The DCIT, Circle-2, Ahmedabad V. Sangita Chandrakant Patel, Ahmedabad

ITA 3132/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6897 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONS AHMEDABAD ITA NOS
• Assessee Lawyers: A C SHAH A R SHRI K MADHUSUDAN
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 45(2); 50C; 56(2); 37; 56; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER APPEAL(S) BY SL. NO(S). ITA NO(S) ASSTT. YEAR(S) APPELLANT (S) RESPONDENT(S) 1. 3139/AHD/2009 2006-07 ITO WARD-2(4) AHMEDABAD SHRI CHANDRAKANT R.PATEL C/O.R.M.PATEL & SONS 1477, NAVA MADHUPURA AHMEDABAD PAN : AASPP 6047J 2. 3132/AHD/2009 2006-07 DCIT CIR-2 AHMEDABAD SANGITA CHANDRAKANT PATEL C/O.R.M.PATEL & SONS AHMEDABAD PAN AASPP6066D 3. 3133/AHD/2009 2006-07 DCIT CIR-2 AHMEDABAD VISHAL VINUBHAI PATEL C/O.R.M.PATEL & SONS AHMEDABAD PAN AFJPP3832 R 4. 3134/AHD/2009 2006-07 DCIT CIR-2 AHMEDABAD GIRISHBHAI R.PATEL C/O.R.M.PATEL & SONS AHMEDABAD PAN : AAVPP 9060C 5. 3135/AHD/2009 2006-07 DCIT CIR-2 AHMEDABAD GEETABEN VINUBHAI PATEL C/O.R.M.PATEL & SONS AHMEDABAD PAN : AASPP6065A 6. 3136/AHD/2009 2006-07 DCIT CIR-2 AHMEDABAD FENIL VINUBHAI PATEL C/O.R.M. PATEL & SONS AHMEDABAD PAN : AIUPP3973F 7. 3137/AHD/2009 2006-07 DCIT CIR-2 AHMEDABAD VINUBHAI RAN CHHODBHAI PATEL C/O.R.M.PATEL & SONS AHMEDABAD ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 2 - PAN : AASPP6044M 8. 3138/AHD/2009 2006-07 DCIT CIR-2 AHMEDABAD KAILASHBEN G.PATEL C/O.R.M.PATEL & SONS AHMEDABAD AAVPP9127 A PAN : AAVPP9127A ASSESSEE(S) BY : SHRI A.C. SHAH, A.R. REVENUE BY : SHRI K.MADHUSUDAN, SR. D.R. O R D E R PER BENCH : IN ALL THERE ARE 8 APPEALS OF THE REVENUE ARISING F ROM THE ORDERS OF CIT(A)-VII, AHMEDABAD ALL IDENTICALLY DAT ED 23-09-2009. SINCE THE RESPONDENT ASSESSEES ARE THE CO-OWNERS OF THE PROPE RTY IN QUESTION THEREFORE, THE FACTS ARE SIMILAR HENCE TO BE DECIDE D BY THIS COMMON ORDER. PARTIES APPEARING BEFORE US HAV E INFORMED THAT THE CASE OF SHRI CHANDRAKANT R. PATEL IS THE LEAD C ASE THEREFORE, WE SHALL DISCUSS THE FACTS OF THIS CASE WHICH SHALL IPSO-FACTO APPLY IN ALL OTHER CASES; GROUNDS RAISED ARE AS UNDER:- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN HO LDING THAT SECTION 55A IS APPLICABLE ONLY IN CASES COVERE D BY SUB-SECTION 45(1A), 45(2) AND 45(A) OF THE I.T. ACT ., SECTION 55A(B) EMPOWERS ASSESSING OFFICER TO REFER ANY OTHER CASE IF HE IS OF THE OPINION THAT FAIR MARKE T VALUE OF ASSETS EXCEEDS THE VALUE SHOWN HAVING REGARDS TO THE FACT AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT(A) ERRED IN LAW IN NOT DISPOSING THE APPEAL ON FACTS AND MERITS OF THE CASE BY QUESTIONING THE REFERENCE MADE TO THE DVO U/S.55A OF THE I.T. ACT. ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 3 - 3. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.62,34,459/- MADE BY THE ASSESSING OFFICER. A. FACTS IN BRIEF 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT W AS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD SHOWN L ONG TERM CAPITAL GAIN ON SALE OF LAND SITUATED AT VEJALPUR. IN RESP ECT OF THE TWO PLOTS BEARING NUMBERS 181/1 & 161/1 SITUATED AT T. P. SCH EME, VEJALPUR THERE WAS A COMMON SALE DEED EXECUTED ALONG WITH OT HER CO-OWNERS. ASSESSEES SHARE IN THE SALE PRICE WAS AT RS.10,47, 19,391/- AND THE CAPITAL GAIN WAS SHOWN AT RS.10,32,32,367/-. THE A. O. HAS OBSERVED CONSIDERING THE AREA OF PROPERTY ETC., THE SAME WA S REFERRED TO THE DEPARTMENTAL VALUATION UNIT I.E. DVO. A VALUATION REPORT WAS OBTAINED DATED 26-12-2008 ACCORDING TO WHICH TH E VALUATION WAS MADE AT RS. 66,13,74,000/-. AS AGAINST THAT THE TOTAL CONSIDERATION IN RESPECT OF BOTH THE PLOTS AS SHOWN BY THE ASSESSEE WAS AT RS.61,52,16,350/-. A COPY OF THE VALUATION REPORT WAS FORWARDED TO THE ASSESSEE ALONG WITH THE SHOW CAUSE NOTICE SUGGESTING TO RE-COMPUTE THE LONG TERM CAPITAL GAIN ACCORDINGLY. ASSESSEE HAS FURNISHED CERTAIN SUBMISSIONS AS PRODU CED BY THE A.O. AS UNDER :- 1. THE VALUATION OFFICER HAD CITED ON 18/10/2004 B EFORE 13 MONTHS WHICH WAS VALUED AT RS.22800/-. THIS MEANS AFTER 13 MONTHS THE RATE PER METER COULD NEVER BE INCREASED FROM RS.22,800 TO RS.45,000/-. ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 4 - 2. THE ASSESSEE HAS SHOWN RATE OF SELLING PRICE RS.418 60/- PER METER I.E. THE RATE CONSIDERATION. ALL THE EXPENSE S ARE BORNED BY PURCHASER. IF THESE EXPENSES ARE CONSIDERED I.E . STAMP DUTY, TRANSFER FEE, REG. FEE ETC. IT CONTRA VALUE FOR RS. 2000/- PER METER AND THUS SALE VALUE IS AS GOOD AS RS.43860/-. 3. THE SALE PRICE OF BOTH LAND PROPERTY IS TAKEN AT RS .45000/- AND SURVEY NO.996 OF LAND IS NOT ON THE MAIN CROSS ROAD . 4. PRICE IS ALSO THE HIGHEST IN THE PERIOD. ALSO ASSE SSEE IS ALSO NOT INTERESTED IN TAKING BLACK MONEY AS ALL THE CONSID ERATION AMOUNT IS INVESTED IN BONDS FOR EXEMPTION FROM CAPI TAL GAIN. 5. TILL DATE THERE IS NO OBJECTION FROM STAMP DUTY DEP ARTMENT. 6. THE VALUATION OFFICER SHOULD VALUE THE PROPERTY BEF ORE 36 MONTHS. 2.1. HOWEVER, THE A.O. WAS NOT CONVINCED AND IT WAS HELD THAT THE VALUATION OFFICER HAD GIVEN THE VALUATION REPORT ON THE BASIS OF THE INFORMATION COLLECTED AND HE HAD NO ALTERNATIVE BUT TO PROCEED AS PER THE VALUATION REPORT TO DETERMINE THE CAPITAL GAIN. THE RELEVANT COMPUTATION OF THE CAPITAL GAIN IS AS FOLLOWS:- INCOME UNDER THE HEAD LTCG FROM THE LAND SQUARE METERS SOLD : 2501.67 METERS VALUE PER METER : RS.45,000/- TOTAL VALUATION : RS.11,25,75,150/- (2501.67 X 45,000) LESS COST OF LAND VALUE AS ON 01/04/1981 : RS.250/- PER METER AS PER VALUATION REPORT COST INDEX VALUE OF 2501.67 METER RS.31,08,324/- ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 5 - LONG TERM CAPITAL GAIN VALUE AS PER VALUATION REPORT : RS.11,25,75,1 50/- LESS : COST INDEX VALUE OF 2501.67 METER : RS. 31 ,08,324/- DIFFERENCE THAT IS LONG TERM CAPITAL RS.10,9 4,66,826/- GAIN LESS : EXEMPTION ON INVESTMENT IN THE NOTIFIED THREE YEAR BONDS (SECTION 54EC) : RS.10,32,32,367/- TAXABLE LTCG FROM LAND RS. 62,34,459/- TOTAL INCOME ASSESSED INCLUDED LTCG RS. 68 ,13,885/- (AGRICULTURAL INCOME RS.5,000/- FOR RATE PURPOSE) B. OBSERVATION OF FIRST APPELLATE AUTHORITY :- 3. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY. THE LD. CIT(A) HAD MADE THE OPENING REMARKS VIDE PA RA-2 OF THE JUDGMENT THAT THE TWO PLOTS HAVE BEEN SOLD AND THE ASSESSEE HAPPENED TO BE ONE OF THE CO-OWNERS OF THE PROPERTY . HE HAD AFFIRMED THAT THE JANTRI RATE ADOPTED BY STAMP D UTY AUTHORITY WAS AT RS.4,500/- AND RS.7,000/- PER SQ. MTR. FOR PLOT NO.161/1 AND 181/1 RESPECTIVELY. THE LD. CIT (A) HAS MENTIONED THAT AS AGAINST THAT THE SALE CONSIDERATION SHOWN BY THE ASSESSEE WAS AT RS. 41,860/- PER SQ. MTR . THEREAFTER, THE LD.CIT (A) HAS MENTIONED THAT THE MATTER WAS REFERRED BEFORE THE DVO WHO HAS WORKED OUT THE FAIR MARKET VALUE AT RS.45,000/- PER SQ. MTR. BEFORE LD. CIT (A) ASSESSEE HAS FURNISHED WRITTEN SUBMISSIONS AND IN THOSE SUBM ISSIONS FIRSTLY IT ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 6 - WAS CONTESTED THAT THERE WAS NO SCOPE FOR INVOCATIO N OF THE PROVISION OF SEC.50C OF THE I.T. ACT. IN THE SAID WRITTEN SUBMISSION IT WAS CONTESTED THAT THE REFERENCE TO DVO U/S. 50C (2) WAS ILLEGAL. IN THE SAID WRITTEN SUBMISSION A SECOND POINT HAS ALSO BEEN RAISED THAT THERE WAS NO POSSIBILITY OF ANY ADDITION ON TH E BASIS OF THE DVOS REPORT BECAUSE OF THE REASON THAT THE DIFFERE NCE BETWEEN THE VALUATION MADE BY THE DVO AND THE SALE CONSIDERATIO N AS PER THE ASSESSEE WAS LESS THAN 15% THEREFORE, AS PER RULE 111AA THE CONDITIONS FOR REFERENCE TO VALUATION OFFICER WAS N OT SATISFIED. THIRD POINT RAISED BY THE ASSESSEE WAS IN CONNECTION TO SECTIO N 50C(3) FOR THE PROPOSITION THAT THE JANTRI RATE H AS TO BE FOLLOWED AND TO BE CONSIDERED AS FULL VALUE OF CONSIDERATION . IT WAS ALSO DEMONSTRATED BEFORE LD.CIT(A) THAT THE DIFFERENCE B ETWEEN THE RATE ADOPTED BY THE DVO AND THE SALE PRICE AS MENTIONED IN THE SALE DEED WAS ACTUALLY LESS THAN 7% , COMPUTED AS UNDER:- 5.2. THE DIFFERENCE BETWEEN THE RATE ADOPTED BY D VO AND THE SALE PRICE IS ACTUALLY LESS THAN 7% AND THEREFORE T HE QUESTION OF ANY ADDITION DOES NOT ARISE AS CAN BE SEEN FROM BEL OW :- F.P. NO.181/ & F.P. NO.161/1 VALUE AS PER DVO REPORT RS.45,000/- PER SQ.MTR. LESS : 15% THEREOF RS.6,750/- RS.38,250/- SALE PRICE AS PER SALE DEED RS.41,860 FROM THE ABOVE, IT MAY PLEASE BE SEEN THAT AFTER DE DUCTING 15% IT COMES TO ONLY RS.38,250/- WHEREAS THE DEED IS FOR R S.41,860/-. IN FACT, THE DIFFERENCE IS RS.45,000 RS.41,860 = RS .3,140 WHICH IS HARDLY 7% THEREFORE THE QUESTION OF ANY ADDITION DO ES NOT ARISE. ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 7 - 4. BEFORE LD.CIT (A) IT WAS ALSO CONTESTED THAT SECTION 52 HAS BEEN OMITTED WHICH WAS IN RESPECT OF UNDER-STATEMENT OF CONSIDERATION FOR TRANSFER OF PROPERTY. ON MERITS AS WELL IT WAS CONTESTED THAT THE COMPARABLE INSTANCES HAVE NOT BE EN APPRECIATED BY THE DVO. THE DESCRIPTION WAS AS FOLLOWS:- 7. IT MAY PLEASE FURTHER BE NOTED THAT THE BUYER HAVE( HAKS- SIC) PURCHASED THREE ADJOINING PLOTS. TWO PLOTS BE ARING S.NO.181/1 AND 161/1 ARE SOLD @ RS.41,850/- PER SQ. MTR WHEREAS THE THIRD PLOT BEARING JODHPUR S.NO.332 TPS NO. 6 F.P.NO.160/1 IS SOLD @ RS.7,889/- PER SQ.MTR. THER E IS ACCEPTED BY THE DEPARTMENT. .. THE DVO REPORT MAY PLEASE BE REFERRED (PAGE NO.70) . THE DVO HAS CITED THE SALE INSTANCES ON THAT PAGE. THE HIGHEST SALE INSTANCE IS FOR RS.23,200/- WHICH IS AUCTIONED BY AUDA ON 08/01/2004. THE ANOTHER INSTANCE OF AUCTION BY AUDA IS FOR RS.22,800/- ON 18/10/2004. THE ESTIMATES THE P RICE AT RS.45,000/- PER SQ.MTR. THERE CANNOT BE DOUBLE RIS E IN ONE YEAR. THE DVO DOES NOT GIVE ANY REASONS FOR ESTIMA TING AT RS.45,000/- THEREFORE THE DVOS ESTIMATE IS ON VERY HIGH SIDE. 5. A QUERY HAS ALSO BEEN RAISED THAT WHETHER AO CAN MADE REFERENCE U/S. 55A BY LD. CIT(A). IN THIS REGARD IT WAS EXPLAINED FROM THE SIDE OF THE ASSESSEE THAT IN CASE OF A TR ANSFER TAKING PLACE W.E.F. 1-4-2003 BY INSERTION OF SECTION 50C BY FIN ANCE ACT, 2002 ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 8 - FROM A.Y. 2003-04, THEN ONLY SECTION 50C IS THE GOV ERNING SECTION AND THAT WAS TO BE APPLIED. IT HAS ALSO BEEN ARGUED THAT AFTER THE INSERTION OF SECTION 50C THE APPLICABILITY OF SECTI ON 55A HAD BECOME REDUNDANT . ALTERNATIVELY, IT WAS CONTESTED THAT SECTION 55A CAN BE APPLIED IF THE DIFFERENCE IS MORE THAN THE P ERCENTAGE PRESCRIBED UNDER RULE 111AA. IT WAS REITERATED TH AT IF A REFERENCE IS MADE U/S. 55A AND A VALUATION REPORT IS OBTAINED BY THE AO, EVEN THEN THE VALUE CANNOT BE SUBSTITUTED BECAUSE OF THE OMISSION OF SECTION 52 FROM THE I.T. ACT, W.E.F. 1-4-1998 (FINA NCE ACT,1987). FEW CASE LAWS CITED WERE IN THE CASE OF JITENDRA MO HAN SAXENA VS. ITO REPORTED AT 305 ITR 62 (AT)[LUCKNOW] AND IN TH E CASE OF PUNJAB POLY JUTE CORPORATION VS. ACIT REPORTED AT 3 13 ITR 178 (AT)[AMRITSAR]. 