Appeal Details
Counselvise Citation
[2011] 119 COUNSELVISE.COM (IT) 7220 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-08-2011
Appeal Filed By
Department
Bench Allotted
C
Assessment Year
2007-2008
Appeal Filed On
11-01-2011
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [ () , , . .. . ! ! ! !. .. . , , , , '# ] ]] ] [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI C. D. RAO, AM] % % % % /ITA NO.55/KOL/2011 &' ()/ ASSESSMENT YEAR : 2007-08 (+, / APPELLANT ) - & - ( ./+, /RESPONDENT) D.C.I.T., CIRCLE-1, M/S.SHREEBHUMI SYNTHETIC IN DIA LTD. KOLKATA -VERSUS- KOLKATA (PAN:AAECS 6798 N) +, 0 1 '/ FOR THE APPELLANT: SHRI NIRAJ KUMAR, CIT ./+, 0 1 '/ FOR THE RESPONDENT: SHRI J.P.KHAITAN '2 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST ORDE R DATED 22.09.2010 OF THE CIT(A)-I, KOLKATA PERTAINING TO A.YR. 2007-08. 2. THE REVENUE HAS RAISED THE FOLLOWING SOLE GROUND OF APPEAL :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED AND IS NOT JUSTIFIED IN DIRECTING TO ACCEPT T HE SUM OF RS.3,51,06,473/- AS AGAINST RS.7,63,63,375/- DETERMINED BY A.O. AS THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF THE COMPUTATION OF CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT WHILE DOI NG THE SCRUTINY ASSESSMENT AO HAS OBSERVED THAT :- 2. AS PER SCHEDULE OF DEPRECIATION ANNEXED TO THE T AR, ASSESSEE SOLD ALL OF ITS FIXED ASSETS DURING THE PREVIOUS YEAR AND DECLARED SHORT TERM CAPITAL GAIN OF RS.1,68,02,495/- IN THE COMPUTATION OF TOTAL INCOME . A SPECIFIC QUERY WAS MADE IN THIS REGARD VIDE Q.NO.1 ANNEXED TO NOTICE U/S 142(1 ) DT.24.07.09. LD.A/R FILED EXPLANATION AND CERTAIN DETAILS. COPIE S OF CERTAIN IMPORTANT DOCUMENTS WERE COLLECTED AND PLACED ON RECORD. FOLLOWING FACT EMERGES ON SCRUTINY OF THOSE DOCUMENTS. A) VIDE A LEASE AGREEMENT DT.27.03.02 ASSESSEE COMP ANY (LESSEE) HAD TAKEN A PART (31262 SQ.FT) OF LAND ON LEASE FROM ONE OF ITS GROU P COMPANY M/S. SHREEBHUMI STEELS 2 PRIVATE LIMITED (M/S. SSPL) BEING THE LESSOR. THE E NTIRE LAND MEASURING ABOUT 360000 SQ.FT WAS OWNED BY M/S.SSPL. THE LEASE DEED WAS DULY REGISTERED. B) ASSESSEE COMPANY CONSTRUCTED FACTORY SHED INCLU DING OTHER INFRASTRUCTURES AND INSTALLED PLANT & MACHINERY AFTER MAKING NECESS ARY DEVELOPMENT OF THE LEASE HOLD LAND FROM TIME TO TIME FOR THE PURPOSE OF ITS BUSINESS. LEASE RENTAL WAS ALSO PAID TO THE LESSOR. C) IN AUGUST, 2006, THE GOVT. OF WEST BENGAL ISSUED NOTICE FOR ACQUISITION OF LAND FOR NANO PROJECT OF TATA MOTORS LIMITED. THE ENTIRE L AND OF THE LESSOR M/S.SSPL INCLUDING LEASEHOLD PORTION OF THE ASSESSEE TOGETHE R WITH ALL EXISTING FACTORY SHED, PLANT & MACHINERY AND OTHER INFRASTRUCTURES WERE AC QUIRED BY THE GOVT. UNDER COMPULSORY ACQUISITION. COMPENSATION MONEY TOTALING RS.8,87,77,000/- WAS PAID BY THE GOVT. TO THE LAND OWNER M/S. SHREEBHUMI STEELS PRIVATE LIMITED, VIDE CHEQUE NO.025459 DT. 20.10.06 DRAWN ON STATE BANK OF INDIA , CHINSURAH BRANCH, HOOGHLY. D) THE ASSESSEE COMPANY HAD SHOWN ITS SHARES IN THE TOTAL COMPENSATION, RS.3,51,06,473/- AND COMPUTED STCG AS UNDER :- SALE CONSIDERATION (LUMP SUM) OF FIXED ASSETS = R S.3,51,06,473/- LESS : WDV = RS.1,83,03,981/- RS.1,68,02,492/- 4A) DURING THE COURSE OF HEARING ON 15.10.09 LD . A/RS PRODUCED TWO IMPORTANT DOCUMENTS :- A COPY OF VALUATION REPORT OBTAINED BY THE GOVT. O F WEST BENGAL TO AWARD COMPENSATION FOR ACQUISITION OF LAND, FACTORY PREMI SES, PLANT & MACHINERY ETC. VALUATION WAS MADE BY M/S. TEXPRO (INDIA) ON BEHAL F OF THE GOVT. DULY AUTHENTICATED BY WEST BENGAL INDUSTRIAL DEVELOPMENT CORPORATION L IMITED. A RECONCILIATION STATEMENT SHOWING APPORTIONMENT O F THE AWARDED AMOUNT IN BETWEEN ASSESEE COMPANY AND M/S. SHREEBHUMI STEELS PRIVATE LIMITED. B) CONTENTS OF THE TWO DOCUMENTS ARE PUT TOGETHER H EREIN BELOW IN A TABULAR FORM. SL.NO. BRIEF DESCRIPTION TOTAL VALUATION MADE BY GOVT. APPORTIONMENT M/S.SHREEBHUMI STEELS PRIVATE LIMITED MADE M/S.SHREEBHUMI SYNTHETICS PRIVATE LIMITED (ASSESSEE) I DEVELOPMENT OF LAND, ROAD, BOUNDARY WALL, CULVERT, MAIN GATE 70,02,000/- - 70,02,000/- II. VALUE OF MAIN FACTORY 1,07,14,000/- - 1,07,14,0 00/- III PLANT & MACHINERY 4,45,77,000/- 38,00,000/- 4,0 7,77,000/- IV TOTAL LESS: 10% 6,22,93,000/- 62,29,300/- 38,00,000/- 3,80,000/- 5,84,93,000/- 58,49,300/- V BALANCE 5,60,63,700/- 34,20,000/- 5,26,43,700/- VI 1.3187 OF BALANCE ADD:10% 7,39,31,200/- 73,93,120/- 45,09,954/- 4,50,995/- 6,94,21,200/- 69,42,125/- VII TOTAL OF (VI) ABOVE ADD:VALUATION OF LAND 8,13,24,320/- 74,53,000/- 49,60,949/- 74,53,000/- 7,63,63,375/- ----- VIII TOTAL COMPENSATION DETERMINED BEING TOTAL OF (VII) ABOVE 8,87,77,320/- (R/O)8,87,77,000/- 1,24,13,949/- 7,63,63,375/- 3 C) FROM THE ABOVE DETAILS, IT CAN CONCLUSIVELY BE H ELD THAT ASSESSEES SHARE IN THE COMPENSATION MONEY WAS RS.7,63,63,000/- (ROUNDED OF F AS THE COMPENSATION MONEY WAS PAID IN A ROUND FIGURE) AND NOT RS.3,51,06,473/ - AS DECLARED BY THE ASSESSEE IN THE RETURN. LD. A/RS WERE REQUESTED TO EXPLAIN THE DIFF ERENCE. 3.1. AFTER TAKING INTO CONSIDERATION OF THE VARIOUS SUBMISSIONS OF THE ASSESSEE HE FINALLY CONCLUDED THE DISCUSSIONS AS UNDER :- 7. SUMMARY OF THE FOREGOING DISCUSSIONS :- ASSESSEE HAD TAKEN ON LEASE A PART OF LAND OWNED BY GROUP COMPANY M/S. SHREEBHUMI STEELS PRIVATE LIMITED. LAND WAS DEVELOPED, FACTORY BUILDING WAS CONSTRUCTE D AND PLANT & MACHINERY WAS INSTALLED BY THE ASSESSEE COMPANY. GOVT. OF WEST BENGAL ACQUIRED THE WHOLE LAND ALONG WITH STANDING INFRASTRUCTURE, FACTORY SHED BUILDING, PLANT & MACHINERY MARKET VALUE OF THE PROPERTY SO ACQUIRED WAS VALUED BY THE GOVT. AT RS.8,87,77,000/- AND PAID COMPENSATION ACCORDINGLY. ASSESSEES SHARE IN THE COMPENSATION MONEY COMES TO RS.7,63,63,000/- WHICH IS TO BE TAKEN FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAI N. ASSESSEE CLAIMED THAT THE ASSETS WERE TRANSFERRED T O M/S. SHREEBHUMI STEELS PRIVATE LIMITED BEING THE OWNER OF THE LAND ON 30.09.06 FOR A CONSIDERATION OF RS.3,51,06,473/- WHICH IS TO BE TAKEN FOR CAPITAL G AIN COMPUTATION. ALLEGED TRANSFER IN SEPTEMBER, 2006, WAS MADE AFTER THE NOTIFICATION OF COMPULSORY ACQUISITION IN AUGUST, 2006, THEREFORE INVALID. THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DAT E OF TRANSFER IS TO BE TAKEN AT RS.7,63,63,000/- FOR THE PURPOSE OF CAPITAL GAIN EV EN IN TERMS OF SECTION 50C OF THE INCOME-TAX ACT. ACCORDINGLY ASSESSABLE INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN IS COMPUTED U/S 50(2) AS UNDER :- FULL VALUE OF CONSIDERATION 7,63,63,000/- LESS : W.D.V. AS ON 01.04.2006 (EXCLUDING THE BLOCK -COMPUTER) 1,82,56,137/- SHORT TERM CAPITAL GAIN 5,81,06,863/- 3.2. ON APPEAL LD. CIT(A) HAS ALLOWED THE GROUNDS O F APPEAL OF ASSESSEE AND DIRECTED AO TO ACCEPT RS.3,51,06,473/- AS THE FULL VALUE OF SALE CONSIDERATION IN PLACE OF RS.7,63,63,000/- AFTER TAKING INTO CONSIDERATION OF VARIOUS SUBMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE AND AFTER CONSIDERING THE NECESSARY PROVISIONS OF THE LAND ACQUISITION ACT, THE RELEVANT OBSERVATIONS OF LD. C IT(A) AT PARAS 6.2. TO 6.6. ARE AS UNDER :- 6.2. THE AFORESAID PROVISIONS OF THE LAND ACQUISI TION ACT SHOW THAT THE COLLECTOR HAS TO DETERMINE THE COMPENSATION AND ALSO APPORTIO N IT AMONG ALL THE PERSONS INTERESTED AND PAYMENT HAS TO BE MADE ACCORDINGLY T O ALL SUCH PERSONS. I HAVE NOT COME ACROSS ANY PROVISION IN THE LAND ACQUISITION A CT SPECIFICALLY PROHIBITING PRIVATE ALIENATION OF THE LAND IN RESPECT OF WHICH A NOTIFICATION UNDER SECTION 4(1) HAS 4 BEEN ISSUED. SECTION 24 OF THE LAND ACQUISITION ACT PROVIDES, INTER ALIA, THAT ANY DISPOSAL OF THE LAND MADE WITHOUT THE SANCTION OF T HE COLLECTOR AFTER THE DATE OF PUBLICATION OF THE NOTIFICATION UNDER SECTION 4(1) SHALL NOT BE TAKEN INTO CONSIDERATION IN DETERMINING THE COMPENSATION. IN MY VIEW THE SAI D PROVISION DOES NOT PROHIBIT SUCH DISPOSAL. ALL THAT THE PROVISION SAYS IS THAT SUCH DISPOSAL WILL NOT HAVE RELEVANCE FOR DETERMINING THE COMPENSATION IF SANCTION OF THE COLLECTOR HAS NOT BEEN TAKEN FOR IT. 6.3 I FIND THAT THE VALUATION REPORT OBTAINED BY T HE GOVERNMENT AND THE POSSESSION CERTIFICATE GIVEN BY IT TAKE NOTE OF THE FACT THAT THE APPELLANT HAD ITS FACTORY ON A PORTION OF THE LAND SOUGHT TO BE ACQUIRED. IN SPITE THEREOF, THE ENTIRE COMPENSATION AMOUNT OF RS.8, 87, 77,000/- WAS PAID BY THE GOVERN MENT BY A SINGLE CHEQUE TO SSPL. IN VIEW OF THE SAID FACTUAL POSITION, I HAVE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE GOVERNMENT ACCEPTED THE AGREEMENT DATED SEPTEMBER 30, 2006 BETWEEN THE ASSESSEE AND SSPL AND THAT IT ACCEPTED THAT SSPL WAS THE ONLY PERSON INTERESTED IN THE PROPERTY UNDER ACQUISITION AND WA S ENTITLED TO THE WHOLE OF THE COMPENSATION. HAD THAT NOT BEEN THE CASE, HAVING RE GARD TO THE SCHEME OF THE LAND ACQUISITION ACT, IT IS CLEAR THAT THE APPELLANT WOU LD ALSO HAVE BEEN TREATED AS ONE OF THE PERSONS INTERESTED AND WOULD HAVE BEEN PAID A P ORTION OF THE COMPENSATION. THE ACCEPTANCE BY THE GOVERNMENT OF THE AGREEMENT DATED SEPTEMBER 30, 2006 AND PAYMENT OF THE ENTIRE COMPENSATION TO SSPL ALSO SHO WS THAT ISSUE OF NOTIFICATION UNDER SECTION 4(1) OF THE LAND ACQUISITION ACT DOES NOT HAVE THE EFFECT OF PROHIBITING PRIVATE ALIENATION OF THE PROPERTY SOUGHT TO BE ACQ UIRED. IN MY VIEW THE INESCAPABLE CONCLUSION IS THAT THE AGREEMENT DATED SEPTEMBER 30 , 2006 AND THE TRANSFER BY THE ASSESSEE IN TERMS THEREOF WAS VALID AND ACCEPTED TO BE SO BY THE GOVERNMENT OF WEST BENGAL. THERE IS NO LEGAL BASIS OR FOUNDATION FOR T HE FINDING OF THE AO THAT THE TRANSFER MADE BY THE ASSESSEE WAS PROHIBITED OR WAS ILLEGAL OR VOID. THE AO WAS NOT RIGHT IN IGNORING THE AGREEMENT DATED SEPTEMBER 30, 2006 AS ILLEGAL/VOID OR AS AN AFTERTHOUGHT. THE AGREEMENT WAS ENTERED INTO BEFORE THE GOVERNMENT TOOK POSSESSION OF THE LAND FROM SSPL ON OCTOBER 4, 2006, THE GOVER NMENT ACCEPTED IT AND PAID THE ENTIRE COMPENSATION TO SSPL BY A CHEQUE DATED OCTOB ER 20, 2006 TREATING IT AS THE SOLE PERSON INTERESTED. 6.4. I FIND THAT THE APPELLANT HAS EXPLAINED THE C IRCUMSTANCES UNDER WHICH THE AGREEMENT DATE SEPTEMBER 30, 2006 WAS ENTERED INTO. IN THE FIRST PLACE, SSPL HAD GRANTED THE LEASE FOR A PALTRY RENTAL. THE APPELLAN TS LOSSES WERE FUNDED BY INTEREST- FREE LOANS FROM SSPL. SSPL HAD MORTGAGED ITS IMMOVA BLE PROPERTIES AS SECURITY FOR THE LOAN FACILITIES OBTAINED BY THE APPELLANT FROM THE BANK AND ALSO STOOD AS GUARANTOR. BECAUSE OF THE PROPOSED ACQUISITION, THE APPELLANT COULD NOT CARRY ON ITS MANUFACTURING ACTIVITIES ON THE LEASE-HOLD LAND. SS PL HAD REQUIRED IT TO VACATE THE PROPERTY AND REMOVE THE PLANT AND MACHINERY AND FAC TORY BUILDING AND SHED. REMOVAL OF THE FACTORY BUILDING AND SHED WOULD HAVE MEANT D EMOLITION THEREOF RESULTING IN LOSS OF ALMOST THE ENTIRE INVESTMENT. BY VIRTUE OF THE A GREEMENT, THE ASSESSEE WAS ABLE TO RECOVER MORE THAN THE AMOUNT INVESTED BY IT AND THE CONSIDERATION WAS NEARLY TWICE THE WRITTEN DOWN VALUE. IN ANY EVENT, IT IS NOT THE AOS CASE THAT THE ASSESSEE RECEIVED ANYTHING MORE THAN RS.3, 51, 06,473. THE ASSESSEE H AS COMPUTED ITS CAPITAL GAINS WITH REFERENCE TO THE CONSIDERATION ACTUALLY RECEIVED BY IT FROM SSPL AND SSPL HAS COMPUTED ITS CAPITAL GAINS WITH REFERENCE TO THE EN TIRE COMPENSATION RECEIVED FROM THE GOVERNMENT. IT IS SEEN FROM THE COMPUTATION OF INCO ME OF SSPL AND THE ASSESSEE THAT BOTH SSPL AND THE ASSESSEE HAVE COMPUTED THEIR RESP ECTIVE CAPITAL GAINS WITH REFERENCE TO THE AMOUNTS RECEIVED BY EACH OF THEM. 5 6.5. IN MY VIEW THE APPELLANTS RELIANCE UPON TH E JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN NANDINI NOPANYS CASE IS WELL PLACED. IN THAT CASE, THE ASSESSEE SOLD HER QUOTED SHARES TO A COMPANY AT A PRICE WHICH WAS ADMITTEDLY LOWER THAN THEIR FAIR MARKET VALUE AND RECEIVED AS CONSIDERATION SHARES I N THE TRANSFEREE COMPANY, WHICH GAVE HER ABSOLUTE CONTROL OVER IT. IT WAS NOT SHOWN BY THE REVENUE THAT THE DIFFERENCE BETWEEN THE QUOTED PRICE AND THE TRANSFER PRICE WAS RECEIVED BY THE ASSESSEE. THE HONBLE HIGH COURT, RELYING UPON THE APEX COURT JUD GMENT IN CIT V SHIVAKAMI CO. PVT. LTD., (1986) 159 ITR 71 (SC) [A CASE RELATING TO CAPITAL GAINS] AND THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN INDIA FINANCE A ND CONSTRUCTION CO. PVT. LTD. V. B.N. PANDA, (1993) 200 ITR 710 (BOM), HELD THAT THE DIFFERENCE BETWEEN THE QUOTED PRICE AND THE TRANSFER PRICE WHICH WAS NOT RECEIVED BY THE ASSESSEE COULD NOT BE ASSESSED IN HER HANDS. I FIND THAT IN THAT CASE, TH E GENUINENESS OF THE TRANSACTION WAS NOT DOUBTED BY THE AO. IN THIS CASE TOO THE AO HAS PROCEEDED ON THE BASIS THAT THE TRANSFER BY THE ASSESSEE WAS PROHIBITED AND THEREFO RE VOID, BUT AS HELD EARLIER THIS IS NOT THE CORRECT POSITION IN LAW. THE AO WAS NOT RIG HT IN HIS VIEW THAT THE AGREEMENT DATED SEPTEMBER 30, 2006 IS NOT AN AFTERTHOUGHT. IT WAS VERY MUCH IN EXISTENCE AT THE MATERIAL TIME, CONTEMPORANEOUSLY ACTED UPON BY THE PARTIES AND ACCEPTED BY THE GOVERNMENT. THE AO HAS NOT SUPPORTED HIS FINDING OF TAX EVASION BY ANY OBJECTIVE DATA. THE ASSESSEE ON THE OTHER HAND HAS SHOWN THAT SSPL HAD COMPUTED ITS CAPITAL GAINS WITH REFERENCE TO THE ENTIRE AMOUNT OF COMPEN SATION. IN MY VIEW CAPITAL GAINS CAN BE COMPUTED IN THE APPELLANTS HANDS ONLY WITH REFERENCE TO THE ACTUAL CONSIDERATION OF RS.3, 51, 06,473/- RECEIVED BY IT, WHICH IS WHAT IT HAS DONE. EVEN IF THE FIGURE OF RS.7,63,63,000/- DETERMINED BY THE AO IS TAKEN AS REPRESENTING THE FAIR MARKET VALUE OF THE APPELLANTS ASSETS, CAPITAL GAI NS CAN NOT BE COMPUTED IN THE APPELLANTS HANDS WITH REFERENCE TO THE SAID FIGURE OF RS.7,63,63,000/- WHICH WAS NEVER RECEIVED BY IT. 6.6. THE NEXT ASPECT IS AS REGARDS INVOCATION OF SE CTION 50C. I FIND THAT THE SAID SECTION IS APPLICABLE ONLY IN RESPECT OF TRANSFER O F LAND AND BUILDING. THE ASSESSEE IS RIGHT IN ITS CONTENTION THAT SALE OF THE MOVABLE PL ANT AND MACHINERY FOR RS.3, 10, 06,260/- DID NOT REQUIRE REGISTRATION AND IS OUTSID E THE PURVIEW OF SECTION 50C. THE AO HAS STATED THAT THE AGREEMENT DATED SEPTEMBER 30 , 2006 BETWEEN THE ASSESSEE AND SSPL WAS NOT REGISTERED. THERE WAS NO VALUATION BY ANY STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF THE SAID AGREEMENT. IN MY VIEW IN THE ABSENCE OF ANY VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF THE SURRENDER/RELINQUISHMENT OF ITS LEASE-HOLD INTEREST IN THE LAND BY THE ASSESSEE AND TRANSFER OF THE CONSTRUCTION MADE THEREON IN TERMS OF. THE AGREEMENT DATED SEPTEMBER 30, 2006, IT WAS NOT OPEN TO THE AO TO INVOKE SECTION 50C OF THE ACT AS IN FORCE FOR THE ASSESSMENT YEAR 2007-2008. THE SECTION WAS AMENDED BY THE FINANCE (NO.2) ACT, 2009 ONLY WITH EFFECT FROM OCTOBER 1, 2009 TO ROPE IN TRANSACTIONS WHICH WERE NOT REGISTERED WITH THE STAMP VALUATION AUTHORITY. 6.7 FROM THE REASONS CITED ABOVE, IT IS CLEAR THAT THE AO SHOULD HAVE ACCEPTED THE SHORT TERM CAPITAL GAINS OF RS.1,68,02,495 AS RETUR NED BY THE APPELLANT WITH REFERENCE TO THE CONSIDERATION OF RS.3,51,06,473 AC TUALLY RECEIVED BY IT AND THE COMPUTATION OF THE CAPITAL GAINS AT RS.5,81,06,863 BY THE AO WITH REFERENCE TO THE FIGURE OF RS.7,63,63,000 IS CONTRARY TO LAW. I THER EFORE ALLOW THIS GROUND OF APPEAL AND DIRECT THE AO TO ACCEPT THE SUM OF RS. 3, 51, 0 6,473 AS THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF THE COMPUTATION OF CAPITAL GAINS IN THE HANDS OF THE APPLICANT. 6 3.3. AGGREIVED BY THIS THE REVENUE IS IN APPEAL BEF ORE US. 4. THE LD. DR APPEARING ON BEHALF OF THE REVENUE HA S REITERATED THE OBSERVATIONS MADE BY LD. AO WHICH WAS REPRODUCED IN THE EARLIER PARAGRAPHS AND CONTENDED THAT AO IS JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF T HE CASE. THEREFORE HE REQUESTED TO SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE THAT OF AO. 5. THE LD. AR APPEARING ON BEHALF OF ASSESSEE BY R EFERRING TO THE LAND ACQUISITION ACT 1894, PROVISIONS RELATING TO DIRECT TAXES FINAN CE (NO.2) BILL, 2009 AND THE LEASE AGREEMENT DATED 27.03.2002 BETWEEN ASSESSEE AND M/S . SHREEBHUMI STEEL PRIVATE LIMITED WHICH WAS PLACED AT PAGES 1-22 OF THE PAPER BOOK AND THE AGREEMENT DATED 30 TH SEPTEMBER, 2006 BETWEEN ASSESSEE AND M/S. SHREEBHU MI STEEL PRIVATE LTD. WHICH WAS PLACED AT PAGES 24-36 OF THE PAPER BOOK AND COM PUTATION OF THE TOTAL INCOME FOR THE YEAR ENDED 31.03.2007 OF SHREEBHUMI STEEL PRIVA TE LTD. WHICH WAS PLACED AT PAGE 42 OF THE PAPER BOOK HAS SUPPORTED ORDERS OF LD. CI T(A). 5.1. HE FURTHER RELIED ON THE DECISION OF THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS NIDHI NOPANY REPORTED IN 230 IT R 670 (CAL) AND ON THE DECISION OF HONBLE DELHI COURT IN THE CASE OF DEV KUMAR JAI N VS ITO & ANOTHER REPORTED IN 309 ITR 240 (DELHI). HE REQUESTED TO UPHELD THE ORD ER OF LD. CIT(A). 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD KEEPING IN VIEW OF THE PROVISIO NS APPEARING IN LEASE AGREEMENT DATED 27.3.2002 BETWEEN THE ASSESSEE AND M/S SHREEB HUMI STEEL PRIVATE INDIA LTD. AND THE AGREEMENT DATED 30 TH SEPTEMBER, 2006 BETWEEN ASSESSEE AND SHREEBHUMI ST EEL PRIVATE LTD. AND COMPUTATION OF TOTAL INCOME FOR TH E YEAR ENDED 31.03.2007 WE OBSERVE THAT LD. CIT(A) HAS RIGHTLY OBSERVED THAT T HE AO HAS NOT SUPPORTED HIS FINDING OF TAX EVASION BY ANY OBJECTIVE DATA. THE A SSESSEE ON THE OTHER HAND HAS SHOWN THAT SSPL HAD COMPUTED ITS CAPITAL GAINS WITH REFERENCE TO THE ENTIRE AMOUNT OF COMPENSATION. IN MY VIEW CAPITAL GAINS CAN BE COMPU TED IN THE APPELLANTS HANDS ONLY WITH REFERENCE TO THE ACTUAL CONSIDERATION OF RS.3, 51, 06,473/- RECEIVED BY IT, 7 WHICH IS WHAT IT HAS DONE. EVEN IF THE FIGURE OF RS .7,63,63,000/- DETERMINED BY THE AO IS TAKEN AS REPRESENTING THE FAIR MARKET VALUE O F THE APPELLANTS ASSETS, CAPITAL GAINS CAN NOT BE COMPUTED IN THE APPELLANTS HANDS WITH REFERENCE TO THE SAID FIGURE OF RS.7,63,63,000/- WHICH WAS NEVER RECEIVED BY IT AS THE SAME HAS BEEN ACCOUNTED BY M/S. SHREEBHUMI STEEL PRIVATE LTD. IN THEIR COMPUTA TION OF INCOME FOR THE YEAR ENDING 31.3.2007 WHICH WAS PLACED AT PAGE NO.42 OF THE PAP ER BOOK. 6.1. HE HAS FURTHER RIGHTLY OPINED THAT IT WAS NOT OPEN TO AO TO INVOKE SECTION 50C OF THE ACT AS THE SAID SECTION WAS AMENDED BY THE F INANCE ACT (2009) ONLY WITH EFFECT FROM 1 ST OCTOBER, 2009. 6.2. IT IS FURTHER OBSERVED THAT THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS SMT.NANDINI NOPANY (SUPRA) HAS HELD THAT WHERE THERE WAS NO EVIDENCE DIRECT OR INFERENTIAL, NOR WAS THERE ANY FINDING BY ANY INCOME-TAX AUTHORITY THAT THE ASSESSEE RECEI VED THE DIFFERENCE BETWEEN THE BOOK VALUE AND MARKET VALUE OF SHARES SOLD. THE REFORE, THE TRIBUNAL WAS JUSTIFIED IN UPHOLDING THE ORDER OF THE COMMISSIONE R OF INCOME-TAX (APPEALS) IN DELETING THE ADDITION OF RS.7,57,076 ON ACCOUNT OF TRANSFER OF SHARES MADE BY THE ASSESSEE. 6.3. AGAIN THE HONBLE DELHI HIGH COURT IN THE CAS E OF DEV KUMAR JAIN VS ITO AND ANOTHER REPORTED IN 309 ITR 240 HAS HELD THAT WHEN THERE IS NOTHING ON RECORD TO SHOW THAT ASSES SEE RECEIVED CONSIDERATION FOR SALE OF THE SAID PROPERTY IN EXCESS OF THAT WHI CH WAS SHOWN IN THE AGREEMENT TO SELL. THUS THE ACTUAL SALE CONSIDERATI ON RECORDED IN THE AGREEMENT TO SELL COULD NOT BE SUBSTITUTED BY THE VALUE OF THE PROPERTY AS ARRIVED AT BY THE DVO. 6.4. KEEPING IN VIEW OF THE OBSERVATIONS MADE BY LD . CIT(A) IN PARAS 6.2 TO 6.7 AND OUR OBSERVATIONS MADE IN PARAS 6 AND 6.1. ABOVE AN D THE JUDICIAL PRONOUNCEMENTS MENTIONED IN PARAS 6.2 AND 6.3 WE FIND NO INFIRMITY IN THE ORDERS OF LD. CIT(A) TO BE INTERFERED WITH. THEREFORE WE CONFIRM THE SAME AND DISMISS THE REVENUES APPEAL. 8 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE COURT ON 30.08.2011. SD/- SD/- [ , ] [ . !., '# ] [ MAHAVIR SINGH ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (!# !# !# !#) )) ) DATE: 30.08.2011. R.G.(.P.S.) '2 0 .3 4'3(5- COPY OF THE ORDER FORWARDED TO: 1. M/S. SHREEBHUMI SYNTHETIC INDIA LTD., 94/C, LALABAB U SHIRE ROAD, 1 ST FLOOR, BELURMATH, HOWRAH-711202. 2 THE D.C.I.T., CIRCLE-1, KOLKATA 3. THE CIT, 4. THE CIT(A)-I, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA /3 ./ TRUE COPY, '2&:/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES
Mehul