ITAT Allows Appeal as DVO Reference Under Section 55A Was Invalid for AY 2010-11

Dipakkumar Someshwar Pandya Vs ITO (ITAT Ahmedabad)

The assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Ahmedabad, against the order of the Commissioner of Income Tax (Appeals)-5, Ahmedabad, for Assessment Year 2010-11. The dispute related to the computation of long-term capital gains arising from the sale of a one-third share in an immovable property situated at Saijpur Bogha, Ahmedabad.

The assessee had sold the property through a sale deed dated 06.05.2009 for a consideration of ₹41,00,000 and had declared a long-term capital loss of ₹33,25,159 in the return of income. The loss was computed on the basis of a valuation report dated 28.05.2014 prepared by a registered valuer, who determined the value of the property as on 01.04.1981 at ₹35,24,600, resulting in the assessee’s one-third share being valued at ₹11,74,867.

The Assessing Officer referred the matter to the Departmental Valuation Officer (DVO) for determination of the fair market value as on 01.04.1981. The DVO estimated the value of the entire property at ₹16,67,000, resulting in a value of ₹5,56,000 for the assessee’s one-third share. The DVO also determined the value of the property as on 06.05.2009 at ₹44,01,000. Based on the DVO’s report, the Assessing Officer rejected the assessee’s computation and recomputed the long-term capital gain at ₹8,87,080, which was added to the income of the assessee.