The Asstt. Commissioner of Income-tax, Hoshiarpur V. The Jammu Cooperative Wholesale Ltd, Jammu

ITA 3/ASR/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2472 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Keywords: Capital asset; Cost of acquisition; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR [JAMMU CAMP JAMMU] BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NO. 03(ASR)/2014 ASSESSMENT YEAR: 2004-05 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2, JAMMU. VS. THE JAMMU COOPERATIVE WHOLESALE LTD., CHILD HOSPITAL ROAD, JAMMU. PAN:AAAJJ0397H (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R.K. SHARDA (D R.) RESPONDENT BY: SH. TARUN BANSAL, (CA.) DATE OF HEARING: 22.12. 2015 DATE OF PRONOUNCEMENT: 05 .01.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT, JAMMU, DATED 07.10.2013, FOR THE ASST. YEAR 20 04-05. 2. THE FOLLOWING GROUNDS OF APPEAL HAS BEEN TAKEN B Y REVENUE. 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN ALLOWING THE RELIEF ON ACCOUNT OF CAPITAL GAINS ON SALE OF LAND. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT BY HOLDING THAT THE INDEXATION BENEFIT CAN BE AVAIL ED BY THE ASSESSEE AS THE ASSESSEE HAS SHOWN COST OF ACQUISIT ION OF THE ASSETS AS NIL. ITA NO. 03(ASR)/2015 ASST. YEAR 2004-05 2 3. THE BRIEF FACTS AS NOTED IN THE ASSESSMENT ORDER ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SOLD A PLOT FOR A CONSIDERATION OF RS.2 CORERS AND DECLARED A CAPITAL LOSS ON SALE OF SUCH LAND AT RS. 401.90 LACS. THE VALUE OF THIS PLOT IN THE BALANCE SHEET OF ASSESSEE WAS NIL, HOWEVER, ON THE BASIS OF A REPORT FROM AN APPROVED VALUER THE ASSESSEE ARRIVED AT FAIR MARKET VALUE OF THIS PLOT AS ON 01.04.1981 AT RS.1.30 CRORES AND TREATED THE SAME A S COST OF ACQUISITION AND THEREAFTER, IT INDEXED THE COST OF ACQUISITION AT RS.601.90 LACS AFTER INDEXING WITH THE COST INFLATION INDEX. THE ASSESSI NG OFFICER HELD THAT SINCE THE COST AS PER THE BALANCE SHEET OF THE ASSE SSEE WAS NIL, THEREFORE, COST OF LAND WAS NIL TO ASSESSEE AND THEREFORE, HE DID NOT ALLOW THE COST OF ACQUISITION AT FAIR MARKET VALUE AND ALSO DID NOT A LLOW THE APPLICATION OF COST INFLATION INDEX AND WORKED OUT THE CAPITAL GAI N AT RS.2,00,00,000/- BEING THE TOTAL CONSIDERATION RECEIVED BY ASSESSEE. 4. AGGRIEVED BY THE ORDER THE ASSESSEE FILED APPEAL BEFORE LEARNED CIT(A) AND LEARNED CIT(A) ALLOWED THE RELIEF BY HOL DING AS UNDER. 6.9. GROUND OF APPEAL NO 10 & 11 RELATES TO CAPIT AL GAINS OF RS. 2 CRORE ON SALE OF LAND. THE APPELLANT HAS ARGUED THAT IT H AS SOLD A LAND TO JAMMU DEVELOPMENT AUTHORITY FOR RS.2 CRORES AND THE SAID LAND WAS ACQUIRED BEFORE 01.04.1981 AND ACCORDINGLY THE MARKET VALUE AS ON 01.04.1981 SHOULD BE ALLOWED AS COST OF ACQUISITION AND FURTHE R INDEXATION SHOULD BE ALLOWED ON SUCH VALUE AS THE LAND UNDER QUESTION IS A LONG TERM CAPITAL ASSETS. ON THE PERUSAL OF THE RECORDS OF THE CASE A ND PROVISION OF THE INCOME TAX ACT IT IS OBSERVED THAT THE PLEA OF THE APPELLANT IS GENUINE, AND ACCORDINGLY A LETTER WAS ISSUED TO THE TEHSILDAR, J AMMU VIDE LETTER NO ITA NO. 03(ASR)/2015 ASST. YEAR 2004-05 3 CIT(A)/JMU/627 DATED 19.06.2013 TO PROVIDE THE VALU E OF LAND UNDER CONSIDERATION AS ON 01.04.1981. THE TEHSILDAR, JAMM U ISSUED A LETTER NO 1211/08 DATED 22/07/2013 SPECIFYING THAT THE VALUE OF SUCH LAND IN THE YEAR 1980-81 WAS AROUND 15.00 TO 16.00 LAKHS PER KA NAL. THE LAND SOLD BY THE APPELLANT IS 5 LAKHS/KANAL COMES TO RS.75 LA KHS AND INDEXED COST COMES TO RS.3.47 CRORES. THEREFORE, THE TRANSACTION RESULTS INTO CAPITAL LOSS. THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED A ND A RELIEF OF RS.2.00 CORE IS ALLOWED. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 6. THE LEARNED DR, AT THE OUTSET, SUBMITTED THAT SI NCE COST OF PLOT AS PER BALANCE SHEET OF ASSESSEE WAS NIL, THEREFORE, T HE ASSESSEE WAS NOT ENTITLED TO TAKE FAIR MARKET VALUE AS ON 1.4.1981 A ND HENCE, THE AO HAD RIGHTLY NOT ALLOWED INDEXATION THEREOF. 7. THE LEARNED AR, ON THE OTHER HAND, SUBMITTED THA T THE ASSESSEE HAS TAKEN FAIR MARKET VALUE AS PER PROVISION OF SEC TION 55(2)(B)(I) OF THE ACT WHEREIN IT HAS BEEN SPECIFICALLY PROVIDED THAT IF THE ASSET WAS ACQUIRED BEFORE 1.4.1981 THE ASSESSEE IS AT LIBERTY TO TAKE FAIR MARKET VALUE OF PROPERTY AS ON 1.4.1981. THE LEARNED AR FU RTHER RELIED UPON THE CASE LAW OF CIT VS. RAJA MALWINDER SINGH REPORTED I N 334 ITR 48 DECIDED BY HON,BLE PUNJAB & HARYANA HIGH COURT. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THESE ARE T HE UNDISPUTED FACTS THAT THE ASSET HELD BY ASSESSEE WAS A CAPITAL ASSET AND THE SAME HAS BEEN HELD BY ASSESSEE CONTINUOUSLY. THE ONLY DISPUT E RAISED BY DEPARTMENT IS THAT SINCE THE VALUE OF SUCH LAND AS PER BOOKS OF ACCOUNTS ITA NO. 03(ASR)/2015 ASST. YEAR 2004-05 4 OF ASSESSEE WAS NIL AND HENCE ASSESSEE WAS NOT ENTI TLED TO TAKE FAIR MARKET VALUE AS ON 1.4.1981 AND FURTHER INDEXATION THEREON WAS NOT ALLOWABLE. WE FIND THAT SECTION 55(2)(B)(1) HAS BEE N ENACTED SPECIFICALLY FOR COVERING SUCH CASES WHERE THE ASSET IS HELD BY ASSESSEE PRIOR TO 1.4.1981 AND THEREFORE, COST OF ACQUISITION IN SUCH CASES HAS TO BE TAKEN AT OPTION OF THE ASSESSEE AS FAIR MARKET VALUE AS O N 1.4.1981. THE ASSESSEE HAS ADOPTED FAIR MARKET VALUE AS ON 1.4.19 81 ON THE BASIS OF VALUATION REPORT OF APPROVED VALUER AND THE LEARNED CIT(A) HAS FURTHER VERIFIED SUCH VALUATION ON THE BASIS OF VALUE OF SU CH LAND AS ON 1.4.1981 FROM TEHSILDAR, JAMMU. THE SAID TEHSILDAR, JAMMU HA D ALSO SPECIFIED THAT THE SAID LAND WAS OWNED BY ASSESSEE FIRM 1964- 65 ONWARDS. WE FURTHER FIND THAT THE HONBLE PUNJAB AND HARYANA HI GH COURT IN THE CASE OF CIT VS. RAJA MALWINDER SINGH (SUPRA) HAS HELD TH AT WHERE THE VALUE OF PROPERTY WAS NOT ASCERTAINABLE FOR THE PURPOSES OF LEVY OF CAPITAL GAINS THE COSTS OF ACQUISITION TO BE TAKEN IS FAIR MARKET VALUE AS ON 1.04.1981. THE RELEVANT FINDINGS OF THE HONBLE COURT ARE REPR ODUCED BELOW. FOR THE ASSESSMENT YEARS 1977-78, THE ASSESSEE SOL D PLOTS OF LAND FOR CONSIDERATION ON WHICH TAX UNDER THE HEAD OF CAPIT AL GAINS WAS SOUGHT TO BE LEVIED. THE ASSESSEE CONTENDED THAT THE PREVI OUS OWNER WAS AN EX- RULER OF THE PEPSU STATE AND SINCE THE ASSET WAS AC QUIRED UNDER THE INSTRUMENT OF ANNEXATION ITS COSTS OF ACQUISITION C OULD NOT BE ASCERTAINED AND THAT CAPITAL GAINS TAX WAS ATTRACTED ONLY WHEN THE COST OF ACQUISITION WAS CAPABLE OF BEING ASCERTAINED. THIS PLEA WAS REJ ECTED AND THE ASSESSING OFFICER ASSESSED THE CAPITAL GAINS TAKING THE MARKET VALUE AS ON JANUARY 1, 1954 OR JANUARY 1,1964 AS THE COST OF AC QUISITION DEPENDING ON THE DATES SPECIFIED UNDER SECTION 55(2) OF THE A CT, AS APPLICABLE TO THE YEAR OF ASSESSMENT. ON APPEAL, THE COMMISSIONER (AP PEALS) AFFIRMED THIS. HOWEVER, THE TRIBUNAL REVERSED THE VIEW FOLLOWING B .C. SRINIVASA SETTY [1981] 128 ITR 294(SC). ON A REFERENCE: ITA NO. 03(ASR)/2015 ASST. YEAR 2004-05 5 HELD, THAT THE ASSESSEE ACQUIRED THE PROPERTY BY SU CCESSION FROM THE PREVIOUS OWNER. THE CONTENTION THAT THE VALUE WAS I NCAPABLE OF BEING ASCERTAINED, WAS NOT TENABLE. IT WAS NOT THE CASE O F THE ASSESSEE THAT THE LAND HAD NO MARKET VALUE AT ALL ON THE DATE OF ITS ACQUISITION. EVEN WHERE THE COST OF ACQUISITION OF THE CAPITAL ASSET CANNOT BE ASCERTAINED BUT THE ASSET HAS A MARKET VALUE, CAPITAL GAINS TAX WILL BE ATTRACTED BY TAKING THE COST OF ACQUISITION TO BE THE FAIR MARKET VALUE AS ON JANUARY, 1, 1954 OR ON A DATE STATUTORILY SPECIFIED OR AT THE OPTION BY AS SESSEE, MARKET VALUE ON THE DATE OF ACQUISITION. IN VIEW OF THE ABOVE FINDING OF THE HONBLE PUNJAB & HARYANA HIGH COURT AND IN VIEW OF THE SPECIFIC PROVISIONS OF THE ACT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A) AND THEREF ORE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REV ENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JANUARY, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED: 07.01.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.