5.1. LD.CIT (A) HAS ANALYZED THOSE THREE S ECTIONS OF THE I.T. ACT AS QUOTED BEFORE HIM. AS PER HIS OBSERVATIONS A REFERENCE TO DVO CAN BE MADE EITHER U/S. 142A, OR U/S. 55A OR U/ S. 50C OF I.T. ACT . HE HAS DISCUSSED ONE BY ONE ALL THESE THREE SECT IONS WHICH WE SHALL TAKE UP HEREIN BELOW. IN SHORT THE LD.CIT (A) HAS OPINED THAT SECTION 142A HAS LIMITED SCOPE FOR REFERENCE T O VALUATION CELL I.E. FOR THE PURPOSE OF ESTIMATING AN INVESTMENT AS PRESCRIBED U/S. 69 AND 69B. NEXT, SECTION 55A IS IN RESPECT OF ASCERT AINING THE FAIR MARKET VALUE FOR THE PURPOSE OF DETERMINING THE COS T OF ACQUISITION U/S. 55(2)(B) OF I.T. ACT. THEN HE HAS DISCUSSED SE CTION 50C OF I.T. ACT AND OPINED THAT REFERENCE IS POSSIBLE WHEN SALE CONSIDERATION IS ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 9 - LESS THAN THE STAMP DUTY FIXED BY STAMP VALUATION AUTHORITY. BY PLACING RELIANCE ON THE CITED PRECEDENTS, HE HAS HE LD THAT THE AOS ACTION OF REFERRING THE MATTER TO DVO FOR SUBSTITUT ING THE SALE CONSIDERATION WAS NOT LEGALLY SUSTAINABLE. HE HAS ALSO OPINED THAT SINCE THE SALE CONSIDERATION AS DISCLOSED BY THE AS SESSEE BEING HIGHER THAN THE STAMP VALUE THEREFORE, THE A.O. WAS NOT LAWFULLY PERMITTED TO SUBSTITUTE THE CONSIDERATION FOR THE P URPOSE OF COMPUTATION OF CAPITAL GAIN. IN THE RESULT, THE ADD ITION WAS DELETED. BEING AGGRIEVED NOW THE REVENUE IS BEFORE US. C. REVENUES ARGUMENT :- 6. FROM THE SIDE OF THE REVENUE LD. SR. D. R. MR. K . MADHUSUDAN HAS ARGUED AT SOME LENGTH AND VEHEMENTLY OPPOSED THE VIEW TAKEN BY LD. CIT (A). HIS FIRST LIMB OF ARGUMENT WAS THAT THE AO HAD NOT AT ALL MADE ANY ADDITION BY INVOKING THE PROVISIONS OF SECTION 50C OF I.T. ACT. HE HAS REFERRED THE ASS ESSMENT ORDER AND POINTED OUT THAT THERE WAS NO MENTION ALTOGETHER OF STAMP DUTY VALUATION OR THE INVOCATION OF SECTION 50C OF I.T. ACT. HE HAS DRAWN OUR ATTENTION ON THE WORDINGS OF AO, BEGIN CONSIDE RING THE AREA OF PROPERTY ETC., THE SAME WAS REFERRED TO THE DEPARTM ENTAL VALUATION UNIT I.E. DVO . IN THE LIGHT OF THE SAID REMARK OF THE A.O., MR. MADHUSUDAN ( DR) HAS ARGUED THAT THE REFERENCE WAS MADE TO DOV U/S. 55A OF I.T. ACT; MORE PARTICULARLY AFTER CONSI DERING SUB-CLAUSE (II) OF CLAUSE (B) OF SECTION 55A OF I.T. ACT. HE HAS EXPLAINED HIS ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 10 - POINT OF VIEW THAT THIS PROVISION HAS PRESCRIBED TH AT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMST ANCES, IF IT IS NECESSARY SO TO DO WITH A VIEW TO ASCERTAIN THE FAI R MARKET VALUE OF THE CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE A.O. MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFIC ER. THE AO HAD THOUGHT IT PROPER, CONSIDERING THE NATURE OF ASSET AND THE CIRCUMSTANCES OF THE CASE, TO MAKE THE REFERENCE TO DVO WHICH WAS WRONGLY HELD ILLEGAL BY LD. CIT(A). HIS SECOND LIMB OF ARGUMENT WAS THAT LD. CIT (A) HAD DECIDED THE APPEAL UNDER W RONG PRESUMPTION THAT THE A.O. HAD MADE THE ASSESSMENT C ONSIDERING THE PROVISIONS OF SECTION 50C OF I.T. ACT. THE ORDER O F LD. CIT (A) WAS ERRONEOUS BECAUSE THE A.O. HAS NOT AT ALL DISCUSSED THE PROVISIONS OF SECTION 50C OF I.T. ACT, NOR HE HAD REFERRED FOR VA LUATION U/S. 50C (2) OF I.T. ACT, PLEADED BY LD. D.R. THE LD. D.R. HAS ALSO PLACED BEFORE US A SHORT SUBMISSION IN WRITING, RELEVANT P ARAS REPRODUCED: 2. IT MAY BE NOTED HERE THAT, REFERENCE TO DVO CAN BE MADE UNDER SECTIONS 142A, 55A AND 50C FOR THE PURPO SES AND ASSESSMENT UNDER THE SECTIONS MENTIONED THEREIN. H ERE IN THIS CASE THE ASSESSING OFFICER MADE REFERENCE UNDER SEC TION 55A CONSIDERING THE AREA OF THE PROPERTY ETC AS CLEARLY MENTIONED IN FIRST PARA ON PAGE 2 OF THE ASSESSMENT ORDER. IT IS NOT THE CASE OF THE AO TO MAKE AN ASSESSMENT UN DER SECTION 50C, IF IT WAS SO, HE WOULD HAVE MENTIONED THE SECT ION 50C OR THE JUNTRY RATES IN THE ORDER. THEREFORE THE ASSUM PTION OF THE CIT(A) THAT THE ASSESSMENT WAS UNDER S.50C AND THE CONSEQUENTIAL ORDER SO, IS INCORRECT AND ERRONEOUS. ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 11 - 3. SECTION 55A IS A COMPREHENSIVE SECTION FOR MAK ING A REFERENCE TO DVO FOR THE PURPOSE OF WORKING OF CAP 0ITAL GAINS UNDER THE CHAPTER IV-E (AFTER OMITTING ERSTW HILE SECTION 52) AND THE AO CAN MAKE A REFERENCE AS PROVIDED IN THAT SECTION. IN THIS CASE AO'S REFERENCE IS UNDER CLA USE (II) OF 55A(B). FURTHER, SECTION 50CIS ONLY LIMITED TO CERTAIN CASES AS THE TITLE GOES, WHERE THE AO WANTS TO APPLY JUN RY RATES OF STAMP VALUATION AUTHORITY AND MAKE ASSESSMENT. THE REFERENCE3 THAT THE AO CAN MAKE TO DVO UNDER 50C I S LIMITED TO SPECIAL CIRCUMSTANCES WHERE THE ASSESSE E CLAIMS THAT THE JUNTRY RATE EXCEEDS THE FAIR MARKET RATE AS MAY BE SEEN FROM THE WORDING OF SUB SECTION (2) OF SECTION 50C. THERE WAS NO SUCH CLAIM BY THE ASSESSEE BEFORE THE AO IN THIS CASE AND THERE WAS NO REFERENCE UNDER THIS SECTION IN THIS CASE. ACTUALLY IT IS THE AO'S CASE TO MAKE A REFER ENCE UNDER SECTION 55A(B)(II) AS MENTIONED IN THE ORDER. 7. LD. D.R. HAS THEREFORE, EMPHASIZED THAT SINCE TH E FIRST APPELLATE AUTHORITY HAS WRONGLY ASSUMED THAT THE PR OVISIONS OF SECTION 50C WERE THE BASIS OF ASSESSMENT, THEREFORE , GROUND RAISED BEFORE THIS TRIBUNAL ARE THAT THE LD. CIT(A) HAS WR ONGLY HELD DVOS REPORT AS ILLEGAL BY LD.CIT (A). HE HAS ALSO SUPPORTED GROUND NO.1 OF THE REVENUE THAT THE PROVISIONS OF S ECTION 55A (B)(II) EMPOWERS THE A.O. TO MAKE A REFERENCE TO DV O IN RESPECT OF ANY OTHER CASE NOT COVERED BY OTHER PROVISIONS OF THE ACT. THEREFORE, SECTION 55A EMPOWERS THE A.O. TO MAKE A REFERENCE TO DVO TO ASCERTAIN THE FAIR MARKET VALUE OF THE CAPIT AL ASSET IN RESPECT OF DETERMINATION OF CAPITAL GAIN AS PRESCRIBED UNDE R CHAPTER IV E OF I.T. ACT. AN INTERESTING ARGUMENT HAS ALSO BEEN RAISED BY MR. MADHUSUDAN THAT EVEN AFTER THE OMISSION OF SECTION 52 OF I.T. ACT W.E.F. 1-4-1988 THE POWERS OF REFERENCE TO DVO BY T HE A.O. IN ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 12 - RESPECT OF A TRANSFER, WHERE IN HIS OPINION, THERE IS UNDER-STATEMENT OF CONSIDERATION, HAS NOT BEEN CURTAILED BECAUSE O F THE INSERTION OF CLAUSE (B) IN SECTION 55A AS PER THE STATUTE. HE H AS ELABORATED THAT IN-SPITE OF THE FACT THAT THERE ARE TWO OTHER SECTI ONS UNDER WHICH A REFERENCE CAN BE MADE TO DVO AS PER SECTION 142A AN D SECTION 50C OF I. T. ACT, BUT THOSE SECTIONS ARE MEANT FOR SPE CIFIC PURPOSE BUT 55A(B) IS WIDER IN ITS SCOPE TO DETERMINE FAIR MARK ET VALUE OF A CAPITAL ASSET, IF IT IS UNDER-STATED BY THE ASSESSE E. D. ASSESSEES ARGUMENTS :- 8. FROM THE SIDE OF THE RESPONDENT-ASSESSEE LD. A.R . MR.A.C. SHAH IS EQUALLY VEHEMENT IN OPPOSING THE ARGUMENTS OF LD. D.R. HIS OPENING REMARK WAS THAT THOUGH THE A.O. HAS NOT SPECIFICALLY MENTIONED SECTION 50C OF I. T. ACT, BUT LIKEWISE HE HAS NOT EVEN MENTIONED SECTION 55A OF I. T. ACT. IN THE BODY OF ASSESSMENT ORDER. MR. SHAH HAS ALSO ARGUED THAT THE SCOPE OF REFERENC E TO DVO IN EITHER OF THREE SECTIONS IS LIMITED AND THE STATUTE HAS PRESCRIBED A LIMITED PURPOSE FOR WHICH A REFERENCE CAN BE MADE T O DVO. THE LD. A.R. HAS ALSO REMARKED THAT CONSIDERING THE DIFFICU LTY OF THE TAX PAYERS AND THE HARDSHIP EXPERIENCED DUE TO THE ARBI TRARY POWERS GIVEN BY SECTION 52 OF I., T. ACT, THE SAME WAS DEL ETED BY THE HONBLE PARLIAMENT. LD. A.R. HAS ALSO POINTED OUT THAT SECTION 55A ONLY SPEAKS ABOUT FAIR MARKET VALUE BUT ON THE OT HER HAND SECTION 48, I.E. MODE OF COMPUTATION OF CAPITAL GAIN, SPE AKS ABOUT FULL VALUE OF THE CONSIDERATION. THEREFORE, EVEN THIS A RGUMENT OF LD. ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 13 - D.R. MUST NOT BE ACCEPTED BECAUSE EVEN VIDE SECTION 55A THE A.O. IS NOT EMPOWERED TO COMPUTE THE CAPITAL GAIN BY SUB STITUTING THE CONSIDERATION AMOUNT. HE HAS ALSO EMPHASIZED THAT LD.C.IT(A) HAS CORRECTLY HELD THAT THE JANTRI RATE WERE LOWER TH AN THE RATE ON WHICH THE SALE DEED WAS EXECUTED THEREFORE, EVEN THE PROV ISIONS OF SECTION 50C WERE NOT APPLICABLE. THE LD. A.R. HAS FURTHER SUBMITTED THAT EVEN ON MERITS THE VALUATION REPORT WAS INCORRECT B ECAUSE THE COMPARABLE INSTANCES OF AN ADJACENT PLOT OF LAND WA S IGNORED BY THE DVO. A COPY OF THE VALUATION REPORT HAS ALSO BEEN PLACED TO DEMONSTRATE THAT AN ARBITRARY RATE OF RS.45,000/- W AS APPLIED BY THE DVO WITHOUT CONSIDERING THE MATERIAL EVIDENCE GIVEN BY THE ASSESSEE. THE FAIR MARKET VALUE AS DETERMINED BY TH E DVO WAS NEITHER REASONABLE NOR FAIR CONSIDERING THE PREVAIL ING MARKET SITUATION OF THAT TIME. CASE LAWS CITED WERE IN THE CASE OF CIT VS. SMT. NILOFER I. SINGH REPORTED AT 309 ITR 233(DEL.) , IN THE CASE OF DEV KUMAR JAIN VS. ITO REPORTED AT 309 ITR 240(DEL ) AND IN THE CASE OF CIT VS. UMEDBHAI INTERNATIONAL P.LTD. REPOR TED AT 330 ITR 506 (CAL.) E CONCLUSION :- 9. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AND ALSO CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BEL OW IN THE LIGHT OF SHORT COMPILATION FILED BEFORE US AS ALSO THE CASE LAWS CITED. A QUESTION HAS TIME AND AGAIN CROPPED UP BEFORE US BE ING RAISED FROM ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 14 - THE SIDE OF THE REVENUE THAT WHAT ARE THE IMPLICATI ONS OF DELETION OF SECTION 52 FROM I. T. ACT. FROM THE SIDE OF THE RE VENUE, IT HAS ALWAYS BEEN CHALLENGED, THAT TOO FERVENTLY, THAT IN CASE OF UNDER- STATEMENT OF CONSIDERATION WHETHER THE A.O. IS POWE RLESS IN NOT SUBSTITUTING THE SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. IN ADDITION TO THIS BASIC APPREHENSI ON AS ALSO CONTENTION, AS FAR AS THIS APPEAL IS CONCERNED, FEW OTHER POINTS ON MERITS HAVE ALSO BEEN CONTESTED BEFORE US. WE SHALL FIRST TAKE UP THE LEGAL ASPECT AS STRONGLY CONTESTED BEFORE US BY BOT H THE SIDES. 9.1. SECTION 52 OF THE ACT WAS AN EMPOWERING SECTION THROUGH WHICH THE ITO HAD BEEN ENSHRINED WITH THE POWERS TO SUBSTITUTE THE AMOUNT OF CONSIDERATION BY THE FAIR MARKET VALUE IN RESPECT OF TRANSFER OF A CAPITAL ASSET IF IN HIS OPINION THE C ONSIDERATION FOR SUCH TRANSFER WAS UNDER-STATED. IT WAS VERY WIDE AND EF FECTIVE SECTION THROUGH WHICH THE A.O. USED TO MAKE REFERENCE TO DV O TO ASCERTAIN THE FAIR MARKET VALUE OF THE PROPERTY. THIS SECTIO N WAS CONSIDERED TO BE ARBITRARY IN NATURE, HENCE IT WAS OMITTED FROM THE STATUTE BY THE FINANCE ACT, 1987 W. E. F. 1-4-1988. IN THE WISDOM OF HONBLE PARLIAMENT IF A SECTION IS NO MORE IN THE STATUTE T HEN NATURALLY THE INTENTION OF THE CONSTITUTIONAL BODY HAS TO BE FOLL OWED AND RESPECTED. IT IS WORTH TO MENTION THAT SECTION 52, AS IT STOOD BEFORE ITS OMISSION, HAS USED TWO PHRASEOLOGY, ONE WAS FAIR MARKET VALUE AND THE OTHER WAS FULL VALUE OF CONSIDERATION. IN THAT SECTION IT WAS VERY MUCH CLEAR THAT WHERE A PERSON TRANSFER A CAPITAL ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 15 - ASSET WITH THE OBJECT TO AVOID OR REDUCE THE LIABIL ITY U/S. 45 THEN THE FULL VALUE OF CONSIDERATION FOR THE TRANSFER SHALL BE SUBSTITUTED BY THE FAIR MARKET VALUE OF THE CAPITAL ASSET AS DETERMINE D BY THE A.O. AFTER ITS DELETION, THERE IS NO SUCH WORDINGS IN AN Y OF THE SECTIONS RELEVANT FOR THE SAID PURPOSE. WE SHALL TAKE UP RI GHT NOW HEREINBELOW THOSE APPLICABLE PROVISIONS, THROUGH WH ICH THE FAIR MARKET VALUE CAN TAKE PLACE THE FULL VALUE OF THE C ONSIDERATION. THE REASON FOR THIS DISCUSSION IS THE APPREHENSION EXPR ESSED BY LD. D.R. MR. MADHUSUDAN BUT HIS APPREHENSION CANNOT BE ANSWE RED BY THIS FORUM AND WE HAVE TO CONFINE OURSELVES WITHIN THE AMBITS OF THE PROVISIONS OF THE I. T. ACT AS APPLICABLE ON THE PR ESENT FACTS AND CIRCUMSTANCES OF THIS CASE. 9.2) NOW, WE SHALL DEAL WITH THE PROVISIONS OF SECTION 55A OF THE I. T. ACT, AS CONTESTED BY MR. MADHUSUDAN BEFORE US . THE LANGUAGE OF THE SECTION READS AS FOLLOWS:- SECTION 55A. 'WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE ASSESSING OFF ICER MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER- (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED B Y THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERE D VALUER, IF THE ASSESSING OFFICER IS OF OPINION THAT THE VALUE SO C LAIMED IS LESS THAN ITS FAIR MARKET VALUE ; (B) IN ANY OTHER CASE, IF THE ASSESSING OFFICER IS OF OPINION : (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSETS AS CLAIMED BY THE ASSESSEE BY MORE T HAN ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 16 - SUCH PERCENTAGE OF THE VALUE OF THE ASSET AS SO CLA IMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN TH IS BEHALF; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO, AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISION S OF SUB- SECTIONS (2), (3), (4), (5), AND (6) OF SECTION 16A , CLAUSES (HA) AND (I) OF SUB-SECTION (3A) AND (4) OF SECTION 23, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL WITH THE N ECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OF FICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. EXPLANATION.IN THIS SECTION, 'VALUATION OFFICER' H AS THE SAME MEANING, AS IN CLAUSE (R) OF SECTION 2 OF THE WEALT H-TAX ACT, 1957 (27 OF 1957).' 10. THIS SECTION IS MEANT ONLY TO ASCERTAIN THE FAIR MARKET VALUE OF A CAPITAL ASSET. THIS SECTION IS OPERATIVE ON CHAPTER IV OF I. T. ACT, I.E. FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. CHARGING SECTION FOR CAPITAL GAIN IS SECTION 45 WHICH PRESCRIBES THAT ANY PROFITS AND GAINS SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD CAPITAL GAINS FOR THE PURPOSE OF SECTION 48. FOR TH E PURPOSES OF SECTION 48, WHATSOEVER, EITHER VALUE OF ANY MONEY OR THE FAIR MARKET VALUE OF THE ASSET ON THE DATE OF SUCH RECEI PT SHALL BE DEEMED TO BE FULL VALUE OF THE CONSIDERATION RECEIV ED OR ACCRUING AS A RESULT OF TRANSFER OF SUCH ASSET. HOWEVER, SEC TION 48 PRESCRIBED THAT FOR THE PURPOSES OF THE COMPUTATION OF CAPITAL GAIN THE FULL VALUE OF CONSIDERATION, HAS TO BE TAKEN INTO ACCOUNT. THI S SECTION DOES NOT ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 17 - REFER THE FAIR MARKET VALUE FOR THE PURPOSES OF CHA RGING CAPITAL GAIN. FOR THE SAKE OF READY REFERENCE RELEVANT PORTION IS REPRODUCED . SECTION 48 MODE OF COMPUTATION. THE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAIN S' SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST O F ANY IMPROVEMENT THERETO: 11. IN THIS CONTEXT THE LD., A.R. MR. SHAH HAS FUR THER EXPLAINED THAT IN SECTION 45 AT SOME PLACES THE TERM FAIR MARKET VAL UE HAS BEEN MENTIONED FOR E.G. SECTION 45 (4) OF I. T. ACT , BUT THAT MENTION IS FOR THE SPECIFIC PURPOSE OF DETERMINING THE VALU E OF DISTRIBUTION OF CAPITAL ASSET ON THE DISSOLUTION OF A FIRM. THEN HE HAS QUOTED SECTION 45 (2) WHICH IS WITH A SPECIFIC PURPOSE OF TRANSFER BY WAY OF CONVERSION OF A PERSONAL CAPITAL ASSET INTO THE STO CK IN TRADE. MR. SHAH HAS ALSO POINTED OUT THAT IN SECTION 45(1A), A S WELL, THERE IS A MENTION OF FAIR MARKET VALUE BUT IT IS IN RESPECT O F PROFITS AND GAINS TO BE RECEIVED FROM AN INSURER ON ACCOUNT OF DAMAGE OR DESTRUCTION DUE TO NATURAL CALAMITY, FLOOD, EARTHQUAKE ETC., O N THE BASIS OF THESE ARGUMENTS A CONCLUSION CAN BE DRAWN THAT SINCE THE LANGUAGE I N SECTION 55A DO NOT REFER VALUE OF CONSIDERATION B UT ONLY USED THE WORDINGS FAIR MARKET VALUE THEN ITS APPLICABI LITY FOR THE PURPOSE OF REFERENCE TO A VALUATION OFFICER HAS TO BE EXERCISED ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 18 - WITHIN THAT LIMITED AREA, SO THE SCOPE IS ALSO CONFINED TO DETERMINE THE FAIR MARKET VALUE OF A CAPITAL ASSET ONLY. THE OUTCOME OF THIS DISCUSSION THUS, LEADS TO A CONCLUSION THAT EVEN IF THE AO HAS CALLED FOR A REPORT TO DETERMINE THE FAIR MARKET V ALUE OF A CAPITAL ASSET BUT CONSIDERING THE LANGUAGE OF SECTI ON 48 OF THE I. T. ACT, THE SAME CANNOT BE SUBSTITUTE THE FULL VAL UE OF THE CONSIDERATION. IN FACT, THIS ISSUE HAD COME UP BEFORE THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SMT. NILEFE R I. SINGH REPORTED AT 309 ITR 233 (DEL), WHEREIN IT WAS DEALT WITH IN THE FOLLOWING MANNER:- WHEN A SALE OF PROPERTY TAKES PLACE, THE CAPITAL G AINS ARISING OUT OF SUCH A TRANSFER HAS TO BE COMPUTED BY TAKING INTO ACCOUNT THE FULL VALUE OF THE CONSIDERATION RECEIVE D OR ACCRUING AS A RESULT OF SUCH TRANSFER. FROM THE FU LL VALUE OF THE CONSIDERATION, THE AMOUNT OF EXPENDITURE INCURR ED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER AS ALSO THE COST OF ACQUISITION OF THE ASSET AND THE COST OF AN Y IMPROVEMENT THERETO HAVE TO BE DEDUCTED. THE EXPRE SSION FULL VALUE OF CONSIDERATION CANNOT BE CONSTRUED A S HAVING REFERENCE TO THE MARKET VALUE OF THE ASSET TRANSFER RED BUT ONLY MEANS THE FULL VALUE OF CONSIDERATION RECEIVED BY T HE TRANSFEROR IN EXCHANGE OF THE CAPITAL ASSET TRANSFE RRED BY HIM. IN THE CASE OF A SALE THE FULL VALUE OF CONSIDERATI ON IS THE FULL SALE PRICE ACTUALLY PAID. FULL VALUE MEANS THE WHOLE PRICE WITHOUT ANY DEDUCTION, WHATSOEVER, AND IT CANNOT RE FER TO THE ADEQUACY OR INADEQUACY OF THE PRICE BARGAINED FOR. NOR DOES IT HAVE ANY NECESSARY REFERENCE TO THE MARKET VALUE OF THE CAPITAL ASSET WHICH IS THE SUBJECT MATTER OF THE TR ANSFER. THE FULL VALUE OF CONSIDERATION DOES NOT HAVE ANY REFER ENCE TO THE MARKET VALUE BUT ONLY TO THE CONSIDERATION REFERRED TO IN THE SALE DEEDS AS THE SALE PRICE OF THE ASSETS WHICH HA VE BEEN TRANSFERRED. ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 19 - THE REFERENCE TO A VALUATION OFFICER UNDER SECTION 55A IS FOR THE OBJECT OF ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET. IT IS ONLY WHEN THE ASSESSING OFFICER IS RE QUIRED TO ASCERTAIN THE FAIR MARKET VALUE OF A CAPITAL ASSET IN SUCH CASES AS COVERED BY SECTION 45(4) OR SECTION 45(1A) THAT THE PROVISIONS OF SECTION 55A CAN BE INVOKED. .. HELD, DISMISSING THE APPEAL, THAT THE FULL VALUE O F THE CONSIDERATION WAS THE SALE PRICE OF THE TWO PROPERT IES SOLD BY THE ASSESSEE. IN SUCH A CASE, THERE WAS NO NECESSI TY FOR COMPUTING THE FAIR MARKET VALUE. THUS, THE ASSESSI NG OFFICER COULD NOT HAVE REFERRED THE MATTER TO THE VALUATION OFFICERS. 12. ON CAREFUL READING OF THE ABOVE JUDGEMENT OF HO NBLE DELHI HIGH COURT IT EMERGES THAT THE AREA OF OPERATION O F SECTION 55A OF THE ACT IS TO ASCERTAIN THE FAIR MARKET VALUE OF A CAPITAL ASSET. SINCE SECTION 48 OF THE ACT THROUGH WHICH CAPITAL GAIN IS COMPUTED PRESCRIBE TO COMPUTE THE GAIN ON THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. THEREFORE, SECTION 55A CANNOT GIVE ANY ASSISTANCE TO COMPUTE THE CAPIT AL GAIN U/S.48 OF THE I.T. ACT. IN OUR HUMBLE UNDERSTANDING THE EXPRESSION FULL VALUE OF CONSIDERATION( SEC. 48 ) DOES NOT HAVE TH E SAME MEANING AND CAN NOT BE USED IN PLACE OF FAIR MARK ET VALUE (SEC.55A). TO ELABORATE THIS POINT, SECTION 48 DO NOT PRESCRI BE THAT THE CAPITAL GAIN IS TO BE COMPUTED ON THE FAIR MARK ET VALUE OF A CAPITAL ASSET, BUT IT ONLY PRESCRIBES TO CHARGE CAP ITAL GAIN ON THE CONSIDERATION RECEIVED, THEREFORE, SECTION 55A CAN NOT BE USED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN U/S.48 O F I.T. ACT. EVEN FURTHER, WE ELABORATE THAT SECTION 55A IS MEANT ONL Y TO ASCERTAIN THE ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 20 - FAIR MARKET VALUE OF A CAPITAL ASSET BUT NOT MEANT TO DETERMINE THE FULL VALUE OF THE CONSIDERATION RECEIVED AS A RESUL T OF THE TRANSFER THEREFORE SECTION 55A HAS ITS OWN LIMITATION FOR I TS OPERATION. THE HONBLE DELHI HIGH COURT HAD TAKEN INTO CONSIDERATI ON THE LANGUAGE OF BOTH THE SECTIONS AND THEREUPON GIVEN A VERDICT THAT THE EVENTS UNDER WHICH A REFERENCE TO A VALUATION OFFICER CAN BE MADE IS LIKE THE ONCE ACQUIRING IN SECTION 45(4) OR SECTION 45(1 A) OF I.T. ACT. THE COURT HAS CONCLUDED THAT SINCE SECTION 48 DO NOT PRESCRIBE THE DETERMINATION OF CAPITAL GAIN ON FAIR MARKET VALUE , HENCE OUT OF THE AMBITS OF REFERENCE PRESCRIBE U/S.55A OF THE ACT . IN THE LIGHT OF THE ABOVE DISCUSSION AS ALSO FOLLOWING THE CASE LAW CITED SUPRA, WE HEREBY REJECT THE GROUND NO.1 OF THE REVE NUE. 12.1. THE EXPRESSION FAIR MARKET VALUE HAS ALSO BEEN USED IN RESPECT OF COST OF ACQUISITION WHERE A CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BEFORE 1ST DAY OF APRIL 19 81 AS PE R SECTION 55(2)(B) OF THE ACT. FOR THE PURPOSE OF COMPUTATION OF CAPI TAL GAIN U/S 48 THE FAIR MARKET VALUE CAN BE TAKEN INTO CONS IDERATION IN PLACE OF COST OF ACQUISITION AND FOR THAT PURPOSE THE VAL UATION CAN BE REFERRED TO A VALUATION OFFICE. THEREFORE, THIS PRO VISION FURTHER STRENGTHEN THE ARGUMENT THAT THE LEGISLATURE HAS PR OVIDED IN THE STATUTE TO DETERMINE THE FAIR MARKET VALUE OF THE COST OF ACQUISITION BUT IT HAS NOT BEEN PROVIDED TO DISTURB THE SALE PR ICE WITH THE FAIR MARKET VALUE. ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 21 - 13. SCOPE OF REFERENCE U/S.55A VIS-AVIS SECTION 50C OF I.T. ACT. AS DISCUSSED HEREINABOVE SECTION 50C OF THE ACT IS TITLED AS SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAI N CASES. MEANING THEREBY THIS SECTION IS NOT APPLICABLE TO EACH AND EVERY CASE OF SALE BUT THIS IS TO BE APPLIED IN RESPECT OF THOSE SALES INSTANCES W HERE CONSIDERATION RECEIVED IS LESS THAN THE VALUE ADOPT ED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMEN T OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. IN THAT SITUATION, FOR THE PURPOSE OF SECTION 48 OF THE ACT I.E. COMPUTATION OF CAPITAL GAIN, VALUE SO ADOPTED BY THE STAMP VALUATION AUTHORITY BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED AS A RESULT OF SUCH TRANSFER. MEANING THEREBY THE SUBSTITUTION OF FULL VALUE OF CONSIDERATION IS POSSIBLE, IF THE DISCLOSED CONSIDERATION IS LESS TH AN THE VALUE DETERMINED FOR PAYMENT OF STAMP DUTY. IT HAS ALSO BEEN PRESCRIBED THAT WHERE THE ASSESSEE CLAIMS THAT THE VALUE ADOPT ED BY THE STAMP VALUATION AUTHORITY EXCEEDS THEIR FAIR MARKET VALUE OR THE VALUE SO ADOPTED BY THE STAMP VALUATION AUTHORITY IS NOT DE CIDED BY ANY OTHER COURT OR HIGH COURT, THEN THE AO MAY REFER TH E VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER U/S.55A OF I.T. ACT. THEREFORE THE CONCLUSION IS THAT THE ACT HAS PRESCR IBED THAT A REFERENCE U/S.55A CAN BE MADE FOR A LIMITED PURPOSE AS PRESCRIBED U/S.50C OF THE I.T. ACT. WHEREVER THE LEGISLATURE CONSIDERED IT PROPER, A PROVISION FOR REFERENCE TO DVO HAS BEEN P RESCRIBED IN THE STATUTE, BUT REFERENCE U/S.55A IS NOT PRESCRIBED TO BE APPLIED IN EACH SUCH CASE MERELY ON THE SWEET WILL OF THE AO. WE C AN, THEREFORE, ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 22 - HOLD THAT IF A REFERENCE CAN BE MADE TO ASCERTAIN T HE FAIR MARKET VALUE OF A PROPERTY, THEN WHEREVER THIS PHRASE I.E. TO DETERMINE THE FAIR MARKET VALUE OF THE PROPERTY IS USED THER E ONLY THE RECOURSE OF SECTION 55A IS POSSIBLE. IN THIS CONTEXT, FEW DECISIONS, NAMELY JITENDRA MOHAN SAXENA 117 TTJ 975/ 305 ITR 6 2 ( AT) (LUCKNOW) AND THE DECISION PUNJAB POLY JUTE CORPORA TION 120 TTJ 1113 / 313 ITR 178 ( AT) (AMRITSAR) CAN ALSO BE CIT ED. IT WAS RULED THAT THE SCOPE OF SECTION 50C OF THE ACT IS I N RESPECT OF ARRIVING AT THE FULL VALUE OF CONSIDERATION IF IT I S LOWER THAN THE STAMP DUTY VALUE, THEN THE AO IS JUSTIFIED TO MAKE A REFERENCE U/S.55A TO DVO. IN OTHER WORDS, WE CAN THUS HOLD THAT FOR THE PURPOSES OF THE COMPUTATION OF CAPITAL GAIN U/S.48, A REFERENCE CAN BE MADE TO DVO ONLY IN A SITUATION AS PRESCRIBE D U/S.50C OF THE ACT. AND NOT OTHERWISE. IN THE LIGHT OF THE ABOVE DISCUSSION, WE HEREBY DISMISS GROUND NO.2 OF THE REVENUE. 1 4. IN THIS REGARD, WE HAVE ALSO EXAMINED THE PROVIS IONS OF SECTION 142A OF THE I.T. ACT TITLED AS ESTIMATE BY VALUATION OFFICER IN CERTAIN CASES. THIS SECTION PRESCRIBE S THAT FOR THE PURPOSE FOR MAKING AN ASSESSMENT WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69, 69B, 69A IS REQUIRED TO BE MADE THE AO MAY REQUIRE THE VALUATION OFFICER TO MA KE AN ESTIMATE OF SUCH VALUE AND REPORT THE SAME TO AO. THEREFORE , THE AREA OF OPERATION AND THE SCOPE OF SECTION 142A IS LIMITED IN ITS SPAN I.E. ONLY TO DETERMINE THE VALUE OF INVESTMENT IN RESPEC T OF CERTAIN ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 23 - ASSETS, SUCH AS, BULLION, JEWELLERY, VALUABLE ARTIC LES ETC. IN THIS SECTION AS WELL THERE IS NO POWER VEST WITH AO TO S EEK THE HELP OF VALUATION OFFICER IN RESPECT OF DETERMINATION OF CA PITAL GAIN PRESCRIBED U/S.48 OF THE ACT. 14.1. IT IS VERY INTERESTING, AS ALSO IMPORTANT, TO NOTE THAT WITH EFFECT FROM 01/07/2010 A CLAUSE HAS BEEN INSERTED BY THE F INANCE ACT, 2010 WHICH SAYS, QUOTE, OF FAIR MARKET VALUE OF ANY PROPERTY REFERRED TO IN SUB-SECTION (2) OF SECTION 56 , UNQUOTE. BY THE INSERTION OF THIS CLAUSE, THE SCOPE OF VALUATION U/ S 142A HAS BEEN ENLARGED BY INCLUDING THE PROPERTY REFERRED IN SECT ION 56(2) TO DETERMINE ITS FAIR MARKET VALUE. SECTION 56(2) IS IN RESPECT OF CERTAIN ASSETS, THE INCOME FROM WHICH IS SUBJECT TO TAX U/S .56 I.E. UNDER THE HEAD INCOME FROM OTHER SOURCES. THE FAIR MARKET VALUE OF THE PROPERTIES WHICH GENERATE DIVIDEND INCOME, INTEREST INCOME, HIRING INCOME, ETC. CAN NOW BE DETERMINED BY THE DVO. TO R EMOVE ANY DOUBT VIDE AN EXPLANATION ANNEXED TO SECTION 56(2), FAIR MARKET VALUE IS DEFINED THAT THE VALUE IS TO BE DETERMINE D IN RESPECT OF THE PROPERTIES IN ACCORDANCE WITH THE METHOD AS PRESCRI BED UNDER RULE 11U AND 11UA OF THE I.T. RULES, 1962. RULE 11UA I S IN RESPECT OF DETERMINATION OF FAIR MARKET VALUE FOR THE PURPOSES OF SECTION 56 OF THE PROPERTY, SUCH AS, VALUATION OF JEWELLERY, VALU ATION OF ARCHAEOLOGICAL COLLECTION, DRAWINGS, PAINTINGS, VAL UATION OF SHARES AND SECURITIES, FAIR MARKET VALUE OF UNQUOTED EQUIT Y SHARES AND SECURITIES, ETC. THEREFORE, THE AREA OPERATION OF SECTION 142A IS ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 24 - LIMITED IN ITS RANGE AND CONFINED TO THE PROVISION S OF SECTION 69, ETC. AND SECTION 56(2) OF I.T. ACT. A CONCLUSION THEREFORE CAN BE DRAWN AND IT IS SIGNIFICANT TO MENTION THAT WHILE I NSERTING A CLAUSE OF VALUATION FOR THE PROPERTIES PRESCRIBED U/S.56(2), THE LEGISLATURE HAD IN ITS WISDOM THOUGHT IT PROPER NOT TO INCLUDE ANY OTHER KIND OF PROPERTY WITHIN THE SCOPE OF VALUATION AS PER SECTI ON 142A OF THE ACT. HENCE, AGAIN A CONCLUSION CAN BE DRAWN THAT E VEN THE PROVISIONS OF SECTION 142A OF THE ACT, DO NOT SUBSC RIBE TO SUBSTITUTE THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF CAPITAL GAIN U/S.48 OF THE ACT. 15. BEFORE WE PART WITH, WE MAY LIKE TO REFER THAT IN THE CASE OF PUNJAB POLY JUTE CORPORATION 313 ITR 178 (AT)(AMRI TSAR) THE RESPECTED CO-ORDINATE BENCH HAS OPINED THAT WHERE A PROPERTY IS REGISTERED AT A PARTICULAR RATE, WHICH WAS ADOPTED FOR REGISTRATION PURPOSE, THEN THERE WAS NO QUESTION OF REPLACING THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY WITH THE V ALUE DETERMINED BY THE DEPARTMENTAL VALUATION OFFICER FOR THE PURPO SE OF COMPUTING THE CAPITAL GAIN. SINCE THE STAMP VALUATION AUTHORI TY HAD ACCEPTED THE CONSIDERATION DECLARED BY THE ASSESSEE IN THE S ALE DEED, THERE WAS NO QUESTION OF ONCE AGAIN REFERRING THE MATTER TO T HE DEPARTMENTAL VALUATION OFFICER. OUR ATTENTION HAS ALSO BEEN BRO UGHT ON AN ANOTHER DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DEV KUMAR JAIN 309 ITR 240 (DEL) WHEREIN IT WAS OBSERVE D THAT A COMBINED READING OF SECTION 55A AND SECTION 48 SHOW S THAT WHEN A ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 25 - SALE OF PROPERTY TAKES PLACE THE CAPITAL GAINS AR ISING OUT OF SUCH A TRANSFER HAS TO BE COMPUTED BY LOOKING AT THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. THE EXPRESSION FULL VALUE OF SALE CONSIDERATION IS NO T THE SAME AS FAIR MARKET VALUE AS APPEARING IN SECTION 55A. IT WAS HELD THAT FOR THE PURPOSES OF COMPUTING CAPITAL GAINS, THERE IS NO N ECESSITY FOR COMPUTING THE FAIR MARKET VALUE. 16. THE SUMMUMBONUM OF ABOVE LEGAL AND FACTUAL DISCUSSION IS THAT SECTION 45 TALKS ABOUT SUBSTITUTION OF FAIR MARKET VALUE WITH THE FULL VALUE OF CONSIDERATION ONLY IN CERTAIN SPECIAL CIRCUMSTANCES, SUCH AS, DETERMINATION OF VALUE OF DAMAGE AS A RESULT OF FLOOD, RIOT, ACCIDENT, FIRE, ETC( SEC.45( 1A). SECTION 45(4) ALSO PRESCRIBES THAT THE FAIR MARKET VALUE BE DEEME D TO THE FULL VALUE OF THE CONSIDERATION IN RESPECT OF DISTRIBUTION OF CAPITAL ASSET ON THE DISSOLUTION OF A FIRM. CERTAIN SPECIFIC INSTANCES HAVE BEEN PRESCRIBED UNDER THE ACT AND ONLY UNDER THOSE CIRCU MSTANCES THE FAIR MARKET VALUE CAN BE SUBSTITUTED WITH THE AMOUNT OF FULL VALUE OF CONSIDERATION. BUT AS PER ABOVE DISCUSSION, THERE IS NO SUCH CLAUSE OF SUBSTITUTION WHILE COMPUTING THE CAPITAL GAIN U/ S.48 OF THE ACT AND THE GAIN HAS TO BE COMPUTED ON THE BASIS OF THE FULL VALUE OF THE CONSIDERATION. WE HAVE ALSO ARRIVED AT A CONCLUSI ON THAT A REFERENCE TO VALUATION OFFICER U/S.55A OF THE ACT C AN BE MADE TO ASCERTAIN THE FAIR MARKET VALUE OF A CAPITAL ASSET. WE HAVE ALSO CONCLUDED THAT SECTION 48 IS, THEREFORE, OUT OF THE SCOPE OF VALUATION ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 26 - MADE U/S.55A BECAUSE CAPITAL GAIN IS TO BE TAXED ON THE AMOUNT OF CONSIDERATION RECEIVED ON TRANSFER OF ASSET. WE HE REBY ALSO OPINE THAT HAVING REGARD TO THE NATURE OF THE ASSET, IF T HE AO IS OF THE OPINION, THAT VALUATION OF THE CAPITAL ASSET IS REQ UIRED, BUT SUCH REFERENCE CAN BE MADE ONLY TO ASCERTAIN THE FAIR MA RKET VALUE, THEREFORE, THE APPLICABILITY OF SECTION 55A(B)(II) IS ALSO LIMITED ONE. WE HAVE READ SECTION 50C ALONGWITH THESE CONNECTED SECTIONS AND THEN ARRIVED AT A CONCLUSION THAT THE AO IS EMPOWER ED TO REFER FOR VALUATION OF A CAPITAL ASSET UNDER SPECIFIC CIRCUMS TANCES AS PRESCRIBED UNDER THIS SECTION PROVISION OF SECTION 50C WHERE HE HAS FOUND THAT THE CONSIDERATION RECEIVED IS LESS THAN THE STAMP DUTY. WHEREAS IN THE PRESENT APPEAL THERE IS A FINDING ON FACTS THAT THE CONSIDERATION IS NOT LESS THAN THE STAMP DUTY. ADMI TTED FACTUAL POSITION IS THAT THE JANTRI RATE AS PER THE STAM P DUTY AUTHORITY WAS AT RS.4,500/- AND RS.7,000/- PER SQ.METER RESPE CTIVELY FOR THE PLOT NOS.161/1 & 181/1; WHEREAS THE ASSESSEE HAD SO LD THEM @ RS.41,860/- PER SQ.MTR. THEREFORE WE HEREBY HOLD TH AT THE AO WAS NOT EMPOWERED TO REFER TO DVO BECAUSE AS PER SECTIO N 50C(2) THE AO MAY REFER THE VALUATION OF A CAPITAL ASSET WHERE ASSESSEE CLAIMS BEFORE AO THAT THE VALUE ADOPTED BY THE STAMP VALUA TION AUTHORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER. DUE TO THIS REASON, THE VALUATION AS SU GGESTED BY DVO AND THE CONSEQUENTIAL ADDITION AS MADE BY THE ASSES SING OFFICER IS HEREBY REVERSED. IN THE RESULT, THE VIEW TAKEN BY THE LD.CIT(A) IS ITA NOS.3139 AND 3132-3138/A HD/2009 ASST.YEARS 2006-07 - 27 - HEREBY UPHELD AND THE GROUND NO.3 RAISED BY THE REV ENUE IS DISMISSED. RESULTANTLY, ALL THE GROUNDS ARE DISMIS SED. 17. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE HEREBY DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 8 TH APRIL, 2011. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED 08/ 04 /2011 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPA RTMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT(A PPEALS)-VII, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION.. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S8.4.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8.4.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER