Asstt. Comm. Of Income Tax Circle 2,, Margao v. Shri. Vallabh Vinayak Juwarkar, Goa

ITA 222/PAN/2013 | 2007-2008
Pronouncement Date: 25-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 22224114 RSA 2013
Assessee PAN ACSPJ0098H
Bench Panaji
Appeal Number ITA 222/PAN/2013
Duration Of Justice 2 month(s) 27 day(s)
Appellant Asstt. Comm. Of Income Tax Circle 2,, Margao
Respondent Shri. Vallabh Vinayak Juwarkar, Goa
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 25-10-2013
Assessment Year 2007-2008
Appeal Filed On 29-07-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH PANAJI BEFORE SHRI P. K. BANSAL HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA HONBLE JUDICIAL MEMBER ITA NO. 222/PNJ/2013 : (ASST. YEAR : 2007 - 08) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 2 MARGAO GOA (APPELLANT) VS. SHRI VALLABH VINAYAK JUWARKAR 3 RD FLOOR JEET BUILDING AIRPORT ROAD CHICALIM GOA. PAN : ACSPJ0098H (RESPONDENT) ITA NO. 223/PNJ/2013 : (ASST. YEAR : 2007 - 08) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 2 MARGAO GOA (APPELLANT) VS. SMT. BHARATI VALLABH JUWARKAR 3 RD FLOOR JEET BUILDING AIRPORT ROAD CHICALIM GOA. PAN : ABPPJ7043Q (RESPONDENT) CO NO. 42/PNJ/2013 ( IN ITA NO. 222/PNJ/2013 ) : (ASST. YEAR : 2007 - 08) SHRI VALLABH VINAYAK JUWARKAR 3 RD FLOOR JEET BUILDING AIRPORT ROAD CHICALIM GOA. PAN : ACSPJ0098H (CROSS OBJECTOR) VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 2 MARGAO GOA (RESPONDENT) CO NO. 43/PNJ/2013 ( IN ITA NO. 223/PNJ/2013 ) : (ASST. YEAR : 2007 - 08) SMT. BHARATI VALLABH JUWARKAR 3 RD FLOOR JEET BUILDING AIRPORT ROAD CHICALIM GOA. PAN : ABPPJ7043Q (CROSS OBJECTOR) VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 2 MARGAO GOA (RESPONDENT) REVENUE BY : AMRIT RAJ SINGH DR ASSESSEE BY : D.E. ROBINSON ADV. DATE OF HEARING : 22 / 1 0/2013 DATE OF PRONOUNCEMENT : 25 / 1 0/2013 2 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) O R D E R PER P.K. BANSAL : 1. BOTH THESE APPEALS AS WELL AS CROSS OBJECTIONS ARE ARISING OUT OF THE ORDER OF CIT(A) DT. 14.5.2013. SINCE BOTH THE APPEALS AS WELL AS THE CROSS OBJECTIONS HAVE COMMON GROUNDS THEREFORE BOTH ARE BEING DISPOSED OFF BY THIS COMMON ORDER. BOTH THE APPEALS RELATE TO SPOUSES OF EACH OTHER AND THE INCOME HAS TO BE ASSESSED EQUALLY U/S 5A IN THE HANDS OF BOTH THE ASSESSEES THEREFORE WE ARE DISPOSING OFF BOTH THESE APPEALS AFTER CONSIDERING THE FACTS IN THE CASE OF SHRI VALLABH VINAYAK JUWARKAR. THE COMMON EF FECTIVE GROUNDS TAKEN BY THE REVENUE IN BOTH THE APPEALS READS AS UNDER : 2. THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION OF RS. 3 CRORE IN COMPUTING THE LONG TERM CAPITAL GAINS WHICH WAS PAID BY THE ASSESSEE TO THE LEGAL HEIRS OF HIS DECEASED BROTH ER SHRI DIGAMBAR V. JUWARKAR EVEN WHEN WHOSE RIGHT OVER THE SUBJECT PROPERTY HAS NEITHER BEEN RECOGNIZED IN THE ORIGINAL GIFT DEED NOR RECOGNIZED BY ANY COURT. 3. THE LD. CIT(A) HAS ERRED IN ADOPTING THE COST OF THE LAND AS ON 01.04.1981 AT THE RATE OF R S. 17 PER SQ.MTR. ON ADHOC BASIS & WITHOUT GIVING PROPER REASONING AS AGAINST RS. 3.75 PER SQ. MTR. ADOPTED BY THE AO WHICH WAS THE COST OF THE LAND NEAREST TO THAT DATE AND NEAREST TO THAT AREA BASED ON INSPECTORS REPORT. IN THE CROSS OBJECTIONS FILED B Y BOTH THE ASSESSEES THE COMMON GROUND READS AS UNDER : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT ACCEPTING THE REGISTERED VALUERS REPORT WHEREIN THE REGISTERED VALUER HAS DETERMINED THE MARKET VALUE OF THE CAPITAL ASSET AS ON 01.04.1981 AT RS.65/ - PER METRE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN IGNORING THE REPORT OF THE INSPECTOR OF INCOME TAX WHEREIN SEVERAL SALE INSTANCES HAD BEEN CITED AND THE VALUE OF THE CAPITAL ASSET ARRIVED AT RS. 25/ - PER METRE. 3 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) 2. THE FIRST GROUND RELATES TO THE DEDUCTION OF RS. 3 CRORES IN COMPUTATION OF LONG TERM CAPITAL GAINS ALLOWED BY CIT(A). THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE SOLD PRO PERTY NAMED QUINTAL GOALIM MOULA VILLAGE TISWADI TALUKA TO M/S. RPA PROMOTERS & BUILDERS PVT. LTD. VIDE SALE DEED DT. 28.7.2006 18.10.2006 AND 8.1.2007 DURING THE IMPUGNED ASSESSMENT YEAR FOR A CONSIDERATION OF RS. 11 63 34 841/ - . WHILE COMPUTING THE CAPITAL GAINS THE ASSESSEE CLAIMED DEDUCTION OF RS. 3 CRORES PAID TO DIGAMBAR V. JUWARKAR (DECEASED BROTHER OF THE ASSESSEE) AS PER THE CONSENT ORDER OF THE HON'BLE HIGH COURT DT. 24.5.2006 AS AMENDED VIDE ORDER DT. 1.6.2007. THE SAID PROPERTY IS AN AGR ICULTURAL LAND GIFTED TO SHRI VALLABH JUWARKAR AND SHRI SHRIPAD JUWARKAR (BROTHER OF THE ASSESSEE) BY THEIR GRANDMOTHER MRS. BAGUIROTI SINAI JUWARKRA ON 24.10.1950. THEY WERE IN POSSESSION AND ENJOYMENT OF THE PROPERTY SINCE 1950. THE TOTAL LAND WAS 4 4 6 775 SQ. MTRS. OUT OF WHICH A PIECE OF LAND ADMEASURING 23 743 WAS ALLOTTED IN F.Y 1984 - 85 TO SHRI DATTARAM PUNO NAIK BY WAY OF GIFT IN SETTLEMENT OF HIS DEMAND ARISING OUT OF TENANCY RIGHTS. THE BALANCE AREA REMAINED 4 23 032 SQ. MTRS. WHICH IS EQUALLY OWNED BY SHRI VALLABH JUWARKAR AND SHRI SHRIPAD JUWARKAR. SHRI SHRIPAD JUWARKAR DISPOSED OFF 1 50 000 SQ. MTRS. OUT OF HIS AREA VIDE SALE DEED DT. 31.5.2006. THE BALANCE AREA REMAINS 2 73 032 SQ. MTRS. WHICH WAS SOLD BY VARIOUS SALE DEEDS BY BOTH THE CO - OWNERS. THE GIFT PROPERTY WAS NEVER DISPUTED UNTIL IT WAS DECIDED BY THE LEGAL HEIRS OF LATE VINAYAK JUWARKAR (FATHER OF THE ASSESSEE) TO INVENTORISE THE ENTIRE PROPERTY OF THE FAMILY. THE ASSESSEE BEING THE ELDEST OF THE FAMILY WAS HELD TO BE THE CABEC A DE CASAL (PERSON RESPONSIBLE FOR INVENTORISING). DURING THE INVENTORY PROCEEDINGS THE SAID PROPERTY WAS EXCLUDED OUT OF THE FAMILY PROPERTY ON THE PREMISE THAT THE TWO BROTHERS SHRI VALLABH JUWARKAR AND SHRI SHRIPAD JUWARKAR WERE THE EXCLUSIVE OWNERS OF THE SAID PROPERTY. THE INVENTORY PROCEEDINGS WAS CHALLENGED BY SIX SISTERS AND ONE BROTHER (DIGAMBAR JUWARKAR) INDEPENDENTLY. THE HON'BLE HIGH COURT OF BOMBAY AT GOA BY ORDER 4 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) NO. 73 OF 2004 HAS CATEGORICALLY STATED THAT BY NO STRETCH OF IMAGINATION COULD THE SISTERS EVER BECOME CO - OWNERS OF THE SUIT PROPERTY. SHRI DIGAMBAR JUWARKAR WAS BORN AFTER THE PROPERTY WAS GIFTED TO BOTH THE BROTHERS SHRI VALLABH JUWARKAR AND SHRI SHRIPAD JUWARKAR BUT THE PROPERTY WAS BEING ENJOYED BY ALL THE THREE BROTHERS FOR SEVERAL YEARS. THE THIRD BROTHER DISPUTED THE DIVISION OF THE ASSETS BY FILING A CIVIL SUIT IN PANAJI. THE COURT BY ITS INTERIM ORDER DIRECTED THE TWO BROTHERS TO GIVE THE THIRD BROTHER HIS SHARE IN THE INCOME OF THE PROPERTY UNTIL THE MAIN SUIT WAS DECIDED. SUBSEQUENTLY AGAINST THE INTERIM ORDER THE MATTER WENT BEFORE THE HON'BLE HIGH COURT AND IN THE HIGH COURT CONSENT ORDER WAS PASSED AND AS PER THE CONSENT ORDER THE THIRD BROTHER HAS TO BE GIVEN A SUM OF RS. 3.50 CRORES WHICH WAS SUBSEQUENTL Y REDUCED TO RS.3 CRORES AS PER THE MODIFIED ORDER OF THE HON'BLE HIGH COURT DT. 1.6.2007. THE ASSESSEE CLAIMED THE PAYMENT BEIN G MADE TO THE THIRD BROTHER SHRI DIGAMBAR JUWARKAR AS DEDUCTION OUT OF THE CAPITAL GAINS WHICH WAS DENIED BY THE AO. 2.1 TH E MATTER WENT BEFORE THE CIT(A). CIT(A) DIRECTED THE AO TO ALLOW THE DEDUCTION OF RS. 3 CRORES TO THE ASSESSEE BY OBSERVING AS UNDER : 8. I HAVE GONE THROUGH THE ASSESSMENT ORDER DETAILED DIRECTIONS AND ANALOGY ADOPTED BY THE ADDL. CIT U/S 144A ARGUMENTS AND SUBMISSIONS OF THE LEARNED COUNSEL OF THE APPELLANT AND OTHER RELEVANT DETAILS AND DOCUMENTS. THERE ARE CERTAIN FACTS WHICH EMERGE FROM THE DISCUSSION AND DOCUMENTS ON RECORD WHICH CAN BE SUMMARISED AS UNDER: THE SUBJECT LAND WAS GIFTED TO SHRI. VALLABH JUWARKAR AND SHRI. SHRIPAD JUWARKAR BY THEIR GRANDMOTHER THROUGH A GIFT DEED DATED 24.10.1950. THE THIRD AND THE YOUNGEST BROTHER SHRI. DIGAMBAR JUWARKAR WAS NOT BORN WHEN THE GIFT DEED WAS MADE IN 1950. 5 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) AT THE DEATH OF THEIR FATHER DURING INVENTORY PROCEEDINGS DIGAMBAR JUWARKAR REQUIRED INCLUSION OF THE SUBJECT PROPERTY IN THE ASSETS TO BE INVENTORIZED. THE OTHER TWO ELDER BROTHERS DISPUTED IT. THE DISPUTE WAS THE SUBJECT MATTER OF ADJUDI CATION BEFORE THE CIVIL COURT PANAJI. THE CIVIL COURT DECREED THAT THE SUBJECT PROPERTY SHOULD BE INCLUDED IN THE ASSETS INVENTORIZED AND DIGAMBAR JUWARKAR WAS ENTITLED TO A SHARE IN THE PROPERTY. THE COURT FURTHER HELD THAT THE INCOME FROM THE SUBJECT P ROPERTY HAS TO BE SHARED AMONG THREE BROTHERS AT LAST TILL THE INVENTORY IS DECIDED. THE COURT ISSUED DIRECTIONS THAT IN THE INTERIM INCOME FROM THE SUBJECT PROPERTY OF RS. 30 000/ - PER ANNUM FOR THE YEAR 1995 WAS PAYABLE TO DIGAMBAR JUWARKAR. THE APPEL LANT VALLABH JUWARKAR APPEALED AGAINST THE ORDER OF THE CIVIL COURT BEFORE THE HIGH COURT OF BOMBAY AT PANAJI. DURING THE PENDENCY OF APPEAL DIGAMBAR JUWARKAR EXPIRED. VALLABH JUWARKAR ENTERED INTO AN AGREEMENT WITH THE WIFE OF DIGAMBAR JUWARKAR. ACCORD ING TO THE CONSENT TERMS PRESENTED BEFORE THE HIGH COURT AS MODIFIED BY THE ORDER OF THE HIGH COURT DATED 01.06.2007 THE APPELLANT ARGUED TO PAY A SUM OF RS. 3 00 00 000/ - TO THE LEGAL HEIRS OF SHRI. (LATE) DIGAMBAR JUWARKAR WHO AGREED TO WITHDRAW AND RE LINQUISH ALL CLAIMS TO THE SUBJECT PROPERTY. SUBSEQUENTLY AN AMOUNT OF RS. 3 00 00 000/ - WAS PAID TO SMT. URMILA D. JUWARKAR WIFE OF LATE DIGAMBAR JUWARKAR. THE APPELLANT SHRI. VALLABH V. JUWARKAR ALSO SUBMITTED A COPY OF THE AFFIDAVIT OF SMT. URMILA D. JUWARKAR WHEREIN SHE CONFIRMED HAVING RECEIVED THE AMOUNT OF RS. 3 CRORES IN LIEN OF DIGAMBAR JUWARKAR'S RIGHTS ON THE SUBJECT PROPERTY; SMT. URMILA D. JUWARKAR FILED HER ROI WHEREIN SHE DISCLOSED RECEIPT OF THIS AMOUNT. IN VIEW OF THE DISCUSSION ABO VE IT IS CLEAR THAT LATE SHRI. DIGAMBAR JUWARKAR HAD A RIGHT IN THE SAID PROPERTY AND RS. 3 CRORES WAS PAID TO HIS LEGAL HEIRS FOR THIS RIGHT BY THE APPELLANT AND THEREFORE THE APPELLANT IS ELIGIBLE FOR A DEDUCTION OF RS. 3 CRORES FROM THE SALE CONSIDERA TION RECEIVED BY HIM. THE AO IS DIRECTED TO 6 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) ALLOW A DEDUCTION OF RS. 3 CRORES TO SHRI VALLABH JUWARKAR. THIS GROUNDS OF APPEAL OF THE APPELLANT IS ALLOWED ACCORDINGLY. 2. 2 BEFORE US THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE CIT( A) AND POINTED OUT THAT THE ASSESSEE HAD SOLD THE SAID PROPERTY BUT WHILE COMPUTING THE CAPITAL GAINS THE ASSESSEE CLAIMED DEDUCTION FOR A SUM OF RS. 3 CRORES PAID TO HIS BROTHER SHRI DIGAMBAR JUWARKAR AS PER THE CONSENT ORDER OF THE HON'BLE HIGH COURT D T. 24.5.2006 WHICH WAS MODIFIED VIDE ORDER DT. 1.6.2007. THE SAID PROPERTY WAS GIFTED TO THE ASSESSEE AND HIS BROTHER SHRI SHRIPAD JUWARKAR BY THEIR GRANDMOTHER THROUGH GIFT DEED DT. 24.10.195 0 . THE THIRD BROTHER SHRI DIGAMBAR JUWARKAR WAS NOT BORN AT THE TIME WHEN THE GIFT WAS GIVEN TO THE ASSESSEE AND HIS BROTHER. AT THE DEATH OF THEIR FATHER DURING INVENTORY PROCEEDINGS SHRI DIGAMBAR JUWARKAR REQUIRED INCLU SION OF THE SUBJECT PROPERTY IN THE ASSETS TO BE INVENTORISED. THE OTHER TWO BROTHERS DISPU TED IT AS THEY HAD ALREADY RECEIVED IT IN GIFT. SHRI DIGAMBAR JUWARKAR WENT BEFORE THE CIVIL COURT BEING INVENTORY PROCEEDINGS NO. 33/ 93/A. THE CIVIL COURT VIDE ITS INTERIM ORDER DT. 15.9.2004 DECIDED AS UNDER : FOR THE DISCUSSION MADE HEREIN THE CABEC A DE CASAL IS ORDERED TO PAY INTERIM INCOME OF RS. 30 000/ - PER ANNUM FROM 1995 TILL THE FINAL DISTRIBUTION OF INCOME/ASSETS OF APPLICANT SHRI DIGAMBAR JUWARKAR WITH STATEMENT OF ACCOUNT TO COMARCA COURT. ORDER ACCORDINGLY. PRONOUNCED IN THE OPEN COURT. SUBSEQUENTLY THE INTERIM ORDER DT. 15.9.2004 WAS CHALLENGED BY SHRI VALLABH JUWARKAR AND SHRI SHRIPAD JUWARKAR IN APPEAL. SHRI DIGAMBAR JUWARKAR IN THE MEANTIME EXPIRED ON 24.5.2006. SUBSEQUENTLY CONSENT TERMS CAME TO BE FILED BY SHRI VALLABH JUWARK AR SHRI SHRIPAD JUWARKAR AND SMT. URMILA DIGAMBAR JUWARKAR (ON BEHALF OF HERSELF AND HER CHILDREN BEING THE LEGAL HEIRS OF LATE SHRI DIGAMBAR JUWARKAR) BY WHICH SHRI DIGAMBAR JUWARKAR AGREED TO WITHDRAW THE 7 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) APPLICATION DT. 29.6.1995 FOR THE DISTRIBUTION OF THE INCOME AND THE OBJECTIONS RAISED ON 15.2.1994 BEFORE THE INVENTORY COURT. AS PER CONSENT ORDER OF THE HON'BLE COURT THE ASSESSEE HAS TO PAY RS. 3.50 CRORES TO THE LEGAL HEIRS OF LATE SHRI DIGAMBAR JUWARKAR. THE SAID ORDER WAS AMENDED AND THE CONS IDERATION WAS REDUCED TO RS. 3 CRORES AND ACCORDINGLY THE ASSESSEE HAS PAID RS. 3 CRORES OTHERWISE THE ASSESSEE COULD HAVE NOT SOLD THE PROPERTY. THE LD. AR RELIED ON THE ORDER OF THE CIT(A) AND CONTENDED THAT THE ORDER OF CIT(A) BE CONFIRMED ON THIS ISS UE. 2.3 THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF THE AO AND CONTENDED BY REFERRING TO THE ORDER OF THE HON'BLE HIGH COURT THAT THE HON'BLE HIGH COURT HAS CLEARLY STATED UNDER PARA 3 OF THE ORDER THAT THE EXCLUSIVE OWNERSHIP OF THE PROPERTY SOLD LIES WITH THE ASSESSEE AND HIS CO - BROTHER. SHRI DIGAMBAR JUWARKAR WAS NOT HAVING ANY RIGHT THEREIN. THE GIFT WAS NOT SUBJECT TO CHALLENGE. THE GIFT MADE BY THE GRANDMOTHER WAS A VALID GIF T AND WAS DULY SUBSISTING. THE AMOUNT PAID BY THE ASSESSEE AMOUNTING TO RS. 3 CRORES BY WAY OF CONSENT ORDER OF THE HON'BLE HIGH COURT IS THE CONSIDERATION FOR WITHDRAWAL OF THE SUIT AND IN THIS REGARD OUR ATTENTION WAS DRAWN TOWARDS PARA 5 & 6 OF THE OR DER OF THE TRIBUNAL. IT WAS VEHEMENTLY CONTENDED THAT THE CAPITAL GAINS HAS TO BE COMPUTED AS PER THE PROVISIONS OF SEC. 48 OF THE INCOME TAX ACT. CIT(A) HAS SIMPLY ALLOWED THE DEDUCTION TO THE ASSESSEE BUT DID NOT GIVE A CLEAR - CUT FINDING WHETHER THE PA YMENT SO MADE IS THE COST OF ACQUISITION OR THE COST OF IMPROVEMENT. FROM THE ORDER OF CIT(A) IT APPEARS THAT THE CIT(A) HAS TREATED IT AS AN EXPENDITURE FOR THE SALE OF THE PROPERTY. THUS THE ORDER OF CIT(A) BE SET ASIDE. 2.4 WE HAVE HEARD THE RIVA L SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE HAVE ALSO PERUSED THE MATTER ON RECORD ALONGWITH THE ORDER OF THE TAX 8 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE FACTS OF THE CASE. WE NOTED THAT THE ASSESSEE AND HIS BROTHER SHRI SHRIPAD JUWARK AR HAD BECOME THE EXCLUSIVE OWNERS OF THE SAID PROPERTY BY WAY OF GIFT DT. 24. 10 .1950 EXECUTED BY THEIR GRANDMOTHER IN THEIR FAVOUR. AT THAT TIME SHRI DIGAMBAR JUWARKAR WAS NOT BORN. SUBSEQUENTLY WHEN THE FATHER OF THE ASSESSEE EXPIRED SHRI DIGAMBAR J UWARKAR INITIATED INVENTORY PROCEEDINGS BEARING NO. 33/93/A TO PARTITION THE ESTATE OF HIS FATHER SHRI VINAYAK SINAI JUWARKAR HIS MOTHER AND HER LATE HUSBAND YESHWANT SINAI JUWARKAR. THE ASSESSEE BEING THE ELDEST SON WAS APPOINTED AS ADMINISTRATOR/CABE CA DE CASAL. HE FILED LIST OF ASSETS BELONGING TO THE ESTATE OF THE SAID INVENTORIED/INVENTARIADOS. SHRI DIGAMBAR JUWARKAR ON/ABOUT 15.2.1994 RAISED OBJECTION TO THE SAID LIST STATING THAT THE PROPERTY WHICH WAS SOLD BY THE ASSESSEE ALSO FORMED PART OF T HE ESTATE OF THE SAID INVENTORIED AND WAS LIABLE TO BE LISTED WHEREUPON THE SUIT PROPERTY WAS ALSO LISTED. SUBSEQUENTLY SHRI DIGAMBAR JUWARKAR ON/ABOUT 29.6.2005 FILED APPLICATION FOR INTERIM DISTRIBUTION OF THE INCOME FROM THE SUIT PROPERTY TO THE EXTE NT OF 1/3 RD SHARE. THE ASSESSEE AND SHRI SHRIPAD JUWARKAR ON/ABOUT 12.1.1995 FILED APPLICATION FOR EXCLUSION OF THE SUIT PROPERTY CONTENDING THAT THE SAID DIGAMBAR JUWARKAR HAD NO RIGHT OR CLAIM OVER THE IMPUGNED PROPERTY WHICH WAS IN EXCLUSIVE OWNERSHIP AND POSSESSION OF SAID SHRI VALLABH JUWARKAR AND SHRI SHRIPAD JUWARKAR. THE APPLICATION MADE BY SHRI VALLABH JUWARKAR AND SHRI SHRIPAD JUWARKAR REMAINED PENDING. IN THE IN QUIRY PROCEEDINGS FILED BY SHRI DIGAMBAR JUWARKAR THE LD. CJSD PASSED THE FOLLOWING INTERIM ORDER DT. 15.9.2004 : FOR THE DISCUSSION MADE HEREIN THE CABECA DE CASAL IS ORDERED TO PAY INTERIM INCOME OF RS . 30 000/ - PER ANNUM FROM 1995 TILL THE FINAL DISTRIBUTION OF INCOME/ASSETS OF APPLICANT SHRI DIGAMBAR JUWARKAR WITH STATEMENT OF ACCOUNT TO COMARCA COURT. ORDER ACCORDINGLY. PRONOUNCED IN THE OPEN COURT. 9 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) COPY OF THE ORDER WAS PLACED BEFORE US AT PG. 14 - 25. FROM THE ORDER WE OBSERVED THAT THE ORDER IS DT. 15.9.2004 BUT IN THE FIRST PARAGRAPH OF THE ORDER IT IS MENTIONED THAT THE APPLICANT HAS FILED APPLICATION DT. 29.6. 199 5 . SUBSEQUENTLY WE NOTED THAT SHRI VALLABH JUWARKAR AND SHRI SHRIPAD JUWARK AR WENT IN APPEAL BEFORE THE HON'BLE HIGH COURT AGAINST THE INTERIM ORDER BEING APPEAL NO. 73 OF 2004 AND A CONSENT ORDER WAS PASSED BY THE HON'BLE HIGH COURT ON 24.5.2006 BY HOLDING IN PARA 4 & 5 AS UNDER : (RELEVANT FOR THE ISSUE) 4. THE RESPONDENTS ADMIT AND DECLARE THAT THE GIFT DEED DATED 24.10.1950 MADE BY LATE SHRI. BHAGUIROTI ZUARKAR IN FAVOUR OF THE APPELLANTS IS VALID SUBSISTING AND THE SAME HAS BEEN ACCEPTED BY THE RESPONDENTS. THE RESPONDENTS FURTHER ADMIT THAT THE VALUE OF THE SAID PROPERTY KNOWN AS QUINTAL' ALSO KNOWN AS 'QUINTA DE CIMA' ALSO KNOWN AS 'MOULA DE CIMA' ALSO KNOWN AS PADRI QUINTA' UNDER SURVEY NOS. 32/0 33/0 34/0 OF THE VILLAGE GOULI MOULA ILHAS BEARING MATRIZ NOS. 46 47 48 AND REGISTERED UNDER REGISTR ATION NO. 1196 AT FOLIO 176 V OF BOOK B23 (OLD) DESCRIBED IN PARAGRAPH 2 SUBJECT MATTER OF THE GIFT WAS CORRECTLY VALUED AT RS. 3500/ - (RUPEES THREE THOUSAND FIVE HUNDRED ONLY) AS ON THE DEATH OF THE SAID SMT. BHAGUIROTI JUWARKAR ON 10.01.1951. 5. THAT IN CONSIDERATION OF WITHDRAWAL OF THE APPLICATIONS REFERRED TO IN PARAGRAPH 1 AND ADMISSIONS MADE IN THE PRECEDING PARAGRAPHS THE APPELLANTS AGREE TO PAY TO THE RESPONDENTS THROUGH RESPONDENT NO. 1 AS GUARDIANS OF RESPONDENTS NOS. 2 AND 3 A TOTAL AMOUNT O F RS. 3 50 00 000/ - (RUPEES THREE CRORES FIFTY LAKHS ONLY) IN THE FOLLOWING MANNER: (A) ON SIGNING THESE TERMS RUPEES 25 000/ - (RUPEES TWENTY FIVE THOUSAND ONLY) BY CHEQUE NO. 564921 DATED 24/05/2006 DRAWN ON SYNDICATE BANK VASCO DA GAMA RECEIPT OF WHIC H THE RESPONDENTS ACKNOWLEDGE. (B) ON OR BEFORE 31/08/2006 RUPEES 34 75 000/ - (RUPEES THIRTY FOUR LAKHS SEVENTY FIVE THOUSAND ONLY). (C) ON OR BEFORE 30/11/2006 RUPEES 52 50 000/ - (RUPEES FIFTY TWO LAKHS FIFTY THOUSAND ONLY). (D) ON OR BEFORE 28/02/2007 R UPEES 87 50 000/ - (RUPEES EIGHTY SEVEN LAKHS FIFTY THOUSAND ONLY). (E) ON OR BEFORE 31/05/2007 RUPEES 1 75 00 000/ - (RUPEES ONE CRORE SEVENTY FIVE LAKHS ONLY). THE AMOUNTS SHALL BE PAID ON THE NAME OF THE RESPONDENT NO. 1. 10 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) SUBSEQUENTLY THE SAID CONSENT ORDER WAS AMENDED VIDE ORDER DT. 1.6.2007 AND BY THE AMENDED ORDER THE TOTAL CONSIDERATION OF RS. 3.50 CRORES WAS REDUCED TO RS. 3 CRORES AS STATED UNDER PARA 5 OF THE HON'BLE HIGH COURT ORDER DT. 24.5.2006. COPIES OF THE OR DERS ARE AVAILABLE AT PG. 52 & 54 OF THE PAPER BOOK. FROM THE ORDER OF THE CIT(A) WE NOTED THAT CIT(A) ALTHOUGH HAS DULY RE - PRODUCED ALL THE FACTS OF THE CASE BUT DID NOT GIVE A SPECIFIC FINDING UNDER WHICH PROVISION OF THE INCOME TAX ACT THE DEDUCTION IS TO BE ALLOWED TO THE ASSESSEE. WE MAY MENTION THAT COMPUTATION OF INCOME FROM CAPITAL GAINS HAS TO BE WORKED OUT IN ACCORDANCE WITH PART E OF CHAPTER IV . MODE OF COMPUTATION HAS BEEN GIVEN UNDER SEC. 48 OF THE INCOME TAX ACT WHICH STATES AS UNDER : 48 . THE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS NAMELY : ( I ) EXPENDITURE INCU RRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; ( II ) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO: FROM THE ABOVE PROVISION IT IS APPARENT THAT INCOME CHARGEABLE UNDER HEAD CAPITAL GAINS HAS TO BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE EXPENDITURE INCURRE D WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER AND ALSO THE COST OF ACQUISITION OF THE ASSET AND THE COST OF IMPROVEMENT THERETO. WE HAVE PERUSED THE ORDER OF CIT(A). CIT(A) ALTHOUGH DIRECTED THE AO TO ALLOW THE DEDUCTION TO THE ASSESSEE HAS NOT GIVEN ANY FINDING WHETHER THE PAYMENT MADE BY THE ASSESSEE REPRESENTS EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY WITH REGARD TO THE TRANSFER OR IT IS COST OF ACQUISITION OR IT IS COST OF IMPROVEMENT THEREOF. WE NOTED FROM THE ORDER OF THE HON'BLE HIG H COURT THAT THE HON'BLE HIGH COURT HAS DIRECTED THE ASSESSEE TO PAY A SUM OF RS. 3 CRORES TO 11 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) SHRI DIGAMBAR JUWARKAR FOR WITHDRAWAL OF THE APPLICATION FILED BY DIGAMBAR JUWARKAR DT. 29.6.1995 AND 15.2.1994 BEFORE THE CIVIL COURT. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE CIT(A) WITH A DIRECTION THAT THE CIT(A) WILL RECONSIDER THIS ISSUE AFRESH AND GIVE A CLEAR - CUT FINDING UNDER WHICH HEAD THE EXPENDITURE HAS TO BE ALLOWED UNDER THE PROVISIONS OF SEC. 48 OF T HE INCOME TAX ACT. WE MAY MENTION THAT THE ASSESSEE SHOULD BE GIVEN PROPER OPPORTUNITY BEFORE DECIDING THE ISSUE AFRESH SO THAT THE ASSESSEE MAY ADDUCE NECESSARY EVIDENCE IN THIS REGARD. 3. THE SECOND ISSUE IN THE GROUNDS TAKEN BY THE REVENUE AS WELL AS GROUND NOS. 1 & 2 TAKEN BY THE ASSESSEE IN THEIR CROSS OBJECTIONS RELATE TO DETERMINATION OF THE FAIR MARKET VALUE AS ON 1.4.1981 AS IS PERMISSIBLE WHILE COMPUTING THE CAPITAL GAINS U/S 48 R/W SEC. 55 OF THE INCOME TAX ACT. THE BRIEF FACTS RELATING TO THI S GROUND ARE THAT WHILE COMPUTING THE CAPITAL GAINS THE ASSESSEE HAS OPTED TO TAKE THE FAIR MARKET VALUE AT RS. 65/ - PER SQ. MTR. A S PER THE VALUATION CARRIED OUT BY THE APPROVED VALUER COPY OF WHICH IS AVAILABLE AT PG. 4 - 13 OF THE PAPER BOOK. THE AO APPOINTED THE INSPECTOR. THE INSPECTOR HAD VERIFIED THE RECORD OF THE SUB - REGISTRAR FOR THE YEAR 1980 1981 AND 1982 AND ARRIVED AT THE AVERAGE PRICE OF RS. 25/ - PER SQ. MTR. THE SUB - REGISTRAR HAS ALSO CERTIFIED THAT THERE WAS NO SALE STATISTICS F ROM 1981 FOR GUALIM MAULA VILLAGE IN WHICH THE IMPUGNED PROPERTY WAS SITUATED BUT FURNISHED THE DETAILS FOR BATIM VILLAGE BEING THE NEAREST VILLAGE. THE AVERAGE PRICE IS SHOWN AT RS.15 - 16/ - PER SQ. MTR. THE AO AFTER NOTING FROM THE VALUATION REPORT OF TH E REGISTERED VALUER THAT THE REGISTERED VALUER HAS ALSO NOT GIVEN COMPARATIVE INSTANCES OF THE VILLAGE BUT OF THE OTHER VILLAGE AND OF VERY SMALL PLOT MEASURING 300 - 500 SQ. MTRS. REJECTED THE VALUATION REPORT AND DETERMINED THE FAIR MARKET VALUE AS ON 1.4. 1981 AT RS. 3.75 PER SQ. MTR. THE ASSESSEE WENT IN APPEAL BEFORE CIT(A). CIT(A) AFTER VERIFYING THE ASSESSMENT RECORD OF SHRI SHRIPAD 12 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) JUWARKAR NOTED THAT THE ITA IN THE CASE OF SHRI SHRIPAD JUWARKAR REPORTED THE AVERAGE RATE DURING 1981 IN THAT AREA AT R S. 15 - 16 / - PER SQ. MTR. CIT(A) THEREFORE DIRECTED THE AO LOOKING AT THE OVERALL SITUATION TO ADOPT THE FAIR MARKET VALUE AS ON 1.4.1981 AT RS. 17/ - PER SQ. MTR. 3.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORD ER OF THE TAX AUTHORITIES BELOW. THE LD. AR BEFORE US RELIED ON THE VALUATION REPORT OF THE APPROVED VALUER KIREN GEDAM COPY OF WHICH IS FILED BEFORE US AT PG. 4 - 10 OF THE PAPER BOOK . WE NOTED FROM THE SAID VALUATION REPORT THAT THE INSTANCES DOES NOT RELATE TO THE VILLAGE IN WHICH THE PROPERTY SOLD BY THE ASSESSEE IS SITUATED. EVEN THE INSTANCES GIVEN IN THE VALUATION REPORT ARE NOT RELEVANT TO THE TIME. EVEN THE INSTANCES RELATE TO SMALLER PLOT AREA OF WHICH IS BETWEEN 300 - 500 SQ. MTRS. EVEN THE PLOTS DO NOT RELATE TO AGRICULTURAL LAND. UNDER THESE FACTS IN OUR OPINION THE INSTANCES GIVEN BY THE APPROVED VALUER CANNOT BE REGARDED TO BE COMPARATIVE INSTANCES. COMPARATIVE INSTANCES SHOULD RELATE TO THE LOCALITY TIME OF THE SALE AND AREA OF THE PLOT MUST BE APPROXIMATELY EQUAL TO THE IMPUGNED AREA. EVEN THE NATURE OF THE LAND SHOULD ALSO BE THE SAME. WE HAVE ALSO NOTED THAT THERE ARE EVIDENCES ON RECORD BEFORE THE AO THAT NO LAND WAS SOLD IN THE SAID VILLAGE IN 1981 AND THEREFORE NO COMPARATIV E INSTANCES RELATING TO THE SAME VILLAGE WERE AVAILABLE BUT ON THE BASIS OF THE SURROUNDING VILLAGE NATURE OF THE LAND AND KEEPING IN THE AREA OF THE LAND THE INSPECTOR OF INCOME TAX HAS WORKED OUT THE AVERAGE FAIR MARKET VALUE OF THE IMPUGNED LAND AT RS . 25/ - PER SQ. MTR. THE AO WITHOUT BRINGING ANY EVIDENCE ON RECORD HAS SIMPLY REJECTED THE FAIR MARKET VALUE AS DETERMINED BY THE INSPECTOR AND ADOPTED THE FAIR MARKET VALUE AT RS. 3.75 PER SQ. MTR. THE SUB - REGISTRAR HAS ALSO CITED INSTANCES FROM THE SURROUNDING VILLAGES WHERE THE RATE VARIES FROM RS. 0.96 TO RS. 70/ - PER SQ. MTR. NO DOUBT IN THE CASE OF THE BROTHER OF THE ASSESSEE THE OTHER INSPECTOR HAS WORKED OUT THE AVERAGE FAIR 13 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) MARKET VALUE AT RS. 15 - 16 / - PER SQ. MTR. IN VIEW OF ALL THESE DIFFERENT FAIR MARKET VALUE BEING DETERMINED BY DIFFERENT PERSONS WE ARE OF THE VIEW THAT THE AO CANNOT TAKE THE LEAST FAIR MARKET VALUE SINCE IN THE CASE OF THE ASSESSEE THE INSPECTOR O F THE SAME OFFICE HAS DULY VERIFIED THE NATURE OF THE LAND AND HAS ALSO COLLECTED THE VARIOUS SALE INSTANCES OF THE COMPARATIVE VILLAGES THEREFORE IT WILL BE APPROPRIATE IN OUR OPINION THAT THE FAIR MARKET VALUE AS ON 1.4.1981 BE TAKEN AT RS. 25/ - PER SQ. MTR. THE FAIR MARKET VALUE IN RELATION TO A CAPITAL ASSET MEANS THE PRICE THAT CAPITAL ASSET WOULD ORDINARILY FETCH ON SALE IN THE OPEN MARKET ON THE RELEVANT DATE. IT IS ALSO A FACT THAT THERE IS NO RULE PRESCRIBED FOR THE DETERMINATION OF THE FAIR MARKET VALUE. IN THIS REGARD UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE IN OUR OPINION IT WILL BE FAIR AND REASONABLE TO ADOPT THE FAIR MARKET VALUE AS HAS BEEN WORKED OUT BY THE INSPECTOR OF THE DEPARTMENT. WE THEREFORE SET ASIDE THE ORDER OF CIT(A) ON THIS ISS UE AND DIRECT THE AO TO WORK OUT THE FAIR MARKET VALUE AS ON 1.4.19981 AT RS. 25/ - PER SQ. MTR. THUS THE GROUND TAKEN BY THE REVENUE STANDS DISMISSED WHILE THE GROUNDS TAKEN BY THE ASSESSEE IN THEIR CROSS OBJECTIONS ARE PARTLY ALLOWED. 4. IN THE RESULT BOTH THE A PPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTIONS FILED BY THE ASSESSEES ARE ALSO PARTLY ALLOWED. 5. ORDER PRONOUNCED IN OPEN COURT ON 25 /10/2013. SD/ - (D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 25 /10/ 2013 *SSL* 14 ITA NOS. 222 & 223/PNJ/2013 CO NOS. 42 & 43/PNJ/2013 (ASST. YEAR : 2007 - 08) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY BY ORDER SR. P RIVATE S ECRETARY ITAT PANAJI GOA