Balubhai Mustufabhai Mahida Vs DCIT (ITAT Surat)
The assessee appealed against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2012-13 relating to additions concerning valuation of land, indexed cost of acquisition, cost of improvement, deduction under Section 54B, and treatment of agricultural income.
The assessee had sold two parcels of land situated at Village Valak, Kamrej, during the relevant financial year. While computing long-term capital gains, the assessee claimed indexed cost of acquisition and cost of improvement based on a valuation report of a Government Registered Valuer as on 01.04.1981. The Assessing Officer (AO) considered the valuation to be on the higher side and referred the matter to the Departmental Valuation Officer (DVO) under Section 55A of the Income-tax Act. As the DVO’s report was not received before completion of assessment, the AO denied indexed cost of acquisition and cost of improvement and treated the entire sale consideration as long-term capital gain. The AO also disallowed deduction under Section 54B and treated agricultural income of ₹3,12,400 as income from undisclosed sources.
Before the Commissioner (Appeals), the assessee contended that the valuation was supported by a Government-approved valuer’s report and that the reference to the DVO was invalid. The assessee also challenged the disallowance of cost of improvement, Section 54B deduction, and treatment of agricultural income. After obtaining a remand report, the Commissioner (Appeals) upheld the DVO-based valuation, granted partial relief regarding cost of improvement, but confirmed the disallowance under Section 54B and the addition relating to agricultural income.
