Shri Laxmanbhai Jivrajbhai Patel, Ahmedabad V. The Dy. Commissioner of Income Tax, Circle-5(3), Ahmedabad

ITA 421/AHD/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9643 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 21-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILAM DAS GUPTA
• Assessee Lawyers: M J SHAH
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNT AN T MEMBER AND M S . MADHUMITA ROY, JUDICIAL MEMBER ./ ITA NO. 421/AHD/2018 ( / ASSESSMENT YEAR : 2013 - 14 ) LAXMANBHAI JIVRAJBHAI PATEL M/S.SHREE KRISHNA VIJAY SAW MILLS LATI GBAZAR ZONE - 3 GEETA MANDIR AHMEDABAD - 380 022 / VS. THE DCIT CIRCLE - 5(3) AHMEDABAD ./ ./ PAN/GIR NO. : ABHPP 3999 H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M.J. SHAH, AR / RESPONDENT BY : SHRI NILAM DAS GUPTA, SR.DR / DATE OF HEARING 08/05/2019 / DATE OF PRONOUNCEMENT 17 /0 6 /201 9 / O R D E R PER WASEEM AHMED , ACCOUNTANT MEMBER : THE CAPTIONED APPEAL HA S BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) 5 , A HMEDABAD [CIT (A) IN SHORT] VIDE APPEAL NO. CIT(A) - 5/DCIT CIR.5(3)/10530/2017 - 18 DATED 08/12/2017 ARISING IN THE A SSESSMENT ORDER PASSED UNDER S. 143(3) OF THE INCOME TAX ACT, 1961( HEREINAFTER REFERRED TO AS 'THE ACT') DATED 16/02/2016 RELEVANT TO ASSESSMENT YEAR (AY) 2013 - 14 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 2 - 1. THE CIT(APPEALS) ERRED IN NOT GRANTING DEDUCTION OF RS.94,90,000/ - PAID TOWARDS CANCELLATION OF BANAKHAT WHILE COMPUTING THE SHORT TERM CAPITAL GAINS, WHICH AROSE ON SALE OF AGRICULTURAL LAND. THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND, ALTER OR MODIFY ANY OF THE GROUNDS STATED HEREINABOVE EITHER BEFORE OR AT THE TIME OF HEARING. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT THE LD. CIT (A) ERRED IN NOT GRANTING THE DEDUCTION AMOUNTING TO RS. 94,90,000/ - PAID T OWARDS CANCELLATION OF BANAKHAT AGAINST THE INCOME UNDER THE HEAD CAPITAL GAIN. THE FACTS OF THE CASE ARE THAT THE ASSESSEE AN INDIVIDUAL AND GENERATING HIS INCOME FROM LET - OUT OF HOUSE PROPERTY, COMMISSION, CAPITAL GAIN ON SALE OF LAND, INTEREST AND DIVIDEND INCOME. THE AO DURING THE ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HA D TRANSFERRED THE LAND SITU ATED AT SURVEY NO. 917 OF VILLAGE MOUJE SANATHAL DATED 23 - 07 - 2012 FOR RS. 6,48,30,800/ - . THE LAND WAS ALSO HELD BY THE OTHER FOUR CO - OWNERS. AS SUCH, THE ASSESSEE S SHARE WAS ONLY 23.50% IN THE SAID LAND , AND ACCORDINGLY , THE CONSIDERATION RECEIVED BY HIM WAS AMOUNTING TO RS. 1,52,35,238/ - ONLY . T HE ASSESSEE IN HIS RETURN OF INCOME ON THE SALE OF SUCH LAND DECLARED THE SHORT TERM CAPITAL GAIN (IN SHORT STCG) AT RS. 12,91,243/ - AFTER DEDUCTI N G THE COST OF ACQUISITION AMOUNTING TO RS. 1,39,43,995/ - AGAINST T HE SALE CONSIDERATION. ON THE QUESTION BY THE AO, T HE ASSESSEE SUBMITTED AS DETAILED UNDER : ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 3 - 1. THAT THE AGRICULTURAL LAND WAS PURCHASED ALONG WITH OTHER FOUR CO - OWNERS ON DATED 29 - 03 - 2011 FOR A SUM OF RS. 44,35,860/ - INCLUDING PURCHASE COST, STAMP DUTY, REG ISTRATION FEES, BROKERAGE , ETC. 2. THE ASSESSEE SHARE IN SUCH LAND IS ONLY 23.5 0 %. 3. SUBSEQUENTLY , HE MADE A BANAKHAT DEED DATED 08 - 07 - 2011 WITH MAVJIBHAI PATEL AND DHARMENDRA PATEL IN RESPECT OF THE SAID LAND. AFTER A FEW MONTHS , THE BANAKHAT DEED WAS CANCELLED ON DATED 07 - 07 - 2012. THEREFORE T HE ASSESSEE PAID RS. 36,57,264/ - AS CANCELLATION OF B ANAKHAT DEED TO AVOID ANY DISPUTE IN THE TITLE OF THE PROPERTY AND TO GET WAIVE D THE RIGHT OF THE PROPOSED PURCHASERS (PARTIES) IN THE SAID LAND . 4. THE ASSESSEE F URTHER MADE ANOTHER BANAKHAT DEED DATED 08 - 10 - 2011 WITH PASAWALA SHARE TRADING CO. PVT LTD. AGAIN AFTER A FEW MONTHS , THE BANAKHAT DEED WAS CANCELLED ON DATED 27 - 06 - 2012. THEREFORE HE PAID RS. 58,84,460/ - AS CANCELLATION OF BANAKHAT DEED TO AVOI D ANY DISPUTE IN THE TITLE OF THE PROPERTY AND TO GET WAIVED THE RIGHT OF THE PROPOSED PURCHASERS (PARTIES) IN THE SAID LAND. 5. FINALLY , HE SOLD SAID AGRICULTURAL LAND ON 23 - 07 - 2012 WHERE HE RECEIVED HIS SHARE OF SALE CONSIDERATION FOR RS. 1,52,35,238/ - AN D DECLARED STCG AFTER CLAIMING ABOVE EXPENDITURE AS COST OF ACQUISITION IN HIS RETURN OF INCOME AT RS. 12,91,243/ - ONLY . 6. THE ASSESSEE FURTHER IN SUPPORT OF THE ABOVE SUBMITTED THAT HE RECEIVED THE ADVANCE AS CASH FROM THE SAID PARTY ON THE EXECUT ION OF BANAKHAT DEED WHICH W AS REFLECTING IN HIS BALANCE - SHEET AS A N ADVANCE IN THE FINANCIAL YEAR 2011 - 12. ON THE OTHER HAND , ON CANCELLATION OF BANAKAHT DEED , HE PAID THE COMPENSATION THROUGH CHEQUE TO AVOID THE LITIGATION IN THE TITLE OF LAND AND THE SAME ALSO REFLECTED IN HIS REGULAR BOOKS OF ACCOUNT. ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 4 - 7. THE PAYMENT RECEIVED BY THE SAID PARTIES AGAINST CANCELLATION OF BANAKAHAT DEED WAS ALSO REFLECTED IN THEIR ACCOUNT , AND THEY ALSO DECLARED AS INCOME IN THEIR INCOME TAX RETURN. 8. IN SUPPORT OF THE ABOVE CONTENT ION , HE SUBMITTED ALL THE RELEVANT DOCUMENTS. THE DETAILS OF DOCUMENTS SUBMITTED BY HIM ARE AVAILABLE ON PAGE 8 OF AO ORDER WHICH ARE REPRODUCED AS UNDER: (1) LEDGER ACCOUNT OF AGRICULTRUAL LAND PURCHASE SURVEY NO.917 OF SANATHAL FOR A.Y. 2012 - 13 & 2013 - 14. (2) LEDGER ACCOUNT OF BOTH THE PARTIES F ROM WHOM I HAD RECEIVED THE AMOUNT OF BANAKHAT WHICH WAS REFLECTED IN BOOKS OF ACCOUNT FOR THE A.Y. 2012 - 13. (3) LEDGER ACCOUNT OF BOTH THE PARTIES T O WHOM I HAD PAID THE AMOUNT FOR CANCELLATION OF B ANAKHAT WHICH WAS REFLECTED IN BOOKS OF ACCOUNT FOR THE A.Y. 2013 - 14. (4) COPY OF THE BANK STATEMENT. (5) ALL THE PAYMENT FOR CANCELLATION OF BANAKHAT DEED FOR BOTH THE PARTIES A MOUNTING OF RS.94,40,184 / - THE SAID AMOUNT WAS PAID BY A/C PAYEE CHEQUE. (6) COPY OF THE BALANCE SHEET ON BANAKHAT DEED WAS SHOWN AS AN ADVANCE RECEIVED AGAINST THE AGRICULTURAL LAND. THE ASSESSMENT PROCEEDING FOR A.Y. 2012 - 13 WAS FINALIZED U/S.143(3) READ W.S. 147 DATED 31.07.2015 , THE SAID FACTS WAS BROUGHT TO YOUR NOTICE. (1) LEDGER ACOUNT OF AGRICULTURAL LAND FROM THE BOOKS OF MAVJIBHAI SAVANI & DHARMENDRA SAVANI DULY SIGNED BY THEM. (NAME, ADDRESS & PA N NUMBER) ALONG - WITH THEIR ITR F ILED AND COMPUTATION OF INCOME. 2) LEDGER ACCOUNT OF AGRICULTURAL LAND FROM THE BOOK SOF PASSAWALA TRADING CO PVT.LTD. DULY SIGNED BY THE DIRECTOR. (NAME, ADDRESS & PAN NUMBER) ALONG - WITH THEIR ITR FILED AND COMPUTATION OF INCOME. FURTHER THE SAID PARTY HAD FURNISHED A SEPARATE LETTER EXPLAINING THE FACTS VIDE HIS LETTER DATED 16.12.2015 BY CONFIRMING ALL THE FACTS. ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 5 - HOWEVER , THE AO FROM THE SUBMISSION MADE BY THE ASSESSEE OBSERV ED AS UNDER : I. T HE BANAKHAT DEED WAS EXECUTED ON STAMP PAPERS WHICH WERE NOTARIZED , BUT THE SAME HAS NO LEGAL SANCTITY UNLESS IT IS REGISTERED WITH THE PRESCRIBED AUTHORITY. II. ON PERUSAL OF THE BANAKHAT D EED EXECUTED WITH THE SAID PARTIES , THERE WAS NOT MENTIONED TO PAY ANYTHING ON CANCELLATION OF BANAKHAT DEED. III. T HE SECOND BANAKHAT DATED 08 - 10 - 2011 WAS EXECUTED WITH PASSAWALA SHARE TRADING CO. LTD WITHOUT CANCELLING THE FIRST BANAKHAT DATED 08 - 07 - 2011 WHICH WAS EXECUTED WITH MAVJIBHAISHIVANI AND DHARMENDRABHAISHIVANI. SIMILARLY , THE 2 ND BANAKHAT WAS CANCELLED DATED 27 - 06 - 2012 BEFORE THE CANCELLATION OF THE FIRST ONE DATED 07 - 07 - 2012 . IV. T HE 2 ND BANAKHAT WAS EXECUTED WITH NON - AGRICULTURIST , BUT AS PER THE NORMS IT CAN BE SOLD ONLY TO AN AGRICULTURIST. V. T HE PROVISIONS OF SECTION 55(2) AND SECTION 55(1) RELATE TO COST OF ACQUISITION AND COST OF IMPROVEMENT , BUT THE SAME DOES NOT APPLY TO THE EXPENSES INCURRED TOWARDS THE CANCELLATION OF BANAKHAT. VI. THE PROVISION OF SECTION 48 OF THE ACT ALSO PROVIDES THAT THE EXPENDITURE S INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER ARE ALLOWED AS DEDUCTION . BUT THE ASSESSEE DID NOT INCUR THE AMO UNT IN CONNECTION WITH THE SALE, PURCHASE OF ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 6 - THE SAID AGRICULTURE LAND (I.E. , STAMP DU TY, REGISTRATION FEES , ETC.). THEREFORE, THE SAME CANNOT BE ALLOWED AS DEDUCTION. THUS THE AO IN VIEW OF THE ABOVE CONCLUDED THAT THE SAID PAYMENT MADE BY THE ASSESSEE WAS NEITHER RELATED TO THE ACQUISITION NOR FOR THE COST OF IMPROVEMENT AND ALSO IT IS NOT INCURRED WHOLLY AND