Comparative study of Reference for valuation u/s 55A and 142A

1. Introduction:

Income tax Act, 1961 contains two provisions conferring on the Assessing Officer (AO) the power of making reference to District Valuation Officer (DVO) for valuation of any property or asset/ capital asset. Section 55A is included in Chapter IV under head E- Capital Gains whereas Section 142A is included in Chapter XIV relating to procedure for assessment. Both the sections empower the AO to refer a property or asset for determination of value/ investment on a particular date or in a particular period. However, the scope of power available to the AO and also defences available to the assessee under these two sections are substantially different. In this article, such differences are proposed to be explained on the basis of judicial precedents.

2. Section 55A:

2.1 Section 55A reads as under—

Reference to Valuation Officer.

55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer—

(a)		in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed is at variance with its fair market value;
(b)		in any other case, if the Assessing Officer is of opinion—

(i)		that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such per- centage of the value of the asset as so claimed or by more than such amount as may be prescribed in this behalf ; or
(ii)		that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do,

and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act.

Explanation.—In this section, "Valuation Officer" has the same meaning, as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957)

It may be seen that section 55A can be invoked for estimation of fair market value of a capital asset for the purposes of this chapter (i.e. chapter relating to capital gains).

2.2 Analysis of the Section:

(i)		Section 55A was inserted by Taxation Laws (Amendment) Act, 1972 w.e.f. 01-01-1973 and it provides for reference by the AO to a valuation officer for ascertaining the FMV of any capital asset where he differs from the report of the registered valuer in the matter of valuation. The relevant Rules are Rule 111AA and 111AB.
(ii)		The reference to the DVO can be made either under clause (a) or under clause (b) of section 55A.
(iii)		Clause (a) is applicable when the valuation of capital asset as declared by the assessee is supported by a report from the registered valuer and the AO is of the opinion that such valuation is less than fair market value of the asset (on or before 30-06-2012).
(iv)		Clause (a) is also applicable on or after 1-7-2012 where valuation as per registered valuer is at variance with the fair market value of the capital asset.
(v)		Clause (b) is applicable when valuation adopted by assessee is not supported by report from the registered valuer.
(vi)		Clause (b) has two sub-clauses. Sub-clause (i) is applicable when in the opinion of the AO, valuation adopted by the assessee is less than the fair market value by 15% of value of the asset or by Rs.25,000/-, as prescribed in Rule 111AA of the I.T. Rules, 1962.
(vii)		Sub-clause (ii) is applicable when, in the opinion of the AO, it is necessary to make a reference having regard to the nature of the asset and relevant circumstances.
(viii)		Prior to the decision of Hon'ble Apex Court in Smt. Amiya Bala Paul v. CIT [2003] 130/511/262 ITR 407, references u/s. 55A were also made for determination of cost of construction.
(ix)		In view of use of the expression 'it is necessary so to do', it becomes necessary for the AO to apply his mind before reference is made under sub-clause (ii). Where reference is made without application of mind, the reference made by the AO as well as the report received from the DVO will be invalid. Sajjankumar M. Harlalka v. Jt. CIT [2006] 100 ITD 418/284 ITR (AT) 156 (Mum.)

3. Section 142A:

3.1 Section 142A reads as under—

"142A. (1) The Assessing Officer may, for the purposes of assessment or reassessment, make a reference to a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment and submit a copy of report to him.

(2) The Assessing Officer may make a reference to the Valuation Officer under sub-section (1) whether or not he is satisfied about the correctness or completeness of the accounts of the assessee.

(3) The Valuation Officer, on a reference made under sub-section (1), shall, for the purpose of estimating the value of the asset, property or investment, have all the powers that he has under section 38A of the Wealth-tax Act, 1957 (27 of 1957).

(4) The Valuation Officer shall, estimate the value of the asset, property or investment after taking into account such evidence as the assessee may produce and any other evidence in his possession gathered, after giving an opportunity of being heard to the assessee.

(5) The Valuation Officer may estimate the value of the asset, property or investment to the best of his judgment, if the assessee does not co-operate or comply with his directions.

(6) The Valuation Officer shall send a copy of the report of the estimate made under sub-section (4) or sub-section (5), as the case may be, to the Assessing Officer and the assessee, within a period of six months from the end of the month in which a reference is made under sub-section (1).

(7) The Assessing Officer may, on receipt of the report from the Valuation Officer, and after giving the assessee an opportunity of being heard, take into account such report in making the assessment or reassessment.

Explanation.—In this section, "Valuation Officer" has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957)"

It may be seen that section 142A can be invoked for estimation of value including fair market value of an asset, property or investment for the purposes of assessment or reassessment.

3.2 Analysis:

(i)		This provision was initially inserted by Finance (No. 2) Act, 2004 Act w.r.e.f. 15-11-1972. It was amended by Finance Act, 2010 w.e.f. 1-7-2010. It was further amended by Finance (No. 2) Act, 2014 w.e.f. 1-10-2014.
(ii)		The provision as it existed at the time of amendment on 01-07-2010 provided that "for the purposes of making assessment or reassessment under this Act, where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or section 69B or fair market value of any property referred to in sub-section (2) of section 56 is required to be made, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him".
(iii)		After the amendment on 01-10-2014, it is provided that the Assessing Officer may, for the purposes of assessment or reassessment, make a reference to a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment and submit a copy of report to him and such reference can be made to the Valuation Officer under sub-section (1) whether or not the AO is satisfied about the correctness or completeness of the accounts of the assessee.
(iv)		The DVO will have all the powers as he had u/s. 38A of the Wealth Tax Act, 1957 for the purposes of estimating the value of the asset, property or investment.
(v)		Such valuation of asset, property or investment will be done by the DVO after considering such evidence as is produced before him by the assessee or gathered by him after giving opportunity of being heard to the assessee.
(vi)		A report shall be sent by him to the assessee as well as to the AO within a period of six months from the end of the month in which reference is made to him by the AO.

4. General v. Specific provision:

4.1 Section 142A is a general provision for estimation of value, including fair market value, of any asset, property or investment for the purposes of assessment/ reassessment, whereas section 55A is a special provision for estimating FMV of capital asset for the purposes of computing capital gains. Thus, the scope of section 142A is very large, being a general provision for enabling, through the DVO, estimation of the value/ fair market value of an asset, for the purposes of assessment/ reassessment. One may infer that Section 142A also includes reference to DVO for valuation for computation of capital gains. However, section 55A is a special provision which enables the AO to estimate only the fair market value of a capital asset and not any other asset, for the purposes of computation of capital gains. Thus, section 55A carves out special area for estimation of FMV of capital asset out of general area covered by section 142A which provides for estimation of value of every asset. Thus, as per the maxim Generalia specialibus non derogant, special provision will prevail over general provision and, therefore, where issue is of computation of capital gains for estimating the value of a capital asset, reference to DVO can only be made u/s. 55A and not u/s. 142A.

4.2 Relevant authorities:

For the proposition that special provision will prevail over general provision, reference may be made to the following authorities-

(i)		CIT v. Shahzada Nand & Sons[1966] 60 ITR 392 (SC):
		The doctrine, generalia specialibus non derogant, embodies a rule of construction, but it has no universal application. To invoke it, the general and special provisions should occupy the same field.
		This principle was also followed in Mathurdas Govinddas v. G.N. Gadgil, ITO [1965] 56 ITR 621 (Guj): Mandanlal Jajodia v. ITO [1965] 58 ITR 693 (Cal.)
(ii)		Girdharilal Nannelal v. CIT [1984] 147 ITR 529 (MP)(FB)
(iii)		Rao Bahadur Ravulu Subba Rao v. CIT [1956] 30 ITR 163 (SC)
(iv)		CIT v. Indian Molasses Co. (P.) Ltd. [1989] 45 /103/176 ITR 473 (Cal)
(v)		Addl. CIT v. Tarun Commercial Mills Ltd . [1978] 113 ITR 745 (Guj)
(vi)		Eicher Tractors Ltd. v. Dy. CIT [2003] 126/58 (Mag)/84 ITD 49 (Delhi) (SB)
(vii)		Bhagya Wanti Devi v. CIT [1994] 210 ITR 687 (Raj)
(viii)		Kirloskar Pneumatic Co. Ltd. v. Commissioner of Surtax [1994] 74/615/210 ITR 485 (Bom.)
(ix)		Kirloskar Pneumatic Co. Ltd.'s case (supra)
(x)		Forbes Forbes Campbell & Co. Ltd. v. CIT [1994] 74 /268/206 ITR 495 (Bom.)

