Shri Rahabhai B. Bharwad, Baroda V. The ACIT., Cent.Circle-2, Baroda

ITSSA 207/AHD/2006

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2303 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-07-2016
• Assessment Year: misc
• Appeal Filed On: 02-08-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Capital asset; Loose papers; Cost of acquisition; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. K. BILLAIYA , ACCOUNTANT MEMBER. IT(SS)A. NO. 207/AHD/2006 (ASSESSMENT YEAR: BLOCK PERIOD 1.4.1996 TO 02.07.20 02) SHRI RAHABHAI B. BHARWAD BEHIND HARNI JAKAT NAKA, HARNI ROAD, BARODA APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, BARODA RESPONDENT PAN: AGKPB8624M & IT(SS)A. NO. 208/AHD/2006 (ASSESSMENT YEAR: BLOCK PERIOD 1.4.1996 TO 02.07.20 02) SHRI HARISHBHAI B. BHARWAD BEHIND HARNI JAKAT NAKA, HARNI ROAD, BARODA APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, BARODA RESPONDENT IT(SS)A NOS.207 & 208/AHD/06 [SHRI RAHABHAI B. BHAR WAD & SHRI HARISHBHAI B. BHARWAD] PAGE 2 PAN: AGNPB3168R /BY APPELLANT :SHRI S. N. SOPARKAR, A.R. /BY RESPONDENT :SHRI SANJAY AGRAWAL, CIT D.R. /DATE OF HEARING : 27.07.2016 /DATE OF PRONOUNCEMENT : 20.09.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH APPEALS HAVE BEEN FILED BY TWO ASSESSEES AGAIN ST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)- IV, AHMEDABAD, DATED FEBRUARY 2, 2006. SINCE BOTH APPE ALS PERTAIN TO SAME FAMILY AND SIMILAR ISSUES WERE RAIS ED IN BOTH APPEALS; THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO.208/AHD/2006 IN CASE OF SHRI HARISHBHA I B. BHARWAD, ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF AP PEAL:- 1. THE LD. CIT(A)-IV, AHMEDABAD HAS ERRED IN LAW A ND IN FACTS IN CONFIRMING THE ORDER OF THE LD. ASSESSI NG OFFICER IN DETERMINING THE CAPITAL GAINS OF RS. 18,03,385/- (1/2 OF TOTAL CAPITAL GAINS OF RS. 36,06,770/-) IN RELATION TO TRANSFER OF LAND ADMEASURING ABOUT 46,300 SQ. FT. THE DETERMINATION OF CAPITAL GAINS AND ITS ASSESSMENT IN THE CASE OF THE APPELLANT BEING ERRONEOUS IN LAW AND IN FACTS, DESERVES TO BE DELETED. IT(SS)A NOS.207 & 208/AHD/06 [SHRI RAHABHAI B. BHAR WAD & SHRI HARISHBHAI B. BHARWAD] PAGE 3 2. THE LD. CIT(A)-IV, AHMEDABAD HAS ERRED IN LAW AN D IN FACTS IN DISREGARDING THE VARIOUS CONTENTIONS OF THE APPELLANT WITH REGARD TO THE CLAIM THAT THE CAPITAL GAINS IN THE CASE OF THE APPELLANT WAS INDETERMINABLE ON ACCOUNT OF THE FOLLOWING: I) THE COST OF ACQUISITION OF THE PROPERTY IS TO BE TAKEN AT RS. NIL AS SUCH PROPERTY WAS RECEIVED BY THE APPELLANT FROM THE ERSTWHILE RULING FAMILY OF BARODA WITHOUT ANY COST. SINCE THERE WAS NO COST TO THE PREVIOUS OWNERS, THE COST ACQUISITION IN THE HANDS OF THE APPELLANT WAS INDETERMINABLE AND CONSEQUENTLY, CAPITAL GAINS WAS UNQUANTIFIABLE. II) THE AGREEMENT FOR SALE OF PROPERTY WAS MADE IN VIOLATION OF PROVISIONS OF SEC.43 OF BOMBAY TENANCY AND AGRICULTURAL LAND ACT AND, THEREFORE, THE TRANSFER WAS VOID AB INITIO AND THUS NO CAPITAL GAINS COULD HAVE BEEN DETERMINED AS THE PROPERTY TRANSFERRED WAS INVALID BEING PROHIBITED UNDER OTHER ACT. III) THE AGREEMENT FOR SALE WAS UNSIGNED, AMBIGUOUS, DEVOID OF CLARITY OF TERMS, THEREFORE, THE PROVISIONS OF SEC. 2(47)(V) WERE NOT APPLICABLE TO THE TRANSACTION OF TRANSFER OF PROPERTY. IV) THE AGREEMENT FOR SALE IS MADE WITH SHRI ASHOK GUPTA WHILE THE POSSESSION OF THE PROPERTY IS GIVEN TO A COMPANY M/S. R.B.G INFRASTRUCTURE PVT. LTD., A COMPANY INDEPENDENT OF THE INDIVIDUAL WITH WHOM THE AGREEMENT FOR SALE IS SIGNED AND, THEREFORE, THE POSSESSION HANDED OVER TO ANOTHER PERSON THAN THE PERSON NAMED IN THE AGREEMENT FOR SALE CANNOT BE THE BASIS FOR INVOKING THE PROVISIONS OF SEC. 2(47)(V). 3. THE LD. CIT(A)-IV, AHMEDABAD HAS FURTHER ERRED I N LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF CLAIM OF EXPENDITURE OF RS.36.00 LAKHS INCURRED FOR IT(SS)A NOS.207 & 208/AHD/06 [SHRI RAHABHAI B. BHAR WAD & SHRI HARISHBHAI B. BHARWAD] PAGE 4 VACATING THE CHARGE / RIGHTS HI THE PROPERTY TO SHR I BANDISH SHAH. SUCH EXPENSE BEING INCURRED IN CONNECTION WITH THE TRANSFER / COST OF IMPROVEMENT OF THE PROPERTY DESERVES TO BE ALLOWED IN COMPUTING THE CAPITAL GAINS. 4. THE LD. CIT(A)-IV, AHMEDABAD HAS FURTHER ERRED IN LAW AND IN FACTS IN CONFIRMING THE INTEREST EXPENSE S OF RS.2,30,000/- ON THE AMOUNT BORROWED FOR PAYMENT TO SHRI BANDISH SHAH ABOVE MENTIONED. SUCH EXPENDITURE BEING INCURRED IN CONNECTION WITH THE TRANSFER / COST OF IMPROVEMENT OF THE PROPERTY DESERVES TO BE ALLOWED IN COMPUTING THE CAPITAL GAINS. 2.1. ASSESSEE FILED HIS RETURN OF INCOME AT NIL, HO WEVER, ASSESSING OFFICER HAS ASSESSED SAME AS RS.18,03,358 /-. THE MAIN ISSUE BEFORE US WITH REGARD TO CAPITAL GAI N ON THE PROPERTY TRANSACTED DURING THE YEAR UNDER CONSIDERA TION. THE MAIN CONTENTION OF ASSESSEE IS THAT AGREEMENT O N THE BASIS OF WHICH PROPERTY NAMELY A LAND BEARING SURVE Y NO.1081/1 HAS BEEN CONSIDERED AS TRANSFERRED WAS NO T A VALID CONTRACT, HENCE THE INVOKING OF PROVISION OF SECTION 2(47)(V), IN CHARGING THE CAPITAL GAIN IS ILLEGAL, UNWARRANTED AND UNJUSTIFIED IN LAW. HE HAS ALSO CHALLENGED THE DISALLOWANCE OF RS.36 LACS AS AN EXPENDITURE, WHILE WORKING OUT THE CAPITAL GAIN AND HAS ALSO DISPUTED THE DISA LLOWANCE OF RS.2,30,000/- BEING INTEREST PAID ON AMOUNT BORR OWED FOR PAYMENT TO SHRI BANDISH SHAH. THE FACTS AS REPORTE D BY ASSESSING OFFICER IN HIS ASSESSMENT ORDER ARE AS UN DER: (I) THE ASSESSEE IS SON OF SHRI BECHARBHAI BHARWAD RESIDENT OF HARNI VILLAGE, VADODARA. SHRI BECHARBHAI BHARWAD WAS CULTIVATING THE LAND IN THE CAPACITY OF GANOTAYA ON S.NO. 123, 125, 164 , 166, 216 313, 314, 319 & 1081 BELONGING TO SHRI IT(SS)A NOS.207 & 208/AHD/06 [SHRI RAHABHAI B. BHAR WAD & SHRI HARISHBHAI B. BHARWAD] PAGE 5 VIJAYSINH KHANDERAO GAEKWAD. THE LAND OWNER FILED AN APPLICATION BEFORE THE DISTRICT COURT OF BARODA TO GET THE POSSESSION OF THESE LAND FROM THE FARMER I. E. SHRI BECHARBHAI BHARWAD. HE FILED AN OBJECTION BEFORE THE HON'BLE COURT OF LAW., THAT HE WAS A PROTECTED GANOTAYA AND THE LAND IN QUESTION ARE COVERED BY THE BOMBAY TENANCY AND AGRICULTURAL LANDS ACT AND THEREFORE, IT IS THE OUTSIDE THE PURVIEW OF THE JURISDICTION OF DISTRICT COURT OF BARODA. THEREAFTER A SETTLEMENT WAS ARRIVED AT BETWEEN SHRI BECHARBHAI BHARWAD AND THE OWNERS OF THE LAND V I.E. SHRI VIJAYSINH KHANDERAO GAEKWAD AND OTHERS. AS PER THE SAID SETTLEMENT AGREEMENT DATED 5/4/66, THE LANDS BEARING S.NO.313, 314, 319, 216 & 1081/1 WAS TO BE TRANSFERRED IN NAME OF SHRI BECHARBHAI BHARWAD AND POSSESSION OF THE LAND BEARING S.NOS. 123, 125, 164 166 WERE TO BE HANDED OVER TO THE ORIGINAL LAND OWNER I.E. SHRI VIJAYSINH KHANDERAO GAEKWAD. (II) THERE WAS SUBSEQUENTLY ANOTHER DISPUTE BETWEE N SHRI BECHARBHAI BHARWAD AND URBAN LAND DEVELOPMENT AUTHORITY. THE ORDER OF THE COMPETENT AUTHORITY OF URBAN LAND DEVELOPMENT WAS QUASHED BY THE SECRETARY OF URBAN LAND COMMISSION, AHMEDABAD. THE MATTER WAS CONTESTED BEFORE HON'BLE GUJARAT HIGH COURT ON 4.2.1994 VIDE SPECIAL CIVIL APPLICATION NO.7463/1990 AND THE HON'BLE HIGH COURT OF GUJARAT REMANDED VIDE ORDER DATED 4.2.1994, THAT THE APPLICATION WAS TO BE DISPOSED OFF ON TOP PRIORITY PREFERABLY BY 31.5.199 4 (PAGE NO.129 OF ANNEX. LP-2) SHRI BECHARBHAI BHARWAD ALONG WITH HIS LEGAL HEIRS INCLUDING THE POSSESSION OF THIS LAND SURVEY NO. 1081/1 ON 4.12.1991 TO (I) SMT. KETKIBEN B. SHAH (II) SHRI KAMLESH RASIKLAL SHAH AND (III) SMT.SONALBEN ARUNKUMAR SHAH IN PART PERFORMANCE OF 'AN AGREEMENT TO SALE' WITH THESE THREE-PERSONS DATED 4.12.1991 ( PAGE NO. 139 TO 141 OF ANNEXURE LP-2) THE SAID DEAL WAS THEN CANCELLED VIDE THE DEED DATED 15.4.1998 AS PUBLISHED IN LOCAL NEWSPAPER SANDESH DT.17.04.1998. THERE AFTER AN AGREEMENT TO SALE DT.20.6.98 WAS EXECUTED WITH SHRI ASHOK IT(SS)A NOS.207 & 208/AHD/06 [SHRI RAHABHAI B. BHAR WAD & SHRI HARISHBHAI B. BHARWAD] PAGE 6 R.GUPTA AND OTHERS AT AGREED PRICE OF RS.LLL PER SQ.FT. FOR TOTAL LAND AREA 2,50,000 SQ.FT I.E. RS.2,77,50,000. AS PER TERMS NO.7 OF THE SAID AGREEMENT ( PAGE NO.100 TO 103 OF ANNEX. LP -2 ), THE POSSESSION OF THE LAND WAS TO BE GIVEN EITHER A T THE TIME OF SALE DEED OR AS PER CONSENT OF BOTH PARTIES. THESE AGREEMENT HAS BEEN SIGNED BY THE LEGAL HEIRS OF SHRI BECHARBHAI BHARWAD IN THE WITNESSES OF KANUBHAI BHARWAD , ANKIT BHARWAD AND ASHOK GUPTA AND WAS NOTARIZED BEFORE SHRI M.C.VAIDHYA , NOTARY. AS PER PAGE NO. 4 & 5 OF ANNEXURE A/17 FOUND AND SEIZED FROM THE OFFICE OF SHRI ASHOK GUPTA AND SHRI VIKRAM GUPTA, IT IS WRITTEN THAT L,15,000/-SQ.FT AT THE RATE RS.LLL/- P ER SQ.FT. TOTALING TO RS.1,27,65,000/- FROM SHRI KANUBHAI BHARWAD WHO IS SON OF SHRI RAHABHAI BECHARBHAI BHARWAD AND 65,000 SQ.FT. AT THE RATE OF RS.LLL/- PER SQ.FT. TOTALING TO RS.72,15,000/- FROM SHRI HARISHBHAI BHARWAD. IN BOTH OF THESE ACCOUNTS,RS. 20,00,000/- EACH HAS BEEN CREDITED AS ADDITIONAL AMOUNTS DECIDED (REFER TO PAGE 4 & 5 OF ANNEX A-17). IT INDICATES THAT 1,80,000 SQ.FT. LAND WAS FINALLY DECIDED FOR TOTAL CONSIDERATION OF RS.2,23,80,000/-. BOTH THESE ACCOUNTS ARE UPDATED UPTO 24/3/2000/- AND ARE MATTER OF RECORD AS PER SEIZED PAPERS. THE ASSESSEE IN HIS STATEMENT U/S.132(4) OF THE ACT ADMITTED THAT RS.20 LACS WERE RECEIVED FROM SHRI ASHOK GUPTA DURING 23/2/1998 TO 24/3/1998 WHICH WERE DEPOSITED IN HIS BANK ACCOUNT NO.2126 WITH STATE BANK OF SAURASHTRA. (III) IT APPEARS FROM THE SEIZED RECORD THAT THE AI RPORT AUTHORITY OF INDIA HAS LODGED A CLAIM IN THE YEAR 1999-2000 REGARDING OWNERSHIP OF SAID ENTIRE UNDER R.S.NO. LAND 1081 OUT OF WHICH ASSESSEE GROUP WAS OWNING R.S.NO. 1081/1. BASED ON THE CLAIM OF AIR PORT AUTHORITY OF INDIA, THE TOWN DEVELOPMENT OFFICER OF VMC,BARODA VIDE HIS LETTER DATED 4.2.200 1 WITHDREW THE PERMISSION OF CONSTRUCTION GRANTED VIDE ORDER DATED 18.5.2000 ( PAGE NO.145 OF ANNEX. LP-2). 2.2 CONSIDERING THE ABOVE FACTS OF CASE, ASSESSEE W AS COMMUNICATED THAT FOR THE PURPOSE OF SECTION 45 OF THE ACT IT(SS)A NOS.207 & 208/AHD/06 [SHRI RAHABHAI B. BHAR WAD & SHRI HARISHBHAI B. BHARWAD] PAGE 7 TRANSFER OF PROPERTY I.E. CAPITAL ASSETS HAS TAKEN PLACE AND CAPITAL GAIN HAS ACCRUED VIDE THIS OFFICE LETTER DA TED 14.07.04 AND WAS ASKED TO EXPLAIN AS TO WHY CAPITAL GAIN SHALL NOT BE WORKED OUT AND TAXED ACCORDINGLY. ASS ESSEE MADE FOLLOWING SUBMISSIONS IN THIS REGARD: 'I) THAT THE COST OF THE ACQUISITION IN RESPECT OF THE LAND SOLD WAS NILL AS THE LAND WAS ACQUIRED BY FATHER OF LEGAL HEIR OUT OF SETTLEMENT WITH GAIKWAD . II) THAT HE AGREEMENT TO SELL AND POWER OF ATTOR NEYS IN FAVOUR OF GUPTA FAMILY IS NOT VALID. THE ASSET IN QUESTION COULD NOT BE LEGALLY TRANSFERRED AS PER TH E PROVISIONS OF 43 OF BOMBAY TENANCY AND AGRICULTURAL LAND ACT. THE AGREEMENT TO SALE AND POWER OF ATTORNEY ARE NOT SIGNED BY THE LEGAL OWNER OF THE LAND. III) THAT THE TRANSFER OF CAPITAL ASSETS HAS NOT TA KEN PLACE WITHIN THE MEANING OF SECTION 2(47). SINCE THERE WAS NO LEGAL AND ENFORCEABLE CONTRACT. THE TRANSACTION HAS BEEN FINALIZED AFTER THE SEARCH VID E AGREEMENT DATED 11/9/2003 BETWEEN THE ASSESSEE AND R.B.G. INFRASTRUCTURE PVT. LTD. 2.3 ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION ON BEHALF OF ASSESSEE AND DETERMINED CAPITAL GAIN OF RS.18,03,385/- (1/2 OF CAPITAL GAIN OF RS.36,06,770 /- IN RELATION TO CONTROVERSY OF LAND ADMEASURING ABOUT 4 6300 SQ. FT.). THE SAID ORDER WAS CONFIRMED BY CIT(A). 2.4 THE STAND OF ASSESSEE BEFORE US HAS BEEN THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING CAPI TAL GAIN OF RS.18,03,385/- IN RELATION TO TRANSFER OF LAND IN Q UESTION. ACCORDING TO ASSESSEE, CAPITAL GAINS IN CASE OF ASS ESSEE WAS INDETERMINABLE ON ACCOUNT OF THE COST OF ACQUISITI ON OF IT(SS)A NOS.207 & 208/AHD/06 [SHRI RAHABHAI B. BHAR WAD & SHRI HARISHBHAI B. BHARWAD] PAGE 8 PROPERTY WAS TO BE TAKEN AT RS.NIL AS SUCH PROPERTY WAS RECEIVED BY ASSESSEE FROM THE ERSTWHILE RULING FAMI LY OF BARODA WITHOUT ANY COST. SINCE, THERE WAS NO COST TO THE PREVIOUS OWNERS, THE COST ACQUISITION IN THE HANDS OF ASSESSEE WAS INDETERMINABLE AND CONSEQUENTLY, CAPIT AL GAINS WERE UNQUANTIFIABLE. LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE AGREEMENT FOR SAL E OF PROPERTY WAS MADE IN VIOLATION OF PROVISIONS OF SEC TION 43 OF BOMBAY TENANCY AND AGRICULTURAL LAND ACT AND, THEREFORE, THE TRANSFER WAS VOID AB INITIO AND THUS NO CAPITAL GAINS COULD HAVE BEEN DETERMINED AS THE PROPERTY TRANSFERRED WAS INVALID BEING PROHIBITED UNDER OTHE R ACT. ASSESSEE ALSO POINTED OUT THE DEFECTS IN SALE DEED. ASSESSEE HAS CLAIMED EXPENDITURE OF RS.36 LACS INCURRED FOR VACATING THE CHARGE/RIGHTS IN THE PROPERTY TO SHRI BANDISH S HAH. SUCH EXPENSE BEING INCURRED IN CONNECTION WITH THE TRANSFER / COST OF IMPROVEMENT OF THE PROPERTY DESERVES TO B E ALLOWED IN COMPUTING THE CAPITAL GAINS AND FURTHER REVENUE AUTHORITIES WERE NOT JUSTIFIED IN CONFIRMING HE INT EREST EXPENSES OF RS.2,30,000/- ON ACCOUNT OF BORROWED FO R PAYMENT TO SHRI BANDISH SHAH. SO, ADDITION IN QUES TION BE DELETED. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF CIT(A). 2.5 WE FIND LAND IN QUESTION WAS ACQUIRED BY FATHER OF LEGAL HEIR VIDE A SETTLEMENT AGREEMENT BETWEEN SHRI BECHA RBHAI BHARWAD AND VIJAYSINH KHANDERAO GAEKWAD, THE ORIGIN AL OWNER OF THE SAID LAND ON 05.06.1966. AS PER THE SA ID IT(SS)A NOS.207 & 208/AHD/06 [SHRI RAHABHAI B. BHAR WAD & SHRI HARISHBHAI B. BHARWAD] PAGE 9 SETTLEMENT AGREEMENT FILED BY ASSESSEE DURING THE PROCEEDING THE LAND BEARING S.NOS. 1081/1,313, 314 ,319, 216, WERE TRANSFERRED IN THE NAME OF SHRI BECHARBHA I BHAIWAD, IN LIEU OF HANDING OVER THE POSSESSION OF LAND BEARING S.NOS. 123, 125, 164 166. BOTH THE PARTIES HAD EXCHANGED THE POSSESSION THESE LANDS IN PURSUANCE O F THE DEED EXECUTED IN THE COURT OF CIVIL JUDGE (S.D),BAR ODA ON 5.4.1996. DURING THE COURSE OF SEARCH AT THE RESID ENCE OF THE ASSESSEE, LOOSE PAPERS AND OTHER DOCUMENTS FOUN D AND SEIZED WERE INVENTORISED AS PER ANNEXURE LP NO.1 TO LP NO.4. AT THE STRENGTH OF ITS POSSESSORY RIGHTS OVE R THE LAND IN QUESTION, IT WAS RECOGNIZED BY ERSTWHILE OWNER T HAT THE LAND BEARING S.NO.1081/1 WAS RETAINED IN LIEU OF EX CHANGE OF RIGHTS IN CERTAIN OTHER LANDS AS PER AGREEMENT D ISCUSSED ABOVE. REVENUE AUTHORITIES STATED THAT ACQUISITION OF LAND WAS NOT FREE OF COST AS CLAIMED BY ASSESSEE BECAUSE IT IS IN EXCHANGE OF LAND. BUT BASIC FACT REMAINS IS THAT A SSESSEES FATHER HAD ADVERSE POSSESSORY RIGHTS OVER THE LAND FOR A LONG PERIOD, WHICH WAS ALSO ACKNOWLEDGED BY ERSTWHILE OW NER. ULTIMATELY ISSUES WERE SETTLED BY VIRTUE OF WHETHER THE POSSESSION OVER THE S.NO.1081/1 WAS ALLOWED TO BE R ETAINED BY ASSESSEE AS PER AGREEMENT STATED ABOVE. SO, IT IS NOT A CASE OF POSSESSION IN LIEU OF OTHER LAND BUT IT IS A CASE OF RETAINING A PORTION OF LAND AS PER AGREEMENT WHICH ALSO ENVISAGED THAT POSSESSION OVER THE LAND WAS NOT WIT H THE ERSTWHILE OWNER. FURTHER, IT IS ABUNDANTLY CLEAR T HAT LAND IN QUESTION WAS HAVING NO VALUE IN THE HANDS OF ANCEST OR OF ASSESSEE FROM WHOM ASSESSEE HAS INHERITED PROPERTY IT(SS)A NOS.207 & 208/AHD/06 [SHRI RAHABHAI B. BHAR WAD & SHRI HARISHBHAI B. BHARWAD] PAGE 10 POSSESSORY RIGHTS BEING LEGAL HEIR. THUS, THERE WA S NO COST IN THE HANDS OF ASSESSEE OR ITS ANCESOTRS. WE FIND THAT HONBLE GUJARAT HIGH COURT IN CASE OF CIT VS. MANDH ARSINHJI P. JADEJA (2006) 281 ITR 19 (GUJ), WHEREIN ASSESSEE INHERITED CERTAIN PROPERTY ON DEATH OF HIS FATHER, WHICH WAS ACQUIRED BY HIS FOREFATHERS BY CONQUEST. SAID PROP ERTY WAS SOLD BY INCOME TAX DEPARTMENT IN PUBLIC AUCTION IN ORDER TO EFFECT RECOVERY OF OUTSTANDING DUES TOWARDS CERTAIN TAX DEMANDS AND ESTATE DUTY PAYABLE. IT WAS HELD THAT THERE WAS NEITHER COST NOR DATE OF ACQUISITION OF PROPERT Y WERE ASCERTAINABLE, NO CAPITAL GAIN COULD BE BROUGHT TO TAX IN RESPECT OF SAID PROPERTY. THE RATIO OF CIT VS. MAN DHARSINHJI P. JADEJA (SUPRA) SQUARELY APPLIES THE FACTS OF CAS E BEFORE US, WHEREIN ANCESTORS OF ASSESSEE HAD ACQUIRED THE LAND WITHOUT CONSIDERATION BUT BY VIRTUE OF ADVERSE POSS ESSION. POSSESSION IS BEST TITLE EXCEPT OWNER. THE SAID AD VERSE POSSESSION HAS BEEN DULY RECOGNIZED BY THE SETTLEME NT AS DISCUSSED ABOVE. SINCE, THERE IS NO COST IN THE HA NDS OF FATHER OF ASSESSEE AS WELL AS ASSESSEE, NO CAPITAL GAIN WOULD BE LEVIABLE ON TRANSFER OF SAID LAND BY ASSESSEE. THE CASE RELIED BY LEARNED DEPARTMENTAL REPRESENTATIVE IS NO T APPLICABLE TO THE FACTS OF ASSESSEES CASE. UNDER FACTS AND CIRCUMSTANCES, ASSESSING OFFICER IS DIRECTED TO DEL ETE THE ADDITION MADE BY WAY OF LEVYING CAPITAL GAIN IN QUE STION. 3. AS A RESULT, APPEAL FILED BY ASSESSEE IN ITA NO.208/AHD/2006 IS ALLOWED. IT(SS)A NOS.207 & 208/AHD/06 [SHRI RAHABHAI B. BHAR WAD & SHRI HARISHBHAI B. BHARWAD] PAGE 11 4. SIMILAR ISSUE AROSE IN ITA NO.207/AHD/2006. ASSESSEE BEING BROTHER OF SHRI HARISHBHAI B. BHARWA D, WE HAVE DISCUSSED AND DECIDED THE SIMILAR ISSUE IN FAV OUR OF ASSESSEE. FACTS BEING SIMILAR, SO FOLLOWING SAME R EASONING, ASSESSING OFFICER IS DIRECTED TO GRANT RELIEF TO AS SESSEE AS PRAYED. 5. IN THE RESULT, BOTH APPEALS FILED BY ASSESSEE AR E ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF SEPTEMBER, 2016. SD/- SD/- (N. K. BILLAIYA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD: DATED 20/09/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE $ %&%'( ) / CONCERNED CIT 4 )- / CIT (A) ,-./00'(1 '( 123& / DR, ITAT, AHMEDABAD 4/5678 / GUARD FILE. BY ORDER / 1 / 2% '( 123&