ITO, WD-1(4), KOLKATA, Kolkata V. M/s Command Constructions Pvt. Ltd., Kolkata

ITA 571/KOL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5356 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 08-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD USMAN
• Assessee Lawyers: J P KHAITAN SR SHRI
• Keywords: Capital asset; Depreciation
• Section: 2(14); 148; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI A T VARKEY, JM, & SHRI M.BAL AGANESH, AM] I.T.A NO. 571/KOL/201 5 ASSESSMENT YEAR : 2006-0 7 ITO, WARD-1(4), KOLKATA -VS- M/S COMMAND C ONSTRUCTIONS PRIVATE LTD. [PAN: AACCC5075A ] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI MD.USMAN, CIT DR FOR THE RESPONDENT : SHRI J. P. KHAITAN, SR. COUNSEL SHRI S.JHAJHARIA, AR AND SHRI SUJOY SEN, ADVOCATE DATE OF HEARING : 08.10.2018 DATE OF PRONOUNCEMENT : 16.10.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-I, KOLKATA [IN SHORT THE LD CIT (A)] IN APPEAL NO. 269/CIT(A)- 1/WARD-1(4)/2014-15 DATED 23.01.2015 AGAINST THE OR DER PASSED BY THE ITO, WARD-1(4), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 147/14 3(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 28.03.2014 FOR THE ASS ESSMENT YEAR 2006-07. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION OF RS 96,37,85,635/- TOWARDS CAPITAL GAINS U/S 45(3) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 2 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSES SEE IS A COMPANY AND FOR THE ASST YEAR 2006-07 HAD FILED ITS RETURN OF INCOME ON 6.11.2006 DECLARING TOTAL LOSS OF RS 39,971/-. THE ASSESSEE ALONG WITH M/S ORCHID GRIHA NIRMAN PRI VATE LIMITED, M/S BLUE HEAVEN GRIHA NIRMAN PVT LTD AND M/S WELLGROWTH GRIHA NIRMA N PVT LTD WERE PARTNERS IN A PARTNERSHIP FIRM BY NAME M/S SALARPURIA SOFT ZONE. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 26.4.2007. THE ASSESSEE HAD S HOWN INTEREST RECEIPT OF RS 7,905/-. THE LD AO REOPENED THE ASSESSMENT FOR THE ASST YEAR 2006-07 ON THE GROUND THAT THE CAPITAL GAINS OF RS 96,37,85,635/- HAD NOT BEEN INC LUDED BY THE ASSESSEE COMPANY IN ITS RETURN OF INCOME FOR THE ASST YEAR 2006-07 AND ACCO RDINGLY IT HAD ESCAPED ASSESSMENT FOR WHICH NOTICE U/S 148 OF THE ACT WAS ISSUED . I N THE REASSESSMENT COMPLETED U/S 147/143(3) OF THE ACT DATED 28.3.2014, THE INCOME O F THE ASSESSEE FIRM REPRESENTING SHORT TERM CAPITAL GAIN OF RS 96,37,85,635/- WAS B ROUGHT TO TAX. THE BRIEF FACTS OF THIS ADDITION IS THAT THE FACTS WITH REGARD TO REVALUATI ON OF ASSETS BY M/S.SALARPURIA SOFTZONE, ARE THAT ONE M/S. I GATE GLOBAL SOLUTIONS LTD WAS THE OWNER OF INDUSTRIALLY CONVERTED LAND MEASURING 3,12,092 SQ. FT. IN BELLAN DUR VILLAGE, VARTHUR HOBLI, BANGALORE EAST TALUK (HEREINAFTER REFERRED TO AS T HE SAID LAND). THE SAID LAND WAS ADVERTISED FOR SALE. THE ASSESSEE ALONG WITH TWO OT HER COMPANIES VIZ. ORCHID GRIHA NIRMAN PVT LTD. AND BLUE HAVEN GRIHA NIRMAN PVT. LT D. (HEREINAFTER COLLECTIVELY REFERRED TO AS 'THE SAID THREE COMPANIES') RESPONDE D BY OFFERING A PRICE OF RS.16,94,34,666. SUBSEQUENTLY, THERE WERE NEGOTIAT IONS BETWEEN THE PARTIES AND THE PRICE WAS INCREASED TO RS.22,36,79,266/- ON THE BAS IS THAT THE SAID LAND MEASURED 3,19,086 SQ. FT. AND ACCORDINGLY, AN AGREEMENT WAS ENTERED INTO ON JUNE 14,2004. HOWEVER, UPON ACTUAL MEASUREMENT THE AREA OF THE LA ND WAS FOUND TO BE 3,12,092 SQ. FT. AND AS SUCH THE FINAL PRICE STOOD AT RS.21,87,76,49 2/- AS PER SUPPLEMENTAL AGREEMENT DATED DECEMBER 28, 2004. THE SAID THREE COMPANIES P AID THE AGREED CONSIDERATION AND RECEIVED POSSESSION. A REGISTERED DEED OF SALE WAS EXECUTED IN THEIR FAVOUR ON MARCH 30, 2005. 3 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 3 3.1. THE STATE GOVERNMENT GUIDELINE VALUE FOR THE PURPOSE OF REGISTRATION AND STAMP DUTY IN RESPECT OF THE SAID LAND WAS RS.260/- PER S Q. FT. WHEREAS THE PURCHASE PRICE PAID BY THE SAID THREE COMPANIES WAS RS.70L/- PER SQ. FT . I.E. MORE TWO AND HALF TIMES THE STAMP VALUE. THE TOTAL COST OF THE SAID LAND TO THE SAID THREE COMPANIES, WHO HAD PURCHASED IT IN EQUAL SHARES, WAS RS.24,54,54,125/- AFTER TAKING INTO CONSIDERATION THE STAMP DUTY AND REGISTRATION COST. THE SAID THREE CO MPANIES HAD PURCHASED THE SAID LAND WITH THE OBJECT OF DEVELOPING AN INDUSTRIAL PARK. E ACH OF THE SAID THREE COMPANIES ACCOUNTED FOR THE SAID LAND SO PURCHASED AS WORK IN PROGRESS AND REFLECTED IT UNDER 'CURRENT ASSETS' IN THE BALANCE SHEET. 3.2. ON JANUARY 9, 2006, THE SAID THREE COMPANIES AND ANOTHER COMPANY CALLED WELLGROWTH GRIHA NIRMAN PVT. LTD. EXECUTED A DEED O F PARTNERSHIP IN TERMS OF WHICH THE SAID THREE COMPANIES TRANSFERRED THE SAID LAND TO THE PARTNERSHIP FIRM M/S. SALARPURIA SOFT ZONE AS THEIR CAPITAL CONTRIBUTION. THE FOURTH COMPANY WAS TO ARRANGE THE ENTIRE FINANCE REQUIRED FOR THE DEVELOPMENT OF THE SAID LAND. EACH OF THE SAID THREE COMPANIES HAD A 10% SHARE IN THE PROFIT/LOSS AND TH E FOURTH COMPANY'S SHARE WAS 70%. THE PARTNERSHIP BUSINESS WAS DEEMED TO HAVE COMMENC ED ON AND FROM APRIL 1, 2005. A SUPPLEMENTAL DEED OF PARTNERSHIP WAS EXECUTED ON MARCH 13, 2006 BETWEEN THE FOUR PARTNERS WHICH INTER ALIA, PROVIDED THAT THE SAID F IRM CAN AVAIL LOAN/CREDIT FACILITIES FROM COMMERCIAL BANKS/FINANCIAL INSTITUTIONS BY MORTGAGI NG/CHARGING ITS MOVABLE AND IMMOVABLE PROPERTIES. THE SAID FIRM SUBSEQUENTLY OB TAINED SUCH LOAN/CREDIT FACILITIES TO THE EXTENT OFRS.250 CRORES. 3.3. THE SAID THREE COMPANIES TRANSFERRED THE SAID LAND TO THE SAID FIRM ON JANUARY 9, 2006 AT COST AND SUCH COST WAS THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT OF THE SAID FIRM FOR THE YEAR ENDED MARCH 31, 2006 AS THE VALUE OF THE SAID LAND WITH CORRESPONDING CREDIT TO THE CAPITAL ACCOUNTS OF EACH OF THE SAID THREE COMPANIES. ACCORDINGLY, THE CAPITAL ACCOUNT OF THE ASSESSEE WAS CREDITED BY RS. 8,15,00,000/-. THE SAID FIRM 4 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 4 ACCOUNTED FOR THE SAID LAND AS WORK IN PROGRESS AND REFLECTED IT UNDER 'CURRENT ASSETS' IN ITS BALANCE SHEET. DIVERSE AMOUNTS WERE THEREAFT ER SPENT BY THE SAID FIRM ON THE DEVELOPMENT OF THE SAID LAND AS AN INDUSTRIAL PARK INCLUDING CONSTRUCTION THEREON. FUNDS FOR THE SAID PURPOSE WERE PROVIDED BY THE FOURTH PA RTNER. THE COMPLETED INDUSTRIAL PARK WAS MOSTLY LEASED OUT BY MARCH, 2008. 3.4. ON MARCH 30, 2008, THE SAID FIRM CONVERTED TH E SAID LAND, BUILDING AND ITS AMENITIES, WHICH WERE SHOWN AS INVENTORY IN ITS ACC OUNTS, INTO FIXED ASSETS. ON MARCH 31, 2008 THE SAID LAND AND BUILDING WERE REVALUED. SUCH REVALUATION WAS MADE IN ORDER TO REFLECT THE-MARKET VALUE OF THE LAND AND BUILDIN G IN THE BOOKS OF ACCOUNT AND TO JUSTIFY THE BANK LOAN OF RS.250 CRORES. THE VALUES OF THE LAND AND BUILDING BEFORE AND AFTER REVALUATION ARE AS UNDER :- COST AS ON REVALUED FIGURE EXTENT OF INCREASE DUE TO 30.03.08 AS ON 31.03.08 REVALUATION RS. RS. RS. LAND 25,16,17,696/- 314,29,74,600/- 289, 13,56,904/- BUILDING 119,02,85,430/- 200,22,90,400/- 81,20,04,970/- TOTAL 370,33,61,874/- 3.5. THE AMOUNT OF REVALUATION WAS CREDITED TO THE CURRENT ACCOUNTS OF THE FOUR PARTNERS IN THEIR PROFIT SHARING RATIO. 4. THE LD AO SHOWCAUSED THE ASSESSEE TO EXPLAIN AS TO WHY THE PROFIT ACCRUED TO ASSESSEE COMPANY ON TRANSFER/CONTRIBUTION OF CAPITA L BY WAY OF CONTRIBUTION IN THE FORM OF ITS AFORESAID SHARE OF LAND ASSET TO THE PART NERSHIP FIRM DURING THE YEAR ENDED 5 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 5 31.3.2006, SHOULD NOT BE TREATED AND ADDED BACK AS ITS CAPITAL GAINS FOR THE ASST YEAR 2006-07. 4.1. IN RESPONSE THERETO, THE ASSESSEE REPLIED VIDE SUBMISSION DATED 24.3.2014 AND GIST OF THOSE SUBMISSIONS AS REPRODUCED IN THE ASSESSMEN T ORDER ARE AS UNDER:- I) SECTION 45(3) IS APPLICABLE ONLY IN CASE OF TRAN SFER OF A CAPITAL ASSET BY A PARTNER TO A FIRM. II) THE ASSESSEE HAD ACCOUNTED FOR THE AFORESAID LA ND AS A CURRENT ASSET AND NOT AS CAPITAL ASSET ON IT ACCOUNTS. III) SINCE THE AFORESAID LAND WAS NOT A CAPITAL ASS ET IN THE HANDS OF THE ASSESSEE, SECTION 45(3) IS EX FACIE NOT APPLICABLE. IV) THE SAID LAND UPON PURCHASE WAS SHOWN BY THE PA RTNERS INCLUDING THE ASSESSEE AS PART OF THEIR CURRENT ASSETS. THE FIRM UPON RECEIPT OF THE SAID LAND DURING THE FINANCIAL YEAR ENDED MARCH 31, 2006 ALSO ACCOUNTED FOR IT AS A CURRENT ASSET. THE PARTNERS TRANSFERRED THE LAND AT COST. AS SUCH, THERE WAS NO PROFIT IN THE HANDS OF THE PARTNERS UPON TRANSFER OF THE LAND TO THE FIRM V) AFTER RECEIVING THE LAND AS CAPITAL CONTRIBUTION , THE FIRM DEVELOPED THE SAME AND EXPENDED AS SUBSTANTIAL AMOUNT FAR: THE SAID PURPOS E DURING THE FINANCIAL YEAR 2005-06 AND THEREAFTER. IT WAS ONLY AN MARCH 30, 2008 THAT THE FIRM CONVERTED THE DEVELOPED LAND INCLUDING CONSTRUCTION THEREON HELD AT INVENTO RY INTO. FIXED ASSETS AND THEREAFTER AN MARCH 31, 2008 REVALUED IT WITH CONSEQUENT CREDI T TO THE. PARTNER'S CURRENT ACCOUNTS. VI) THE PARTNERS ENTERED INTO. THE AGREEMENT FAR PU RCHASE OF THE LAND IN JUNE 2004 AND CONVEYANCE WAS EXECUTED IN THEIR FAVOUR AN MARCH 30 , 2005. SUBSEQUENT TO. THE SAID PURCHASE, THE AREA AN WHICH THE LAND WAS SITUATED U NDERWENT MAJOR DEVELOPMENT AND BECAME A PREMIUM DESTINATION FOR IT AND ITES COMPAN IES , VII) NOTWITHSTANDING SUCH PRICE RISE, IN ACCORDANCE WITH ACCOUNTING PRINCIPLES, THE LAND HELD AS INVENTORY WAS SHOWN BY THE FIRM AT CAST VIII) IT WAS ONLY AFTER CONVERSION OF INVENTORY INT O. FIXED ASSETS THAT THE FIRM REVALUED THE DEVELOPED LAND INCLUDING CONSTRUCTION THEREON IN OR DER TO. BRING IT IN LINE WITH THE CURRENT- MARKET VALUE AND FOR JUSTIFYING THE BANK FINANCE OF NEARLY RS.250 CRORES. SUCH REVALUATION WAS NEITHER COLORABLE NOR A DEVICE IX) THE REVALUATION BY THE. FIRM WAS MADE FOR FINAN CIAL PURPOSES AND NO. TAX ADVANTAGE OF ANY KIND WAS SOUGHT TO BE DERIVED THEREBY. EVEN IN CASE OF TRANSFER OF THE CAPITAL ASSET, NO. TAX BENEFIT OR ADVANTAGE WILL ARISE AN A CCOUNT OF THE REVALUATION 6 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 6 X) SECTION 45(3) OF THE ACT IS APPLICABLE IN THE YE AR OF TRANSFER BY THE PARTNER OF HIS CAPITAL ASSET TO. THE PARTNERSHIP FIRM BY WAY OF C APITAL CONTRIBUTION. FOR PURPOSES OF COMPUTING THE CAPITAL GAINS, THE VALUE OF THE ASSET RECORDED IN THE BOOKS OF THE FIRM ON THE DATE OF THE TRANSFER SHALL BE DEEMED TO. BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET. XI) IN THE INSTANT CASE, SECTION 45(3) OF THE ACT H AD NO APPLICATION IN THE YEAR OF TRANSFER VIZ. THE FINANCIAL YEAR ENDED MARCH 31,2006 SINCE W HAT THE PARTNERS TRANSFERRED TO. THE FIRM WAS INVENTORY AND NOT CAPITAL ASSET. THE CONVE RSION OF INVENTORY INTO. FIXED ASSETS WAS MADE BY THE FIRM MARE THAN TWO. YEAR LATER DURI NG THE FINANCIAL YEAR ENDED MARCH 31, 2008 AS WAS THE REVALUATION OF THE CONVERTED AS SET. NEITHER SUCH CONVERSION NOR REVALUATION BY THE FIRM DURING THE PREVIOUS YEAR RE LEVANT TO ASSESSMENT YEAR 2008-09 CAN BRING THE PROVISIONS OF SECTION 45(3) OF THE AC T INTO PLAY FOR THE ASSESSMENT YEAR 2006-07. THERE WAS NO. TRANSFER OF ANY CAPITAL ASSE T BY THE ASSESSEE TO THE SAID FIRM DURING THE PREVIOUS YEAR RELEVANT TO. THE ASSESSMEN T YEAR 2006-07 FOR SECTION 45(3) TO APPLY. WHEN THE PARTNERS HAD NO. LIABILITY FOR ANY TAX UNDER SECTION 45(3) OF THE ACT, THE QUESTION-OF RESORTING TO. DEVICE TO AVOID TAX UNDER SECTION 45(3) DOES NOT ARISE. XII) EVEN OTHERWISE. SECTION 45(3) SEEKS TO. DETERM INE THE CAPITAL GAINS WITH REFERENCE TO THE VALUE OF THE ASSET RECORDED IN THE BOOKS OF ACC OUNT OF THE FIRM. THE VALUE SO RECORDED IS STATUTORILY DEEMED TO THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING TO. THE PARTNER AS A RESULT OF THE TRANSFER OF THE CA PITAL ASSET TO THE FIRM. THUS, SECTION 45(3) DOES NOT SEEK TO SUBSTITUTE BY ANY OTHER FIGU RE THE VALUE AGREED BETWEEN THE PARTNERS AT WHICH THE ASSET IS TRANSFERRED BY A PAR TNER TO THE FIRM. XIII) WITHOUT PREJUDICE TO THE VALIDITY OF THE ADDI TION/ADJUSTMENT SO MADE IN A.Y.:2008- 09 ON ISSUE OF CAPITAL GAINS, IT MAY KINDLY BE APPR ECIATED THAT SUCH ADJUSTMENT HAVE ALREADY BEEN MADE A. Y.: 2008-09 CANNOT BE DONE AG AIN IN A. Y.: 2006-07 WHICH MAY AMOUNT TO. DOUBLE ADJUSTMENT OF SAME ITEM WHICH IS NOT PERMISSIBLE AT ALL IN LAW. 4.2. THE LD AO DISPOSED OF THE SUBMISSIONS MADE BY THE ASSESSEE IN THE FOLLOWING MANNER:- THE ABOVE CONTENTIONS OF THE ASSESSEE ARE NOT ACCE PTABLE AND ACCORDINGLY ARE NOT ACCEPTED. I) DURING THE COURSE OF ASSESSMENT PROCEEDING, FOR THE ASSESSMENT YEAR 2008-09, IN CASE OF THIS ASSESSEE COMPANY IT HAD BEEN CONTENDED THAT THE AFO RESAID ASSET VIZ. 'LAND' AS CONTRIBUTED BY THE PARTNERS DURING THE CURRENT YEAR ENDED ON 31.03 .2006, AND CAPITAL GAINS IF ANY CAN ARISE ONLY IN THE. YEAR WHEN SUCH ASSET 'WAS ACTUALLY CON TRIBUTED BY THE PARTNERS, TO THE 'PARTNERSHIP FIRM', AS THEIR CAPITAL CONTRIBUTION, I.E. DURING T HE CURRENT YEAR ENDED ON 31.03.2006. II) THE PARTNERSHIP FIRM VIZ. 'M/S SALARPURIA SOFT ZONE' HAS TRANSFERRED & CONVERTED THE 'INVENTORY' OF 'LAND' INTO 'FIXED ASSETS' IN ITS BO OKS OF ACCOUNT AS ON 30.03.2008. SUBSEQUENTLY 7 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 7 ON 31.03.2008 THE, LAND HAS BEEN REVALUED AT RS.314 ,29,74,600/-, AS PER VALUERS REPORT BY THE PARTNERSHIP FIRM. AS SUCH VALUE OF 'LAND' ASSET, WH ICH WAS CONTRIBUTED WAY OF CAPITAL CONTRIBUTION BY THE ASSESSEE ALONG WITH TWO OTHER P ARTNERS DURING THE YEAR ENDED ON 31.03.2006, WAS ULTIMATELY RECORDED AT ITS CORRECT VALUE AT RS.314,29,74,600/- BY THE 'PARTNERSHIP FIRM' DURING THE YEAR ENDED ON 31.03.2 008 I.E. AFTER A GAP OF TWO YEARS. III) HENCE IN ONE DAY I.E. F FM 30.03.2008 TO 31.03 .2008, AFTER CONVERTING THE 'LAND' FROM INVENTORY TO FIXED ASSETS, THE REVALUATION DONE IS ONLY A DEVICE TO AVOID THE MARKET VALUE OF COST OF LAND OF RS.314,29,74,600/- TAKEN AND CONSEQ UENTLY TO AVOID HIGHER TAXES ON CAPITAL GAINS BY THE COMPANY PARTNERS OF THE PARTNERSHIP F IRM VIZ. 'M/S SALARPURIA SOFT ZONE'. IV) SECTION 45(3) OF THE I.T., ACT, 1961 PROVIDES T HAT FOR THE PURPOSE OF CAPITAL GAINS U/S 48 OF THE I.T. ACT, 1961, THE AMOUNT RECORDED IN THE BOOK S OF THE PARTNERSHIP FIRM AS THE VALUE OF ASSETS WOULD BE DEEMED TO BE FULL VALUE OF CONSIDER ATION RECEIVED OR ACCRUED AS A RESULT OF THE TRANSFER OF A CAPITAL ASSET BY WAY OF CAPITAL CONTR IBUTION. EXPLANATORY NOTES TO THE FINANCE ACT'1987 HAS CLARIFIED THE POSITION FOR NEWLY INSER TED DEEMING PROVISIONS OF CAPITAL GAINS VIDE CIRCULAR NO.495/1987 DATED 22.09.1987 AS UNDER: 'WITH A VIEW TO BLOCKING THE ESCAPE ROOT FOR AVOIDI NG CAPITAL GAINS TAX, THE FINANCE ACT'1987 HAS INSERTED A NEW SUB-SECTION (3) IN SECT ION 45. THE EFFECT OF THIS AMENDMENT IS THAT THE PROFITS AND GAINS ARISING, FROM THE TRA NSFER OF CAPITAL ASSET BY A PARTNER TO A FIRM, SHALL BE CHARGEABLE AS THE PARTNERS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. FOR THE PURPOSE OF COMPUTING T HE CAPITAL GAINS, THE VALUE OF ASSETS RECORDED IN THE BOOKS OF THE FIRM ON THE' DATE OF T RANSFER SHALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUED AS A RES ULT OF TRANSFER OF THE CAPITAL ASSET'. V) AS PER PROVISIONS OF SECTION 45(3) OF THE I.T. A CT'1961 FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS U/S48 OF 'THE IT. ACT, 1961, THE AMOU NT OF RS.314,29,74,600/-, WHICH WAS ULTIMATELY RECORDED IN THE BOOKS OF THE PARTNERSHIP FIRM AS VALUE OF 'LAND' ASSET, WILL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIV ED OR ACCRUED AS A RESULT OF THE TRANSFER OF SUCH CAPITAL ASSET BY WAY OF CAPITAL CONTRIBUTION, DURING THE CURRENT YEAR ENDED ON 31.03.2006. VI) THE ASSESSEE HAS CONTENDED THAT THE AFORESAID S HARE OF 'LAND;' ASSET WHICH WAS TRANSFERRED 'AT COST' BY IT BY WAY OF CAPITAL CONTRIBUTION DURI NG THE CURRENT YEAR ENDED ON 31.03.2906 TO THE PARTNERSHIP FIRM VIZ. 'M/S SALARPURIA SOFT ZONE', H AS BEEN ACCOUNTED FOR IN ITS BOOKS OF ACCOUNT AS 'STOCK IN TRADE' I.E. 'CURRENT ASSET' AND NOT A 'CAPITAL ASSET'. HENCE THE PROVISIONS OF SECTION 45(3) OF THE I.T. ACT'1961 WILL NOT BE APPLICABLE A ND IT IS NOT LIABLE TO 'CAPITAL GAIN TAX'. VII) FROM THE DETAILS FILED BY THE ASSESSEE IT IS C LEAR THAT DURING THE CURRENT YEAR ENDED ON 31.03.2006 OR IN SUBSEQUENT YEARS, ASSESSEE WAS NEV ER ENGAGED IN ANY SORT OF TRADING OR BUSINESS ACTIVITY. THE ASSESSEE ALSO WAS NEITHER EN GAGED IN THE BUSINESS OF REAL ESTATE BY DEVELOPING THE AFORESAID LAND DURING THE CURRENT YE AR ENDED ON 31.03.2006 NOR IN SUBSEQUENT YEARS. HENCE THE AFORESAID 'LAND' ASSET TRANSFERRED BY THIS ASSESSEE BY WAY OF CAPITAL CONTRIBUTION TO THE PARTNERSHIP FIRM' VIZ 'M/S SALA RPURIA SOFT ZONE', DURING THE CURRENT YEAR 8 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 8 ENDED ON 31.03.2006, IS ACTUALLY ITS 'CAPITAL ASSET AND BY ANY STRETCH OF IMAGINATION IT CANNOT BE A 'CURRENT ASSET' OR 'CLOSING STOCK' OR 'STOCK-I N-TRADE' IN THE CASE OF THIS ASSESSEE COMPANY. VIII) FURTHER THE COST OF AFORESAID 'LAND' ASSET, A FTER TRANSFER BY WAY OF CAPITAL CONTRIBUTION PARTNERSHIP FIR VIZ., 'M/S SALARPURIA SOFT ZONE', H AS BEEN SHOWN BY THE ASSESSEE 'INVESTMENT: 'CAPITAL INVESTMENT', IN PARTNERSHIP FIRM' BY THE A SSESSEE IN ITS ACCOUNTS. IX) THE REFLECTION OF SUCH/AFORESAID 'LAND' ASSET A S A 'CURRENT ASSET' IN THE BOOKS. OF ACCOUNT OF THE ASSESSEE COMPANY IN THE YEAR ENDED ON 31.03.200 6 AND RECORDING OF THE ACTUAL MARKET VALUE OF COST OF AFORESAID 'LAND' ASSET AT RS.314,2 9,74,600/- BY THE PARTNERSHIP FIRM VIZ. 'M/S SALARPURIA SOFT ZONE' IN ITS BOOKS OF/ACCOUNT AFTER A GAP OF TWO YEARS I.E. DURING THE YEAR ENDED ON31.03.2008, IS NOTHING BUT ADOPTING OF THE MEANS OF COLOURABLE TRANSACTION & DEVICE. IN COLLUSION WITH EACH OTHER TO ACHIEVE THE PURPOSE OF AVOIDING TAXES ON 'CAPITAL GAINS' ACCRUED TO THIS ASSESSEE AS WELL AS TO THE OTHER TWO PARTNER C OMPANIES WHO HAVE CONTRIBUTED LAND IN THE AFORESAID PARTNERSHIP FIRM. X) SUCH GERM OF PLANNING WAS ADOPTED FOR AVOIDING T AXES ON 'CAPITAL GAINS' ACCRUED TO THE ASSESSEE, AS WELL AS TO THE OTHER TWO PARTNER COMPA NIES WHO HAVE CONTRIBUTED LAND IN THE AFORESAID PARTNERSHIP FIRM, EITHER FOR THE YEAR END ED ON 31.03.2006 OR FOR THE YEAR ENDED ON 31.03.2008. XI) THE ASSESSEE'S CONTENTION THAT REVALUATION OF ASSET WAS DONE BY THE 'PARTNERSHIP FIRM' TO GET FINANCIAL ASSISTANCE FROM FINANCIAL INSTITUTION S AND/OR BANKS IS NOT TENABLE SINCE IT IS OBSERVED THAT THE PARTNERSHIP FIRM HAD ALREADY PLED GED THE SAID LAND BEFORE 30.03.2008. XII) IT MAY NOT BE OUT OF WAY TO BRING ON RECORD TH AT ALL THE PARTNER COMPANIES AND THE PARTNERSHIP FIRM HAVE COMMON BUSINESS ADDRESSES AND BELONG TO THE SAME GROUP. THE ASSET I.E. LAND WAS KEPT UNDER INVENTORY AND NOT BROUGHT TO FIXED ASSETS FOR LAST TWO EARLIER FINANCIAL YEARS ENDED ON 31.03.2006 AND 31.03.2007 IN THE BOO KS OF THE PARTNERSHIP FIRM AND ALSO TILL SUCH ASSET WAS KEPT AS INVENTORY ITS XIII) CORRECT VALUE WAS NOT RECORDED IN THE BOOKS O F THE FIRM. IT IS VERY MUCH CLEAR THAT ALL OF THE PARTNER COMPANIES AND THEIR PARTNERSHIP FIRM HAS AD OPTED THE MEANS OF COLOURABLE TRANSACTION, IN COLLUSION WITH EACH OTHER, TO ACHIE VE THE PURPOSE OF AVOIDING TAXES ON CAPITAL GAINS ACCRUED TO THE THREE PARTNER COMPANIES WHO HA VE CONTRIBUTED LAND IN THE FIRM. XIV) IT MAY FURTHER BE NOTED THAT THE 'REVALUATION PROFIT' ACCRUED ON REVALUATION OF LAND & BUILDING WAS CREDITED TO PARTNERS CURRENT A/C IN TH EIR RESPECTIVE PROFIT/LOSS SHARING RATIO BY THE PARTNERSHIP FIRM VIZ. 'M/S SALARPURIA SOFT ZONE' DU RING THE YEAR ENDED ON 31.03.2008. XV) THE PARTNERSHIP FIRM VIZ. 'M/S SALARPURIA SOFT ZONE' WAS CONVERTED INTO A COMPANY NAME M/S SOFTZONE TECH PARK LIMITED (PAN: AAMCS5238D) LA TTER ON DURING THE YEAR ENDED ON 31.03.2008. THE REVALUED PRICE OF LAND WAS TREATED AS 'UNSECURED LOANS' IN THE HANDS OF M/S SOFTZONE TECH PARK LIMITED, AS PAYABLE BY IT TO THI S ASSESSEE COMPANY, WHICH ENABLED THE ASSESSEE PARTNERS OF THE ERSTWHILE 'PARTNERSHIP FIR M' TO WITHDRAW VALUE OF 'LAND ASSET/PROPERTY' AT ANY POINT OF TIME FROM THE ACCOUNTS OF THE COMPA NY. 9 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 9 XVI) THE HON'BLE ITAT COCHIN BENCH HAS, IN THE CASE OF K.T.C. AUTOMOBILES PVT. LTD. -VS- DCIT [2014] 41 TAXMANN.COM 160 (COCHIN -TRIB.), IN AFORE SAID SIMILAR CASE, HELD THAT SUCH TRANSACTIONS WOULD BE SUBJECTED TO CAPITAL GAINS TA X. XVII) THE ,RATIO LAID DOWN BY THE HON'BLE APEX COUR T IN THE CASE OF MC DOWELL & CO. LTD. -VS- CTO [1985] 154 ITR 148/22 TAXMAN 11(SC) IS APPLICAB LE IN THIS PRESENT CASE WHEREIN THE TRANSACTIONS EFFECTED BY THE ASSESSEE ARE NOT BONAF IDE OR GENUINE BUT ARE SHAM, MAKE BELIEVE, ARRANGED ONE AND ARE COLLUSIVE. HENCE SUCH TRANSACT IONS SHOULD BE REGARDED AS HOLLOW AND COLOURABLE DEVICE AND ARE NOT TO BE ACCEPTED BY THE TAX AUTHORITIES. 4.3. THE LD AO HELD THAT THE COST OF LAND AT RS 314 ,29,74,600/- WHEN PARTNERSHIP FIRM M/S SALARPURIA SOFT ZONE HAS TRANSFERRED AND CONVER TED THE INVENTORY OF LAND INTO FIXED ASSETS, WHICH HAS BEEN CONTRIBUTED BY THIS ASSESSEE ALONG WITH TWO OTHER AFORESAID PARTNERS DURING THE CURRENT YEAR ENDED ON 31.3.2006, WIL BE VALUE OF CAPITAL ASSET RECORDED IN THE BOOKS OF THE FIRM. THE LAND CONTRIBUTED BY THE ASSESSEE COMPANY AND OTHER TWO PARTNER COMPANIES TOWARDS CONTRIBUTIO N OF CAPITAL IN PARTNERSHIP FIRM IS A CAPITAL ASSET AND THE PROVISIONS OF SECTION 45(3) OF THE ACT WILL BE APPLICABLE FOR THE ASST YEAR 2006-07. HE OBSERVED THAT THE VALUE OF L AND FOR WHICH THE THREE PARTNER COMPANIES HAD INCURRED A COST OF RS 24,67,49,500/- AND WHICH WAS JOINTLY TRANSFERRED AS THEIR CAPITAL CONTRIBUTION TO THE PARTNERSHIP FIRM DURING THE CURRENT YEAR ENDED ON 31.3.2006, WAS ULTIMATELY RECORDED AT RS 314,29,74, 600/- IN THE BOOKS OF THE PARTNERSHIP FIRM WHEN SUCH ASSET WAS CONVERTED INTO FIXED ASSET S IN THE BOOKS OF THE PARTNERSHIP FIRM. 4.3.1. THE LD AO FURTHER OBSERVED THAT FOR THE PURP OSE OF COMPUTING CAPITAL GAINS OF THE THREE PARTNER COMPANIES, WHO JOINTLY CONTRIBUTED TH EIR AFORESAID LAND, THE VALUE I.E SALE CONSIDERATION OF THE LAND WILL BE RS 313,81,06,404/ - (I.E RS 24,67,49,500, BEING THE COST INCURRED BY PARTNER COMPANIES ON PURCHASE OF LAND) + RS 289,13,56,904/- , BEING THE REVALUATION OF LAND ON 31.3.2008 BY THE PARTNERSHIP FIRM) BE TAKEN AS ACCRUED AND RECORDED IN THE BOOKS OF THE FIRM ON THE DATE OF TH E TRANSFER I.E 31.3.2006. HENCE THE PROFIT ACCRUED TO THE THREE PARTNER COMPANIES, FOR THE YEAR ENDED 31.3.2006, AS A RESULT 10 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 10 OF THE TRANSFER OF THE CAPITAL ASSET I.E AFORE DISC USSED LAND, TO THE PARTNERSHIP FIRM WILL BE DEEMED AT RS 289,13,56,904/-. HE HELD THAT HENCE A SSESSEES SHARE THEREON WOULD BE RS 96,37,85,635/- REQUIRES TO BE TAXED AS SHORT TERM C APITAL GAINS FOR THE ASST YEAR 2006- 07. 5. THE LD CITA APPRECIATED THE FACTS OF THE INSTANT CASE AND AGREED TO THE CONTENTIONS OF THE ASSESSEE AND DELETED THE LEVY OF SHORT TERM CAP ITAL GAINS IN THE HANDS OF THE ASSESSEE PARTNER IN THE SUM OF RS 96,37,85,635/-. AGGRIEVE D, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE PRIMARY FACTS STATED HEREINABOVE REMAIN UNDISPU TED AND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. WE FIND THAT TH IS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH DECISION OF T HIS TRIBUNAL IN THE CASE OF ANOTHER PARTNER OF THE ASSESSEE I/E M/S BLUE HEAVEN GRIHA N IRMAN PVT LTD IN ITA NO. 570/KOL/2015 DATED 1.8.2018 FOR ASST YEAR 2006-07 W HEREIN IT WAS HELD AS UNDER:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE COM PRISING OF PAGES 1 TO 124 OF THE PAPER BOOK. THE PRIMARY FACTS STATED HEREINABO VE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF B REVITY. IT IS NOT IN DISPUTE THAT THE ASSESSEE ALONG WITH OTHER TWO PARTNER COMPANIES HAD GIVEN LAND HELD AS STOCK IN TRADE AS THEIR CAPITAL CONTRIBUTION IN THE PARTNERSHIP FIRM M/S SALARPURIA SOFT ZONE IN ASST YEAR 2006-07. IT IS NOT IN DISPU TE THAT THE SAID LAND WAS TREATED AS STOCK IN TRADE IN THE BOOKS OF THE PARTNERSHIP F IRM. HENCE THE CLOSING INVENTORY COULD BE VALUED ONLY AT THE LOWER OF COST OR MARKET VALUE. IT IS NOT IN DISPUTE THAT THE STAMP VALUATION AUTHORITY HAD INCR EASED THE LAND VALUE SUBSTANTIALLY AFTER THE DATE OF PURCHASE BY THE ASS ESSEE. HENCE THE INCREMENTAL VALUATION OF LAND DUE TO MARKET PERFORMANCE COULD N OT BE CAPTURED IN THE BOOKS OF THE PARTNERSHIP FIRM SO AS TO PROJECT THE REAL S TRENGTH OF THE PARTNERSHIP FIRM. HENCE FOR THE PURPOSE OF SHOWING THE REAL MARKET ST RENGTH OF THE PARTNERSHIP FIRM, THE LAND HELD AS STOCK IN TRADE WAS CONVERTED BY THE PARTNERSHIP FIRM INTO 11 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 11 CAPITAL ASSETS ON 30.3.2008. ON 31.3.2008, THE SAI D CAPITAL ASSET WAS REVALUED AND THE DIFFERENCE BETWEEN THE COST RECORDED AND TH E REVALUATION FIGURE WAS CREDITED TO THE CONCERNED PARTNERS ACCOUNT SO AS TO ENABLE THE PARTNERSHIP FIRM TO PROCURE LOANS FROM BANK FOR ITS BUSINESS PURPOSE S. BASED ON THIS STRENGTH, THE BANK HAD ALSO SANCTIONED HEAVY LOANS TO THE SAID PA RTNERSHIP FIRM. 6.1. WE FIND AT THE OUTSET THAT IN ASST YEAR 2006-0 7, THE ASSESSEE ALONG WITH OTHER TWO PARTNER COMPANIES HAD TRANSFERRED THEIR LANDS H ELD AS STOCK IN TRADE AS CAPITAL CONTRIBUTION TO THE PARTNERSHIP FIRM. IT I S NOT IN DISPUTE THAT THE SAID LANDS WERE HELD BY THE ASSESSEE ALONG WITH OTHER TW O PARTNER COMPANIES AS STOCK IN TRADE AND NOT AS CAPITAL ASSETS. HENCE THERE CO ULD BE NO APPLICATION OF SECTION 45(3) OF THE ACT IN AS MUCH AS WHAT WAS TRANSFERRED WAS ONLY STOCK IN TRADE AND NOT CAPITAL ASSET. HENCE THE TRANSFER WOULD BE OUTS IDE THE SCOPE OF SECTION 2(14) (WHICH DEFINES CAPITAL ASSET) OF THE ACT. HENCE THERE CANNOT BE ANY LEVY OF CAPITAL GAINS THEREON AND ACCORDINGLY THE REVALUATI ON GAINS CANNOT BE BROUGHT TO TAX IN THE ASST YEAR 2006-07 IN THE HANDS OF THE A SSESSEE AND OTHER TWO PARTNER COMPANIES. 6.2. WE FIND THAT SECTION 45(3) OF THE ACT SEEKS TO DETERMINE THE CAPITAL GAINS WITH REFERENCE TO THE VALUE OF THE ASSET RECORDED I N THE BOOKS OF ACCOUNT OF THE FIRM. THE VALUE SO RECORDED IS STATUTORILY DEEMED T O BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING TO THE PARTNER A S A RESULT OF THE TRANSFER OF THE CAPITAL ASSET TO THE FIRM. THUS, SECTION 45(3) OF THE ACT DOES NOT SEEK TO SUBSTITUTE BY ANY OTHER FIGURE THE VALUE AGREED BETWEEN THE PA RTNERS AT WHICH THE ASSET IS TRANSFERRED BY A PARTNER TO THE FIRM. HENCE THE FIN DING OF THE LD AO THAT THE LAND WAS GROSSLY UNDERVALUED TILL IT WAS PART OF INVENTO RY IN THE BOOKS OF THE SAID FIRM IS WITHOUT ANY BASIS. WE HAVE ALREADY DISCUSSED TH E PURPOSE OF CONVERSION OF LAND HELD AS STOCK IN TRADE INTO A CAPITAL ASSET IN THE BOOKS OF THE PARTNERSHIP FIRM IN ASST YEAR 2008-09. ONLY PURSUANT TO SUCH C ONVERSION AND PURSUANT TO REVALUATION OF THE CONVERTED LAND, THE GAINS TO THE EXTENT OF REVALUATION AROSE WHICH IS MERELY A BOOK ENTRY. INFACT THAT THE AS SESSEE TOGETHER WITH OTHER TWO PARTNER COMPANIES HAD ACTUALLY PAID RS 21,87,76,492 /- FOR PURCHASING THE SAID LAND WHICH WAS MORE THAN TWO AND HALF TIMES THE STA TE GOVERNMENT GUIDELINE VALUE FOR STAMP DUTY PURPOSES AT THE TIME OF PURCHA SE IN MARCH 2005. THE LD AR STATED THAT SUBSEQUENT TO THE SAID PURCHASE, THE AREA IN WHICH THE SAID LAND WAS SITUATED UNDERWENT MAJOR DEVELOPMENT AND BECAME A PREMIUM DESTINATION FOR IT AND ITES COMPANIES ; SEVERAL IT PARKS AND SE Z AS ALSO HIGH END RESIDENTIAL PROJECTS WERE DEVELOPED IN THE SAID ARE A ; THE AREA WHICH WAS UNDER GRAM PANCHAYAT CAME UNDER THE LIMITS OF MUNICIPAL C ORPORATION OF BANGALORE. HE STATED THAT THE MUNICIPAL CORPORATION CARRIED OU T VARIOUS IMPROVEMENTS IN THE AREA BY CONSTRUCTING SEVERAL FLYOVERS AND UNDER PASSES ; SUPPLY OF WATER WAS 12 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 12 PROVIDED AND SEWERAGE LINES WERE LAID ; AND IN JUNE 2007, THE COMPREHENSIVE DEVELOPMENT PLAN OF BANGALORE WAS REVISED AND THE F AR RATIO FOR CONSTRUCTION OF BUILDINGS IN THE SAID AREA WAS INCREASED FROM 2 TO 3.25 BECAUSE OF ROAD WIDTH OF 150 FEET. AS A CONSEQUENCE OF ALL SUCH DEVELOPM ENT ACTIVITIES, THE LAND PRICE IN THE AREA KEPT ON RISING. THE STATE GOVERNMENT RE VISED THE GUIDELINE VALUE FOR STAMP DUTY PURPOSES THRICE AFTER PURCHASE OF THE LA ND BY THE SAID THREE COMPANIES AS FOLLOWS:- DATE RATE RESIDENTIAL COMMERCIAL 2.8.2004 200 260 14.10.2005 800 1040 19.4.2007 1500 1950 26.9.2007 2200 3080 HOWEVER, NOTWITHSTANDING SUCH PRICE RISE, IN ACCORD ANCE WITH ACCOUNTING PRINCIPLES, THE LAND HELD AS INVENTORY COULD ONLY B E SHOWN AT ITS COST. HENCE THERE CANNOT BE ANY UNDERVALUATION OF LAND IN THE B OOKS OF THE ASSESSEE AND OTHER TWO PARTNER COMPANIES OF RECORDING THE VALUE OF LAN D AS ALLEGED BY THE LD AO. WE FIND THAT ONLY AFTER CONVERSION OF INVENTORY INT O FIXED ASSETS THAT THE SAID FIRM REVALUED THE DEVELOPED LAND INCLUDING CONSTRUCTION THEREON IN ORDER TO BRING IT IN LINE WITH THE CURRENT MARKED VALUE AND FOR JUSTIFYI NG THE BANK FINANCE OF NEARLY RS 250 CRORES. SUCH REVALUATION WAS NEITHER COLOURA BLE NOR A DEVICE. IT IS WELL SETTLED THAT REVALUATION IN THE BOOKS OF ACCOUNTS O F AN ASSET WHICH THE ASSESSEE CONTINUES TO OWN DOES NOT RESULT IN ANY PROFIT OR I NCOME. REVALUATION AT MARKET VALUE RESULTS IN NOTIONAL IMAGINARY PROFIT WHICH CA NNOT BE TAXED. REVALUATION OF AN ASSET WHICH AN ASSESSEE CONTINUES TO HOLD IS NOT A TAXABLE EVENT AND DOES NOT GIVE RISE TO ANY TAXABLE INCOME. A PERSON CANNOT MA KE A PROFIT FROM HIMSELF. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF SANJEEV WOOLEN MILLS VS CIT REPORTED IN 279 ITR 434 (SC) AT PAGE 447 AND 448 ,AS UNDER:- ' IN THE PRESENT CASE, THE METHOD ADOPTED BY THE AS SESSEE IS TO VALUE THE CLOSING STOCK AT THE MARKET VALUE IRRESPECTIVE OF THE FACT WHETHER THE MARKET VALUE OF THE STOCK AT THE RELEVANT TIME IS MORE THAN THE COST VA LUE OF THE STOCK, WHICH NECESSARILY RESULTS IN IMAGINARY OR NOTIONAL PROFIT S TO THE ASSESSEE WHICH HE HAS NOT ACTUALLY RECEIVED. IN FACT SUCH A NOTIONAL IMAG INARY PROFIT CANNOT BE TAXED. IT IS A WELL SETTLED PRINCIPLE AS HELD IN SIR KIKAB HAI PREMCHAND V. CIT [1953] 24 ITR 506 (SC) THE CONSTITUTION BENCH JUDGMENT THA T THE FIRM CANNOT MAKE A PROFIT OUT OF ITSELF THE TRANSACTION WHICH IS NOT B USINESS TRANSACTION AND DOES NOT DERIVE IMMEDIATE PECUNIARY GAIN IS NOT SUBJECTE D TO TAX. IN THE PRESENT CASE BY SHOWING THE MARKET VALUE OF THE CLOSING STOCK TH E ASSESSEE HAS EARNED POTENTIAL PROFIT OUT OF ITSELF IN AS MUCH AS THE ST OCK-IN-TRADE REMAINED WITH THE ASSESSEE AT THE CLOSING OF THE ACCOUNTING YEAR. SEC ONDLY, PUTTING THE STOCK AT THE 13 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 13 MARKET VALUE DOES NOT AND CANNOT BRING IN ANY REAL PROFIT WHICH IS NECESSARY FOR TAXING THE INCOME UNDER THE ACT AS IS HELD IN CHAIN RUP SAMPATRAM V. CIT [1953] 24 ITR 481 (SC) AND CIT V. HIND CONSTRUCTION LTD [1972 ] 83 ITR 211 (SC). THIRDLY, IT IS A SETTLED PRINCIPLE OF INCOME- TAX LAW THAT IT IS THE REAL INCOME, WHICH IS TAXABLE UNDER THE ACT. THIS PROPOS ITION WAS ENUNCIATED IN CIT V. BIRLA GWALIOR (P.) LTD [1973] 89 ITR 266 (SC), W HICH WAS PRONOUNCED IN CIT V. SHOORJI VALLABHDAS AND CO. [1962] 46 ITR 144 (SC).' 6.3. WE HOLD THAT THE ASSESSEE HAD NOT DERIVED ANY TAX ADVANTAGE PURSUANT TO THE REVALUATION OF LAND IN THE SAID FIRM IN ASST YEAR 2 008-09. IN ANY CASE, THE REVALUATION, EVEN IF HELD TO BE TAXABLE, COULD BE E XAMINED ONLY IN ASST YEAR 2008-09 AND IT HAS GOT ABSOLUTELY NO BEARING IN ASS T YEAR 2006-07. THE ASSESSEE CANNOT BE EXPECTED TO PRE-EMPT IN ASST YEAR 2006-07 , THAT THE PARTNERSHIP FIRM WOULD RECONVERT THE STOCK IN TRADE INTO CAPITAL ASS ET AND THEN REVALUE THE SAME . HENCE IN ANY EVENT, THERE IS ABSOLUTELY NO SCOPE FO R BRINGING ANY CAPITAL GAINS TO TAX IN THE ASST YEAR 2006-07 IN THE HANDS OF THE AS SESSEE PARTNER. 6.4. WE FIND THAT THE SIMILAR ISSUE HAD COME UP FOR ADJUDICATION BEFORE THIS TRIBUNAL IN THE CASE OF ONE OF THE PARTNERS CASE I .E M/S ORCHID GRIHA NIRMAN PVT LTD IN ITA NO. 2269/KOL/2013 FOR ASST YEAR 2008-09 DATED 19.10.2016. YET ANOTHER JUDGEMENT RENDERED BY THIS TRIBUNAL IN ASSE SSEES OWN CASE FOR THE ASST YEAR 2008-09 IN ITA NO. 2270/KOL/2013 DATED 16.11.2 016 ALSO SUPPORTS OUR AFORESAID VIEW WE FIND THAT IN THE CASE OF YET ANO THER PARTNER I.E M/S COMMAND CONSTRUCTIONS PVT LTD FOR THE ASST YEAR 2008-09, IN ITA NO. 2271/KOL/2013 DATED 15.3.2017, SIMILAR VIEW HAS BEEN TAKEN BY THI S TRIBUNAL. THE RELEVANT OPERATIVE PORTION OF ONE OF THE PARTNERS CASE I.E M/S ORCHID GRIHA NIRMAN PVT LTD IN ITA NO. 2269/KOL/2013 DATED 19.10.2016, WHER EIN DETAILED FINDINGS ARE GIVEN ARE REPRODUCED HEREINBELOW:- 27. AS FAR AS THE QUESTION WHETHER THERE WAS SHOR T TERM CAPITAL GAIN OF RS.96,37,85,635/- IS CONCERNED, THE PROVISIONS OF S EC.45(3) OF THE ACT HAVE BEEN PRESSED INTO SERVICE BY THE REVENUE. THE PROVISION S OF SEC.45(3) OF THE ACT READS THUS: SECTION: 45 (3): THE PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET BY A PERSON TO A FIRM OR OTHER ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS (NOT BEING A COMPANY OR A CO-OPERATIVE SOCIETY) IN WHICH HE IS O R BECOMES A PARTNER OR MEMBER, BY WAY OF CAPITAL CONTRIBUTION OR OTHERWISE, SHALL BE CHARGEABLE TO TAX AS HIS INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TRANSFER TAKES PLAC E AND, FOR THE PURPOSES OF SECTION 48, THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT OF THE FIRM, ASSOCIATION OR BODY AS THE VALUE OF THE CAPITAL ASSET SHALL BE DEEMED TO B E THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET. 14 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 14 PROVISIONS OF SECTION 45(3) OF THE ACT, WERE INSERT ED BY FINANCE ACT, 1987 (W.E.F. 1-4-1988). THE FACTS WITH REGARD TO PURCHA SE OF LAND BY THE ASSESSEE AND TWO OTHER COMPANIES OF LAND AT BANGALORE AND THE FA CTS WITH REGARD TO TRANSFER OF THE LAND BY THE THREE COMPANIES AS CAPITAL CONTRIBUTION TO A PARTNERSHIP FIRM DURING THE FINANCIAL YEAR ENDED MARCH 31, 2006 RELE VANT TO THE ASSESSMENT YEAR 2006-07, CANNOT BE DISPUTED. THE PARTNERSHIP DEED, WHICH PROVIDED THAT THE SAID THREE COMPANIES WOULD TRANSFER THE SAID LAND TO THE SAID FIRM AS CAPITAL CONTRIBUTION, WAS EXECUTED ON JANUARY 9, 2006. THE SAID DEED VIDE THE SECOND RECITAL EXPRESSLY STATED THAT AT OR BEFORE THE EXEC UTION OF THE DEED THE SAID FIRM HAD TAKEN OVER THE SAID LAND AS PART OF THE ASSETS OF THE PARTNERSHIP BUSINESS. THE SAID TRANSFER WAS GIVEN EFFECT IN THE ACCOUNTS OF THE PARTNERS FOR THE FINANCIAL YEAR ENDED MARCH 31, 2006. THE ASSESSEE'S BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE SAID FINANCIAL YEAR SHOWED THE SAID LAND, WHICH HAD BEEN REFLECTED AS WORK IN PROGRESS UNDER 'CURRENT A SSETS', WAS TRANSFERRED TO THE SAID FIRM AS CAPITAL CONTRIBUTION. THE SAID LAND RE CEIVED FROM THE SAID THREE COMPANIES WAS SHOWN IN THE SAID PROFIT AND LOSS ACC OUNT AND BALANCE SHEET AS WORK IN PROGRESS UNDER 'CURRENT ASSETS' WITH CORRES PONDING CREDIT TO THE PARTNERS' CAPITAL ACCOUNTS. THE PURPORTED FINDING O F THE ITO THAT THE PARTNERS' CAPITAL ACCOUNTS WERE NOT CREDITED DURING THE FINAN CIAL YEAR ENDED MARCH 31, 2006 FOR THEIR CAPITAL CONTRIBUTION BY WAY OF BRING ING IN THE SAID LAND IS CONTRARY TO THE FACTUAL POSITION. THAT THE SAID LAN D WAS BROUGHT IN BY THE PARTNERS AS INVENTORY/CURRENT ASSETS DOES NOT IN AN Y WAY ALTER THE FACT THAT THE PARTNERS HAD IN FACT BROUGHT IN THE LAND INTO THE P ARTNERSHIP BUSINESS AS THEIR CAPITAL CONTRIBUTION. IT IS NOT A REQUIREMENT THAT AN ASSET BROUGHT IN BY A PARTNER BY WAY OF CAPITAL CONTRIBUTION MUST BE A FIXED ASSE T OR THAT A CURRENT ASSET CANNOT BE BROUGHT IN BY A PARTNER AS HIS CAPITAL CO NTRIBUTION. THE BOOKS OF ACCOUNT OF THE SAID FIRM FOR THE FINANCIAL YEAR END ED MARCH 31, 2006 CLEARLY REFLECTED THE RECEIPT OF THE SAID LAND BY IT BY WAY OF CAPITAL CONTRIBUTION FROM THREE OF ITS PARTNERS AS ALSO THE VALUE THEREOF WIT H CORRESPONDING CREDIT TO THE PARTNERS' CAPITAL ACCOUNTS. THE LAND UPON PURCHASE WAS SHOWN BY THE SAID THREE COMPANIES AS PART OF THEIR CURRENT ASSETS. THE SAID FIRM UPON RECEIPT OF THE SAID LAND DURING THE FINANCIAL YEAR ENDED MARCH 31, 2006 ALSO ACCOUNTED FOR IT AS A CURRENT ASSET. THE PARTNERS TRANSFERRED THE SAID LA ND AT COST. AS SUCH, THERE WAS NO PROFIT IN THE HANDS OF THE PARTNERS UPON TRANSFE R OF THE SAID LAND TO THE SAID FIRM. SECTION 45(3) OF THE ACT IS APPLICABLE ONLY I N RESPECT OF A CAPITAL ASSET. THE SAID PROVISION HAS NO APPLICATION IN THE INSTANT CA SE SINCE WHAT WAS TRANSFERRED BY THE PARTNERS WAS A CURRENT ASSET AND NOT A CAPIT AL ASSET. SECTION 45(3) OF THE ACT DID NOT COME INTO OPERATION FOR THE ASSESSMENT YEAR 2008-09 BY REASON OF CONVERSION OF THE DEVELOPED LAND AND BUILDING INTO FIXED ASSETS BY THE SAID FIRM OR DUE TO REVALUATION BY THE SAID FIRM OF THE ASSET SO CONVERTED DURING THE PREVIOUS YEAR ENDED MARCH 31, 2008. SECTION 45(3) O F THE ACT IS APPLICABLE IN THE YEAR OF TRANSFER BY THE PARTNER OF HIS CAPITAL ASSET TO THE PARTNERSHIP FIRM BY WAY OF CAPITAL CONTRIBUTION. IN THE INSTANT CASE, T HE YEAR OF TRANSFER WAS THE FINANCIAL YEAR ENDED MARCH 31, 2006. THE ITO WAS WH OLLY UNJUSTIFIED IN INVOKING SECTION 45(3) WHICH HAD NO APPLICATION IN THE ASSESSMENT YEAR 2008-09 OR FOR THAT MATTER IN THE ASSESSMENT YEAR 2006-07. EVEN OTHERWISE, SECTION 45(3) 15 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 15 SEEKS TO DETERMINE THE CAPITAL GAINS WITH REFERENCE TO THE VALUE OF THE ASSET RECORDED IN THE BOOKS OF ACCOUNT OF THE FIRM. THE V ALUE SO RECORDED IS STATUTORILY DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIV ED OR ACCRUING TO THE PARTNER AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET TO THE FIRM. THUS, SECTION 45(3) DOES NOT SEEK TO SUBSTITUTE BY ANY OTHER FIGURE THE VALUE AGREED BETWEEN THE PARTNERS AT WHICH THE ASSET IS TRANSFERRED BY A PAR TNER TO THE FIRM. THE ITO'S ACTIONS ARE COMPLETELY CONTRARY TO THE SCHEME OF TH E STATUTE. WE THEREFORE UPHOLD THE ORDER OF THE CIT(A) IN SO FAR AS IT RELA TES TO HIS CONCLUSION THAT THE AO WAS NOT JUSTIFIED IN ASSESSING SHORT TERM CAPITA L GAIN OF RS.96,37,85,635/- IN THE HAND OF THE ASSESSEE ON THE GROUND THAT: (A) THE PARTNERS' CAPITAL ACCOUNTS WERE CREDITED DU RING THE FINANCIAL YEAR ENDED MARCH 31, 2006 FOR THEIR CAPITAL CONTRIBUTION BY WA Y OF BRINGING IN LAND AT BANGALORE AND THAT THE BOOKS OF ACCOUNT OF THE SAID FIRM FOR THE FINANCIAL YEAR ENDED MARCH 31, 2006 CLEARLY REFLECTED THE RECEIPT OF THE SAID LAND BY IT BY WAY OF CAPITAL CONTRIBUTION FROM THREE OF ITS PARTNERS AS ALSO THE VALUE THEREOF WITH CORRESPONDING CREDIT TO THE PARTNERS' CAPITAL ACCOU NTS. SECTION 45(3) OF THE ACT IS APPLICABLE IN THE YEAR OF TRANSFER BY THE PARTNE R OF HIS CAPITAL ASSET TO THE PARTNERSHIP FIRM BY WAY OF CAPITAL CONTRIBUTION. IN THE INSTANT CASE, THE YEAR OF TRANSFER WAS THE FINANCIAL YEAR ENDED MARCH 31, 200 6. THE ITO WAS WHOLLY UNJUSTIFIED IN INVOKING SECTION 45(3) WHICH HAD NO APPLICATION IN THE ASSESSMENT YEAR 2008-09 OR FOR THAT MATTER IN THE ASSESSMENT Y EAR 2006-07. (B) THE LAND WAS BROUGHT IN BY THE PARTNERS AS INV ENTORY/CURRENT ASSETS DOES NOT IN ANY WAY ALTER THE FACT THAT THE PARTNERS HAD IN FACT BROUGHT IN THE LAND INTO THE PARTNERSHIP BUSINESS AS THEIR CAPITAL CONT RIBUTION. IT IS NOT A REQUIREMENT THAT AN ASSET BROUGHT IN BY A PARTNER B Y WAY OF CAPITAL CONTRIBUTION MUST BE A FIXED ASSET OR THAT A CURRENT ASSET CANNO T BE BROUGHT IN BY A PARTNER AS HIS CAPITAL CONTRIBUTION. THE LAND UPON PURCHAS E WAS SHOWN BY THE SAID THREE COMPANIES AS PART OF THEIR CURRENT ASSETS. TH E SAID FIRM UPON RECEIPT OF THE SAID LAND DURING THE FINANCIAL YEAR ENDED MARCH 31, 2006 ALSO ACCOUNTED FOR IT AS A CURRENT ASSET. SECTION 45(3) OF THE ACT IS APP LICABLE ONLY IN RESPECT OF A CAPITAL ASSET. THE SAID PROVISION HAS NO APPLICATIO N IN THE INSTANT CASE SINCE WHAT WAS TRANSFERRED BY THE PARTNERS WAS A CURRENT ASSET AND NOT A CAPITAL ASSET. (C) SECTION 45(3) SEEKS TO DETERMINE THE CAPITAL GA INS WITH REFERENCE TO THE VALUE OF THE ASSET RECORDED IN THE BOOKS OF ACCOUNT OF TH E FIRM. THE VALUE SO RECORDED IS STATUTORILY DEEMED TO BE THE FULL VALUE OF CONSI DERATION RECEIVED OR ACCRUING TO THE PARTNER AS A RESULT OF THE TRANSFER OF THE C APITAL ASSET TO THE FIRM. THUS, SECTION 45(3) DOES NOT SEEK TO SUBSTITUTE BY ANY OT HER FIGURE THE VALUE AGREED BETWEEN THE PARTNERS AT WHICH THE ASSET IS TRANSFER RED BY A PARTNER TO THE FIRM. 28. AS FAR AS THE QUESTION WHETHER THE AO WAS JUST IFIED IN BRINGING TO TAX A SUM OF RS.37,03,36,187/- AS SHARE OF REVALUATION PROFIT , IS CONCERNED, THE AO HAS 16 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 16 PROCEEDED TO ASSESS THE AFORESAID SUM AS INCOME OF THE ASSESSEE FOR THE PREVIOUS YEAR RELEVANT TO AY 08-09 ON THE BASIS OF REVALUATION OF THE LAND AT BANGALORE BY THE ASSESSEE DURING THE PREVIOUS YEAR. THE LAW IS WELL SETTLED THAT FOR ACCOUNTING PURPOSES, STOCK IS VALUED AT COST OR MARKET PRICE, WHICHEVER IS LOWER. THE MARKET VALUE IS TAKEN ONLY WHEN IT FALLS BELOW THE COST. REFERENCE IN THIS BEHALF WAS MADE TO THE JUDGMENT OF THE HON'BLE SUPREME COURT IN CHAINRUP SAMPATRAM, (1953) 24 ITR 481 (SC). THE FIRM CORRECT LY REFLECTED THE LAND RECEIVED FROM ITS PARTNERS BY WAY OF CAPITAL CONTRI BUTION AND HELD AS INVENTORY AT COST. THE THREE COMPANIES PAID RS.21,87,76,492 /- FOR PURCHASING THE SAID LAND WHICH WAS MORE THAN TWO AND HALF TIMES THE STA TE GOVERNMENT GUIDELINE VALUE FOR STAMP DUTY PURPOSES AT THE TIME OF PURCHA SE. THE THREE COMPANIES ENTERED INTO THE AGREEMENT FOR PURCHASE OF THE SAID LAND IN JUNE 2004 AND CONVEYANCE WAS EXECUTED IN THEIR FAVOUR ON MARCH 30 , 2005. SUBSEQUENT TO THE SAID PURCHASE, THE AREA IN WHICH THE SAID LAND WAS SITUATED UNDERWENT MAJOR DEVELOPMENT AND BECAME A PREMIUM DESTINATION FOR IT AND ITES COMPANIES. SEVERAL IT PARKS AND SEZ AS ALSO HIGH END RESIDENTI AL PROJECTS WERE DEVELOPED IN THE SAID AREA. THE AREA WHICH WAS UNDER GRAM PAN CHAYAT CAME UNDER THE LIMITS OF THE MUNICIPAL CORPORATION OF BANGALORE. T HE MUNICIPAL CORPORATION CARRIED OUT VARIOUS IMPROVEMENTS IN THE AREA BY CON STRUCTING SEVERAL FLYOVERS AND UNDER PASSES. SUPPLY OF WATER WAS PROVIDED AND SEWERAGE LINES WERE LAID. IN JUNE 2007, THE COMPREHENSIVE DEVELOPMENT PLAN OF BANGALORE WAS REVISED AND THE FAR RATIO FOR CONSTRUCTION OF BUILDINGS IN THE SAID AREA WAS INCREASED FROM 2.00 TO 3.25 BECAUSE OF ROAD WIDTH OF 150 FEET . AS A CONSEQUENCE OF ALL SUCH DEVELOPMENT ACTIVITIES, THE LAND PRICE IN THE AREA KEPT ON RISING. THE STATE GOVERNMENT REVISED THE GUIDELINE VALUE FOR STAMP DU TY PURPOSES THRICE AFTER PURCHASE OF THE LAND BY THE THREE COMPANIES AS FOLL OWS: DATE RATE RESIDENTIAL COMMERCIAL 02.08.2004 200 260 14.10.2005 800 1040 19.04.2007 1500 1950 26.09.2007 2200 3080 HOWEVER, NOTWITHSTANDING SUCH PRICE RISE, IN ACCORD ANCE WITH ACCOUNTING PRINCIPLES, THE LAND HELD AS INVENTORY WAS SHOWN AT ITS COST. THEREFORE IT CANNOT BE SAID THAT THERE WAS ANY UNDERVALUATION DONE BY T HE ASSESSEE AS ALLEGED BY THE AO. 29. AFTER CONVERSION OF INVENTORY INTO FIXED ASSET S THE FIRM REVALUED THE DEVELOPED LAND INCLUDING CONSTRUCTION THEREON IN OR DER TO BRING IT IN LINE WITH THE CURRENT MARKET VALUE AND FOR JUSTIFYING THE BAN K FINANCE OF NEARLY RS.250 CRORES. SUCH REVALUATION WAS NEITHER COLOURABLE NOR A DEVICE. IT IS SETTLED LAW 17 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 17 THAT REVALUATION IN THE BOOKS OF ACCOUNT OF AN ASSE T WHICH THE ASSESSEE CONTINUES TO OWN DOES NOT RESULT IN ANY PROFIT OR I NCOME. REVALUATION AT MARKET VALUE RESULTS IN NOTIONAL IMAGINARY PROFIT WHICH CA NNOT BE TAXED. REVALUATION OF AN ASSET WHICH AN ASSESSEE CONTINUES TO HOLD IS NOT A TAXABLE EVENT AND DOES NOT GIVE RISE TO ANY TAXABLE INCOME. A PERSON CANNOT MA KE A PROFIT FROM HIMSELF. THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF SANJEEV WOOLEN MILLS (SUPRA) WHEREIN IT WAS HELD THAT NOTIONAL IMAGINARY PROFIT CANNOT BE TAXED, CLEARLY SUPPORTS THE STAND OF THE ASSESSEE. IN FACT THE OBSERVATIONS OF THE HONBLE SUPREME COURT MADE WITH REFERENCE TO VALUAT ION OF STOCK AT MARKET VALUE HIGHER THAN COST ARE EQUALLY APPLICABLE IN RE SPECT OF ANY OTHER ASSET. REVALUATION BY THE FIRM WAS MADE FOR FINANCIAL PURP OSES AND NO TAX ADVANTAGE OF ANY KIND WAS SOUGHT TO BE DERIVED THEREBY. THE F IRM DID NOT CLAIM ANY DEPRECIATION IN RESPECT OF ANY ASSET OF THE DEVELOP ED PROJECT. THE FIRM LET OUT THE DEVELOPED PROJECT TO DIFFERENT PARTIES AND DID NOT SELL ANY PART THEREOF. IN THE EVENT OF SALE, IN COMPUTING THE CAPITAL GAINS, ONLY THE ACTUAL COST OF THE ASSET WOULD HAVE BEEN CONSIDERED AS THE COST OF ACQUISITI ON AND NOT THE REVALUED COST. THUS, EVEN IN CASE OF TRANSFER OF THE CAPITAL ASSET , THE REVALUATION WOULD NOT HAVE RESULTED IN ANY TAX BENEFIT OR ADVANTAGE. THE RE WAS NO WITHDRAWAL BY THE PARTNERS FROM CAPITAL ACCOUNT AND THEREFORE THERE C ANNOT BE ANY INCOME LIABLE TO TAXATION IN THEIR HANDS. WE THEREFORE CONCUR WI TH THE VIEW OF THE CIT(A) ON THIS ISSUE ALSO. 30. WE THEREFORE CONFIRM THE ORDER OF THE CIT(A) B Y HOLDING THAT THE ASSESSEE DID NOT MAKE ANY SHORT TERM CAPITAL GAINS OF RS.96, 37,85,635/- TAXABLE UNDER SECTION 45(3) OF THE ACT OR OTHERWISE AND THAT ON R EVALUATION OF ITS FIXED ASSETS BY THE FIRM (OF ITS LAND AND BUILDING) THERE WAS NO INCOME THAT ACCRUED OR AROSE IN THE HANDS OF THE PARTNERS AND THE ADDITION OF RS .37,03,36,187/- ON ACCOUNT OF ALLEGED REVALUATION PROFIT IS NOT SUSTAINABLE AND W AS RIGHTLY DELETED BY THE CIT(A). 31. IN THE RESULT, THE APPEAL BY THE REVENUE IS DI SMISSED. 6.5. HENCE IN VIEW OF THE AFORESAID FINDINGS IN THE AFORESAID FACTS AND CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE ORDERS OF THIS TRIBUNAL ON SIMILAR SET OF FACTS, WE HOLD THAT THE ORDER OF THE LD CITA GRA NTING RELIEF DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED B Y THE REVENUE ARE DISMISSED. 6.1. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENT, WE DISMISS THE GROUNDS RAISED BY THE REVENUE. 18 ITA NO.571/KOL/2015 M/S COMMAND CONSTRUCTION PVT. LTD. A.YR. 2006-07 18 7. SINCE THE ISSUE HAS BEEN ADDRESSED ON MERITS IN FAVOUR OF THE ASSESSEE, THE PETITION FILED UNDER RULE 27 OF THE ITAT RULES BY THE ASSESS EE IS NOT ADJUDICATED HEREIN. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 16.10.20 18 SD/- SD/- [A T VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16.10.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-1(4), KOLKATA, 7 TH FLOOR, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069. 2. M/S COMMAND CONSTRUCTIONS PVT LTD., LAHA PAINT H OUSE, 3 RD FLOOR, 7, C.R. AVENUE, KOLKATA-700072. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES