Deputy Commissioner of Income tax, Panvel V. Ganesh Pandurang Kumbhar, Raigad

ITA 402/PUN/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6867 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 16-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT HALDAR
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report; Set aside; Capital Gains
• Section: 143(3); 50C; 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO. 402/PUN/2017 / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, PANVEL CIRCLE, PANVEL ....... / APPELLANT / V/S. SHRI GANESH PANDURANG KUMBHAR, 001, ULWA GAON, KUMBHAR AALI, PANVEL, RAIGAD-400 707 PAN : AZEPK6049A / RESPONDENT ASSESSEE BY : SHRI SUBODH RATNAPARKHI REVENUE BY : SHRI ABHIJIT HALDAR / DATE OF HEARING : 27.02.2019 / DATE OF PRONOUNCEMENT : 28.02.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM THE ORDER OF LD. CIT(APPEAL)-2, THANE DATED 30.11.2016 FOR THE ASSESSMENT YEAR 2012-13 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1.WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE CI T(A) IS CORRECT IN DELETING THE ADDITION MADE BY AD AND DIRECTING THE AD TO DETERMINE THE VALUE OF LTCG BY ADOPTING THE MARKET VALUE OF THE P LOT AS ON THE DATE OF ALLOTMENT. 2 ITA NO.402 /PUN/2017 A.Y.2012-13 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE C IT(A) IS CORRECT IN RELYING UPON THE CASE OF ATUL G PURANIK VS ITO 132 ITO 499 (2011) (MUM). 3. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE C IT(A) IS CORRECT IN NOT RELYING UPON THE CASE OF ITO VS HEMANT TANDEL I N I.T.A. NO. 1934/MUM/2012 WHEREIN ITAT, AFTER ALSO TAKING CONSI DERATION OF THE ORDER OF ITAT IN THE CASE OF ATUL G. PURANIK, HAS T AKEN THE VIEW THAT: ' AS ACTUAL AMOUNT PAID BY THE ASSESSEE FOR GETTING THE LEASEHOLD RIGHT IN THESE PLOTS IS AVAILABLE ON RECO RD, WE DO NOT FIND IT NECESSARY FOR ADOPTING MARKET VALUE OF THE SAME.' 4. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY GROUND OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF IN COME DECLARING TOTAL INCOME OF RS 66,60,220/- WAS FILED ON 31.03.2014 BY THE ASSE SSEE AND THE SAME WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE ACT). THE CASE WAS SELECTED FOR SCRUTINY, THEREFORE, THE STATUTORY NOTICES U/S.142(1)/143(2) OF THE ACT, ALONG WITH Q UESTIONNAIRE, WERE ISSUED AND SERVED UPON THE ASSESSEE. IN COMPLIANCE THE ASSESSEE FILED NECESSARY DETAILS AND AFTER CONSIDERING THE SUBMISSION, THE ASSESSMENT U/S. 143(3) OF THE ACT, WAS COMPLETED ON 27.03.2015, DETERMINING TOTAL INCOME AT RS 1,88,98,345/-, BY ASSESSING THE UNDISCLOSED LONG TERM C APITAL GAIN OF RS 1,22,38,125/-. 3. AGGRIEVED WITH THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE RELEVANT FACTS WITH REGARD TO THE ISSUE OF LONG TERM CAPITAL GAIN ARE THAT THE LAND BELONG TO THE FAT HER OF THE ASSESSEE, WAS ACQUIRED BY THE LAND ACQUISITION AUTHORITIES AND COMP ENSATION OF RS.6,96,913/-WAS ORIGINALLY PAID. THEREAFTER, THE LATE FATHER O F THE ASSESSEE CONTESTED THE ISSUE OF QUANTUM OF COMPENSATION AND WAS FINALLY GRANTED PLOT OF LAND FROM CIDCO UNDER THE 12.50% SCHEME, VIDE LEASE DEE D DATED 04.06.2008, IN ADDITION TO THE ABOVE COMPENSATION. IN THE SAID LAND PLOT THE 3 ITA NO.402 /PUN/2017 A.Y.2012-13 ASSESSEES SHARE WAS 1/4 TH . THE SAME WAS GIVEN FOR DEVELOPMENT TO THE DEVELOPER, FOR TOTAL CONSIDERATION OF RS.4,89,52,500/-. THE SH ARE OF THE ASSESSEE, IN THE SAID SALE CONSIDERATION BEING 1/4 TH WAS TAKEN AT RS.1,22,38,125/- (1/4 TH OF RS.4,89,52,500/-), WHEREAS THE INDEXED COST OF ACQUISITION, ON THE BASIS OF VALUATION REPORT OF VALUER, WAS D ETERMINED AT RS. 1,39,29,704/- AND ACCORDINGLY WORKED OUT THE VALUE OF LONG TERM CAPITAL GAIN. THE VALUER HAS VALUED THE LAND, AS PER READY RECKON ER VALUE, AS ON 04.06.2008. THE ASSESSEE CLAIMED THAT THE COMPUTATION OF LONG TERM CAPITAL GAIN WAS AS PER THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ATUL G. PURANIK, 132 ITD 499 (MUMBAI). THE ASSESSING OFFICER ALSO ADMITTED THAT THE RATIO OF THE ABOVE DECISION WAS APPLICAB LE TO THE FACTS OF THE ASSESSEE'S CASE , HOWEVER, TOOK A DIFFERENT VIEW, BY HOLDING THAT THE MANNER OF ADOPTING COST OF ACQUISITION, AS PER THE ORDER O F THE MUMBAI BENCH OF THE TRIBUNAL, WAS NOT IN ACCORDANCE WITH LAW. TH E ASSESSING OFFICER, THEREFORE, COMPUTED THE LONG TERM CAPITAL GAIN BY GR ANTING NIL COST OF ACQUISITION AT RS.1,22,38,125/-. 4. AT THE TIME OF HEARING BEFORE THE LD. CIT(A), THE LD. AR OF THE ASSESSEE HAS FILED DETAILED WRITTEN SUBMISSIONS WHICH ARE AS UNDER: 1. THE APPELLANT IS AN INDIVIDUAL HAVING INCOME FRO M THE OTHER SOURCES. THE RETURN OF INCOME FOR THE YEAR UNDER APPEAL WAS FILED ON 31.03.2014, DECLARING TOTAL INCOME OF RS.66,60,220/-. THE GRAND FATHER OF THE APPELLANT LATE SHRI SHANKAR RAGHO KUMBHAR WAS THE O WNER OF SEVERAL PARCELS OF AGRICULTURAL/AND AT VILLAGE BAMBAVI, TAL UKA PANVEL, DIST. RAIGAD. THE SAID LANDS WERE COMPULSORILY ACQUIRED U NDER THE LAND ACQUISITION ACT OF 1894 FOR THE NEW BOMBAY PROJECT AND UNDER AWARD DT. 25.08. 1989, A SUM OF RS.6,96,913/- WAS PAID AS COMPENSATION. AS THE AGRICULTURAL LAND WAS NOT WITHIN THE AMBIT OF T HE TERM 'CAPITAL ASSET' AS CONTAINED IN SECTION 2(14) OF THE I. TAX ACT 196 1. SHRI SHANKAR RAGHO KUMBHAR EXPIRED ON 29.06.1995. THE APPELLANT WHO IS THE GRANDSON OF THE LATE SHRI SHANKAR RAGHO KUMBHAR WAS BEQUEATHED 1/4 TH SHARE IN THE ADDITIONAL COMPENSATION CLAIM SOUGHT BY THE LAT E SHRI SHANKAR RAGHO KUMBHAR BY CONTESTING THE COMPENSATION ORIGIN ALLY PAID TOWARDS ACQUISITION OF AGRICULTURAL LAND. 3.2. SUBSEQUENTLY, ON 04.06.2008, THE APPELLANT ALO NG WITH 3 OTHERS (ALL BEING HEIRS OF THE ORIGINAL OWNER, MR. SHANKAR RAGH O KUMBHAR) WERE 4 ITA NO.402 /PUN/2017 A.Y.2012-13 GRANTED LEASE HOLD RIGHTS IN-RESPECT OF PLOT OF LAN D ADMEASURING ABOUT 5099.18 SQ. MTRS AS PART OF ADDITIONAL COMPENSATION FOR ACQUISITION OF AGRICULTURAL LAND, UNDER WHAT IS COMMONLY KNOWN AS THE 12,5% SCHEME. THE SAID SCHEME APPLIED TO PERSONS WHOSE LANDS' WER E ACQUIRED FOR THE NEW BOMBAY DEVELOPMENT, AS THE ADDITIONAL COMPENSAT ION RECEIVED IN THE FORM OF PLOTS, UNDER THE 12,5% SCHEME, AROSE ON ACCOUNT OF ORIGINAL ACQUISITION OF AGRICULTURAL LAND WHICH WAS NOT A 'C APITAL ASSET', NO LIABILITY TO TAX AROSE ON ALLOTMENT OF THE PLOT OF LAND AT ULWE, TALUKA PANVEL, DIST. RAIGAD IN THE PREVIOUS YEAR RELEVANT TO ASST. YR, 2009-10, THE APPELLANT ALONG- WITH THREE OTHER CO-OWNERS CON TINUED TO HOLD THE SAID LAND AS A CAPITAL ASSET. 3.3. IN THE YEAR UNDER APPEAL, THE APPELLANT ALONG- WITH 4 CO-OWNERS UNDER TRIPARTITE AGREEMENT DT.1 2 .12.2011, TRANSFERRED THE LEASE HOLD RIGHTS IN RESPECT OF 5099,18 SQ, MTRS OF LAND BEARI NG PLOT NO. 123 TO 125A, SECTOR 23, ULWE, TALUKA PANVEL, DIST. RAIGAD TO ONE, M/S. SEEYONA ENTERPRISES, THE DEEMED CONSIDERATION FOR T RANSFER OF LEASE HOLD RIGHTS IS ADOPTED AT RS.4,89,52,500/- BEING THE MARKET VALUE AS PER STAMP VALUATION AUTHORITIES. THE SAID TRANSACTI ON IS THE SUBJECT MATTER OF THE ADDITION IN THE PRESENT APPEAL. COMPUTATION OF LONG TERM CAPITAL GAIN AGREEMENT VALUE 91,800/- VALUE AS PER STAMP DUTY 4,89,52,500/- THEREFORE CONSIDERATION TAKEN AS PER SEC. 50C FOR COMPUTATION OF CAPITAL GAIN U/S.45(3) 4,89,52,500/- ------------------------- 1/4 TH SHARE THEREOF 1,22,38,125/- LESS : INDEXED COST OF ACQUISITION RESTRICTED TO 1,39,29,704/- 1,22,38,125/- WORKING FOR INDEXED COST OF ACQUISITION PLOT ACQUIRED THROUGH LEASE DEED DT. 04.06.2008 4,13,20,000/- READY RECKONER VALUE AS PER REGISTER OF THE SAID PL OT 4,13,10,000/- THEREFORE, COST OF ACQUISITION TO ASSESSEE (1/4 TH SHARE) 1,03,27,500/- ( AS PER VALUATION REPORT OF VALUER, MAHENDRA PATIL ENCLOSED AT PG. NOS. 84 TO 102) COST OF INFLATION INDEX FOR F.Y.2008-09 582 COST OF INFLATION INDEX FOR F.Y. 2011-12 785 THEREFORE INDEX COST OF ACQUISITION IS (10327500*785/582) RS.1,39,29,704/- 5. THE ID. AO HAS DISCUSSED AND CONCURRED WITH THE ABOVE NARRATED FACTS IN THE ASST ORDER. THE ID AO HAS FURTHER CAND IDLY ADMITTED THAT THE CASE OF THE APPELLANT IS COVERED BY DECISION OF THE HON. JURISDICTIONAL TRIBUNAL IN ATUL G. PURANIK-VS -ITO, 132 ITO 499 (2011) (MUM). THE LD AO THEN ON THE LOGIC THAT THE RATIONALE OF THE DECISIO N IN THE CASE OF ATUL G. PURANIK-VS -ITO, 132 ITO 499 IS NOT IN ACCORDANCE WITH THE PROVISIONS 5 ITA NO.402 /PUN/2017 A.Y.2012-13 OF THE IT ACT 1961, HAS HELD THE COST OF ACQUISITION OF LAND TO BE NIL, RESULTING IN ADDITION OF RS. RS. 1,22,38,125/- TO THE RETURNED INCOME. 6. THE ISSUE OF GRANT OF DEDUCTION FOR INDEXED COST OF ACQUISITION DOES NOT WARRANT ANY AMBIGUITY AS MADE OUT BY THE ID. AO . THE MARKET VALUE OF LEASEHOLD RIGHTS IN THE PLOT AS ON THE DATE OF A LLOTMENT (IN THIS CASE 04.06.2008) WOULD BE THE COST OF ACQUISITION WITH T HE APPROPRIATE INDEXATION LEADING TO THE WORKING OF INDEXED COST O F ACQUISITION FOR DETERMINATION OF LONG TERM CAPITAL GAINS. THE HON. JURISDICTIONAL MUMBAI TRIBUNAL IN THE CASE OF ACIT, RG 16(2) - VS- SHRI. NIRMALLIHOGILAL, ITA NO. 2942/MUM/02, DT. 23.11.2005, WHERE THE ASSESSEE WAS SIMILARLY ALLOTTED A PLOT OF LAND A T NAVI MUMBAI AS ADDITIONAL COMPENSATION UNDER THE 12.5% SCHEME AND THE ISSUE AROSE BEFORE THE HON. TRIBUNAL AS TO THE COST OF ACQUIS ITION OF SUCH PLOTS, THE HON'BLE TRIBUNAL HELD AS UNDER: FROM THE ABOVE DISCUSSION THE QUESTION ARISES WHETH ER THE SAID PIECE OF LAND WAS ALLOTTED TO THE ASSESSEE WITHOUT ANY FINAN CIAL CRITERIA I.E. IF CASH WAS GIVEN TO THE ASSESSEE IN LIEU OF ALLOTMENT OF PIECE OF LAND THEN WHAT WOULD HAVE BEEN THE AMOUNT OF CASH. THERE HAS BEEN REFERENCE TO THE AWARD IN THE LETTER OF ALLOTMENT (BOTH PRELIMIN ARY AS WELL AS FINAL) BUT THE COPY OF THE AWARD HAS NOT BEEN PLACED ON RE CORD. ADMITTEDLY, LANDS HAVE BEEN ALLOTTED BY THE GOVT. TO VARIOUS PE OPLE AS A RESULT OF MASS REPRESENTATION THEREFORE, BY NO STRETCH OF IMA GINATION IT CAN BE ASSUMED THAT THERE WERE NO MONETARY CRITERIA FOR DE CIDING THE QUANTUM OF LAND TO BE ALLOTTED TO VARIOUS PERSONS UNDER THE SAID SCHEME. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT SU CH FINANCIAL EQUIVALENT OF THE LAND ALLOTTED BY THE GOVT. SHOULD BE THE COST OF ACQUISITION AND DIRECT THE ASSESSING OFFICER TO OBT AIN NECESSARY INFORMATION FROM THE CONCERNED GOVT. AUTHORITIES IN THIS REGARD TO DETERMINE THE COST OF ACQUISITION. IF THE LAND WAS ALLOTTED WITHOUT ANY FINANCIAL CRITERIA, THEN MARKET VALUE OF THE SIMILA R PLOTS IN THE SAME LOCALITY WOULD BE THE COST OF ACQUISITION OF IMPUGN ED LAND. THE DIFFERENCE BETWEEN THE COST OF ACQUISITION SO DETER MINED AND TRANSFER CONSIDERATION RECEIVED BY THE ASSESSEE WOULD BE CHA RGEABLE TO TAX AS SHORT TERM CAPITAL GAINS. SIMILAR, DECISIONS HAVE BEEN TAKEN BY THE HON. MUMBA I TRIBUNAL IN THE CASE OF COPY ENCLOSED AT PG. NOS. (I) ATUL G. PURANIK VS. ITO 132 ITD 499 (2011) ( MUM) 116 TO 127 (II) RAMESH ABAJI WALAVLKAR VS. ACIT 54 SOT 15 (2012) ( MUM) 128 TO 136 THUS, ON FACTS VERY SIMILAR TO THAT OF THE APPELLA NT, THE JURISDICTIONAL TRIBUNAL HAS CONSISTENTLY HELD THAT THE MARKET VALUE OF THE 6 ITA NO.402 /PUN/2017 A.Y.2012-13 'PLOT AS ON THE DATE OF ALLOTMENT WOULD CONSTITUTE THE COST OF ACQUISITION TO THE ASSESSEE. RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON . SUPREME COURT IN THE CASE OF CIT- VS-GROZ-BECKERT SABOO LTD ., 116 ITR 125 (SC) WHEREIN THE ISSUE OF DETERMINATION OF 'COST OF ACQU ISITION' OF AN ASSET RECEIVED WITHOUT ANY APPARENT MONETARY CONSIDERATIO N IS DISCUSSED AND DECIDED. (COPY OF THE SAID ORDER IS ENCLOSED AT PG NOS. 137 TO 141) 8. IT IS ACCORDINGLY SUBMITTED THAT THE LD. AO HAS ERRED IN ADOPTING THE COST OF ACQUISITION OF LEASE HOLD RIGHTS AT NIL. TH E RESULTANT ADDITION OF RS.1,22,38,125/- IS NOT AS PER LAW. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, FACTS OF THE CASE AND THE ASSESSMENT ORDER HAS HELD AS FOLLOWS: 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, FINDINGS OF THE AO IN THE ASSESSMENT ORDER, SUBMISSIONS OF THE LD. AR AND THE MATERIAL PLACED ON RECORD. FROM THE FACTS OF THE CASE, IT IS NOTICED THAT THE GRANDFATHER OF THE APPELLANT ( NOT HIS LATE FATHER AS STATED BY THE AO IN THE ORDER) WAS THE OWNER OF SEVERAL PARCELS OF AGRI CULTURAL LAND AT VILLAGE BAMBAVI, TALUKA PANVEL, DIST. RAIGAD WHICH WAS ACQUIRED UNDER LAND ACQUISITION ACT FOR THE NEW BOMBAY PROJE CT. ORIGINALLY THE COMPENSATION OF RS.6,69,913/- WAS PAID. THEREAFTER, WITH THE LATE GRANDFATHER AGITATING THE ISSUE OF COMPENSATION AND ACCORDINGLY A LEASE HOLD RIGHTS, IN PLOTS OF ABOUT 5099.18 SQ MTRS, WER E ALLOTTED AT ULWE, AS ADDITIONAL COMPENSATION, UNDER 12.50% SCHEME. THE G RANDFATHER OF THE APPELLANT WAS EXPIRED, THEREFORE, THE APPELLANT AND 3 OTHERS CO-OWNERS, CLAIMED 1/4 TH SHARE IN THE SAID PLOTS. DURING THE YEAR UNDER APP EAL, VIDE AGREEMENT DT. 12.12.2011, THEY HAD TRANSFERRED LEASE HOLD RIGHTS IN THE SAID PLOTS, TO ONE M/S. SEEYONA ENTERPRISES, FOR TOTAL CONSIDERATION OF RS.4,89,52,500/-. (APPELLANTS 1/4T H SHARE WAS WORKED OUT AT RS.1,22,38,125/-). THE AO, AFTER CONSIDERING THE SUBMISSION OF THE APPELLANT, HAD TAKEN THE ENTIRE SHARE OF APPELL ANT OF RS.1,22,38,125/-, AS LTCG, BY HOLDING THE COST OF P LOT AS NIL. 6.1 ON THE OTHER HAND THE APPELLANT, WHILE DETERMIN ING THE LTCG, HAS TAKEN INDEXED COST OF ACQUISITION AT RS.1,39,29,704 /- AND ACCORDINGLY REDUCED THE SAME FROM THE TOTAL CONSIDERATION OF RS . 1,22,38,125/-, AS PER ABOVE WORKING, TO DETERMINE THE VALUE OF LTCG. THE APPELLANT CLAIMS THAT THE MARKET VALUE OF PLOTS, AS ON THE DA TE OF ALLOTMENT, HAS TO BE THE COST OF THE ACQUISITION AND THE INDEXED COST THEREOF HAS BEEN CLAIMED AS DEDUCTION, FOR COMPUTING LTCG. 6.2 THE APPELLANT HAD RECEIVED THE LEASEHOLD RIGHTS , IN THE SAID PLOTS, AS ADDITIONAL COMPENSATION FOR ACQUISITION OF AGRICULT URAL LAND, ON 04,.06.2008. NO OTHER MONETARY COST WAS INCURRED TO GET THE SAID PLOTS OF LAND. ACCORDINGLY, THE APPELLANT HAS TAKEN THE M ARKET VALUE OF THE SAID LEASEHOLD PLOTS, AS ON THE DATE OF ALLOTMENT, A S COST OF ACQUISITION, RELYING ON THE DECISIONS IN THE ABOVE CASES. THE AP PELLANT HAD DETERMINED THE COST OF PLOTS AT RS.1,03,27,500/-, B ASED UPON VALUATION REPORT OF ONE MR. MAHENDRA PATIL, WHO HAS RELIED UP ON SEVERAL COMPARABLE SALES INSTANCES OF THE LOCALITY, FOR SAI D PERIOD, FOR DETERMINING SUCH VALUE. IT IS SEEN THAT THE VALUATI ON REPORT OF THE VALUER, HAS NOT BEEN DISPUTED BY THE AO. 7 ITA NO.402 /PUN/2017 A.Y.2012-13 6.3 AS ADMITTED BY THE AO IN THE ASST. ORDER, THE I SSUE IS COVERED BY THE DECISION OF THE