4.3 Both sections 142A and 55A occupy the same field i.e. reference to valuation officer for estimation of value of an asset. However, section 142A provides in general reference for ascertainment of valuation/ fair market value of any asset for the purposes of assessment/ reassessment whereas section 55A is specific provision which provides for reference to valuation officer for estimation of fair market value of a capital asset for the purposes of computation of capital gains. Therefore, where the computation of capital gains is involved, reference can only be made u/s 55A for estimation of fair market value of capital asset. Therefore, the AO has no power to invoke Section 142A for estimation of FMV of a capital asset.

5. Extension of limitation for completing assessment/ reassessment is available, if reference is made u/s. 142A only:

5.1 Extension of limitation for completing reassessment is provided by clause (v) of Explanation 1 to section 153 only when reference to valuation officer is made u/s. 142A. Clause (v) of Explanation 1 reads as under—

Explanation 1.—For the purposes of this section, in computing the period of limitation—

Xxxx

Xxxx

(v) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub-section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer;

Shall be excluded.

Thus, no benefit of extension of limitation will be available to the AO when a reference u/s 55A is made. The benefit of extension of limitation for completing assessment/ reassessment can be availed of by the AO only when correct legal reference is made to the DVO u/s. 142A. No reference to DVO for determination of cost of acquisition and fair market value of capital asset at the time of sale can be made u/s. 142A for the purposes of computation of capital gains and, therefore, where such reference is made u/s. 142A, extension of limitation for completing assessment/ reassessment will not be available and such assessment/ reassessment completed beyond the statutory time limit prescribed u/s. 153(1) will be barred by limitation.

There is no provision in the Act which deals with the situation as to what would happen to a reference made to the DVO u/s. 55A where his valuation report is still awaited at the time of passing the assessment order. It has been held that such a reference to the DVO does not become invalid on the completion of the assessment proceedings before the receipt of the valuation report and that on receipt of the valuation report after completion of the assessment proceedings, the report would become part of the record which may enable the income tax authorities to take action as permissible under the Act, such as section 147, section 263, appellate power u/s. 250 or section 251, etc. The validity of such action will, of course, be open to challenge by the assessee in appropriate legal proceedings. ACC Ltd. v. DVO [2012] 21/397/[2013] 357 ITR 160 (Delhi); Bawa Abhai Singh v. Dy. CIT [2001] 117 /12/[2002] 253 ITR 83 (Delhi) and ICBI (India) (P.) Ltd. v. Jt. CIT [2008] 166 /123 (Bang.)(Mag.)

5.2 Assessment made for computation of capital gains by reference u/s. 142A may be held to be time-barred:

Where reference u/s. 142A was made for determination of FMV of immovable property for substituting the same as full value of consideration u/s 50C and the assessment order was passed beyond the time-limit laid down in section 153(1), ITAT Ahmedabad in Smt. Rashidaben Taher Morawala Badri Mohalla v. Dy. CIT [IT Appeal No. 1353 (AHD) of 2019, dated 19-10-2022] held that assessment so made was barred by limitation. The facts of this case were as under:-

"The assessee sold immovable property on 23.01.2015 in the form of office premises bearing No. 3,4,5,6,7,13 & 14, in building wing "CBI" at Wonder City situated at Katran village, Taluka-Haveli, Pune-District and also adjacent Terrance portion fora consideration of Rs. 1,50,00,000/-. On 09/11/2017, the A.O. referred the transaction to the Valuation Officer, Solapur u/s. 142A to ascertain the property value as on the date of sale. The stamp value of the property as on the date of sale was Rs. 2,21,40,900/-. The Valuation Officer submitted his report on14/08/2018 valued the Fair Market Value of the property at Rs. 1,80,39,000/-.

……..

Heard rival parties and perused the materials available on record including the Paper Book and Case Laws cited by the assessee counsel. Section 142A of the I.T. Act titled as 'Estimate by Valuation Officer in certain cases'. This section prescribes that for the purpose for making an assessment, where an estimate of the value of any investment referred to in sections 69, 69A, 69B are required to be made, the A.O. may require the Valuation Officer to make an estimate of such value and report the same to A.O. Thus the scope of section 142A is limited in its span only to determine the value of investment in respect of certain assets, such as, bullion, jewellery, valuable articles etc. In this section as well there is no power vested with A.O. to seek the help of Valuation Officer in respect of determination of capital gain prescribed undersection 48 of the Act.

…….

6.4. Reading of the above provisions makes it very clear that the Assessing Officer is necessarily to pass the assessment order within the time limit as prescribed under section 153(1) of the Act which is in this case namely 31.12.2017. However the Assessing Officer has wrongly referred the valuation of the immovable property under section 142A of the Act which is not provided under the provisions of the Income Tax Act. However after receipt of the Valuation Report from the DVO, the A.O. passed the assessment order on 28.09.2008 which is clearly barred by limitation which is not sustainable in law. Therefore, the assessment order is hereby invalid in law. Thus the ground no. 1 raised by the assessee is hereby allowed."

5.3 Hon'ble Gujarat High Court in CIT v. Gauranginiben S. Shodhan Indl. [2014] 45/253/367 ITR 238 held that ascertainment of fair market value with aid of DVO's report would have no relevance for purpose of determining full value of consideration received or accruing as a result of transfer of capital asset for purposes of section 48. [Headnotes from that judgment are as under—

"Section 55A, read with sections 48 and 50C, of the Income-tax Act, 1961 - Capital gains - Reference to Valuation Officer (Validity of reference) - Assessment year 2006-07 - Assessee sold a house property and Assessing officer opined that assessee had underestimated value of sale consideration of his house property by adopting lower rate as on date of sale and fair market value as on 1-4-1981 was also not correctly taken - He referred valuation to DVO under section 55A - Whether ascertainment of fair market value with aid of DVO's report as referred to in section 55A would have no relevance for purpose of determining full value of consideration received or accruing as a result of transfer of capital asset for purposes of section 48 and thus, reference to DVO for ascertaining fair market value of capital asset as on date of sale was wholly redundant - Held, yes - Whether in respect of fair market value as on 1-4-1981, since assessee relied on Registered Valuer's Report, Assessing Officer could not refer same under clause(b) of section 55A - Held, yes [Paras 11,12 &16][In favour of assessee]"

6. Reference u/s. 142A:

6.1 Scope of reference:

An idea about scope of section 142A may be drawn from the judgement of Hon'ble Apex Court in Smt. Amiya Bala Paul's case (supra). Hon'ble Apex Court in that case held that no reference u/s. 55A can be made for determination of cost of construction. "The power of the Assessing Officer under sections 131(1) and 133(6) is distinct from and does not include the power to refer a matter to the Valuation Officer under section 55A. Nor does section 142(2) allow him to do so." In order to overcome the absence of enabling power to make reference for determination of cost of construction or investment in the Act, section 142A was inserted by Finance (No. 2) Act 2004. The Memorandum explained the provision as under: -

"Estimates by valuation officer in certain cases:

For determining the cost of construction of properties, an Assessing Officer has been taking the assistance of a Valuation Officer by exercising his power vested in him under section 131 of the Income-tax Act which provides that the Assessing Officer shall have the same powers as are vested in a Court under the Code of Civil Procedure, 1908, when trying a suit. One such power is of "issuing commission" provided under clause (d) of sub-section (1) of the said section which inter alia empowers the court "to make a local investigation" and also "to hold a scientific, technical or expert investigation". The authority of Valuation Officer was created under the Wealth-tax Act by Taxation Laws (Amendment) Act, 1972 with effect from 15-11-1972. The scope of power under section 131 vested in an Assessing Officer to make a reference to the Valuation Officer for estimating the cost of construction of properties has been a matter of different legal interpretations.

With a view to remove any doubt in this regard, it is proposed to insert a new section 142A, with retrospective effect from 15-11-1972, so as to clarify that Assessing Officer has and always had the power to make a reference to the Valuation Officer.

Sub-section (1) of proposed section provides that where an estimate of the value of any investment referred to in section 69 or section 69B or the value of any bullion, jewellery or other valuable article referred to in section 69A or section 69B is required for the purposes of making any assessment or re-assessment, the Assessing Officer may require the Valuation Officer to make an estimate of the same and report to the Assessing Officer.

Sub-section (2) of the proposed section provides that the Valuation Officer to whom such a reference is made under sub-section (1) shall, for the purpose of dealing with such reference, have all the powers that he has under section 38A of the Wealth-tax Act, 1957.

Sub-section (3) of the proposed section provides that on receipt of the report from the Valuation Officer, the Assessing Officer may after giving the assessee an opportunity of being heard, take into account such report in making such assessment or reassessment."

Thus, there was a clear intention of the Legislature to insert the provision of section 142A for the purposes of determination of cost of construction and value of other investments referred to in section 69 or 69B. Since enabling power for making reference for the purposes of computing capital gains was already existing u/s. 55A as clarified by Hon'ble Apex Court in Smt. Amiya Bala Paul's case (supra), such power could not be deemed to be further provided in section 142A. Thus, clear dividing line is made for references u/s 55A and 142A, the former being confined to Chapter IV-E and the latter in respect of other matters covered u/ss. 69, 69A and 69B. Smt. Rashidaben Taher Morawala Badri Mohalla's case (supra); Asstt. CIT v. Shaik Ahmed Banafe [IT Appeal No. 1748 (HYD) of 2012, dated 12-2-2014]

6.2 Limitation on Power to make reference u/s. 142A:

Reference u/s. 142A is restricted to matters concerning sections 69, 69A or 69B and since subject matter of examination under sections 69, 69A or 69B is understatement in value of investments acquired during year,reference under section 142A could not have been made for determination of FMV as cost of acquisition or as full value of consideration. In this regard, reliance is placed on the decision in Dashrathbhai G. Patel v. Dy. CIT [2020] 116/229/182 ITD 327 (Ahd. - Trib.), wherein reference was made to the decision of Hon'ble Delhi Tribunal in Sumit Khurana v. Asstt. CIT [2011] 14 /44/48 SOT 92 (URO) for the proposition that no reference can be made under section 142A of the Act to the Valuation Officer for estimating the full value of consideration of the property for the purpose of computation of capital gains under section 48 of the Act.

6.3 Some relevant Authorities on the scope of reference u/s 142A are as under:-

(i)		Where assessee purchased a ready built house and it was not a case of investment in construction, provisions of section 142A are not attracted (AY 2014-15). Ananthakrishna Vasudev Aithal v. ITO [2023] 147/376 (Bang. - Trib.)
(ii)		DVO's report u/s 142A cannot be adopted without considering assessee's objection. CIT v. M. Nagaraja [2012] 25/118 (Kar.)(Mag.)
(iii)		No provisional assessment can be made by the AO subject to DVO's report in a reference u/s 142A as the Act does not contemplate an incomplete assessment. Darshan Buildcon v. ITO [2019] 111/12/416 ITR 66 (Guj)
(iv)		Reference can be made to DVO u/s. 142A for determination of fair market value of property for purpose of assessment in respect of properties received without consideration referred to in section 56(2). ITO v. Ms. Namita Singh [2011] 15/19/48 SOT 339 (Delhi)
(v)		No reference to DVO can be made u/s. 142A for valuation of properties unless incriminating materials or evidences have been found or seized during the course of search/ survey etc. indicating under-statement of investment in such properties. CIT v. Abhinav Kumar Mittal [2013] 30/54 (Mag.)/351 ITR 20 (Delhi)

6.3 Circular No. 1/2015 dated 21-01-2015:

This Circular explains amendments carried out by Finance (No.2) Act, 2014 whereby provisions of Section 142A of the Act was substituted w.e.f. 1-10-2014. The Circular reads as under:—

"43. Estimate of value of assets by Valuation Officer and time limit for completion of assessments where reference made

43.1 The provisions contained in section 142A of the Income-tax Act, before its amendment by the Act, provided that the Assessing Officer may, for the purpose of making an assessment or reassessment, require the Valuation Officer to make an estimate of the value of any investment, any bullion, jewellery or fair market value of any property. On receipt of the report of the Valuation Officer, the Assessing Officer may after giving the assessee an opportunity of being heard take into account such report for the purposes of assessment or reassessment.

43.2 Section 142A of the Income-tax Act does not envisage rejection of books of account as a pre-condition for reference to the Valuation Officer for estimation of the value of any investment or property. Further, the said section 142A does not provide for any time limit for furnishing of the report by the Valuation Officer.

43.3 Accordingly, section 142A has been substituted so as to provide that the Assessing Officer may, for the purposes of assessment or reassessment, require the assistance of a Valuation Officer to estimate the value, including fair market value, of any asset, property or investment and submit the report to him. The Assessing Officer may make a reference to the Valuation Officer whether or not he is satisfied about the correctness or completeness of the accounts of the assessee. The Valuation Officer, shall, for the purpose of estimating the value of the asset, property or investment, have all the powers of section 38A of the Wealth-tax Act, 1957. The Valuation Officer is required to estimate the value of the asset, property or investment after taking into account the evidence produced by the assessee and any other evidence in his possession or gathered, after giving an opportunity of being heard to the assessee. If the assessee does not co-operate or comply with the directions of the Valuation Officer, he may estimate the value of the asset, property or investment to the best of his judgment.

43.4 It has also been provided that the Valuation Officer shall send a copy of his estimate to the Assessing Officer and the assessee within a period of six months from the end of the month in which the reference is made. On receipt of the report from the Valuation Officer, the Assessing Officer may, after giving the assessee an opportunity of being heard, take into account such report in making the assessment or reassessment.

43.5 Sections 153 and 153B of the Income-tax Act have also been amended to provide that the time period beginning with the date on which the reference is made to the Valuation Officer and ending with the date on which his report is received by the Assessing Officer shall be excluded from the time limit provided under the aforesaid section for completion of assessment or reassessment.

43.6 Applicability:—These amendments take effect from 1st October, 2014."

6.4 The Circular was examined by the Tribunal in Dashrathbhai G. Patel v. Dy. CIT [2020] 116 /229/182 ITD 327 (Ahd. - Trib.) and it was observed as under:—

"In the aforesaid Circular also, Board did not express any material departure from the erstwhile provision except that erstwhile provisions of section 142A of the Act did not envisage rejection of books of account as a precondition per se before making reference to Valuation Officer. The time limit for furnishing report by the valuation report was also found absent by the Board. Thus, the scope of erstwhile provisions of Section 142A of the Act as well as the substituted provision continue to envisage estimation of the value of any investment referred to in Section 69, 69A or 69B of the Act as its object".

Thus, reference u/s 142A could not have been made for computation of capital gains by estimating FMV through DVO for substituting cost of acquisition or full value of consideration.

6.5 The power to make reference to DVO by DDIT was provided by the Finance Act, 2017 u/s. 132 (9B) w.e.f. 1-4-2017 and prior to this date, any reference made by DDIT to DVO will be invalid. Pr. CIT v. Narula Educational Trust [2023] 150 /83/292 Taxman 456 (Cal.)

7. Reference u/s 55A can be made only under specified circumstances:

7.1 A reference to determine cost of acquisition u/s 55A can be made under following circumstances:

(i)		FMV of the asset as on 1-4-1981/1-4-2001 (either in the hands of the assessee or in the hands of the previous owner) to be taken as cost of acquisition for computation of capital gains in the hands of the assessee.
(ii)		FMV of the security/shares for determination of cost of acquisition u/s 49(2AA) or u/s 49(2AB).
(iii)		FMV of the asset, to be considered as cost of acquisition, which has been taken into account for the purposes of Income Declaration Scheme, 2016 as per section 49(5).
(iv)		FMV of the asset to be adopted as cost of acquisition, which has been taken into account for computation of accreted income on the specified date as referred to in section 115TD(2) as per section 49(8).
(v)		FMV of the asset to be taken as cost of acquisition on the date when the asset is converted from stock-in-trade into investment as provided in section 28(via) as per section 49(9).
(vi)		FMV of the asset on the date on which previous owner became the owner.
(vii)		FMV of an asset as on 01-04-1981/01-04-2001 u/s. 55.

7.2 A reference u/s 55A can be made for determination of FMV to be deemed as Full Value of Consideration (FVC) under following circumstances:

(i)		FMV on the date when capital asset is received under an insurance from the insurer u/s. 45(1A).
(ii)		FMV on the date when capital asset is converted into stock-in-trade u/s. 45(2).
(iii)		FMV on the date when capital asset was received by the specified person from the specified entity on its reconstitution as provided u/s. 45(4).
(iv)		MV (or FMV) of the assets received by the shareholder on the liquidation of the company as required u/s. 46(2).
(v)		FMV of the asset on the date of transfer deemed as full value of consideration u/s. 50B(2).
(vi)		FMV of the asset being land or building or both as required u/s. 50C(2).
(vii)		FMV of the asset to be treated as full value of consideration as required u/s. 50D.
(viii)		FMV where an asset is exchanged with another asset [Section 2(47)].

7.3 Limitations on reference u/s. 55A:

(i)		A reference to DVO u/s. 55A for estimation of FMV at the time of acquisition and at the time of sale can be made only when law provides for substitution of cost of acquisition by FMV and FVC by FMV. If law does not provide so, the reference will be invalid.
(ii)		For the AY 2017-18 and earlier years, there is no provision to substitute FMV as FVC in case of unquoted equity shares. This provision (section 50CA) was brought into the statute book by the Finance Act, 2017 w.e.f. 01-04-2018 (AY 2018-19). A reference may be made to the following authorities in this regard:-

i.		Eldeco Infrastructure & Properties Ltd. v. CIT [2012] 23/17/52 SOT 207 (Delhi) (URO)
ii.		Analjit Singh v. Dy. CIT [2018] 92/310 (Delhi – Trib.)
iii.		Asstt. CIT v. Manoj Arjun Menda [IT Appeal No. 1710 (Bang.) of 2016, dated 4-1-2021]
iv.		Arun Kirpal v. Asstt. CIT [IT Appeal No. 2335 (Delhi) of 2014, dated 17-5-2014]

(iii)		Where actual purchase price is opted as cost of acquisition, no reference to DVO can be made for determination of FMV.
(iv)		Section 50C cannot be applied to refer the shares to valuation officer for determination of FMV as full value of consideration. ACIT v. Raj Arjun Menda [IT Appeal No. 1720 (Bang) of 2016, dated 20-2-2020]
(v)		Section 55A is meant only to ascertain fair market value of a capital asset and not to determine full value of consideration received as a result of transfer and, therefore, it has its own limitation for its operation. ITO v. Chandrakant R. Patel [2011] 11/180/131 ITD 1 (Ahd. - Trib.). Thus, where section 48 does not prescribe determination of capital gain on fair market value, it is out of ambit of reference prescribed under section 55A.

8. Conclusion:

(i)		Section 142A is a general provision for reference to the DVO in respect of any asset for the purposes of assessment/ reassessment whereas section 55A is a special provision for reference to DVO for determination of FMV of capital asset for the purposes of computation of capital gains.
(ii)		No extension of limitation u/s 153 is available for a reference made u/s. 55A.
(iii)		A reference to DVO can be done only when the AO is empowered by law for substituting FMV as FVC of unlisted shares. The power to substitute FMV as FVC provided u/s. 50CA is effective from AY 2018-19 onwards and is not applicable for AY 2016-17. If it had been possible to substitute FVC by FMV in the AY 2016-17 for computing capital gains u/s. 48, there was no need to enact section 50CA.
(iv)		Prior to AY 2018-19, section 55A could not have been invoked for determination of FMV of unlisted shares (being capital asset) for substituting the same as FVC as there was no enabling provision for doing so for earlier assessment years while computing capital gains u/s. 48.
(v)		Reference u/s. 142A for estimation of value of any asset, property or investment cannot provide unbridled power to the AO to get extension of limitation provided u/s 153 in every case as every assessee/ taxpayer is dealing with sale, purchase or income from asset, property or investment.
(vi)		If the AO can refer any asset, property or investment for estimation of value including fair market value, whether such estimate is relevant or not for the purposes of assessment or reassessment, it will make the provision of section 153 otiose and the AO will get unlimited extension.
(vii)		Relevancy of valuation has to be considered for attributing validity to the reference made to the DVO. If FMV can be substituted neither as cost of acquisition nor as FVC, reference u/s 55A will be invalid.
(viii)		Sub-section (6) of section 142A mandates the valuation officer to submit his report within six months to the AO and the assessee. But if the DVO does not submit his valuation report within 6 months, there is no unlimited extension of limitation by virtue of clause (v) of Explanation 1 to section 153. To contend that mere reference to DVO u/s. 142A may provide unlimited limitation to the AO to complete the assessment/ reassessment if report from DVO is not received will lead to absurd consequences. This cannot be the intention of the Legislature. Such extension of limitation under Explanation 1 (v) of Section 153 can be only up to 6 months being the time period provided to the DVO u/s. 142A(6).