ITO, Ward 2(1), Aurangabad V. Shri Anil Rajaram Belambe (HUF), Aurangabad

ITA 806/PUN/2013

• Counselvise Citation: 80624514 RSA 2013
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Capital asset; Fair market value; Valuation report
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.806/PN/2013 (A.Y: 2009-10) ITO, WARD-2(1), AURANGABAD APPELLANT VS. SHRI ANIL RAJARAM BELAMBE (HUF) PLOT NO.35, SUYOG APARTMENT, VIDYANAGAR, JALNA ROAD, AURANGABAD - 431003 PAN: AAJHA6201L RESPONDENT APPELLANT BY : SHRI S.P. W ALIMBE RESPONDENT BY : SHRI SHA RAD SHAH DATE OF HEARING: 09.04.2014 DATE OF ORDER : 28.04.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL), [IN SHORT C IT(A)] AURANGABAD, DATED 24.01.2013 FOR A.Y. 2009-10 ON TH E FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED IN DELETING THE ADDITION ON ACCO UNT OF CAPITAL GAIN PRESUMING THAT THE ADDITION IS SOLELY BASED ON VALUATION REPORT CALLED FOR UNDER SECTION 55A(A). 2. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , THE CIT (APPEALS) ERRED IN DELETING THE ADDITION ON ACC OUNT OF CAPITAL GAIN CONSIDERING THAT VALUATION REFERENCE M ADE BY THE ASSESSING OFFICER IS INVALID AND WITHOUT JURISD ICTION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (APPEALS) ERRED IN NOT CONSIDERING THE CONTENT OF THE VALUATION REPORT OF THE DVO IN VIEW OF THE HON'BLE 2 SUPREME COURT'S DECISION IN THE CASE OF POORANMAL ( 1974) (93 ITR 505). 4. THE ORDER OF THE AO BE RESTORED AND THAT THE ORDER OF THE CIT(APPEALS) MAY BE VACATED. 5. THE APPELLANT CRAVES TO LEAVE/ADD/AMEND ANY GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A HUF AND HAS DERIVED INCOME FROM CAPITAL GAIN AND INCOME FRO M OTHER SOURCES I.E. INTEREST INCOME. THE ASSESSEE HAS FIL ED RETURN OF INCOME DECLARING TOTAL INCOME OF 1,63,453/- AND CAPITAL GAIN AT NIL. THE ASSESSING OFFICER ASSESSED THE INCOME OF ASSESSEE AT 1,66,597/- AND LONG TERM CAPITAL GAIN OF 93,52,354/-. 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) HAS GRAN TED RELIEF TO THE ASSESSEE. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA, SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING ADDITION ON ACCOUNT OF CAPITAL GAIN PRESUM ING THAT THE ADDITION IS SOLELY BASED ON VALUATION OF REPORT CAL LED FOR U/S.55A(A) OF THE ACT. THE CIT(A) ERRED IN DELETIN G ADDITION ON ACCOUNT OF CAPITAL GAIN CONSIDERING THAT THE VALUAT ION REFERENCE MADE BY THE ASSESSING OFFICER WAS INVALID AND WITHO UT JURISDICTION. THE CIT(A) ERRED IN CONSIDERING THE CONTENTS OF VALUATION REPORT OF THE DVO IN VIEW OF THE HONBLE SUPREME COURTS DECISION IN THE CASE OF POORANMAL (1974) (9 3 ITR 505). ACCORDINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND T HAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNE D AUTHORIZED REPRESENTATIVE HAS SUPPORTED THE ORDER OF CIT(A) ON THE ISSUE. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ADDITION IN QUESTION HAS B EEN MADE ON ACCOUNT OF CAPITAL GAINS WHICH HAS BEEN MADE ON THE BASIS OF 3 VALUATION REPORT CALLED FOR BY DVO. THE ASSESSEE H AS RAISED AN OBJECTION THAT THE REFERENCE TO DVO FOR VALUING THE PROPERTY FOR VALUATION U/S.55A WAS WITHOUT JURISDICTION. FOR TH E SAKE OF CONVENIENCE, THE PROVISIONS OF SECTION 55A OF THE A CT ARE REPRODUCED AS UNDER: 'WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER, THE [ASSESS ING OFFICER] MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A V ALUATION OFFICER- (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIM ED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER, IF THE [ASSESSING OFFICER] IS OF OPINION TH AT THE VALUE SO [IS LESS THAN ITS FAIR MARKET VALUE]; (B) IN ANY OTHER CASE, IF THE [ASSESSING OFFICER] I S OF OPINION (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS 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 SUBSECTION (1) AND SUB-SECTIONS (3A) AND (4) OF SECTION 23, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTIO N 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957) , SHALL WITH THE NECESSARY MODIFICATIONS, APPLY IN RELATION TO S UCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY TH E WEALTH-TAX OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THA T ACT. EXPLANATION : IN THIS SECTION, 'VALUATION OFFICER' HAS THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH -TAX ACT, 1957 (27 OF 1957).] FOR THE WORDS 'IS LESS THAN ITS FAIR MARKET VALUE, THE WORDS' IS AT VARIANCE WITH ITS FAIR MARKET VALUE' SHALL BE SUBST ITUTED BY FINANCE ACT, 2012 (W.E.F. 1-7-2012).' FROM THE ABOVE PROVISIONS, IT IS NOTICED THAT UP T O 01.07.2012, THE ASSESSING OFFICER COULD MAKE REFERE NCE TO VALUATION OFFICER UNDER CLAUSE (A) OF SECTION 55A I N CASE OF VALUE OF ASSET CLAIMED BY ASSESSEE IN THE OPINION OF ASSE SSING OFFICER IS LESS THAN MARKET VALUE. IN THE CASE UNDER APPEAL, THE VALUE OF 4 LAND AS ON 01.04.1981 AS PER OPINION OF THE ASSESSI NG OFFICER IS MORE THAN MARKET VALUE CLAIMED BY THE ASSESSEE AND HENCE, THE ASSESSING OFFICER CANNOT REFER THE PROPERTY FOR VAL UATION BY VALUATION OFFICER UNDER CLAUSE (A) OF SECTION 55A O F THE ACT. FOR SIMILAR REASON AS ABOVE, THE ASSESSING OFFICER COUL D NOT REFER THE PROPERTY FOR VALUATION OFFICER UNDER CLAUSE (B)(I) OF SECTION 55A OF THE ACT. THE ASSESSING OFFICER COULD NOT REFER THE PROPERTY FOR VALUATION BY DVO UNDER CLAUSE (B)(II) OF SECTION 55 A AS THE ASSESSEE HAS ADOPTED THE VALUE AS ON 01.04.1981 ON THE BASIS OF VALUATION REPORT OF GOVERNMENT APPROVED VALUER SHRI ATUL THOMBARE. IN THE CASE OF SMT. SARALA N. SAKRANEY V S. ITO, A.Y. 2006-07 (2011) 140 TTJ 411 (MUM) HAS HELD THAT THE FAIR MARKET VALUE OF PROPERTY AS ON 01.04.1981 DECLARED BY THE ASSESSEE AS PER GOVERNMENT REGISTERED VALUERS REPORT BEING MOR E THAN FAIR MARKET VALUE AS ESTIMATED BY THE DVO ON REFERENCE B Y THE ASSESSING OFFICER, SAID REFERENCE IS NOT VALID AND CONSEQUENTLY, ESTIMATION OF FAIR MARKET VALUE OF THE PROPERTY AS MADE BY THE ASSESSEE HAS TO BE ACCEPTED. THE RATIO OF SMT. SAR ALA N. SAKRANEY (SUPRA) HAS BEEN LAID DOWN BY FOLLOWING TH E DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DA ULAL MOHTA (HUF) IN IT APPEAL NO.1031 OF 2008 DECIDED ON 22.09 .2008. IN VIEW OF ABOVE, IT IS EVIDENT THAT THE REFERENCE MAD E BY THE ASSESSING OFFICER FOR VALUATION OF PROPERTY AS ON 0 1.04.1981 IS WITHOUT JURISDICTION. 4.1 THE STAND OF THE ASSESSEE IS FORTIFIED FROM THE AMENDMENT MADE TO SECTION 55A W.E.F. 01.07.2012. IN ORDER TO REMOVE THE ABOVE HURDLE FOR REFERRING THE PROPERTY FOR VALUATI ON WHERE AS PER ASSESSING OFFICER, THE VALUE OF THE PROPERTY IS DIF FERENT FROM THE VALUE ADOPTED BY ASSESSEE, THE LEGISLATURE HAS REPL ACED THE WORDS IS LESS THAN FAIR MARKET VALUE BY THE WORD IS AT VARIANCE WITH ITS FAIR MARKET VALUE BY THE FINANCE ACT, 2012 W.E .F. 01.07.2012. THERE IS NOTHING BEFORE US TO SUGGEST THAT THE AMEN DMENT IS 5 RETROSPECTIVE. IN VIEW OF ABOVE FACTS AND DISCUSSI ON INCLUDING THE AMENDMENT TO SECTION 55A, THE CIT(A) RIGHTLY HELD T HAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDIT ION OF 93,52,345/- BY REFERRING THE PROPERTY FOR VALUE BY DVO U/S.55A OF THE ACT AND FOLLOWING THE SAME VALUATION REPORT OF THE DVO. ACCORDINGLY, THE ADDITION WAS IN QUESTION WAS RIGHT LY DELETED, WHICH NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHO LD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 28 TH OF APRIL, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 28 TH APRIL, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), AURANGABAD 4) THE CIT, AURANGABAD 5) THE DR, B BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE