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The word ‘may’ used in the sub-sec. (2) to sec. 50C do not give discretion to the A.O. to refer or not to refer the matter to the DVO

Mrs Asha Bharat Shah Vs ITO (ITAT Mumbai)

 The Ld. Counsel submitted that the DVO has determined the fair market value of the property as on 1.4.1981 at 29.62 lakhs as against the value declared by the assessee at 43.10 lakhs. It is argued that no reference can be made by the DVO for determining the lesser fair market value and this issue stands covered in favour of the assessee by the decision of the ITAT Mumbai in the case of Smt. Sarala N. Sakraney vs. ITO 46 DTR (Mum)(Trib) 208. He, therefore, pleaded that the A.O. may be directed to adopt the fair market value as per valuation made by assessee’s valuer. We have also heard the Ld. D.R.After elaborately discussing the provisions of section 55A and relying on the decision in the case of CIT vs. Daulal Mohta (HUF) 1031 of 2008 judgment dated 22nd September, 2008 and held as under:-

“14. In view of the aforesaid decisions, we are of the view that reference by the AO to the DVO under s.55A for valuation of fair market value of the property as on 1st April, 1981 is not valid for the reason that fair market value declared by the assessee as per Government registered valuer’s report was more than the fair market value as estimated by the DVO. Since determination of the fair market value as on 1st April, 1981 was based on the report of the DVO, the same is held to be invalid. Consequently, estimation of the fair market value of the property as on 1st April, 1981 as made by the assessee is directed to be accepted. Ground no.1 of the assessee is allowed.

In the present case, the fair market value declared by the assessee as on 1.4.1981 is more than the fair market value determined by the DVO, hence the assessee’s case is squarely covered by the decision of the ITAT Mumbai in the case of Smt. Sarala N. Sakraney (supra) and accordingly ground no.2 is allowed and the A.O. is directed to adopt the fair market value declared by the assessee as per the valuation report as on 1.4. 1981.

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Asha Bharat

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