Section 55 of Income Tax Act : Can Assessing Officer Reject , the valuation report ?
Section 55 of Income Tax Act : Can Assessing Officer Reject , the valuation report ?
Section 55(2)(b)(i) provides that where the capital asset has became property of the assessee before 01.04.2001, then the cost of acquisition of such an asset will be the actual cost to the assessee or fair market value as on 01.04.2001 at the option of the assessee.
The assessee can opt for either value.
Here is an interesting case as under on the same issue:
DCIT Vs Ajanta Tubes Ltd. (ITAT Delhi)
ITA No. 4432/Del/2014
Date of Judgement/Order : 05/09/2019 :-
In the present case, assessee had sold its land and building.
Assessee had taken the cost of acquisition for land as per valuation report as at 1-4-1981 as against the book value.
AO rejected the valuation report stating that it was without any basis and had taken the cost of the land as per the audited balance sheet for the purpose of arriving at the indexed cost of land.
ITAT state that assessee has been given an option according to the provisions of section 55 (2) (b) of the income tax act to adopt the fair market value as on 1/4/1981 by submitting the valuation report from an approved valuer to substitute in option to the cost of acquisition of the asset.
Therefore, this is a beneficial provision.
The learned assessing officer has not put on record any evidence to show that the valuation report obtained by the assessee is devoid of any merit or the prevailing rate as on that date on 01/04/1981 of the similar property were less.
In view of this, the rejection of the valuation report by the learned assessing officer cannot be accepted.
Hence, the appeal filed by the revenue is dismissed
ITAT Mumbai in Rashmikant Baxmi (Huf), Mumbai vs Assessee on 30 September, 2015 :- ITA. Nos. 3711 & 6871/Mum/2012
It has been held that Assessing Officer was not justified in rejecting the valuation report of assessee as on 01.04.1981 obtained by him from registerd Valuer and referred the same to DVO.
Accordingly, the order of CIT(A) was set aside and Assessing Officer is directed to allow the claim of assessee as prayed.
Further, Mumbai Tribunal in case of Sajjankumar M. Harlalka vs. Jt.CIT (2006) 102 TTJ 974 (Mumbai Tribunal) and ITAT, Mumbai in case of ITO vs. Smt. Lalitaben Kapadia (Mum) (2008) 115 TTJ 938 has also expressed similar view.
