Sri Balasubramania Mills Ltd., Coimbatore V. ACIT, Coimbatore

ITA 626/CHNY/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61321 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 24-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 01-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI IRS
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Cost of acquisition; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT, AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.626 /MDS/2009 (ASSESSMENT YEAR: 2006-07) SRI BALASUBRAMANIA MILLS LTD. 483, KAMARAJ ROAD, UPPILIPALAYAM, COIMBATORE-641 015. PAN:AADCS1887K VS. ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(1), MAIN BUILDING, RACE COURSE, COIMBATORE-641 018. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. V.S.JAYAKUMAR, ADVOCATE RESPONDENT BY : MR. ANIR UDH RAI, IRS, CIT DR DATE OF HEARING : 24 TH JULY, 2012 DATE OF PRONOUNCEMENT : 24 TH JULY 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNI NG THE ORDER OF THE CIT(A)-I, COIMBATORE DATED 26.02.2 009 RELEVANT TO THE ASSESSMENT YEAR 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE/AP PELLANT IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF SPINNING YARN AND ITS CONVERSION ON CONTRACT BASIS. THE ASSE SSEE COMPANY FILED ITS RETURN OF INCOME ALONG WITH RETU RN OF FRINGE BENEFIT TAX FOR THE ASSESSMENT YEAR 2006-07 ON 21 .11.2006 ITA NO. 626/MDS/2009 2 ADMITTING TOTAL INCOME TO BE NIL. THE CASE OF THE A SSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) DATED 16.10.2007 WAS SERVED ON THE ASSESSEE . THE ASSESSEE COMPANY ON ACCOUNT OF HUGE LOSSES AND NEGA TIVE NET WORTH WAS REFERRED TO BIFR FOR FINANCIAL REHAB ILITATION. THE ASSESSEE COMPANY OWNED LAND MEASURING ABOUT 26.7 AC RES. THE ASSESSEE HAD PURCHASED THE SAID LAND IN THE YEA R 1936 AT THE TOTAL COST OF ` 3,86,051/-. THE ASSESSEE COMPANY DURING THE PERIOD UNDER ASSESSMENT SOLD 209 CENTS O F LAND WITH BUILDING THEREON FOR A TOTAL CONSIDERATION OF ` 2,92,60,000/-. IN THE PROFIT AND LOSS ACCOUNT, THE COMPANY HAD SHOWN NET INCOME FROM SALE OF LAND AS REVENUE INCOM E. THE ASSESSING OFFICER RAISED OBJECTION TO THE SAME AND ACCOUNTED THE PROFIT FROM SALE OF LAND AS LONG TERM CAPITAL G AINS. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 15.9. 2008 MADE ADDITION TO THE TUNE OF ` 1,38,08,020/-. 3. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE ASSESSE E ASSAILED THE ASSESSMENT ORDER ON THE GROUND THAT ( I) THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING THE VERY S AME ITA NO. 626/MDS/2009 3 PROCEDURE/SYSTEM OF CLASSIFYING THE NATURE OF EXPEN DITURE AND/OR INCOME, THE ASSESSING OFFICER HAS ERRED IN C HANGING THE CLASSIFICATION OF INCOME FROM REVENUE TO LONG T ERM CAPITAL GAIN; AND /OR (II) THE METHOD ADOPTED BY TH E ASSESSING OFFICER IN COMPUTING INDEXED COST OF ACQU ISITION OF THE ASSET. THE CIT(A) VIDE ORDER DATED 26.02.2009 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. HOWEVER, THE C IT(A) DISMISSED THE GROUND OF APPEAL OF THE ASSESSEE WITH REGARD TO METHODOLOGY ADOPTED BY THE ASSESSING OFFICER IN COMPUTING INDEXED COST OF ACQUISITION OF LAND. AGGR IEVED AGAINST THE ORDER OF THE CIT(A), THE ASSESSEE HAS C OME IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. THE COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRI BUNAL IN ASSESSEES OWN CASE IN ITA NO. 831/MDS/2011 DECIDED ON 15 TH NOVEMBER, 2011 RELEVANT TO THE ASSESSMENT YEAR 20 07- 08. 5. WHEN CONFRONTED WITH THE SITUATION, THE DEPARTME NTAL REPRESENTATIVE FAIRLY CONCEDED THAT THE ISSUE IS DE CIDED IN ITA NO. 626/MDS/2009 4 FAVOUR OF THE ASSESSEE IN THE ASSESSEES OWN CASE F OR THE ASSESSMENT YEAR 2007-08. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.831/MDS/2011 HAS HELD AS UNDER: - 6. AFTER CONSIDERING THE FACTS OF THE CASE, WE FI ND THAT THERE WAS NO GUIDELINE VALUE AVAILABLE IN THE CONCERNED SUB- REGISTRARS OFFICE AS ON 1-4-1981 WI TH REFERENCE TO THE PROPERTY SOLD BY THE ASSESSEE. THEREFORE, IT IS NECESSARY TO DECIDE THE FMV AS ON 1- 4-1981 IN THE LIGHT OF THE LOCATIONAL ADVANTAGES OF THE PROPERTY AND THE OTHER INSTANCES OF TRANSACTIONS, I F AVAILABLE. THE LAND SOLD BY THE ASSESSEE COMPANY IS WELL WITHIN THE CITY LIMITS OF COIMBATORE. THE LOCA TION IS ABOUT 3.5 KMS. AWAY FROM PSG COLLEGE OF TECHNOLOGY, A PROMINENT EDUCATIONAL INSTITUTION OF COIMBATORE. THE PROPERTY IS ALSO PROXIMATE TO PSG MEDICAL COLLEGE AND HOSPITAL AND OTHER INSTITUTIONS OF IMPORTANCE. ALL THESE MATTERS HAVE BEEN ACKNOWLEDGED BY THE COMMISSIONER OF INCOME- TAX(APPEALS) IN HIS ORDER. 7. THE ASSESSEE HAD FILED A REPORT FROM AN APPROVED ENGINEER, WHEREIN THE VALUE HAS BEEN ARRIVED AT ` 25,987/- PER CENT. ANOTHER INSTANCE OF TRANSACTION POINTED OUT BY THE ASSESSEE COMPANY IS A SETTLEMENT DEED IN RESPECT OF A PROPERTY LYING WITH IN A DISTANCE OF 1.5 KMS. FROM THE LAND SOLD BY THE ASSESSEE COMPANY. THE VALUE REFLECTED IN THE SETTLEMENT DEED IS ` 35,072/- PER CENT. IN YET ANOTHER CASE OF SALE IN FEBRUARY, 1986, THE VALUE IS ` 7,200/- PER CENT. THIS PROPERTY IS SITUATED IN THE INTERIOR OF UPPILIPALAYAM VILLAGE, SINGANALLUR, COIMBATORE. 8. AFTER CONSIDERING ALL THE FACTUAL ASPECTS OF TH E PRESENT CASE, WE FIND THAT THE FMV ADOPTED BY THE ITA NO. 626/MDS/2009 5 ASSESSING AUTHORITY WAS ABSOLUTELY RIDICULOUS. THE ASSESSING AUTHORITY HAS EXERCISED HIS STATUTORY POWERS IN A HIGHHANDED MANNER. THE ONLY RAY OF JUSTICE IN THE PRESENT CASE IS FOUND IN THE ORDER O F THE COMMISSIONER OF INCOME-TAX(APPEALS). BUT WHEN WE EXAMINE THE LANDMARKS OF THE PRESENT PROPERTY, WE FIND THAT THE VALUE OF ` 9,500/- DETERMINED BY THE COMMISSIONER OF INCOME - TAX(APPEALS) IS STILL INADEQUATE. TO BE FAIR AND REASONABLE, WE FIX THE F MV OF THE PROPERTY AS ON 1-4-1981 AT ` 17,000/- PER CENT. THE LONG TERM CAPITAL GAINS ACCOUNTABLE IN THE HAND S OF THE ASSESSEE COMPANY WILL BE RECOMPUTED ACCORDINGLY. 6. RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDIN ATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FO R THE ASSESSMENT YEAR 2007-08, WE PARTLY ALLOW THE APPEAL OF THE ASSESSEE IN THE SAME TERMS AND DIRECT THE ASSESSING OFFICER TO RECOMPUTE LONG TERM CAPITAL GAINS ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 24 TH DAY OF JULY, 2012 AT CHENNAI. SD/- SD/- (DR. O.K.NARAYANAN) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 24 TH JULY, 2012. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.