A.C.I.T. CIRCLE 21(1), MUMBAI V. MAHESH V. SHAH (HUF), MUMBAI

ITA 4573/MUM/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0749 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: VIPUL SHAH
• Keywords: Capital asset; Additional evidence; Cost of acquisition; Fair market value; Avoidance of tax; Valuation report
• Section: 54F

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - B,BENCH , , BEFORE S/SH RI JOGINDER SINGH,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 4573/MUM/2012 / ASSESSMENT YEAR - 200 9 - 10 INCOME TAX OFFICER 21(1)(4) ROOM NO. 606 , 6 TH F LOOR , C 10, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E) MUM B AI 52 VS M/S. MAHESH V. SHAH (HUF) A 303, KAILASH A P ARTMENT JUHU, VILE PARLE(W) MUMBAI 400 0 56 . PAN:AA KH M 1190 F ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHR I VIPUL SHAH / REVENUE BY :SHRI YOGESH KAMAT / DATE OF HEARING : 30 0 6 2015 / DATE OF PRONOUNCEMENT : 10 0 7 20 15 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM CHALLENGING THE ORDER D ATED 23.04.2012 OF CIT(A) 32 , MUMBA I , THE ASSESSING OFFICER(AO), HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HUF WAS THE OWNER OF THE PROPERTY AND THE RESULTANT LTCG ARISES IN THE HAN DS OF ASSESSEE HUF AND NOT IN THE HANDS OF MAHESH V. SHAH (INDIVIDUAL). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN ADMITTING NEW CLAIM OF THE ASSESSEE OF REPLACING PURCHASE COST WITH FAIR MARKET VALUE OF PROPERTY AS ON 1.4.1981 ON THE BASIS OF A MANUFACTURED EVIDENCE IN THE FORM OF VALUATION REPORT PREPARED AFTER COMPLETION OF ASSESSMENT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DIRECTING THE AO TO ACCEPT THE VALUATION OF THE ENTIRE PROPERTY AT RS.36,72,000/ - AS ON 1.4.1981 IGNORING THE FACT THAT THE VALUATION WAS A NEW CLAIM MADE AFTER COMPLETION OF ASSESSMENT AND THE CIT(A) DID NOT GIVE OPPORTUNITY TO THE AO OF REBUTTAL AFTER VERIFICATION. 4. THE APPELLANT PRAYS THAT T HE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR TO ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. ASSESSEE HUF , DERIVING INCOME FROM BUSINESS ,CAPITAL GAINS AN D OTHER SOURCES, FILED ITS RETURN OF INCOME ON 24.07.2009, DECLARING TOTAL INCOME OF RS. 2,27 LAKHS. AO FINALISED THE ASSESSMENT U/S.143(3) OF THE ACT,ON 31.03.2009 ,DETERMINING THE TOTAL INCOME AT RS. 81,55,140 / . 2. EFFECTIVE GROUND OF APPEAL PERTAINS TO OWNE RSHIP OF A PROPERTY AND ITS VALUATION . AS PER THE AIR INFORMATION, THE ASSESSEE HAD MADE INVESTMENT OF RS.20 LAKHS IN NHAI BONDS.THE ASSESSEE EXPLAINED THAT SOURCES OF THE SAME WERE FROM 1/ 4TH SHARE IN SALE PROCEEDS OF AN ANCESTRAL IMMOVABLE PROPERTY DURING THE YEAR FOR RS 3,25,00,000. IT WAS ALSO EXPLAINED THAT THE LTCG ON 4573/MUM/12 MAHESH (HUF) (0 9 - 10 ) 2 THE ABOVE SALE CONSIDERATION HAD BEEN OFFERED BY ASSESSEE IN THE RETURN FILED FOR AY 2009 10 WHEREIN THE DEDUCTION FOR INVESTMENT OF RS 20 LACS IN NHAI BONDS IN NAME OF ASSESSEE HAS BEEN CLAIMED. HOWEVER, THE AO NOTED THAT THOUGH THE CAPITAL GAIN IN RESPECT OF 1/ 4TH SHARE WAS DISCLOSED FOR AY 2009 10 IN THE RETURNS FILED BY ASSESSEE I.E. MAHESH VRAJLAL SHAH(HUF) BUT IN THE AGREEMENT THE ASSESSEE HAD SIGNED IN HIS INDIVIDUAL CAPACITY ONLY. IT WAS EXPLAINED BY THE ASSESSEE THAT THE AGREEMENT HAD BEEN SIGNED IN THE CAPACITY OF HUF BY MAHESH VRAJLAL SHAH WHO WAS ALSO THE KARTA OF THE HUF AND THE SAID TRANSACTION AND THE L TCG THEREON HAS ALREADY BEEN DISCLOSED IN THE RETURN OF HUF ALREADY FILE D ON 24.7.2009. V IDE LETTER ,DATED 30/11/2011,IT WAS FURTHER SUBMITTED THAT 1/ 4TH SHARE IN ANCESTRAL PROPERTY CAME TO ASSESSEE'S HUF BY ORAL PARTITION OF BI GGER HUF ON 16/10/1979 WHICH HAD BEEN DULY RECORDED IN DEED OF PARTITION DATED 10/3/1981 AND REGIST ERED WITH SUB REGISTRAR OF ASSURANCE OF BOMBAY VIDE SR.NO.779 OF 1981 DATED 10/3/1981. THE AO,HOWEVER, DID NOT ACCEPT THE CONTENTIONS ON GROUND THAT AFTER PARTITION OF BIGGER HUF, THE PROPERTY WOULD DEVOLVE ON TO THE KARTA OF THE HUF IN INDIVIDUAL CAPACITY AND THAT IN THE SAL E AGREEMENT DATED 25/7/2008 IT WAS MENTIONED THAT THE OWNERS WE RE IN INDIVIDUAL CAPACITY. SO HE HELD THAT THE ASSESSEE HUF WAS NOT THE OWNER OF PROPERTY AND HENCE THE 1/ 4TH SALE CONSIDERATION OF RS.81,25,000 WAS ASSESSABLE AS INCOME FR OM OTHER SOURCES IN HANDS OF ASSESSEE AND NOT UNDER CAPITAL GAINS. SINCE THE ASSESSMENT WAS BEING DONE UNDER OTHER SOURCES, SO HE DID NOT ALLOW ANY COST OF ACQUISITION NOR DEDUCTION U/S. 54EC FOR INVESTMENT IN NHAI BONDS OR DEDUCTION U/S 54F FOR INVESTMENT I N RESIDENTIAL HOUSE . 2.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER HE HELD THAT THE PROPERTY WAS AT VILLAGE ERANGAL, MADH ISL AD, MUMBAI ADMEASURING ABOUT 34,000 SQ.YD. WITH STRUCTURE THEREON ,THAT O N 25/7/2008 OF ACTUAL CONSIDERATION OF RS.3,25,00,000/ - WAS RECEIVED,THAT THE STAMP VALUE ADOPTED BY REGISTERING AUTHORITIES WAS 8,33,91,000 ,THAT THE PROPERTY WAS ANCESTRAL PROPERTY RECEIVED BY VRAJLAL TRIBHOVANDAS SHAH HUF ON 14 - 7 - 1962 FROM THE COURT RECEIVER OF THE HIGH COURT OF BOMBAY IN PURSUANCE OF SUIT NO.1175 OF 1946 ,THAT THE PLAINTIFFS HAD MADE IT CLEAR THAT THE PROPERTY BELONGED TO JOINT FAMILY OF TRIBHOVANDAS LALCHAND .THE F AA REPRODUCED THE RELEVANT PROTION WHICH READS AS UNDER : - 'THE PLAINTIFFS PRAY FOR A DECLARATION THAT THE PROPERTIES BELONGING TO THE JOINT FAMILY OF TRIBHOVANDAS LALCHAND.' HE FURTHER HELD THAT THE SAID PROPERTY WAS OWNED BY VRAJLAL TRIBHOVANDAS SHAH H UF AND THERE WAS A PARTITION OF VRAJLAL TRIBHOVANDAS SHAH HUF ON 16 10 1979 WHICH WAS EVIDENCED BY THE DEED OF PARTITION DATED 10 3 1981 DULY REGISTERED WITH THE SUB REGISTRAR OF BOMBAY ,THAT THE FACTS OF PARTITION O F VRAJLAL TRIBHOVANDAS SHAH HUFWE ARE ME NTIONED ON PAGE 2 OF THE SALE AGREEMENT ALSO WHICH WAS BEFORE THE AO ALSO ,THAT THE FACT OF OWNERSHIP OF PROPERTY ORIGINALLY BY VRAJLAL TRIBHOVANDAS SHAH HUF TILL DATE OF PARTITION COULD NOT BE DENIED NOR HA D THE SAME BEEN DISPUTED BY THE AO ,THAT AS PER THE HINDU LAW AND INDIAN SUCCESSION ACT, THE INHERITED PROPERTY AFTER PARTITION OF ORIGINAL HUF WOULD DEVOLVE ON THE SMALLER HUFS OF THE RECIPIENT COPARCENERS ONLY AND NOT IN INDIVIDUAL CAPACITY AS CONCLUDED BY THE AO , THAT A NY HUF PROPERTY THAT WOULD BE DIVI DED ON PARTITION RETAIN ED ITS CHARACTER AS A JOINT FAMILY PROPERTY AND AS SUCH IN THE HANDS OF RECIPIENT THE SAME WOULD BE HUF PROPERTY OF RECIPIENT , THAT MAHESH V SHAH IN INDIVIDUAL CAPACITY HAD NOT CONTRIBUTED TO THE ACQUISITION OF THE INHERITED PROPERTY , THAT HE C OULD NOT BE THE SOLE OWNER OF THE PROPERTY IN INDIVIDUAL CAPACITY FOR THE SHARE RECEIVED ON PARTITION OF HUF ,THAT THE OTHER FAMILY MEMBERS OF HUF ALSO HA D RIGHT IN THE INHERITED PROPERTY ,THAT CONSIDERATION RECEIVED FOR RELEASE OF INTEREST IN THE JOINT FAMILY PROPERTY WOULD ALSO HAVE JOINT FAMILY PROPERTY 4573/MUM/12 MAHESH (HUF) (0 9 - 10 ) 3 CHARACTER WITH THE RESULT THAT ANY INCOME FROM ANY INVESTMENT THEREFORE C OULD ONLY BE TREATED AS JOINT FAMILY PROPERTY. HE RELIED UPON THE CASE OF P. N . SRINIVASA RAO (232 ITR 730 ) .THE FAA OBSERV ED THAT THE ASSESSEE BEING SON OF VRAJLAL TRIBHOVANDAS SHAH WAS A COPARCENER IN VRAJLAL TRIBHOVANDAS SHAH HUF ,THAT HE WAS MARRIED , THAT THERE EXISTED A VALID HUF OF THE ASSESSEE ON WHOM THE INHERITED PROPERTY WOULD HAVE DEVOLVED ,THAT THE ASSESSEE HUF H A D LEGAL RIGHT OVER THE PROPERTY AND NOT THE APPELLANT IN INDIVIDUAL CAPACITY AND THE SAID PROPERTY AT NO POINT OF TIME BECAME THE INDIVIDUAL PROPERTY OF ASSESSEE NOR THERE HAD BEEN ANY SUCH DOCUMENT EVIDENCING THAT THE HUF PROPERTY WAS TRANSFERRED TO KART A IN INDIVIDUAL CAPACITY BY THE ASSESSEE HUF ,THAT THE PROPERTY TAX BILL ISSUED BY BMC FOR ALL YEARS TILL FY 2007 08 MENTION ED THE NAME OF THE OWNER OF PROPERTY SITUATED ON THE SAID LAND AS 'VRAJLAL TRIBHOVANDAS SHAH & HIS BRANCH' ,THAT T HE ABOVE FACTUAL P OSITIONS WAS NOT AT ALL CONSIDERED BY THE AO BEFORE ARRIVING AT CONCLUSION THAT THE PROPERTY BELONGED TO INDIVIDUAL , THAT THE AO HAD NOT LOOKED INTO SUBSTANCE OF THE AGREEMENT AND ALSO TO OTHER RELEVANT FACTORS WHICH INDICATED THE OWNERSHIP OF PROPERTY WA S IN HANDS OF HUF ONLY ,THAT MERE ABSENCE OF WORD HUF IN THE AGREEMENT OR MENTIONING OF HIS INDIVIDUAL PAN WOULD NOT CHANGE THE TAXABILITY FROM HUF TO INDIVIDUAL , THAT ARGUMENT OF THE ASSESSEE THAT IT WAS ONLY A VENIAL TYPOGRAPHICAL ERROR THAT THE WORD HUF REMAINED TO BE MENTIONED IN THE AGREEMENT SEEMED TO BE BONAFIDE , THAT THE AO HAD ALSO ACCEPTED THE FACT THAT PROFIT ON SALE OF THE PROPERTY HAD BEEN SHOWN IN THE RETURN OF INCOME OF ASSESSEE HUF,THAT THE HUF HAD ALREADY FILED ITS RETURN DISCLOSING THE L T CG FOR 1/ 4TH SHARE FOR A Y 2009 10 AT THE SAME TIME WHEN THE INDIVIDUAL RETURN WAS FILED,THAT THERE WAS NO ELEMENT OF ANY AFTERTHOUGHT BY DISCLOSING THE LTCG IN HANDS OF HUF NOR ANY ADDITIONAL BENEFIT COULD HAVE ACCRUED TO APPELLANT BY DISCLOSING LTCG IN HANDS OF HUF AND NOT IN INDIVIDUAL CAPACITY. HE RELIED UPON THE CASES OF NATIONAL CEMENT MINE I NDUSTRIES (42 ITR 69,77 ), PADAMJEE R KADAMBANDE (195 ITR 877 ) . FINALLY,HE HELD THAT THE LTCG ON SALE OF PROPERTY OFFERED BY ASSESSEE COULD NOT BE BROUGHT TO TAX IN HANDS OF ASSESSEE AS INCOME FROM OTHER SOURCES IN INDIVIDUAL CAPACITY BY ANY STRETCH OF INTERPRETATION ,THAT I F ANY INCOME SPECIFICALLY FELL UNDER CAPITAL GAINS THEN THE SAME COULD NO T BE TAXED AS INCOME FROM OTHER SOURCES. HE ALLOWED THE APPEAL FILED B Y THE ASSESSEE . 2.2. BEFORE US,AUTHORISED REPRESENTATIVE(AR) STATED THAT IDENTICAL ISSUE IN THE CASES OF ONE OF THE OTHER CO OWNERS HAS BEEN DECIDED BY THE TRIBUNAL. DEPARTME NTAL REPRESENTATIVE (DR)LEFT THE MATTER TO THE DISCRETION OF THE BENCH. WE HAVE HEA RD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD MADE THE ADDITION IN THE HANDS OF THE ASSESSEE AS IN THE SALE DEED WORD HUF WAS NOT MENTIONED AND MAHESH V SHAH HAD GIVEN HIS PAN NO.IN THE DEED,THAT THE FAA HAD HELD THAT BOTH THESE MISTAKES WERE TECHNICAL ERRORS,THAT HE EMPHASIZED ON SUBSTANCE AND REAL NATURE OF THE TRANSACTION, THAT THE PROPERTY WAS IN POSSESSION OF HUF SINCE ,THAT VIDE DEED IT WAS DEVOLVED TO HUF,THAT THE HUF HAD FILED ITS RETURN OF INCOME SHOWING INC OME FROM THE SALE OF PROPERTY AND THE RETURN WAS ACCEPTED BY THE DEPARTMENT.IN THESE CIRCUMSTANCES WE ARE OF THE OPINION THAT HUF WAS THE OWNER OF THE PROPERTY AND NOT THE INDIVIDUAL.IN THE CASE OF OTHER CO OWNER OF THE PROPERTY THE TRIBUNAL HAS HELD THAT THE HUF AND NOT THE INDIVIDUAL WAS THE OWNER(ITA/3881/ MUM/2012,AY.2009 10 DATED08.04.2015 IN THE CASE OF RAJU V SHAH).WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE ORDER OF RAJU V SHAH(SUPRA) AND SAME READS AS UNDER: 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ONLY ISSUE URGED IN BOTH THE APPEALS IS WHETHER THE LD CIT(A) WAS JUSTIFIED IN HOLDING THAT THE LONG TERM CAPITAL GAIN (LTCG) ARISING ON SALE OF IMMOVABLE PROPERTY IS NOT ASSESSABLE IN THE HANDS OF THE ASSESSES IN THEIR INDIVIDUAL STATUS. 4573/MUM/12 MAHESH (HUF) (0 9 - 10 ) 4 3. THE FACTS RELATING THERETO ARE THAT THE ASSESSING OFFICER RECEIVED AIR INFORMATION SHOWING THAT THESE TWO ASSESSES HAVE JOINTLY SOLD AN IMMOVABLE PROPERTY ALONG WITH OTHERS. HOWEVER, IT WAS SEEN THAT THEY HAVE CLAIMED THAT THE PROPERTY BELONG ED TO THEIR RESPECTIVE HUF AND ACCORDINGLY DECLARED THE LTCG IN THE RETURNS OF INCOME FILED BY THE RESPECTIVE HUF. THE AO NOTICED THAT THE AGREEMENT WAS ENTERED INTO BY ASSESSES IN THEIR INDIVIDUAL NAMES AND THEY HAVE ALSO GIVEN THE PERMANENT ACCOUNT NUMBE RS PERTAINING TO THEIR RESPECTIVE INDIVIDUAL STATUS. ACCORDINGLY, THE AO HELD THAT THE PROPERTY SHOULD BE CONSIDERED AS BELONGING TO THEM IN THEIR RESPECTIVE INDIVIDUAL STATUS AND HENCE THE LTCG ARISING ON SALE OF IMMOVABLE PROPERTY IS ASSESSABLE IN THEIR INDIVIDUAL STATUS AND NOT IN THE STATUS OF HUF. ACCORDINGLY, THE AO ASSESSED THE LTCG IN THE HANDS OF BOTH THE ASSESSEES IN THEIR INDIVIDUAL CAPACITY. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) WAS CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEES THAT IMMOVABLE PROPERTY SOLD BY THEM BELONGED TO THEIR RESPECTIVE HUF. ACCORDINGLY, HE DELETED THE LTCG ASSESSED IN THE HANDS OF THESE ASSESSES IN THEIR RESPECTIVE INDIVIDUAL CAPACITY. AGGRIEVED BY THE ORDERS PASSED BY THE LD CIT(A), THE REVENUE HAS FILED THESE APPEALS BEFORE THE TRIBUNAL. 4. WE NOTICE THAT THE LD.CIT(A) HAS DELETED THE ASSESSMENT OF LTCG WITH THE FOLLOWING OBSERVATIONS IN THE CASE OF SHRI RAJU V SHAH: 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE ARGUMENTS PUT FORWARD BY THE ID. AR . IT IS SEEN THAT THE PROPERTY AT VILLAGE ERANGAI, MADH ISLAND, MUMBAI ADMEASURING ABOUT 34,000 SQ.YD. WITH STRUCTURE THEREON TO M/S. SAI SHIV FILMS PVT. LTD. (SIC. SOLD) ON 25 7 2008 FOR ACTUAL CONSIDERATION OF RS.3,25,00,000/ THOUGH THE STAMP VALUE AD OPTED BY REGISTERING AUTHORITIES WAS 8,33,91,000. I HAVE GONE THROUGH THE SALE AGREEMENT & DOCUMENTS PLACED BEFORE ME. IT IS SEEN THAT THE PROPERTY WAS ANCESTRAL PROPERTY RECEIVED BY VRAJLAL TRIBHOVANDAS SHAH HUF ON 14 - 7 - 1962 FROM THE COURT RECEIVER OF THE HIGH COURT OF BOMBAY IN PURSUANCE OF SUIT NO. 1175 OF 1946. ON GOING THROUGH THE SUIT IT IS SEEN THAT THE PLAINTIFFS HAD MADE IT CLEAR THAT THE PROPERTY BELONGED TO JOINT FAMILY OF TRIBHOVANDAS LALCHAND WHICH READS AS UNDER : T HE PLAINTIFFS PRAY FOR A DECLARATION THAT THE PROPERTIES BELONGING TO THE JOINT FAMILY OF TRIBHOVANDAS LALCHAND. IT IS ALSO SEEN THAT THE SAID PROPERTY WHICH WAS OWNED BY VRAJLAL TRIBHOVANDAS SHAH HUF AND ON 16 - 10 - 1979 WHICH IS EVIDENCED BY THE D EED OF PARTITION DATED 10 - 3 - 1981 DULY REGISTERED WITH THE SUB REGISTRAR OF BOMBAY. THESE FACTS OF PARTITION OF VRAJLAL TRIBHOVANDAS SHAH HUF ARE MENTIONED ON PAGE 2 OF THE SALE AGREEMENT ALSO WHICH WAS BEFORE THE AO ALSO. THUS THE FACT OF OWNERSHIP OF PROP ERTY ORIGINALLY BY VRAJLAL TRIBHOVANDAS SHAH HUF TILL DATE OF PARTITION CANNOT BE DENIED NOR HAS THE SAME BEEN DISPUTED BY THE AO, THOUGH ALL THE FACTS WERE BEFORE HIM ALSO. THUS AS PER THE HINDU LAW AND INDIAN SUCCESSION ACT, THE INHERITED PROPERTY AFTER PARTITION OF ORIGINAL HUF, WOULD DEVOLVE ON THE SMALLER HUFS OF THE RECIPIENT COPARCENERS ONLY AND NOT IN INDIVIDUAL CAPACITY. ANY HUF PROPERTY THAT IS DIVIDED ON PARTITION RETAINS ITS CHARACTER AS A JOINT FAMILY PROPERTY AND AS SUCH, IN THE HANDS OF RECIP IENT, THE SAME WILL BE HUF PROPERTY OF RECIPIENT. SINCE THE RECIPIENT HAD NOT CONTRIBUTED TO THE ACQUISITION OF THE INHERITED PROPERTY, HE CANNOT BE THE SOLE OWNER OF THE PROPERTY FOR THE SHARE RECEIVED BY HIM ON PARTITION OF HUF EVEN IF HE WISHES TO BE S O BE SO, BECAUSE THE OTHER FAMILY MEMBERS OF RECIPIENTS ALSO HAVE RIGHT IN THE INHERITED PROPERTY. THUS CONSIDERATION RECEIVED FOR RELEASE OF INTEREST IN THE JOINT FAMILY PROPERTY WOULD ALSO HAVE JOINT FAMILY PROPERTY CHARACTER WITH THE RESULT THAT ANY INC OME FROM ANY INVESTMENT THERE FROM CAN ONLY BE TREATED AS JOINT FAMILY PROPERTY. IT WAS SO HELD IN CIT V/S. P. N. SRINIVASA RAO 232 ITR 730 (KER.). IT IS NOTED THAT THE ASSESSEE BEING SON OF VRAJLAI TRIBHOVANDAS SHAH WAS A COPARCENER IN VRAJLAL TRIBHOVANDA S SHAH HUF AND HE WAS MARRIED ALSO. SO THERE EXISTED A VALID HUF OF THE APPELLANT ON WHOM THE INHERITED PROPERTY WOULD HAVE DEVOLVED. THUS AS PER THE PREVAILING LAW, IT IS THE APPELLANT'S HUF WHICH HAS LEGAL RIGHT OVER THE PROPERTY AND NOT THE APPELLANT IN INDIVIDUAL CAPACITY AND THE SAID PROPERTY AT NO POINT OF TIME BECAME THE INDIVIDUAL PROPERTY OF A PPELLANT. THE APPELLANT NEVER PAID ANY CONSIDERATION FOR ACQUIRING THE PROPERTY AND HENCE FOR THIS REASON ALSO THE INHERITED PROPERTY COULD NOT HAVE BECOME HI S SOLE PROPERTY. THIS IS FURTHER SUPPORTED BY THE FACT THAT PROPERTY TAX BILL ISSUED BY BMC FOR ALL YEARS TILL FY 2007 08 STILL MENTIONS THE NAME OF THE OWNER OF PROPERTY SITUATED ON THE SAID LAND AS 'VRAJLAL TRIBHOVANDAS SHAH & HIS BRANCH'. THUS IT IS CLE AR THAT IT IS THE APPELLANT'S HUF WHO HAD DOMINION OVER THE PROPERTY IN WHICH HE HAD THE RIGHT TO ENJOY AND TO DO WITH IT AS HE PLEASES. THE ABOVE FACTUAL POSITIONS HAVE NOT AT ALL BEEN DISPUTED BY THE AO. ONCE THE APPELLANT WAS NOT OWNER, 4573/MUM/12 MAHESH (HUF) (0 9 - 10 ) 5 THERE CAN BE NO CHARGE OF CAPITAL GAINS ON THE APPELLANT. THE AO HAS SIMPLY MADE ADDITION IN HANDS OF APPELLANT IN INDIVIDUAL CAPACITY JUST BECAUSE THE WORD HUF WAS NOT MENTIONED IN THE SALE AGREEMENT. THE AO IN MY OPINION HAS NOT LOOKED INTO SUBSTANCE OF THE AGREEMENT AN D ALSO TO OTHER RELEVANT FACTORS WHICH INDICATED THE OWNERSHIP OF PROPERTY IN HANDS OF HUF ONLY. SINCE THE APPELLANT WAS KARTA OF THE APPELLANT'S HUF, IT WAS ONLY HIM WHO WAS REQUIRED AS PER THE LAW TO SIGN ANY DOCUMENT ON BEHALF OF HUF AND MERE ABSENCE O F WORD HUF IN THE AGREEMENT OR MENTIONING OF HIS IN DIVIDUAL PAN WOULD NOT CHANGE THE TAXABILITY FROM HUF TO INDIVIDUAL, IF THE TRANSFER AS PER INTENT AND SUBSTANCE WAS BEING MADE BY HUF. THE NATURE OF A RECEIPT OR A TRANSACTION WOULD NOT BE DETERMINED ON LY BY THE NOMENCLATURE GIVEN BUT BY SUBSTANCE OF THE COVENANTS AND ACTUAL THE CIRCUMSTANCES OF THE TRANSACTIONS AS HELD IN NATIONAL CEMENT MINE INDUSTRIES 42 ITR 69,77(SC), PADAMJEE R KADAMBANDE 195 ITR 877(SC), 191 ITR 173(PAT). THE EXPLANATION OF LD AR THAT IT WAS ONLY A VENIAL TYPOGRAPHICAL ERROR THAT THE WORD HUF REMAINED TO BE MENTIONED IN THE AGREEMENT SEEMS TO BE BONAFIDE. THERE CANNOT BE ANY ATTEMPT FOR AVOIDANCE OF TAX BY DISCLOSING THE LTCG IN HANDS OF HUF AND NOT IN INDIVIDUAL CAPACITY, AS THE T AX RATES AND OTHER DEDUCTIONS AVAILABLE FOR HUF AS WELL AS INDIVIDUAL ARE SAME. THE AO HAS ALSO ACCEPTED THE FACT THAT PROFIT ON SALE OF THE PROPERTY HAVE BEEN SHOWN IN THE RETURN OF INCOME OF APPELLANT'S HUF. THE APPELLANTS HUF HAD ALREADY FILED ITS RETUR N DISCLOSING THE LTCG FOR 1/4TH SHARE FOR AY 2009 10 HUF ON SAME DAY WHEN THE INDIVIDUAL RETURN WAS FILED WHICH SUGGESTED THAT ALL ALONG THE SAID PROPERTY WAS TREATED AS HUF PROPERTY ONLY AND THERE WAS NO ELEMENT OF ANY AFTERTHOUGHT BY DISCLOSING THE LTCG IN HANDS OF HUF NOR ANY ADDITIONAL BENEFIT COULD HAVE ACCRUED TO APPELLANT BY DISCLOSING LTCG IN HANDS OF HUF AND NOT IN INDIVIDUAL CAPACITY. EVEN OTHERWISE ALSO ANCESTRAL OR SELF ACQUIRED PROPERTY CAN BE IMPRESSED WITH THE CHARACTER OF JOINT FAMILY PROPER TY BY THROWING INTO THE COMMON HOTCH POT AS HELD IN DAMODAR KRISHNAJI NIRGUDE 46 ITR 1252 (BORN). THUS BY SHOWING THE PROPERTY IN BALANCE SHEET OF HUF IN EARLIER YEARS, IT WAS CLEAR THAT THE SAID PROPERTY WAS THROWN INTO COMMON HOTCH POT OF HUF AND HENCE T HE SAME BELONGED TO HUF ONLY. THUS MERELY BECAUSE IN THE DEED OF CONVEYANCE THE MENTION OF KARTA OF HUF WAS NOT MADE AND INDIVIDUAL PAN OF KARTA(APPELLANT) WAS MENTIONED, THE OWNERSHIP OF THE PROPERTY WHICH REALLY BELONGED TO THE HUF WILL NOT CHANGE TO BE INDIVIDUAL PROPERTY DUE TO SUCH TECHNICAL ERRORS. THE AO HAS TAXED THE CAPITAL GAINS IN HANDS OF INDIVIDUAL BUT HE HAS NOT MENTIONED AS TO WHAT HAPPENS TO THE LTCG ALREADY OFFERED B Y HUF. IN VIEW OF THESE FACTS OF THE CASE THE LTCG ON SALE OF PROPERTY CAN NOT BE BROUGHT TO TAX IN HANDS OF APPELLANT IN INDIVIDUAL CAPACITY AS THE SAME IS ASSESSABLE IN HANDS OF HUF ONLY AS PER THE PROVISIONS OF THE ACT. ACCORDINGLY, I DIRECT THE AO TO DELETE THE EFFECTIVE ADDITION OF RS 1,85,71,300 MADE IN THE HANDS OF THE AP PELLANT. 5.IDENTICAL ORDERS HAVE BEEN PASSED BY LD CIT(A) IN THE HANDS OF SHRI DILIP VIRAJLAL SHAH. A PERUSAL OF THE ORDER OF LD.CIT(A) WOULD SHOW THAT THE FIRST APPELLATE AUTHORITY HAVE CLEARLY BROUGHT OUT THE FACT AS TO HOW THE ASSESSES HEREIN HAD IN HERITED THE PROPERTY. IT IS SEEN THAT HUF OF THE ASSESSEES FATHER HAS OBTAINED THE PROPERTY UNDER A COURT ORDER AND IT HAS BELONGED TO THE ASSESSEES FATHERS HUF. THEREAFTER, THERE WAS A PARTITION BETWEEN THE MEMBERS OF HUF AND THUS THE ASSESSES HEREIN HAD RECEIVED THEIR RESPECTIVE SHARE IN THE IMPUGNED PROPERTY. THE LD CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEES HEREIN WERE MARRIED AT THAT POINT OF TIME. ACCORDINGLY, THE LD CIT(A) HAS COME TO THE CONCLUSION THAT THEIR RESPECTIVE SHARE IN THE PROPER TY ACTUALLY BELONGED TO THE HUF STATUS OF THE ASSESSEES. ACCORDINGLY, THE LD CIT(A) HELD THAT THE ASSESSES HAVE ENTERED INTO SALE AGREEMENT IN THEIR RESPECTIVE NAMES ON BEHALF OF THEIR RESPECTIVE HUF. UNDER THESE SET OF FACTS, THE LD CIT(A) HELD THAT GIVI NG WRONG PERMANENT ACCOUNT NUMBER (I.E., PERMANENT ACCOUNT NUMBER OF INDIVIDUAL STATUS) WOULD NOT MAKE THE ASSESSEES AS OWNER OF PROPERTY IN THEIR INDIVIDUAL STATUS. ON THE BASIS OF THE DISCUSSIONS MADE BY US ABOVE, WE ARE OF THE VIEW THAT THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THAT THE IMPUGNED PROPERTY BELONGED TO THE HUF STATUS OF THE ASSESSES AND ACCORDINGLY, WE ARE OF THE VIEW THAT HE WAS JUSTIFIED IN DIRECTING THE AO TO DELETE THE ASSESSMENT OF LTCG IN THE INDIVIDUAL STATUS OF THE ASSESSEES. RESP ECTFULLY,FOLLOWING THE ABOVE WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO, AS THE FACTS OF THE CASE ARE IDENTICAL WITH THE FACTS OF OTHER CO OWNER. 4573/MUM/12 MAHESH (HUF) (0 9 - 10 ) 6 3. GROUNDS NO.2 AND 3 ARE INTERLINKED AND ARE ABOUT ADMITTING NEW CLAIM OF THE ASSESSEE OF REPLACIN G PURCHASE COST WITH FAIR MARKET VALUE OF PROPERTY AS ON 1.4.1981 AND DIRECTING THE AO TO ACCEPT THE VALUATION OF THE ENTIRE PROPERTY AT RS.36,72,000/ AS ON 1 ST APRIL, 1981 . 3.1. AT THE TIME OF HEARING BEFORE US,REPRESENTATIVES OF BOTH THE SIDES AGREED THA T IN THE MATTER OF ONE OF THE CO OWNERS NAMELY RAMABEN V SHAH (ITA/ 4572/MUM/2012 AY.2009 10,DATED 23.08. 2013) D BENCH OF THE MUMBAI TRIBUNAL HAD DEALT WITH THE IDENTICAL ISSUE.WE WOULD LIKE TO REPRODUCE THE GROUNDS NO.1 AND 2 OF THE APPEAL FILED BY THE AO : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN ADMITTING NEW CLAIM OF THE ASSESSEE OF REPLACING PURCHASE COST WITH FAIR MARKET VALUE OF PROPERTY AS ON 01.04.1981 ON THE BASIS OF A MANUFACTURED EVIDENCE IN THE F ORM OF VALUATION REPORT PREPARED AFTER COMPLETING OF ASSESSMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DIRECTING THE AO TO ACCEPT THE VALUATION REPORT ON THE ENTIRE PROPERTY AT RS.36,72,000/ - AS ON 01.04.1 981 IGNORING THE FACT THAT THE VALUATION WAS A NEW CLAIM MADE AFTER COMPLETING OF ASSESSMENT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT GIVING AN OPPORTUNITY TO THE AO OF RBUTTAL AFTER VERIFICATION BEFORE TREATING THE NEW CLAIM OF THE ASSESSEE AS A LEGAL CLAIM. THE TRIBUNAL HAS DECIDED THE ISSUE AS UNDER: 7.WE HAVE CONSIDERED RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ISSUE BEFORE US IS REGARDING THE ADOPTION OF FAIR MARKET VALUE OF TH E PROPERTY AS ON 01.04.1981. THERE IS NO DISPUTE ABOVE THE FACT THAT THE PROPERTY IN QUESTION IS ANCESTRAL PROPERTY WHICH WAS ACQUIRED PRIOR TO 01.0 .1981, THEREFORE, FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GAINS, THE COST OF THE ACQUISITION HAS TO BE ADOPTED AS PER SECTION 54(2)(B)(I) OF THE INCOME TAX ACT. SINCE ASSESSEE IN THE RETURN OF INCOME HAS NOT CLAIMED HE COST OF ACQUISITION / FAIR MARKET VALUE AS ON 01.04.1981 AS PER THE PROVISIONS OF SECTION 55(2)(B)(I) AND THE ASSESSEE CLAIMED THE COST OF ACQUISITION IN THE RETURN OF INCOME AT RS.47,500/ - , THEREFORE. THE AO HAD NO OCCASION TO EXAMINE THE ISSUE OF FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 UNDER THE PROVISIONS OF SECTION 54(2)(B)(I). AS FAR AS RAISING A FRESH ISSUE BEFORE THE LEAR NED CIT(A) IS CONCERNED WE ARE OF THE VIEW THAT SINCE THE ISSUE OF COST OF ACQUISITION IN RELATION TO CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BY THE MODE AS SPECIFIED UNDER SECTION 49 AND THE CAPITAL ASSET WAS ACQUIRED BY THE PREVIOUS OWNER BEFOR E 01.04.1981, THEN THE COST OF CAPITAL ASSET TO THE PREVIOUS OWNER OR THE FAIR MARKET VALUE OF THE ASSET AS ON 01.04.1981 AT THE OPTION OF THE ASSESSEE WILL BE TAKEN AS COST OF ACQUISITION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS AND THEREFORE, IT I S PURELY LEGAL ISSUE. THEREFORE, IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF NATIONAL THERMAL POWER CO. LTD. 229 ITR 383, THE ADMISSION OF THE SAME BY THE LEARNED CIT(A) IN OUR VIEW, IS JUSTIFIED. 8. THOUGH THE CIT(A) ASKED THE AO TO SUBMI T THE COMMENTS AS WELL AS THE CORRECTNESS OF THE EVIDENCE PRODUCED BY THE ASSESSEE, HOWEVER, THE AO RAISED ONLY LEGAL OBJECTION ON THE ADMISSION OF THE ADDITIONAL GROUND AND ADDITIONAL EVIDENCE WITHOUT EXAMINATION OF THE CORRECTNESS OF THE ADDITIONAL EVIDE NCE. IT IS PERTINENT TO MENTION HERE THAT THE ISSUE OF THE VALUATION OF THE PROPERTY REQUIRES THE OPINION OF THE EXPERTS AND THEREFORE, IN THE REMAND PROCEEDINGS THE AO WAS NOT HAVING THE OPTION OF TAKING THE EXPERTS OPINION FOR CONSIDERING THE CORRECTNES S OF THE VALUATION OF THE PROPERTY AS GIVEN IN THE VALUATION REPORT FILED BY THE ASSESSEE . 9. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE AND WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER WITH LIMITED PURPOSE FOR VERIFICATION AND EXAMINATION OF THE CORRECTNESS OF THE VALUATION OF THE PROPERTY BEING A 4573/MUM/12 MAHESH (HUF) (0 9 - 10 ) 7 FAIR MARKET VALUE AS ON 01.04.1981 GIVEN IN THE VALUATION REPORT FILED BY THE ASSESSEE. NEEDLESS TO SAY, ASSESSEE HAS TO BE GIVEN APPROPRIATE OPPORTUNITY OF HEARING WHILE DECIDING THIS ISSUE AS PER LAW. RESPECTFULLY,FOLLOWING THE ABOVE WE ALSO REMIT THE MATTER TO THE FILE OF THE AO FOR LIMITED VERIFICATION.HE WOULD DECIDE THE ISSUE AS DIRECTED BY THE TRIBUNAL IN THE CASE OF RAMABEN V SHAH AND AFTER CONSIDE RING THE REPORT OF THE DVO DATED 25.06.2015.GROUNDS NO.2 AND 3 ARE DECIDED IN FAVOUR OF THE AO,IN PART. AS A RESULT APPEAL OF THE AO STANDS PARTLY ALLOWED . . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JU LY ,2015. 10 , 2015 SD/ - SD/ - ( / JOGINDER SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 10 .07 .2015 . . . JV. SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2 . RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.