Rameshchandra Maganlal Gandhi Vs ITO (ITAT Surat)
The ITAT Surat allowed the assessee’s appeal concerning computation of long-term capital gains (LTCG) arising from the sale of land during AY 2009-10. The assessee had adopted the fair market value (FMV) of the property as on 01.04.1981 based on a registered valuer’s report, while the Assessing Officer referred the matter to the Departmental Valuation Officer (DVO) and adopted a substantially lower value, resulting in an addition towards LTCG. The Tribunal noted that the assessment year involved was prior to AY 2013-14 and held that, under the unamended provisions of Section 55A, the DVO had no authority to reduce the FMV adopted by the assessee when such valuation was supported by a registered valuer’s report. Relying on the jurisdictional Gujarat High Court decision in Gauranginiben Shodhan, the Tribunal held that the reference to the DVO was not permissible in the facts of the case. Consequently, the addition made by the Assessing Officer was deleted and the appeal was allowed.
Core Issue: Whether, for AY 2009-10 (i.e., prior to the amendment of section 55A with effect from 01.07.2012), the Assessing Officer could refer a property to the Departmental Valuation Officer (DVO) for the purpose of reducing the fair market value (FMV) as on 01.04.1981 adopted by the assessee on the basis of a registered valuer’s report and thereby recompute long-term capital gains.