EXCLUSIVELY IN RELATION TO TRANSFER OF THE ASSETS. ALL THE TRANSACTION WAS USED AS A COLORAB LE DEVICE TO REDUCE THE CAPITAL GAIN TAX LIABILITY. THEREFORE , THE AO DISALLOWED RS. 58,84,460/ - AND RS. 36,05,724/ - WAS PAID ON ACCOUNT OF THE CANCELLATION OF BANAKHAT DEED WHILE COMPUT ING THE CAPITAL GAIN OF THE ASSESSEE. THE A GGRIEVED ASSESSEE PREFER RED AN APPEAL BEFORE THE LD. CIT (A). THE ASSESSEE BEFORE THE LD. CIT (A) REITERATED THE SUBMISSION AS BEFORE THE AO. THE FURTHER SUBMI SSIONS OF THE ASSESSEE BEFORE THE LD. CIT (A) ARE REPRODUCED AS UNDER: DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS CONTENDED AS UNDER: - 1. THE APPELLANT HAS MADE PAYMENT S TO BOTH THE PARTIES RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AS FAVOURABLE TO THEM. THROUGH ACCOUNT PAYEE CHEQUES WHICH IS DULY REFLECTED IN THE BANK PASS BOOK. 2. BOTH THE PARTIES RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AS FAVOURABLE TO THEM. RECEIVING THE AMOUNT HAVE SHOWN THE SAME ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 7 - IN THEIR INCOME - TAX RETURNS AND HAS ALSO OFFERED THE SAID RECEIPT AS INCOME. 3. BOTH THE ABOVE PARTIES HAVE GIVEN CONFIRMATION OF RE CEIPT OF THE AMOUNT STATED IN CANCELLATION DEED. 4. DISALLOWANCE IN THE HAND OF APPELLANT AND PARALLEL TAXATION IN THE HANDS OF RECIPIENT AMOUNT TO DOUBLE TAXATION ON THE SAME AMOUNT WHICH IS AGAINST THE LAW. 5. IN THE CASE OF ONE OF THE CO - OWNER OF THE LAND SOL D THE AO HAS ALLOWED THE CLAIM OF IMPROVEMENT COST AGAINST THE SALE CONSIDERATION FOR COMPUTING CAPITAL GAIN. THE DIFFERENTIAL TREATMENT CANNOT BE METED OUT TO ANOTHER CO - OWNER WHILE MAKING THE ASSESSMENT OF THE SAME PROPERTY OR WHILE VALUING THE SAME PRO PERTY. 6. BY VIRTUE OF SAID TWO AGREEMENTS RIGHT IN PERSON HAS BEEN CREATED IN FAVOUR OF BOTH THE ABOVE PARTIES AND SAID PARTIES GET RIGHT TO GET THE PROPERTY TRANSFERRED IN THEIR NAME OR SUE FOR COMPENSATION FOR BREACH OF CONTRACT BY WAY OF FILING SUIT OF SPECIFIC PERFORMANCE. HOWEVER , THE LD. CIT (A) DURING APPELLATE PROCEEDINGS REFERRED THE BANAKHAT MADE WITH PASSWALA SHARE TRADING CO. LTD. DATED 8/10/2011 PARA E AND F OF BANAKHAT DEED WHICH ARE REPRODUCED AS UNDER: E. THAT IF YOU ACCEPTING PARTY R EADY AND HAPPY TO GIVE REMAINING CONSIDERATION AMOUNT WITHIN THE ABOVE SAID PERIOD IN TWO SAME INSTALLMENTS EVEN THOUGH IF WE EXECUTING PARTY SHALL NOT EXECUTE REGISTERED SALE DEED BY CLEARING THE RIGHTS AND TITLES AND INTEREST CLEAR AND MARKETABLE OF THE SAID LAND THEN YOU ACCEPTING PARTY AUTHORIZE TO GET SPECIFIC PERFORMANCE OF THIS AGREEMENT BY THE COURT. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX F. THAT IF WE EXECUTING PARTY WILLING AND READY TO TAKE REMAINING CONSIDERATION AMOUNT FROM YOU ACCE PTING PARTY AND READY TO EXECUTE REGISTERED SALE DEED OF THE SAID LAND WITHIN STIPULATED PERIOD, EVEN T4HOUGH YOU ACCEPTING PARTY SHALL NOT PAY THE REMAINING CONSIDERATION AMOUNT AND SHALL NOT BE EXECUTED REGISTERED SALE DEED THEN AFTER COMPLETING THE PERI OD WE EXECUTING PARTY HEREBY AUTHORIZE TO CANCEL THIS AGREEMENT TO SALE (BANAKHAT) . ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 8 - IN VIEW OF THE ABOVE, THE LD. CIT - A CONCLUDED THAT NO RIGHT WAS CREAT ED IN THE SAID LAND IN FAVOR OF THE PARTY MERELY BY EXECUTING THE BANAKHAT DEED. THEREFORE THE ASSESSEE S CONTENTIONS THAT HE MADE THE PAYMENT TO SUCH PARTIES TO GET WAIVE D THE RIGHT OF THE PARTIES IS WRONG . AS THE PARTIES DO NOT COMPLY WITH THE TERMS AND CONDITIONS REGARDING THE PAYMENT AS MENTIONED IN BNAKAHAT DEED , SO THE RIGHT OF THE PARTIES IN THE LAND DOES NOT ARISE. THEREFORE THE QUESTION OF THE PAYMENT AGAINST WAIVER OF THE RIGHT ALSO DOES NOT ARISE. THUS , THE BANAKHAT DEED EXECUTED BY THE ASSESSEE AND AFTER THAT IT WAS CANCELLED WAS RAISING THE DOUBT ABOUT INTENTIONS AND THE GENUINENESS OF THESE BANAKHATS DEED. THEREFORE THE LD. CIT (A) WAS ALSO OF THE VIEW THAT AS THE RIGHT WAS NOT VESTED ON THE SAID LAND , THEN THE PAYMENT MADE BY THE ASSESSEE CANNOT BE SAID THAT IT WAS INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER. TH E LD. CIT (A) ACCORDINGLY CONFIRMED THE ORDER OF THE AO. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. AR BEFORE US FILED A PAPER B OOK RUNNING FROM PAGES 1 TO 157 AND SUBMITTED THAT THE COMPENSATION WAS P AID TO THE PARTIES ON ACCOUNT OF CANCELLATION OF THE AGREEMENTS (BANAKHATS). THE PARTIES WHICH RECEIVED THE COMPENSATION HAVE DULY DISCLOSED THE SAME IN THEIR RESPECTIVE INCOME TAX RETURN. THEREFORE, IT CANNOT BE CONCLUDED THAT THE ASSESSEE HAS ADOPTED A C OLORABLE DEVICE TO ESCAPE FROM THE TAX LIABILITY. ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 9 - THE LEARNED AR ALSO SUBMITTED THAT THE COMPENSATION PAID BY THE ASSESSEE WAS ACCEPTED IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT IN THE CASE OF THE CO - OWNERS OF THE PROPERTY. 4. ON THE OTHER HAND , T HE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT BROUGHT ANY IOTA OF EVIDENCE SUGGESTING THAT THERE WAS SOME DISPUTE BETWEEN THE ASSESSEE AND THE PROSPECTIVE BUYERS. MOREOVER, THE ASSESSEE HAS ENTERED INTO ANOTHER AGREEMENT WITHOUT CANCELLING TH E 1 ST AGREEMENT. THE LEARNED DR ALSO CLAIMED THAT THE COMPENSATION PAID BY THE ASSESSEE CANNOT BE QUALIFIED AS COST OF IMPROVEMENT. THEREFORE THE SAME IS NOT ELIGIBLE FOR DEDUCTION UNDER THE PROVISIONS OF SECTION 48 OF THE ACT. THE LEARNED DR ALSO SUBMITTED THAT THE DEDUCT ION OF THE COMPENSATION ALLOWED IN THE CASE OF CO - OWNERS DOES NOT MEAN THAT THE SAME SHOULD BE ALLOWED IN THE CASE OF THE ASSESSEE. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND P ERUSED THE MATERIALS AVAILABLE ON RECORDS. FROM THE PRECEDING DISCUSSION, WE NOTE THAT THE ASSESSEE ALONG WITH OTHER CO - OWNERS HAS PURCHASED A PIECE OF LAND AMOUNTING TO RS. 44,35,860.00 VIDE DATED 29 - 03 - 2011. THE SHARE OF THE ASSESSEE IN SUCH LAND WAS 23. 50% ONLY WHICH IS REPRESENTING HIS SHARE IN COST OF THE PROPERTY AT RS. 44,35,860.00 ONLY THE ASSESSEE VIDE BANAKHAT (1ST TIME) DATED 8 - 7 - 2011 SOLD SUCH AGRICULTURE LAND AT RS. 3,63,06,918.00. ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 10 - THE ASSESSEE FURTHER VIDE BANAKHAT (2 ND TIME) DATED 8 - 10 - 2011 SOLD SUCH AGRICULTURE LAND AT RS. 2,60,40,291.00. THUS , THE ASSESSEE ON THE CANCELLATION OF 1 ST BANAKHAT DATED 8 TH OF JULY 2011 PAID COMPENSATION OF RS. 36,57,264.00 BEING HIS SHARE IN THE PROPERTY VIDE CANCELLATION DEED DATED 7 - 7 - 2012 . THUS , THE ASSE SSEE ON THE CANCELLATION OF 2 ND BANAKHAT DATED 8 - 10 - 2011 PAID COMPENSATION OF RS. 58,84,460.00 BEING REPRESENTING HIS SHARE IN THE PROPERTY VIDE CANCELLATION DEED DATED 27 - 6 - 2012 . THE ASSESSEE FURTHER VIDE SALE DEED (3 RD TIME) DATED 23 - 7 - 2012 SOLD SUCH AGRICULTURE LAND AT RS. 6,48,30,800/ - IN WHICH HE RECEIVED A SUM OF RS. 1,52,35,238 BEING 23.50% REPRESENTING HIS SHARE IN THE PROPERTY. ACCORDINGLY, THE ASSESSEE WORKED OUT THE SHORT - TERM CAPITAL GAIN IN HI S HANDS , REPRESENTING HIS SHARE IN THE PROPERTY AS DETAILED UNDER: (A) SALE PRICE (MY SHARE 23.50%) RS.1,52,35,238/ - (B) LESS: PURCHASE PRICE (44,53,811/ - PURCHASE COST + 58,84,460/ - AMOUNT PAID FOR CANCELLATION OF BANAK HAT DEED + 36,05,724/ - AMOUNT PAID FOR CANCELLATION OF BANAKHAT DEED RS.1,39,43,995/ - SHORT TERM CAPITAL GAIN (DISCLOSED IN ITR)RS.12,91,243/ - ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 11 - HOWEVER, WE NOTE THAT IF THE ASSESSEE HAD NOT CANCELLED THE 1 ST BANAKHAT DATED 08 - 07 - 2011 THEN HIS INCOME SHOULD HAVE BEEN AT RS. 40,78,315.00 REPRESENTING HIS SHARE IN THE PROPERTY. THE NECESSARY WORKING FOR THE INCOME OF THE ASSESSEE STANDS AS UNDER: (A) SALE PRICE (MY SHARE 23.50% OF RS. 3,63,06,918) RS. 85,32,126.00 (B) LESS: PURCHASE PRICE RS. 44,53,811.00 SHORT TERM CAPITAL GAIN RS.40,78,315/ ON PERUSAL OF THE ABOVE, IT IS REVEAL ED THAT THE ASSESSEE WOULD HAVE EARNED MORE INCOME HAD HE HAD NOT CANCELLED THE BANAKHAT ABO VE . THEREFORE, IT APPEARS THAT THE ASSESSEE TO AVOID THE TAX LIABILITY HAS ADOPTED A COLORABLE DEVICE AS DISCUSSED ABOVE. REGARDING THE 2 ND BANAKHAT DATED 8 - 10 - 2011, WE NOTE THAT THE ASSESSEE HAS AGREED TO S ELL AT RS. 2,60,40,291.00 WHICH IS MUCH LOWER THAN THE SALE VALUE AGREED IN THE 1 ST BANAKHAT AS DISCUSSED ABOVE. AS SUCH, IT APPEARS TO OUR MIND THAT THERE WAS NO REASON FOR THE ASSESSEE TO GO FOR 2 ND BANAKHAT AT THE LOWER VALUE AND THAT TOO AFTER INCURRING THE HUGE COST AS DISCUS SED ABOVE. AT THE TIME OF HEARING, THE LEARNED AR FOR THE ASSESSEE HAS ALSO NOT BROUGHT ANYTHING ON RECORD JUSTIFYING WITH COGENT REASONS FOR ENTERING INTO BANAKHATS AND CANCELLING THE SAME. WE ALSO NOTE THAT THE ASSESSEE HAS RECEIVED ADVANCES ALONGWITH OTHER CO - OWNERS AGAINST 1 ST AND THE 2 ND BANAKHAT FOR RS. 11,00,000/ - AND ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 12 - RS. 5,40,255/ - RESPECTIVELY BUT IT HAS PAID HUGE COMPENSATION AMOUNTING TO RS. 36 ,57,264.00 AND RS. 58 ,84,460.00 RESPECTIVELY , AS DISCUSSED ABOVE. HOWEVER, W E FIND THAT THE ASSESSE E HAS PAID COMPENSATION TO THE FOLLOWING PARTIES: 1. MAVJIBHAISAVANI 2. DHARMENDRASAVANI 3. PASSAWALA SHARE TRADING CO. PVT LTD. ON PERUSAL OF THE INCOME TAX RETURN OF THE AFORESAID PARTIES, WE NOTE THAT ALL THE PART IES HAVE DISCLOSED SUCH COMPENSATION IN THE IR IN COME TAX RETURN AND HAVE PAID THE DUE TAXES ON SUCH COMPENSATION AMOUNT. THIS FACT CAN BE VERIFIED FROM THE RETURNS OF INCOME OF THE AFORESAID PARTIES WHICH ARE PLACED ON PAGES 11, 16, AND 2 3 OF THE PAPER BOOK. ACCORDINGLY, WE HOLD THAT IMPUGNED TRANSACTIO N CANNOT BE SAID TO HAVE MADE TO AVOID THE TAX LIABILITY. IT IS ALSO IMPORTANT TO NOTE THAT THE REVENUE HAS ACCEPTED THE AFORESAID COMPENSATION PAID BY THE ASSESSE E IN THE CASE OF THE CO - OWNER NAMELY RAMJI BHAI P PATEL IN THE ASSESSMENT FRAMED UNDER SECT ION 143(3) OF THE ACT. THE COPY OF THE ASSESSMENT ORDER IS PLACED ON RECORD. THUS WE HOLD THAT ONCE THE REVENUE HAS ACCEPTED THE IMPUGNED TRANSACTION IN THE CASE OF THE CO - OWNER, THE SAME TRANSACTION CANNOT BE DISPUTED/DISTURBED IN THE CASE OF ANOTHER CO - O WNER. REGARDING THIS , WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HON BLE M ADRAS HIGH COURT IN THE CASE OF CIT V/S ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 13 - KUMARARANI SMT. MEENAKSHI ACHI REPORTED IN 292 ITR 624 WHEREIN IT WAS HELD AS UNDER: IT IS TRITE THAT IF DURING THE SAME ASSESSMENT YEAR, THE SAME QUANTITY OF WEALTH IN POSSESSION OF ONE CO - SHARER IS SUBJECTED TO A LOWER RATE OF TAXATION, IT WOULD BE HIGHLY IMPROPER TO BURDEN A SIMILARLY SITUATED CO - SHARER WITH A HIGHER RATE OF TAX. IF SU CH AN ACTION ON THE PART OF THE ASSESSING AUTHORITIES IS SANCTIONED, IT WOULD MILITATE AGAINST THE PRINCIPLE OF EQUALITY OF LAW AS ENSHRINED IN ARTICLE 14 OF THE CONSTITUTION, VIDE JASWANT RAI'S CASE ( SUPRA). [PARA 5] APPLYING THE RATIO LAID DOWN IN JASWAN T RAI'S CASE ( SUPRA), TO THE FACTS OF THE INSTANT CASE WOULD LEAD TO THE FIRM CONCLUSION THAT THE ASSESSEE, WHO WAS ALSO A CO - OWNER OF THE PROPERTY, WAS ENTITLED TO THE BENEFIT ENJOYED BY THE OTHER CO - OWNER, WHOSE VALUATION OF THE SAME PROPERTY, AT THE SAM E RATE