ITA No. 4586/Mum./2011, (Assessment Year: 2008-09). Case: Dy. Commissioner of Income Tax Vs Mr. S.B. Thakkar. Bombay ITAT High Court

Case NumberITA No. 4586/Mum./2011, (Assessment Year: 2008-09)
CounselFor Appellant: None and For Respondents: Mrs. Parminder
JudgesB. Ramakotaiah, Member (A) and Amit Shukla, Member (J)
IssueIncome Tax Act, 1961 - Sections 143(3), 263, 45(2), 55A, 55A(a)
Judgement DateApril 18, 2013
CourtBombay ITAT High Court


Amit Shukla, Member (J), (ITAT Mumbai 'E' Bench)

  1. The present appeal is preferred by the Revenue challenging the impugned order dated 25th March 2011, passed by the learned Commissioner (Appeals)-XXXIV, Mumbai, for the quantum of assessment passed under section 143(3) of the Income Tax Act, 1961 (for short "the Act"), for the A.Y. 2008-09. The sole dispute in this appeal is with regard to the direction of the learned Commissioner (Appeals) to delete the addition of ` 30,03,122, which was based on DVO's report by holding that the Assessing Officer has no jurisdiction to refer the matter to the valuation officer under section 55A ignoring the fact that the fair market value of the property differs by more than 15%.

  2. Facts in brief:- The assessee was 1/4th owner of the plot bearing CTS no. 480/481/1, having area of 298479.26 sq. ft. situated at Ranisati Market, Malad (East). The assessee and other co-owners had entered into a development agreement dated 14th October 2003, with M/s. K. Raheja Universal Pvt. Ltd. after converting the land into stock-in-trade in the financial year 2003-04 and valued the same at ` 7,37,50,000. During the year, the assessee has offered sale proceeds of constructed area Tower-A and Tower-B to be taxed under the head "Business Income". Simultaneously, the assessee has also offered the income under the head "Capital Gain" on transfer of land shown in the closing stock as per the provisions of section 45(2). For the purpose of cost of acquisition, the assessee has taken the value of the said property as on 1st April 1981 at ` 190 per sq.ft. The fair market value was taken at ` 5,67,11,059 and indexed cost for purchase has been shown at ` 1,05,29,163. As a result, long term capital loss was worked out at ` 5,83,942. In order to verify the genuineness of the market value as on 1st April 1981, the Assessing Officer made a reference to the DVO under section 55A. The DVO, vide his report dated 21st December 2010, took the value of the property as on 1st April 1981 at ` 3,73,74,000 instead of ` 5,67,11,059. Detailed objections were made before the Assessing Officer which, however, was rejected and, as a result, addition of ` 30,03,122, was made in the computation of long term capital gains based on the valuation report submitted by the DVO.

  3. Before the learned Commissioner (Appeals), the assessee submitted that the reference under section 55A to the DVO was not made in accordance with the provisions of law, as all the conditions required for making reference to the DVO...

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