFER ENCE TO DVO ONLY IF AO IS OF THE OPINION THAT THE FMV AND THE ESTIMATED VALUE BY THE REGISTERED VALUER IS LESS THAN FMV AS ESTIMATED BY THE AO. THE AO IN THE INST ANT CASE COULD NOT HAVE FORMED SUCH OPINION BECAUSE THE ESTIMATION OF FMV M ADE BY THE REGISTERED VALUER AS ON 1.4.81 WAS HIGHER, I.E. RS.23/-PER SFT. THAN ITS ACTUAL FMV ESTIMATED BY THE AO AT RS.10/- PER SFT. A REFERENCE UNDER SECTION 55 A CLAUSE (B) AND SUB-CLAUSE (IF) 4 ITA NO. 1333-1334/AHD/2 009 CAN BE MADE BY THE AO IF HE. IS OF THE OPINION HAVI NG REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES THAT IT IS N ECESSARY TO DO SO. IT IS OBLIGATORY ON THE PART OF THE AO TO RECORD SUCH OTH ER RELEVANT CIRCUIT STANCES WHICH COULD BECOME BASIS FOR FORMING SUCH AN OPINIO N BEFORE HE MAKES REFERENCE TO THE VALUATION CELL. THE REVENUE HAS NOT SHOWN AS TO WHY REFERENCE HAS BEEN MADE UNDER SECTION 55A(A) OR UNDER SECTION 55A(B)(I I). IN MS, RBAB M. KAZERANI VS. JCIT (2004) 91 ITD 429 (MUM) (TM), THE THIRD ME MBER HELD THAT NEITHER THE AO NOR THE CIT(A) CAN ASSUME POWER TO GIVE SUCH A D IRECTION WHERE VALUE OF THE PROPERTY IS ESTIMATED BY THE APPROVED VALUER. IT IS FURTHER HELD THAT CLAUSE (B) WOULD BE APPLICABLE ONLY IN ANY OTHER CASE I.E, IN A CASE WHERE COST IS NOT ESTIMATED BY REGISTERED VALUER. THUS WHERE NO VALUE R'S REPORT IS GIVEN BY THE ASSESSEE ONLY THEN AO CAN INVOKE HIS POWER UNDER SE CTION 55A(B) AND FURTHER WHEN CONDITION LAID DOWN IN THAT SUB SECTION ARE SA TISFIED. IN THE PRESENT CASE SINCE REGISTERED VALUER HAS SUBMITTED HIS REPORT TH EN ONLY CLAUSE (A) WOULD BE APPLICABLE. HENCE THIS CONDITION LAID DOWN IN THAT SUB- SECTION ARE NOT SATISFIED I.E. FMV AS ESTIMATED BY REGISTERED VALUER IS NOT L ESS THAN FMV AS ESTIMATED BY THE AO. THE REFERENCE TO THE DVO WOULD BE INVALID. 11. THUS IN THE PRESENT CASE NEITHER THE CONDITION LAID DOWN IN CLAUSE (A) NOR IN (B) OR IN SUB-CLAUSE (II) ARE SATISFIED. THEREFORE, LD. CIT(A) COULD NOT HAVE DIRECTED TO MAKE SUCH A REFERENCE. 12. SIMILAR VIEW HAS BEEN GIVEN BY SEVERAL BENCHES OF THE TRIBUNAL AS UNDER:- (1) SMT KRISHNABAI TINGRE (2006) 101 ITD 317 (PUNE) (2) SAJJANKUMAR M, HARLALKA VS, JCIT (2006) 100 ITD 418 (MUM) 13. SO FAR THE MERIT OF THE REPORT AND ADDITION IS CONCERNED, IN OUR VIEW, THE SAME IS NO LONGER REQUIRED TO BE ADJUDICATED BECAUSE REF ERENCE AS SUCH IS INVALID. 14. AS A RESULT ALL THESE APPEALS FILED BY THE ASSE SSEE ARE ALLOWED. 3. THE FACTS AND CIRCUMSTANCES INVOLVED IN BOTH THE APPEALS ARE SIMILAR WITH THE FACTS IN ITA NOS. 1744 & 2694/AHD/2005 AND 436/AHD/2007 FOR THE ASSESSMENT YEARS 2001-02 TO 2003-04 RESPECTIVELY (SUPRA). WE RESPECTFULLY FOLLOWING THE SAME ALLOW THE GROUNDS IN BOTH THE APPEALS RAISED BY THE ASSESSEE. 4. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 12.02.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 / 02 / 2010 5 ITA NO. 1333-1334/AHD/2 009 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER LAHA/SR.P.S. DEPUTY REGISTRAR, ITAT, AHMEDA BAD