AS THAT OF THE ASSESSEE, WAS ACCEPTED BY THE COMMISSIONER AND RECORDED IN THE ORDER UNDER APPEAL BY THE TRIBUNAL. [PARA 6] FINDING NO REASON TO INTERFERE WITH THE ORDER OF THE TRIBUNAL, THE INSTANT APPEAL WAS TO BE DISMISSED. W E ALSO NOTE THAT THE ITAT AHMEDABAD HAS ALSO TAKEN THE SIMILAR VIEW IN THE CASE OF SHRI CHANDULAL PARBATBHAI PATEL V/S DCIT IN ITA NO. 2444 /AHD/ 2016 VIDE ORDER DATED 23 - 10 - 2018 WHEREIN IT WAS HELD AS UNDER ; WITH THE ASSISTANCE OF LD.REPRSENTATIVES, WE HAVE GONE THROUGH THE R ECORD CAREFULLY. THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.AO HAS ERRED IN ADOPTING VALUE OF THE LAND TRANSFERRED BY THE ASSESSEE EQUIVALENT TO THE VALUE ON WHICH STAMP DUTY WAS PAID. IT EMERGES OUT FROM THE RECORD THAT THE ASSESSEE WAS HAVING 25% SHARE IN THE LAND BEARING SURVEY NO.1089/90. HE HAS SOLD THIS LAND WITH OTHER CO - OWNERS. THE LD.AO WHILE COMPUTING THE CAPITAL GAIN UNDER SECTION 48 OF THE ACT ADOPTED FULL VALUE OF THE SALE CONSIDERATION EQUIVALENT TO THE AMOUNT ON WHICH STAMP DUTY WAS PAID. T HE CASE OF THE ASSESSEE WAS THAT IN THE CASE OF CO - OWNER, REFERENCE WAS GIVEN TO DVO UNDER SECTION 50C(2) WHO HAD DETERMINED FAIR MARKET VALUE OF THE PROPERTY. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE MADE A PRAYER BEFORE THE LD.CIT(A) T HAT THE SAME VALUE BE ADOPTED IN THE CASE OF THE ASSESSEE. WE FIND FORCE IN THIS CONTENTION OF THE ASSESSEE, BECAUSE SECTION (2) OF SECTION 50C CONTEMPLATES THAT IN CASE ASSESSEE RAISES AN OBJECTION OF THE VALUE ON WHICH STAMP DUTY WAS PAID, THEN IN ORDER TO FIND FAIR MARKET VALUE OF THE ASSET, REFERENCE WOULD BE MADE TO THE DVO , SINCE IN THE CASE OF CO - OWNER SUCH REFERENCE WAS MADE ON THE SAME PIECE OF LAND. THE SAME VALUE ITA NO.2444/AHD/2016 DETERMINED BY THE AO IN THE CASE OF CO - OWNER OUGHT TO BE ADOPT ED IN THE CASE OF THE ASSESSEE. WE ALLOW THE APPEAL OF THE ASSESSEE AND REMIT THE ISSUE TO THE FILE OF THE AO WITH DIRECTION TO THE LD.AO TO COMPUTE THE CAPITAL GAIN ASSESSABLE IN THE HANDS OF THE ASSESSEE ON TRANSFER OF THE ITA NO.421/AHD/2018 LAXMANBHAI JIVRAJBHAI PATEL VS.DCIT ASST.YEAR - 2013 - 14 - 14 - ABOVE LAND BY ADOPTING FULL SAL E CONSIDERATION EQUIVALENT TO THE AMOUNT DETERMINED BY THE DVO IN THE CASE OF CO - OWNER. WITH THIS DIRECTION, WE ALLOW THIS GROUND OF APPEAL. IN VIEW OF THE ABOVE AND AFTER CONSIDERING THE FACTS IN TOTALITY, WE ARE OF THE CONSIDERED VIEW THAT THERE CANNOT BE ANY ADDITION TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF THE COMPENSATION PAID TO THE PARTIES. HENCE , THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 17 / 0 6 / 201 9 - SD - - SD ( M S . MADHUMITA ROY ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 17 / 0 6 /20 19 DISPOSED BY MR. MANEESH PS. . . , . . . / T.C. NAIR, SR. PS