HON. MUMBAI TRIBUNAL IN THE CASE OF ATUL PURANIK, 132 ITD 499 (MUMBAI). THE AR OF THE APPELLANT HAS ALSO DRAWN MY ATTENTION TO ANOTHER UNREPORTED DECISION, IN THE CASE OF ACIT , RG 16(2) -VS- SHRI. NIRMAL BHOGILAL, ITA NO. 2942/MUM/02, DT. 23.11.2005, WHEREIN THE SIMILAR ISSUE WAS DECIDED BY THE HON. TRIBUNAL, BY OBSERVING, INTER- ALIA, AT PARA 10 OF THE ORDER AS UNDER: '10. FROM THE ABOVE DISCUSSION THE QUESTION ARISES WHETH ER THE SAID PIECE OF LAND WAS ALLOTTED TO THE ASSESSEE WITHOUT ANY FI NANCIAL CRITERIA I.E. IF CASH WAS GIVEN TO THE ASSESSEE IN LIEU OF ALLOTMENT OF PIECE OF LAND THEN WHAT WOULD HAVE BEEN THE AMOUNT OF CASH. THERE HAS BEEN REFERENCE TO THE AWARD IN THE LETTER OF ALLOTMENT (BOTH PRELIMINARY AS WELL AS FINAL) BUT THE COPY OF THE AWARD HAS NOT BEEN PLACED ON RECORD. ADMITTEDLY, LANDS HAVE BEEN ALLOTTED BY THE GOVT. TO VARIOUS PEOPLE AS A R ESULT OF MASS REPRESENTATION THEREFORE, BY NO STRETCH OF IMAGINAT ION IT CAN BE ASSUMED THAT THERE WAS NO MONETARY CRITERIA FOR DECIDING TH E QUANTUM OF LAND TO BE ALLOTTED TO VARIOUS PERSONS UNDER THE SAID SCHEM E. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT SUCH FINANCIAL EQUIV ALENT OF THE LAND ALLOTTED BY THE GOVT. SHOULD BE THE COST OF ACQUISI TION AND DIRECT THE ASSESSING OFFICER TO OBTAIN NECESSARY INFORMATION F ROM THE CONCERNED GOVT. AUTHORITIES IN THIS REGARD TO DETERMINE THE C OST OF ACQUISITION. IF THE LAND WAS ALLOTTED WITHOUT ANY FINANCIAL CRITERIA, T HEN MARKET VALUE OF THE SIMILAR PLOTS IN THE SAME LOCALITY WOULD BE THE COST OF ACQUISITION OF IMPUGNED LAND. THE DIFFERENCE BETWEEN THE COST OF A CQUISITION SO DETERMINED AND TRANSFER CONSIDERATION RECEIVED BY T HE ASSESSEE WOULD BE CHARGEABLE TO TAX AS SHORT TERM CAPITAL GAINS. THE HON'BLE JURISDICTION TRIBUNAL FOLLOWED THE AB OVE DECISION IN THE CASE OF ATUL G. PURANIK VS. ITO 132 ITD 499 (2011) ( MUM ) AND HELD AS UNDER. '10.5 HAVING HELD THAT S. 49(1) IS NOT APPLICABLE, THE IMMEDIATE QUESTION WHICH ARISES FOR CONSIDERATION THEN IS THAT WHAT IS THE COST OF ACQUISITION OF RIGHTS IN THE PLOT TRANSFERRED ON 25TH AUG., 2005 T O M/S. PATHIK CONSTRUCTION. THE LEARNED AUTHORISED REPRESENTATIVE ARGUED THAT THE MARKET VALUE OF THE PLOT OF LAND ON THE DATE OF ALL OTMENT SHOULD BE TAKEN AS THE COST OF ACQUISITION, AS HAS BEEN HELD BY THE TRIBUNAL IN ASSTT. CIT VS. NIRMAL BHOGILAL (SUPRA). FROM THE FACTUAL MATRI X OF THE CASE, IT IS NOTED THAT THE ASSESSEE WAS ALLOTTED RIGHTS IN THE PLOT O N 16TH AUG., 2004 AS COMPENSATION FOR THE ACQUISITION OF LANDS ACQUIRED BY THE SPECIAL LAND ACQUISITION OFFICER WAY BACK IN THE YEARS 1970/1972 . THE VALUE OF RIGHTS IN THE PLOT IS QUID PRO QUO FOR THE ACQUISITION OF LANDS FROM ASSESSEE'S FATHER IN THE PAST. IN OTHER WORDS, THE MARKET VALU E OF SUCH RIGHTS IN THE PLOT WAS CONSIDERED BY THE STATE GOVERNMENT AS COMP ENSATION FOR ACQUISITION OF LAND IN EARLIER