ITO, Thiruvalla V. Kumbazha Tourist home, Pathanamthitta

ITA 404/COCH/2002

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58223 (ITAT-COCHIN)
• Duration Of Justice: 9 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-12-2011
• Assessment Year: 1994-1995
• Appeal Filed On: 31-10-2002
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREETA S NAIR MS VIJAYAPRABHA
• Keywords: Fair market value; Valuation report
• Section: 37; 263

Judgement Text

1 ITA NO.286/COCH/2003 ITA 404/COCH/2002 CO 73/COCH/2002 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI SANJAY ARO RA (AM) I.T.A. NO. 286/COCH/2003 (ASSESSMENT YEAR 1994-95) KUMBAZHA TOURIST HOME (DISSOLVED) VS THE ITO, WD. 3 REPRESENTED BY - THIRUVALLA 1. SHRI DIPU OOMMEN 2. SHRI DINCHU OOMMEN 3. SHRI RENCHU OOMMEN LEGAL HEIRS OF DECEASED PARTNER MR OOMMEN VARGHESE OF M/S KUMBAZHA TOURIST HOME (DISSOLVED), PATHANAMTHITTA PAN : NOT AVAILABLE (APPELLANTS) (RESPONDENT) I.T.A. NO.404/COCH/2002 (ASSESSMENT YEAR 1994-95) THE ITO, WD.3 VS M/S KUMBAZHA TOURIST HOME THIRUVALLA (DISSOLVED) KUMBAZHA, PATHANAMTHITTA (APPELLANT) (RESPONDENT) C.O. NO.73/COCH/2002 (ARISING OUT OF ITA NO.404/COCH/2002) (ASSESSMENT YEAR 1994-95) KUMBAZHA TOURIST HOME (DISSOLVED) VS THE ITO, WD.3 KUMBAZHA, PATHANMTHITTA THIRUVALLA (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SMT. PREETA S NAIR RESPONDENT BY : MS VIJAYAPRABHA DATE OF HEARING : 15-12-2011 DATE OF PRONOUNCEMENT : 20-01-2012 2 ITA NO.286/COCH/2003 ITA 404/COCH/2002 CO 73/COCH/2002 O R D E R PER N.R.S. GANESAN (JM) THE ASSESSEE FILED APPEAL IN ITA NO.286/COCH/2003 CHALLENGING THE ORDER OF THE ADMINISTRATIVE COMMISSIONER PASSED IN EXERCISE OF H IS POWERS U/S 263 OF THE INCOME-TAX ACT. THE REVENUE HAS FILED APPEAL IN ITA NO.404/CO CH/2002 CHALLENGING THE CORRECTNESS OF THE ORDER OF COMMISSIONER OF INCOME-TAX(A) DATED 27-06-2002 FOR THE ASSESSMENT YEAR 1994-95. THE ASSESSEE HAS FLED THE CROSS OBJE CTION AGAINST THE VERY SAME ORDER OF COMMISSIONER OF INCOME-TAX(A). SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THE APPEALS WE HAVE HEARD THE SAME TOGETHER AND DISPOSI NG OF THE SAME BY THIS COMMON ORDER. 2. BOTH THE APPEALS AND THE CROSS OBJECTION WERE DI SPOSED OF EARLIER BY THIS TRIBUNAL BY A COMMON ORDER DATED 18-11-2003. THE R EVENUE FILED THE APPEAL BEFORE THE HIGH COURT IN ITA NO.160 OF 2009. THE HIGH COURT B Y A JUDGMENT DATED 04-12-2009 REVERSED THE ORDER OF THIS TRIBUNAL AND RESTORED TH E ORDER OF THE ADMINISTRATIVE COMMISSIONER PASSED U/S 263 OF THE INCOME-TAX ACT. THE HIGH COURT HAS ALSO UPHELD THE REFERENCE MADE TO THE VALUATION OFFICER FOR VAL UATION OF THE ASSET U/S 55A OF THE INCOME-TAX ACT. HOWEVER, THE VALUATION OF THE ASSE T FOR THE PURPOSE OF CAPITAL GAIN WAS REMANDED BACK TO THE FILE OF THE TRIBUNAL. ACCORDI NGLY BOTH THE APPEALS AND THE CROSS OBJECTION WERE REFIXED. 4. WE HEARD SMT. PREETA S NAIR, THE LD.COUNSEL FOR THE ASSESSEE AND MS. VIJAYAPRABHA, THE LD.DR. 5. ADMITTEDLY THE HIGH COURT UPHELD THE ORDER PASSED B Y THE ADMINISTRATIVE COMMISSIONER U/S 263 OF THE INCOME-TAX ACT. THE RE FERENCE MADE BY THE ASSESSING OFFICER TO THE VALUATION OFFICER U/S 55A OF THE ACT WAS ALSO UPHELD BY THE HIGH COURT. THE HIGH COURT FURTHER FOUND THAT THE DISTRIBUTION OF DEPRECIATED ASSET AMONGST THE 3 ITA NO.286/COCH/2003 ITA 404/COCH/2002 CO 73/COCH/2002 PARTNERS IN THE COURSE OF DISSOLUTION OF THE FIRM I S NOT COVERED BY SECTION 50(1) BUT IT IS TO BE ASSESSED U/S 45(4) OF THE ACT. IN VIEW OF TH E ABOVE FINDING OF THE HIGH COURT, THE APPEAL OF THE ASSESSEE IN ITA NO.286/COCH/2003 AND THE CROSS OBJECTION IN CO NO.73/COCH/2002 ARE TO BE DISMISSED. ACCORDINGLY I TA NO.286/COCH/2003 AND CO NO.73/COCH/2002 ARE DISMISSED. 6. NOW WHAT REMAINS IS THE REVENUES APPEAL IN ITA NO. 404/COCH/2002. THE COMMISSIONER OF INCOME-TAX(A) DIRECTED THE ASSESSIN G OFFICER TO VALUE THE ASSET FOR THE PURPOSE OF ASCERTAINING THE FAIR MARKET VALUE AS ON 01-04-1981 TO ADOPT THE METHOD PRESCRIBED IN SECTION 55A OF THE INCOME-TAX ACT. T HE COMMISSIONER OF INCOME-TAX(A) HAS ALSO FOUND THAT THE VALUATION HAS TO BE MADE AS PROVIDED IN SCHEDULE III OF THE WEALTH-TAX ACT. AS SEEN FROM THE GROUNDS OF APPEAL RAISED BY THE REVENUE THE ONLY CONTENTION OF THE REVENUE IS THAT THE PROVISIONS OF SECTION 16A(2) TO 16A(6) OF THE INCOME-TAX ACT ARE ALONE APPLICABLE AND THE PROVISI ONS OF SECTION 7(1) OF THE WEALTH-TAX ACT AND SCHEDULE III OF THE WEALTH-TAX ACT ARE NOT APPLICABLE FOR THE PURPOSE OF ASCERTAINING THE FAIR MARKET VALUE. THE FACT REMAI NS IS THAT THE HIGH COURT UPHELD THE REFERENCE MADE TO THE VALUATION OFFICER U/S 55A OF THE ACT. THEREFORE, THE ONLY QUESTION REMAINS TO BE ANSWERED IS HOW THE VALUATION OFFICER HAS TO VALUE THE ASSET FOR THE PURPOSE OF DETERMINING THE FAIR MARKET VALUE AS ON 01-04-1981. 7. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SE CTION 55A OF THE ACT. THE COMMISSIONER OF INCOME-TAX(A), IN FACT, HAS REPRODU CED THE PROVISIONS OF SECTION 55A OF THE ACT IN HIS ORDER. ONCE A REFERENCE WAS MADE, S ECTION 55A MAKES IT MANDATORY, THAT THE PROVISIONS OF SECTION 16A(2) TO 16A(6) OF THE W EALTH-TAX ACT WOULD COME INTO OPERATION AND SECTION 23(3A)(1) AND SECTION 23(4) A ND SECTION 24(5) AND SECTION 34AA AND SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT SHALL WITH NECESSARY MODIFICATION WOULD APPLY TO THE REFERENCE MADE BY THE ASSESSING OFFICER. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 16A OF THE W EALTH-TAX ACT. SECTION 16A PROVIDES 4 ITA NO.286/COCH/2003 ITA 404/COCH/2002 CO 73/COCH/2002 FOR PROCEDURE FOR VALUATION OF THE PROPERTY / ASSET BY THE VALUATION OFFICER AND THE PROCEDURE TO BE FOLLOWED BY THE ASSESSING OFFICER O N RECEIPT OF THE VALUATION REPORT FROM THE VALUATION OFFICER. IT DOES NOT SAY ANYTHI NG ABOUT THE METHOD OF VALUATION OF THE PROPERTY. WHEREAS SECTION 7(1) AND SCHEDULE II I, BOTH OF THE WEALTH-TAX ACT, 1957 PROVIDE FOR METHOD OF VALUATION. IN RESPECT OF LAN D AND BUILDING A STATUTORY FORM IS PRESCRIBED IN FORM O-1. THEREFORE, THE VALUATION OFFICER, AFTER RECEIPT OF REFERENCE FROM THE ASSESSING OFFICER HAS TO VALUE THE PROPERT Y FOLLOWING THE METHOD PRESCRIBED IN SCHEDULE III OF THE WEALTH-TAX ACT AND FURNISH THE REPORT AS PROVIDED IN FORM O-1. IN VIEW OF THE ABOVE, THE CONTENTION OF THE DEPARTMENT THAT SCHEDULE III TO WEALTH-TAX ACT IS NOT APPLICABLE TO THE REFERENCE MADE U/S 55A OF THE INCOME-TAX ACT FOR ASCERTAINING THE FAIR MARKET VALUE IS NOT CORRECT. THEREFORE, T HE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO GET THE V ALUATION DONE AS PROVIDED U/S 55A OF THE INCOME-TAX ACT R.W.S. 16A OF THE WEALTH-TAX ACT , MORE PARTICULARLY, SCHEDULE III TO WEALTH-TAX ACT. THIS TRIBUNAL FINDS NO INFIRMITY I N THE DIRECTION OF THE COMMISSIONER OF INCOME-TAX(A). AS A RESULT, THE APPEAL OF THE REVE NUE IN ITA NO.404/COCH/2002 IS ALSO DISMISSED. 8. IN THE RESULT, BOTH THE APPEALS AND THE CROSS OBJEC TION ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF JANUARY, 2012. SD/- SD/- (SANJAY ARORA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT :20 TH JANUARY, 2012 PK/- 5 ITA NO.286/COCH/2003 ITA 404/COCH/2002 CO 73/COCH/2002 COPY TO: 1. SHRI DIPU OOMMEN/SHRI DINCHU OOMMEN/SHRI RENCHU OOM MEN L/H OF PARTNER SHRI OOOMMEN VARGHESE OF THE KUMBHAZHA TOURIST HOME (DIS SOLVED), KUMBHAZHA, PATHANAMTHITTA 2. THE ITO, WD.3, THIRUVALLA 3. THE COMMISSIONER OF INCOME-TAX(A)-IV, KOCHI 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH