Issue/Justification
This section empowers the assessing officer to refer the matter to the valuation officer for the purposes of ascertaining the fair market value of the capital asset.
Under clause (a), the power has been given to the valuation officer to refer the matter, where the value of the asset has been claimed by the assesse in accordance with the estimate made by the registered valuer and the assessing officer is of the opinion that the value is in variance with its fair market value.
The variance has not been defined by the board and hence it is creating lot of difficulties to the assesses as even in case of minor variation, the matters are getting referred to the valuation officer.
Further under clause (b), the assessing officer can refer the matter where he is of the opinion that the fair market value of the asset exceeds the value claimed by the assesse by more than such percentage of the value of the asset or by more than such amount as may be prescribed.
The above limit has been prescribed under Rule 111AA by IT (Fourth Amendment) Rules, 1972. The limit in percentage is 15% and in value is Rs 25,000.
Looking at the situation today and the values of immovable properties, the limits defined are too less and needs a revision
Budget 2018 Suggestion by ICAI
It is recommended that the meaning of variance under clause (a) be defined and given a reasonable tolerance limit. If the variance is within such limits, matter should not be referred to the valuation officer.
Further it is also recommended that the limits prescribed under Rule 111AA be enhanced, percentage being 25% and value being Rs 10,00,000 so that substantial litigation on the reference to valuation officer will be reduced.
OFFHAND
The suggestion pertains to the tolerance limit wprt the value in variance with its fair market value. As is common knowledge and experience in recent times, especially in the aftermath of the historical ‘demonetization’ . so also the new rules and regulations brought in say, the RERA, the real estate transactions, in terms of ‘ monetary value’ /’numbers’ has become quite unpredictable, far more than before. With that in focus, one thinks, a revision of the limit deserves consideration either way-that is, both above or below the tolerance level !