YEARS. IF SUCH RIGHT S IN THE PLOT HAD NOT BEEN ALLOTTED, THEN THE ASSESSEE WOULD HAVE BEEN GIVEN C ASH EQUIVALENT TO THE MARKET VALUE OF SUCH RIGHTS AS COMPENSATION FOR ACQ UISITION OF LANDS. AS IT IS A TRANSACTION WITH THE GOVERNMENT, THE QUESTION OF ANY UNDER-HAND PAYMENT ALSO STANDS RULED OUT. SEC. 48 DEALS WITH THE MODE OF COMPUTATION OF INCOME CHARGEABLE UNDER THE HEAD 'CA PITAL GAINS. IT PROVIDES THAT SUCH INCOME SHALL BE COMPUTED BY DEDU CTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET, THE COST OF ACQUISITION OF THE A SSET AND THE COST OF IMPROVEMENT, IF ANY, ALONG WITH THE EXPENDITURE INC URRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER. THE F ULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE ACQUISITION BY THE GOVERNMENT IS THE AMOUNT GIVEN AS CONSIDERATION FOR SUCH ACQUISITION OR IN THE ALTERNATIVE THE MARKET VALUE OF ANY OTHER CAPIT AL ASSET GIVEN TO THE ASSESSEE AGAINST SUCH ACQUISITION. AS IN THE INSTAN T CASE THE GOVERNMENT HAS ALLOTTED RIGHTS IN THE PLOT AS THE FULL VALUE O F CONSIDERATION ON THE ACQUISITION OF LANDS BY IT IN THE YEARS 1970/1972, THE MARKET VALUE OF 8 ITA NO.402 /PUN/2017 A.Y.2012-13 SUCH RIGHT IS TO BE CONSIDERED AS FULL VALUE OF CON SIDERATION AT THE TIME OF COMPUTING CAPITAL GAIN ON THE FIRST TRANSACTION IN THE PRECEDING YEAR. ONCE A PARTICULAR AMOUNT IS CONSIDERED AS FULL VALUE OF CONSIDERATION AT THE TIME OF ITS PURCHASE, THE SAME SHALL AUTOMATICALLY BECOM E THE COST OF ACQUISITION-AT THE TIME WHEN SUCH CAPITAL ASSET IS SUBSEQUENTLY TRANSFERRED. THUS, THE FULL VALUE OF CONSIDERATION SHOULD MEAN THE MARKET VALUE OF THE LEASE RIGHTS IN THE PLOT FOR SIXTY YEA RS AT THE TIME OF THE FIRST TRANSACTION WHICH WAS COMPLETED ON 16TH AUG., 2004, AND THE SAME AMOUNT SHALL BECOME THE COST OF ACQUISITION WHEN SU CH RIGHTS IN THE PLOT BECAME SUBJECT-MATTER OF TRANSFER IN THE CURRENT YE AR ON 25TH AUG., 2004. WE, THEREFORE. SET ASIDE THE VIEW TAKEN BY THE LEAR NED CIT(A) ON THIS ISSUE AND HOLD THAT THE MARKET VALUE OF SUCH LEASE RIGHTS FOR SIXTY YEARS IN THE PLOT AS ON 16TH AUG .. 2004 SHALL CONSTITUTE THE CO ST OF ACQUISITION FOR THE PURPOSE OF COMPUTING CAPITAL GAIN WHEN IT WAS ASSIG NED FOR A CONSIDERATION OF RS. 2.50 CRORES ON 25TH AUG. 2005 . THE AO IS DIRECTED TO DETERMINE THE COST OF ACQUISITION IN TERMS INDICATE D ABOVE AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 6.4. FROM THE ABOVE DECISIONS, IT IS SEEN THAT THE RATIO LAID DOWN BY THE HON'BLE MUMBAI TRIBUNAL, IN THE ABOVE CASES, IS SQU ARELY APPLICABLE, IN THE FACTS OF THE CASE UNDER APPEAL. ACCORDINGLY, TH E ADDITION MADE BY THE AO CANNOT BE SUSTAINED. THE AO, THEREFORE, IS DIREC TED TO DETERMINE THE VALUE OF LTCG, BY ADOPTING THE MARKET VALUE OF THE PLOT, AS ON DATE OF ALLOTMENT, KEEPING AND MIND THE RATIOS LAID DOWN IN THE ABOVE CASES. GROUNDS NO. 1 TO 3 ARE ALLOWED ACCORDINGLY. 6. IN THE RESULT APPEAL IS ALLOWED. 6. WE HAVE PERUSED THE CASE RECORDS AND ANALYZED TH E FACTS AND CIRCUMSTANCES IN THIS CASE AND HAVE GIVEN THOUGHTFUL CON SIDERATION OF THE FINDINGS OF LD. CIT(A). THE FACTS ON RECORD SHOW THAT THE AS SESSING OFFICER PRIMA FACIE HAS ADMITTED THAT THE RATIO LAID DOWN IN THE CA SE OF ATUL G. PURANIK (SUPRA.) WAS APPLICABLE TO THE FACTS OF THE CASE OF T HE ASSESSEE. HOWEVER, THE ASSESSING OFFICER, THEREAFTER, HAS TAKEN DIFFEREN T VIEW. THE LD. CIT(A) HAS NOT ONLY CONSIDERED THE DECISION OF ATUL G. PURA NIK BUT ALSO HAS REFERRED TO SIMILAR DECISION ON SAME ISSUE BY THE MUMBAI B ENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. SHRI NIRMAL BHOGILAL, ITA NO.29 42/MUM/02 DATED 23.11.2005. DURING FIRST APPELLATE PROCEEDINGS, THE LD . CIT(A) DELETED ALL THE ADDITION MADE BY THE ASSESSING OFFICER ON LONG TERM CAPITAL GAIN AND DIRECTED THE ASSESSING OFFICER TO DETERMINE VALUE OF LONG TE RM CAPITAL GAIN BY ADOPTING FAIR MARKET VALUE OF THE PLOT AS ON DATE OF ALLOTME NT IN CONFORMITY WITH THE JUDICIAL PRONOUNCEMENTS AS REFERRED IN HIS ORDER. 9 ITA NO.402 /PUN/2017 A.Y.2012-13 7. THE REVENUE IN GROUNDS OF APPEAL HAS OBJECTED REGAR DING RELIANCE PLACED IN THE CASE OF ATUL G. PURANIK (SUPRA.) WHEREAS, AS PE R REVENUE, THE LD. CIT(A) SHOULD HAVE CONSIDERED THE DECISION OF ITO VS. H EMANT TANDEL IN ITA NO. 1934/MUM/2012. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE FURNISHED THE COPY OF ORDER OF MUMBAI BENCH OF THE TRIBUNA L IN THE CASE OF ITO VS. HEMANT TANDEL (SUPRA.) AND DEMONSTRATED THAT THE FACTS THEREIN ARE SUBSTANTIALLY DIFFERENT FROM THE FACTS OF THE CASE OF ASSESS EE. IN THE CASE OF ATUL G. PURANIK (SUPRA.), THE TRIBUNAL HAS HELD THAT THE ACTU AL COST OR ALTERNATIVELY THE MARKET VALUE OF THE LEASEHOLD RIGHT SHOU LD BE TAKEN AS COST OF ACQUISITION WHEREAS IN HEMANT TANDELS CASE THE ASSESS EE HAS PAID COST TOWARDS THE PLOT OF LAND, WHICH HAS BEEN ASCERTAINED BY T HE AUTHORITIES AND CONFIRMED BY THEM. THAT PRIMA FACIE EVEN THE ASSESSING OFFIC ER IN HIS ORDER HAS AGREED THAT THE RATIO IN ATUL G PURANIK (SUPRA.) IS APP LICABLE TO THE FACTS OF THE ASSESSEES CASE. THAT IN VIEW OF MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) AND RELIEF PROVIDED TO THE ASSESSEE IS THEREBY SUSTAINED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 28 TH DAY OF FEBRUARY, 2019. SD/- SD/- ANIL CHATURVEDI PART HA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 28 TH FEBRUARY, 2019. SB 10 ITA NO.402 /PUN/2017 A.Y.2012-13 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, THANE. 4. THE PR. CIT-2, THANE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. /// TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 11 ITA NO.402 /PUN/2017 A.Y.2012-13 DATE 1 DRAFT DICTATED ON 27 .0 2 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 28 .0 2 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER