Income Tax Officer, Ward -2, Karwar., Karwar V. Pandurang Pokke Prabhu Family Trust., Ankola

ITA 32/PAN/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93600 (ITAT-PANAJI)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 13-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANAND SHANKAR MARATHE
• Assessee Lawyers: RAGHU PIKALE
• Keywords: Capital asset; Maximum Marginal Rate; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 32 /PNJ/201 5 (ASST. YEAR : 20 11 - 1 2 ) ITO, WARD - 2, KARWAR. VS. SHRI PANDURANG POKKE PRABHU FAMILY TRUST, MANAGER : NAGESH BHIKKU PRABHU, PRABHU HOUSE, MATHAKERI, ANKOLA PAN NO. AA BTP 8521 C (APPELLANT) (RESPONDENT) C.O. NO. 2 4 /PNJ/201 5 (ASST. YEAR : 20 11 - 1 2 ) SHRI PANDURANG POKKE PRABHU FAMILY TRUST, MANAGER : NAGESH BHIKKU PRABHU, PRABHU HOUSE, MATHAKERI, ANKOLA. VS. ITO, WARD - 2, KARWAR. PAN NO. AA BTP 8521 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAGHU PIKALE C A DEPARTMENT BY : SHRI ANAND SHANKAR MARATHE - D R DATE OF HEARING : 1 5 / 0 7 /2015 . DATE OF PRONOUNCEMENT : 15 / 0 7 /201 5 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , MYSORE, DATED 12 / 11 /201 4 . 2 ITA NO. 32/PNJ/2015 & C.O.24/PNJ/2015 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ADOPTING FAIR MARKET VALUE @ RS. 5,000/ - PER GUNTA BASED ON THE TRANSACTION AT SURVEY NO. 88A/6C WHERE THE PRICE PER GUNTA IS RS. 5,000/ - AS AGAIN S T RS. 3,000/ - ADOPTED DURING ASSESSMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR, THE ASSESSEE SOLD CERTAIN PROPERTIES ON WHICH CAPITAL GAIN WAS ARRIVED AT ADOPTING MARKET VALUE AS ON 01/04/ 1981 AT RS. 7,800/ - . THE A SSESSING OFFICER GATHERED ONE SALE INSTANCE IN THE V I C INITY SHOWING THE VALUE AT RS.3,000/ - PER GUNTA, WHICH WORKED OUT TO RS. 600/ - PER GUNTA. THE ASSESSING OFFICER OBSERV ED THAT EVEN AFTER GRANTING OPPORTUNITY TO THE ASSESSEE, THE ASSESSEE FAILED TO PRODUCE ANY INSTANCE OF FAIR MARKET VALUE AT RS. 7,800/ - ADOPTED THE VALUE AT RS. 3,000/ - AND COMPUTED THE CAPITAL GAINS OF THE ASSESSEE. 4 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE SALE INSTANCE CITED BY THE ASSESSEE WHERE ONE OF THE AGRICULTURAL LAND IS SHOWING RS. 3,500/ - , THE NON - AGRICULTURAL LAND IS SHOWING RS. 5,000/ - . C ONSIDERING THE OTHER FACTORS EXPLAINED BY THE ASSESSEE THAT THE LAND OF THE ASSESS EE IS WELL PLACED AND HAVING THREE SIDE ROADS ETC . A CCORDING TO HIM , THE VALUE CAN REASONABLY TAKEN AT RS. 5,000/ - PER GUNTA . ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO RE - COMPUTE THE CAPITAL GAIN OF THE ASSESSEE. 5. BEING AGGRIEVED BY THIS ORDER , THE REVENUE IS IN APPEAL BEFORE US. 6. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ARGUED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER APPRECIATING THE FACTS IN ITS ENTIRETY HAS ESTIMATED THE FAIR MARKET VALUE AS ON 01/04/2008 AT RS.5,000/ - PER GUNTA. HE , THEREFORE, SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 3 ITA NO. 32/PNJ/2015 & C.O.24/PNJ/2015 7. ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE ARGUED IN SUPPORT OF THE ORDER OF THE ASSESSING OFFICER. 8. AFTER CONSIDERING THE RIVAL SUBMISSION S AND PERUSING THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD, WE FIND THAT FOR ESTIMATING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01/04/1981 WHICH WAS SOLD DURING THE YEAR BY THE ASSESSEE, THE ASSESSING OFFICER CONSIDERED THE FOLL OWING SALES INSTANCE: - STATUS S.NO. PRICE (RS./GUNTA) REF.NO. 22/05/81 AGRI. 118A/14A 600 82/81 - 82 157/P 3500 18/12/81 N.A. 88A/6C 5000 789/81.82 22/10/84 118A/17 3000 832/84.85 9. ON THE BASIS OF THIS, THE ASSESSING OFFICER ESTIMATED THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01/04/1981 AT RS. 3,000/ - PER GUNTA AND THE COMMISSIONER OF INCOME TAX (APPEALS) ESTIMATED THE SAME AT RS. 5,000/ - PER GUNTA . WE ARE OF THE CONSIDERED OPINION THAT IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CAS E, THE ASSESSING OFFICER SHOULD HAVE REFERRED THE MATTER TO THE DEPARTMENTAL VALUER FOR ESTIMATING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01/04/1981 AS NEITHER THE ASSESSING OFFICER NOR COMMISSIONER OF INCOME TAX(APPEALS) POSSESS EXPERT KNOWLEDGE IN ESTIMATING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01/04/1981 . BOTH THE PARTIES BEFORE US AGREED THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE - DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01/04/1981 BY OBTAINING THE REPORT FROM THE DVO. WE , THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATING THE ISSUE AFRESH IN THE LIGHT OF THE DISCUSSIONS MADE HEREINABOVE AFTER AL LOWING REASONABLE AND PROPER 4 ITA NO. 32/PNJ/2015 & C.O.24/PNJ/2015 OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 10. T HE FIRST GROUND OF CROSS OBJECTION RAISED BY THE ASSESSEE IS THAT THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ADOPTING THE MARKET VALUE OF THE PROPERTY AS ON 01/04/1981 AT RS. 3,000/ - PER GUNTA AND RS. 5,000/ - PER GUNTA RESPECTIVELY. 11. IN THE APPEAL OF THE R E VENUE , WE HAVE RESTORED THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATI O N IN THE LIGHT OF THE DISCUSSIONS MADE HEREINABOVE . THUS , THE ISSUE INVOLVED IN THE CROSS OBJECTION IS ALSO RESTORED TO T HE FILE OF THE ASSESSING OFFICER . CONSEQUENTLY , THIS GROUND OF CROSS OBJECTION IS ALLOWED FOR STATISTICAL PURPOSE. 12 GROUND NO.3 OF THE CROSS OBJECTION IS DIRECTED AGAINST THE ORDER OF THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN APPLYING THE MAXIMUM MARGINAL RATE OF TAX ON THE LONG TERM CAPITAL GAIN IGNORING THE PROVISIONS OF SEC. 112(1)(D) OF THE ACT. 13 THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WITHOUT GIVING ELABORAT E REASON , REFUSED TO ADOPT THE SPECIAL RATE APPLICABLE UNDER SEC. 112(1)(D) TO LONG TERM CAPITAL GAIN. HE SUBMITTED THAT AS PER SEC. 112(1)(D) WHEREIN THE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY INCOME , ARISING FROM THE TRANSFER OF A LONG TERM CAPITAL ASSET, WHICH IS CHARGEABLE UNDER THE HEAD CAPITAL GAINS THE TAX PAYABLE BY THE ASSESSEE ON THE TOTAL INCOME SHALL BE THE AGGREGATE OF T HE AMOUNT OF INCOME TAX PAYABLE ON THE TOTAL INCOME AS REDUCED BY THE AMOUNT OF LONG TERM CAPITAL GAIN S, HAD THE TOTAL INCOME AS SO REDUCED BEEN ITS TOTAL INCOME. THE AMOUNT OF INCOME TAX CALCULATED ON SUCH LONG TERM CAPITAL GAINS AT THE RATE OF TWENTY PER CENT. HE SUBMITTED THAT IT IS AN ACCEPTED FACT THAT SPECIFIC 5 ITA NO. 32/PNJ/2015 & C.O.24/PNJ/2015 PROVISIONS UNDER THE LAW WILL OVERRIDE THE GENERAL PROVISIONS OF THE ACT. HENCE, THE TAX RATE APPLICABLE TO THE FAMILY TRUST (AOP) ON LONG TERM CAPITAL GAIN IS 20% AS AGAINST MAXIMUM MARGINAL RATE OF 30% ADOPTED BY THE ASSESSING OFFICER. 14 HE FURTHER SUBMITTED THAT SINCE THE ASSESSEE WAS A DISCRETIONARY TRUST, THEREFORE THE RATE OF TAX APPLICABLE IN THE CASE OF AN INDIVIDUAL WAS APPLICABLE IN THE CASE OF THE ASSESSEE. HE RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAEHEAD OFFICE MONTHLY PAID EMPLOYEES WEL FARE TRUST REPORTED IN 271 ITR 159 (DELHI) . HE ALSO ARGUED THAT THE ASSESSEE IS A DISCRETIONARY TRUST WHEN THE TRUSTEES ARE APPOINTED BY THE SETTL O R OF THE TRUST . ON A QUERY BY THE BENCH, HOW IT IS EVIDENT THAT THE TRUSTEES WERE APPOINTED BY THE SETTL O R OF THE TRUST IN THE CASE OF THE ASSESSEE, HE REFERRED TO THE TRUST DEED DATED 31/03/1988. THE BENCH POINTED OUT TO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE SAID TRUST DEED PROVIDES THAT : THIS INDENTURE MADE AND ENTERED AT ANKOLA, THIS THURSDAY, 31 ST DAY OF MARCH, 1988 B ETWEEN 1) BHIKKU RAGHUNATH PRABHU 2) POKKA VISHWANATH PRABHU 3) GAJANAN MANJUNATH PRABHU 4) VASANT VISHWANATH PRABHU 5) DAMODHAR PANDURANG PRABHU 6) LAXUMAN VISHWANATH PRABHU ALL H I NDU INHABITANTS RESIDING EITHER AT BOMBAY OR AT ANKOLA, HEREINAFTER CALLED THE SETTLORS WHICH EXPRESSION SHALL UNLESS REPU N GANT TO THE CONTEXT DEEM AND INCLUDE THE SURVIVING TRUSTEES AND HEIRS, EXECUTORS AND ADMINISTRATORS OF THE SETTLERS AND 1) BHIKKU RAGHUNATH PRABHU 2) POKKA VISHWANATH PRABHU, AND 3) GAJANAN MANJUNATH PRABHU H EREINAFTER CALLED THE TRUSTEES (WHICH EXPRESSED SHALL, UNLESS REPU N GANT TO THE CONTEXT, MENTION AND INCLUDE THE TRUSTEES FOR THE TIME 6 ITA NO. 32/PNJ/2015 & C.O.24/PNJ/2015 BEING AND FUTURE TRUSTEES AS MAY BE NOMINATED AS PER TERMS AND CONDITIONS OF THE TRUST DEED. 15 A READING OF THE ABOVE SHOWS THAT THE SETTLOR S APPOINTED SHRI BHIKKU RAGHUNATH PRABHU, SHRI POKKA VISHWANATH PRABHU AND GAJANAN MANJUNATH PRABHU AS TRUSTEES AS PER THE TRUST DEED FOR THE TIME BEING AND FUTURE TRUSTEES MAY BE NOMINATED AS PER THE TERMS AND CONDITIONS OF THE TRUST DEED DATED 31/03/1988 . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE EXPRESSED HIS INABILITY BY SAYING THAT HE DOES NOT HAVE THESE DETAILS AND AGREED THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER WHERE THE MATTER CAN BE EXAMINED BY HIM THREADBAR E AND HE UNDERTAKES TO FILE ALL NECESSARY EVIDENCES AND DETAILS IN SUPPORT OF THE SAME. 16 . THE DEPARTMENTAL REPRESENTATIVE ALSO AGREED WITH THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. 17 . IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE RESTORE THIS GROUND OF CROSS OBJECTION ALSO TO THE FILE OF THE ASSESSING OFFICER FOR RE - AD JU DI CA TION AS PER LAW AFTER ALLOWING REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THIS GROUND OF CROSS OBJECTION IS ALLOWED FOR STATISTICAL PURPOSE. 18 . IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE , BOTH ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 1 5 TH DAY OF JULY , 201 5 AT GOA . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 1 5 TH JU LY , 201 5 . VR/ - 7 ITA NO. 32/PNJ/2015 & C.O.24/PNJ/2015 COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 8 ITA NO. 32/PNJ/2015 & C.O.24/PNJ/2015 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 1 5 .0 7 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 16 .07 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 16 /07 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 16 /0 7 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 16 /07 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 15 /0 7 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 1 7 /07 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER