Shib Narayan Kshettry -HUF, Kolkata v. The ITO, WD-38(4), KOLKATA, Kolkata

ITA 723/KOL/2015 | 2006-2007
Pronouncement Date: 28-09-2016

Appeal Details

RSA Number 72323514 RSA 2015
Assessee PAN AAGHS7318B
Bench Kolkata
Appeal Number ITA 723/KOL/2015
Duration Of Justice 1 year(s) 4 month(s) 3 day(s)
Appellant Shib Narayan Kshettry -HUF, Kolkata
Respondent The ITO, WD-38(4), KOLKATA, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Bench Allotted SMC
Tribunal Order Date 28-09-2016
Assessment Year 2006-2007
Appeal Filed On 25-05-2015
Judgment Text
I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A(SMC) BENCH KOLKATA BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER I.T.A. NO. 723 /KOL/ 2015 ASSESSMENT YEAR: 2006-2007 SHIB NARAYAN KEHETTRY-HUF ......................... ..........................APPELLANT 44 RAM DULAL SARKAR STREET KOLKATA-700 006 [PAN: AAGHS 7318 B] -VS.- INCOME TAX OFFICER ................................ .................................RESPONDENT WARD-38(4) KOLKATA APPEARANCES BY: SHRI S.K. TULSIAN A.R. FOR THE ASSESSEE SMT. SUCHETA CHATTOPADHYAY JCIT D.R. FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JULY 25 2016 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 28 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-11 KOLKATA DA TED 10.03.2015 AND THE ISSUES INVOLVED THEREIN RELATE TO THE COMPUTATI ON OF LONG-TERM CAPITAL GAIN ARISING TO THE ASSESSEE FROM SALE OF HIS PROPE RTY SITUATED AT 9 AMARTOLA STREET KOLKATA-700 001. 2. THE ASSESSEE IN THE PRESENT CASE IS AN HUF WHIC H DERIVES INCOME FROM RENT SERVICE CHARGES AND INVESTMENT. THE RETU RN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 01.08.2 006 DECLARING TOTAL INCOME OF RS.12 32 357/-. IN THE SAID YEAR A PROPE RTY SITUATED AT 9 AMARTOLA STREET KOLKATA WAS SOLD BY THE ASSESSEE F OR A CONSIDERATION OF RS.48 00 000/- AND AFTER CLAIMING DEDUCTION ON ACCO UNT OF INDEXED COST OF ACQUISITION AT RS.48 01 020/- LONG-TERM CAPITAL LO SS OF RS.1 020/- WAS DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE ASSES SING OFFICER THAT THE VALUE OF THE PROPERTY SOLD BY THE ASSESSEE WAS TAKE N AT RS.1.69 CRORES FOR I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 2 OF 12 THE PURPOSE OF DETERMINING STAMP DUTY BY THE REGIST ERING AUTHORITY. HE THEREFORE MADE A REFERENCE TO THE DEPARTMENTAL VAL UATION OFFICER FOR VALUATION OF THE PROPERTY OF THE ASSESSEE AS ON 01. 04.1981 AND 30.03.2006. IN THE VALUATION REPORT SUBMITTED TO TH E ASSESSING OFFICER THE VALUE OF THE PROPERTY OF THE ASSESSEE WAS DETER MINED BY THE DVO AT RS.9 66 900/- AS ON 01.04.1981 AND RS.78 01 000/- A S ON 30.03.2006. WHEN THE VALUATION REPORT OF THE DVO WAS CONFRONTED BY THE ASSESSING OFFICER TO THE ASSESSEE IT WAS SUBMITTED BY THE AS SESSEE THAT THE STAMP DUTY VALUATION ORIGINALLY DONE AT RS.1.69 CRORES WA S SUBSEQUENTLY REDUCED TO RS.61 99 950/- BY THE ORDER OF THE GOVER NOR. IT WAS ALSO SUBMITTED BY THE ASSESSEE THAT THE PROPERTY IN QUES TION WAS RECEIVED BY THE FAMILY IN GRANT FROM THE COLLECTOR KOLKATA ON 06.02.1899 AND SINCE THE SAID GRANT WAS FREE OF COST THE COST OF ACQUIS ITION OF THE PROPERTY IN QUESTION WHICH HAD BEEN PARTITIONED FROM TIME TO T IME WAS NOT ASCERTAINABLE. RELYING ON THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF CIT VS.- SRINIVASA SETTY (B.C.) REPORT ED IN 128 ITR 294 IT WAS CONTENDED BY THE ASSESSEE THAT THE SALE OF PROPERTY IN QUESTION WHOSE COST OF ACQUISITION WAS NOT ASCERTAINABLE COULD NOT GIVE RISE TO ANY CAPITAL GAIN CHARGEABLE TO TAX. THIS CONTENTION OF THE ASSE SSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCORDING TO H IM THE GOVERNOR BY THE RELEVANT NOTIFICATION HAD GIVEN ONLY A CONCESSI ON IN THE STAMP DUTY PAYABLE ON SALE OF THE PROPERTY IN QUESTION AND THE RE WAS NO REDUCTION IN THE MARKET VALUE OF THE SAID PROPERTY AS TAKEN FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. HE ALSO HELD THAT THE COST OF ACQUIS ITION OF THE PROPERTY IN QUESTION SOLD BY THE ASSESSEE WAS DEFINITELY ASCERT AINABLE AND THEREFORE THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF SRINIVASA SETTY (B.C.) WAS NOT APPLICABLE. IN THIS REGARD HE RELIE D ON THE SUBSEQUENT DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS.- D.P. SANDU BROS. CHEMBUR (P) LIMITED REPORTED IN 273 ITR 1 (S C) WHEREIN IT WAS HELD THAT AN ASSET WHICH IS CAPABLE OF ACQUISITION AT THE COST WOULD BE INCLUDED WITHIN THE PROVISIONS PERTAINING TO THE HE AD CAPITAL GAINS AS OPPOSED TO ASSETS IN THE ACQUISITION OF WHICH NO CO ST AT ALL CAN BE CONCEIVED. HE ALSO RELIED ON THE DECISION OF THE SP ECIAL BENCH OF ITAT IN I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 3 OF 12 THE CASE OF VIJAYSINH R. RATHOD [106 ITD 153] WHER EIN IT WAS HELD THAT THE COST OF ACQUISITION IN THE HANDS OF THE FOREFAT HERS OF THE ASSESSEE BEING THE PREVIOUS OWNER IF CANNOT BE ASCERTAINED IS TO BE THE FAIR MARKET VALUE ON THE DATE ON WHICH CAPITAL ASSETS BE CAME PROPERTY OF THE PREVIOUS OWNER AND IN THAT CASE ALSO THE ASSESSEE WOULD BE ENTITLED TO SUBSTITUTE THE FAIR MARKET VALUE AS ON 01.04.1981 U NDER SECTION 55(2) OF THE ACT. ACCORDINGLY THE LONG-TERM CAPITAL GAIN AR ISING FROM THE TRANSFER OF THE PROPERTY OF THE ASSESSEE IN QUESTION WAS DET ERMINED BY THE ASSESSING OFFICER AT RS.29 95 507/- AFTER REDUCING THE INDEXED COST OF ACQUISITION OF RS.48 05 493/- (RS.9 66 900 X 497 /1 00) FROM THE TOTAL SALE CONSIDERATION OF RS.78 01 000/- AS TAKEN ON THE BA SIS OF D.V.OS VALUATION IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VI DE AN ORDER DATED 28.11.2008. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD THE LD . CIT(APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFICER DETERMINING THE LONG-TERM CAPITAL GAIN ARISING FROM THE SALE OF THE PROPERTY OF THE ASSESS EE AT RS.29 95 507/- FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- THE SUBMISSION OF THE ASSESSEE AND THE FACTS ARE DULY CONSIDERED. THE CLAIMS OF THE ASSESSEE ARE NOT ACCEPTABLE. IT IS HELD THAT THE INCOME TAX ACT 1961 HAS SCOPE FOR DETERMINING THE CAPITAL GAINS IN RESPECT OF ASSETS WHOSE COST OF ACQUISITION IS NOT ASCERTAINAB LE. THE AMENDMENTS BROUGHT IN THE ACT AFTER THE DECISION IN B.C. SRINIVASA SETTY (SUPRA) CASE HAVE CHANGED THE SCENA RIO. THE SUPREME COURT IN CIT VS. B.C. SRINIVASA SETTY [1981] 128 ITR 294 (SC) HAD HELD THAT IF COST OF ACQUISITION OF A CAPITAL ASSET WAS NOT DETERMINABLE THEN EVEN THOUGH THE SALE CONSIDERATION RECEIVED WOULD B E A CAPITAL RECEIPT BUT IT WOULD NOT BE TAXABLE BECAUS E COST OF ACQUISITION WAS INCAPABLE OF BEING ASCERTAINED A ND THE COMPUTATION AS ENVISAGED UNDER SECTION 48 OF THE AC T WAS NOT POSSIBLE. THE EFFECT THEREOF WAS THAT IN SUCH C ASES THE I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 4 OF 12 ASSESSEE WOULD NOT BE LIABLE TO PAY CAPITAL GAINS T AX ON THE SALE CONSIDERATION RECEIVED. THE AFORESAID DECI SION WAS IN RELATION TO CONSIDERATION RECEIVED FOR TRANS FER OF GOODWILL. THE SAID PRINCIPLE WAS EXTENDED TO TENANC Y RIGHTS BY .DELHI HIGH COURT IN BAWA SHIV CHARAN SI NGH VS. CIT DELHI [1984] 149 ITR29 OBSERVING THAT THE TE NANCY RIGHT HAD NO COST OF ACQUISITION AND THEREFORE CA PITAL GAINS CANNOT BE COMPUTED. FACED WITH THE AFORESAID DECISIONS THE LEGISLATURE INSERTED SECTION 55(2) O N THE STATUTE AND AMENDMENTS WERE MADE STIPULATING THAT I N THE SPECIFIED TRANSACTIONS INCLUDING PAYMENT RECEI VED FOR SURRENDER OR RELINQUISHING TENANCY RIGHTS WHERE IT WAS NOT POSSIBLE TO ASCERTAIN COST OF ACQUISITION THE COST OF ACQUISITION WOULD BE TAKEN TO BE NIL FOR COMPUTING THE CAPITAL GAINS. HOWEVER WHERE IT WAS POSSIBLE TO AS CERTAIN THE COST OF ACQUISITION SUCH COST WOULD BE TAKEN I NTO CONSIDERATION FOR COMPUTING TAXABLE GAINS UNDER SEC TIONS 48 AND 49 OF THE ACT. THE SAID INSERTION IS APPLICA BLE WITH EFFECT FROM ASSESSMENT YEAR 1994-95. THUS THE LAW O F B. C. SRINIVASA SETTY HAS BEEN LARGELY OVERRULED BY LEGIS LATURE. SUBSEQUENTLY THE SUPREME COURT WHILE DEALING WITH A CASE OF A.Y. 1987-88 (PRIOR TO INSERTION SECTION 55(2) OF ME ACT) IN CIT VS. D.P. SANDU BROS. CHEMBUR (P) LTD . [2005] 273 ITR 1 (SC) STILL HELD THAT WHEN THE TENA NCY RIGHT GETS ACQUIRED WITH EFFECT FROM A PARTICULAR D ATE IT WOULD BE POSSIBLE THAT IT WAS ACQUIRED AT A COST AN D THIS WAS A QUESTION OF FACT. REFERENCE WAS MADE TO THE DECISION OF THE SUPREME COURT IN A.R. KRISHNAMURTHY & ANR. VS. CIT [1989] 176 ITR 417 (SC) WHEREIN IT HA S BEEN HELD THAT IT CANNOT BE SAID CONCEPTUALLY THAT THERE WOULD BE NO COST OF ACQUISITION FOR GRANT OF LEASE AND CO ST OF ACQUISITION OF LEASE HOLD RIGHTS COULD BE DETERMINE D. THUS THE SUPREME COURT IN CATEGORICAL TERMS HAS HE LD THAT THE JUDGMENT IN THE CASE OF B.C. SRINIVASA SET TY'S CASE (SUPRA) WOULD NOT BE APPLICABLE TO CAPITAL GAI NS EARNED ON SURRENDER OF TENANCY RIGHTS. THESE CASES CLEARLY PAY DOWN THAT THE INTENTION MUST BE TO ASCERTAIN TH E COST OF ACQUISITION BEEN OF TENANCY RIGHTS. MORE RECENTLY THE FULL BENCH OF THE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF COMMISSIONER OF INC OME- TAX V.RAJA MALWINDER SINGH[2012] 206 TAXMAN 137 (P& H)(MAG.) HELD THAT IN RELATION TO SECTION 49 OF THE ACT WHEN COST OF ACQUISITION OF CAPITAL ASSET CANNOT BE ASCERTAINED BUT THE ASSET HAS A MARKET VALUE CAPIT AL GAIN WILL BE ATTRACTED BY TAKING COST OF ACQUISITION TO BE FAIR MARKET VALUE AS ON DATE OF ACQUISITION. IN THIS CAS E THE ASSESSEE SOLD CERTAIN PLOTS OF LAND ON WHICH TAX UN DER THE I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 5 OF 12 HEAD 'CAPITAL GAINS' WAS SOUGHT TO BE LEVIED. THE A SSESSEE CONTESTED THE LEVY BY SUBMITTING THAT COST OF ACQUI SITION BY THE PREVIOUS OWNER WAS INCAPABLE OF BEING ASCERTAINED. THE PREVIOUS OWNER WAS AN EX-RULER OF THE PEPSU STATE AND THE ASSET WAS ACQUIRED UNDER THE INSTRUMENT OF ANNEXATION AND THUS ITS COST OF ACQ UISITION COULD NOT BE ASCERTAINED. THIS PLEA WAS REJECTED AN D THE ASSESSING OFFICER PROCEEDED TO ASSESS CAPITAL GAIN TAKING THE COST OF ACQUISITION EQUAL TO THE MARKET VALUE A S ON 1- 1-1954/1-1- 1964 DEPENDING ON THE DATES SPECIFIED U NDER SECTION 55(2) AS APPLICABLE TO THE YEAR OF ASSESSME NT. ON APPEAL THE COMMISSIONER (APPEALS) ALSO REJECTED TH E PLEA OF THE ASSESSEE THAT THE COST OF ACQUISITION BEING INCAPABLE OF ASCERTAINMENT NO CAPITAL GAIN WAS ATTRACTED. HOWEVER THE TRIBUNAL REVERSED THE SAID VIEW FOLLOWING THE JUDGMENT OF THE SUPREME COURT IN CIT V. B.C. SRINIVASA SETTY [1981] 128 ITR 294 (S.C.) ON REVEN UE'S APPEAL THE HIGH COURT HELD THAT IN THE INSTANT CASE THEASSDSSDE HAD ACQUIRED THE PROPERTY BY SUCCESSION FROM THE PREVIOUS OWNER. ACCORDING TO THE STAND OF THE ASSESSEE THE COST OF ACQUISITION BY THE PREVIOUS O WNER COULD NOT BE ASCERTAINED. HOWEVER HE FAILED TO EXE RCISE THE OPTION OF GOING EITHER BY MARKET VALUE ON THE D ATE OF ACQUISITION OR BY THE COST TO THE PREVIOUS OWNER IN WHICH CASE THE ONLY OPTION AVAILABLE TO THE ASSESSING OFF ICER WAS TO PROCEED TO COMPUTE CAPITAL GAIN BY TAKING THE CO ST OF THE ASSET TO BE THE FAIR MARKET VALUE ON THE SPECIF IED DATE I.E . 1-1-1954 AS PER APPLICABLE PROVISION FOR THE ASSESSMENT YEAR 1977-78 AND AS ON 1-1-1964 FOR THE ASSESSMENT YEAR 1978-79. THE COURT HELD THAT EVEN I N A CASE WHERE THE COST OF ACQUISITION CANNOT BE ASCERT AINED SECTION 55(3) STATUTORILY PRESCRIBES THE COST TO BE EQUAL TO THE MARKET VALUE ON THE DATE OF ACQUISITION. THI S BEING THE POSITION CAPITAL GAIN IS NOT EXCLUDED EVEN ON THE PLEA THAT VALUE OF THE ASSET IN RESPECT OF WHICH CAPITAL GAIN IS TO BE CHARGED WAS INCAPABLE OF BEING ASCERTAINED. I F THE MARKET VALUE CAN BE ASCERTAINED IT HAS TO BE TAKEN TO BE EQUAL THERETO AND IF THE VALUE CANNOT BE ASCERTAINE D IT HAS TO BE EQUAL TO THE MARKET VALUE ON A SPECIFIED DATE AT THE OPTION OF THE ASSESSEE. IT WAS NOT THE CASE OF THE ASSESSEE THAT LAND HAD NO MARKET VALUE AT ALL ON TH E DATE OF ITS ACQUISITION. THE CONTENTION THAT THE VALUE W AS INCAPABLE OF BEING ASCERTAINED WAS TO BE REJECTED A ND THE VALUE IN SUCH CASE HAS TO BE TAKEN AS BEING EQUAL T O MARKET VALUE ON A SPECIFIED DATE. IN THIS CASE THE STAND OF THE REVENUE THAT THE PRINCIPLE OF EXCLUDING TAXABILITY OF CAPITAL GAINS WHERE AN ASSET IS NOT CAPABLE OF BEING VALUED SUCH AS GOODW ILL I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 6 OF 12 CANNOT EXTEND TO CAPITAL ASSETS LIKE LAND WHICH ARE CAPABLE OF BEING VALUED. THE JUDGMENT OF THE HON'BL E SUPREME COURT IN B.C. SRINIVASA SETTY [1981] 128 IT R 294 (SC) WAS NOT APPLICABLE TO SUCH A SITUATION. THE FU LL BENCH HIGH COURT DID NOT FOLLOW ITS EARLIER DIVISIO N BENCH JUDGMENT IN THE CASE OF CIT V. AMRIK SING [2008] 29 9 ITR 1 (P&H) AND A JUDGMENT OF THE MADHYA PRADESH HIGH COURT IN CIT V. H.H MAHARAJA SAHIB SHRI LOKENDRA SI NGHJI [1986] 162 ITR 93 (MP) WHICH WERE GIVEN ON THE BASI S OF THE PRINCIPLE LAID DOWN IN B.C. SRINIVASA SETTY [19 81] 128 ITR 294 (SC). THE FULL BENCH ALSO HELD THAT EVEN IN A CASE WHERE THE COST OF ACQUISITION CANNOT BE ASCERTAINED SECTION 55(3) STATUTORILY PRESCRIBES THE COST TO BE EQUAL TO THE MARKET VALUE ON THE DATE OF ACQUISITION. THI S BEING THE POSITION CAPITAL GAIN IS NOT EXCLUDED EVEN ON THE PLEA THAT VALUE OF THE ASSET IN RESPECT OF WHICH CAPITAL GAIN IS TO BE CHARGED WAS INCAPABLE OF BEING ASCERTAINED. SUBSEQUENTLY THE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF THAKUR DWARA SHRI KRISHANJI MAHARAJ HANDIYAYA V.COMMISSIONER OF INCOME-TAX PATIALA(201 4) 366 ITR 381 (P&H)HAS PASSED A SIMILAR ORDER. IN THI S CASE THE AGRICULTURAL LAND OF ASSESSEE WAS SITUATED WITH IN THE MUNICIPAL LIMITS OF BAMALA WHICH WAS ACQUIRED BY TH E IMPROVEMENT TRUST BAMALA AND A COMPENSATION OF RS. 2.77 CRORES WAS AWARDED TO THE ASSESSEE. THE ASSESS EE CONTENDED THAT SINCE THE LAND WAS GIFTED TO THE ASS ESSEE BY THE MAHARAJA OF PATIALA THE COST OF ACQUISITION OF THE SAID LAND WAS THE SAME AS THAT WAS IN HANDS OF THE MAHARAJA. SINCE THE MAHARAJA DID NOT INCUR ANY COST THE LAND WAS NOT CHARGEABLE TO TAX UNDER SECTION 45 OF THE ACT. THE ASSESSING OFFICER REJECTED THE SAID PLEA O F THE ASSESSEE BY HOLDING THAT AS PER THE PROVISIONS OF S ECTION 55(3) EVEN IN CASES WHERE THE COST OF ACQUISITION OF THE PREVIOUS OWNER COULD NOT BE ASCERTAINED THE SAME H AD TO BE COMPUTED BY TAKING INTO ACCOUNT THE FAIR MARKET VALUE OF THE ASSETS AS ON 1-4-1981. HENCE THE ASSESSING OFFICER ADOPTED THE MARKET VALUE OF THE LAND AS ON 1-4-1981 AND COMPUTED THE CAPITAL GAINS IN RELATION TO THE ACQUI SITION OF LAND. ON APPEAL THE COMMISSIONER (APPEALS) SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER AND DELET ED THE ADDITION ON ACCOUNT OF CAPITAL GAINS MADE BY THE ASSESSING OFFICER. ON THE REVENUE'S APPEAL THE TRI BUNAL ACCEPTED THE APPEAL BY PLACING RELIANCE ON THE FULL BENCH DECISION OF THIS COURT IN CIT V. RAJA MALWINDER SIN GH [2011] 334 ITR 48(P&H). IN THIS CASE ALSO THE ASSES SEE- APPELLANT HAD SUBMITTED THAT THE COST OF ACQUISITIO N IN THE PRESENT CASE HAD TO BE TAKEN AS THE COST TO THE PREVIOUS OWNER UNDER SECTION 49 OF THE ACT AND THE I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 7 OF 12 EXPLANATION TO SECTION 49 SPECIFICALLY PROVIDES THA T PREVIOUS OWNER IS ONE WHO HAS ACQUIRED THE ASSET BY A MODE OTHER THAN REFERRED TO IN CLAUSES 1 2 3 AND 4 OF THIS SUB SECTION. IT WAS FURTHER ARGUED THAT THE PREVIOU S OWNER UNDER THE ACT IS A PERSON WHO HAS ACQUIRED TH E ASSET BY PAYMENT OF MONEY I.E. THE COST INCURRED FO R ACQUISITION OF THE ASSET. IN CASE THE PREVIOUS OWNE R HAS NOT INCURRED ANY COST NEITHER THE PROVISIONS OF SEC TION 55(2) (B) NOR THE PROVISIONS OF SECTION 55 (3) OF T HE ACT WOULD APPLY. SUPPORT WAS DRAWN FROM JUDGMENT OF THE APEX COURT IN CIT V. B.C. SRINIVASA SETTY [1981] 12 8 ITR 294(SC). THE HIGH COURT REJECTED SUCH A CONTENTION AND HELD IN FAVOUR OF REVENUE. FURTHER ON 28.8.2014 A SIMILAR DECISION HAS BEEN PASSED BY THE HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOME-TAX V. GULAB SUNDRI BAPNA[20 14] 227 TAXMAN 161 (DELHI)(MAG.).IN THIS CASE THE ASSES SEE HAD TENANCY RIGHTS IN A LAND AND THE SUB-LEASE WAS FOR 17 YEARS AND ASSESSEE CONSTRUCTED A FACTORY THEREON. O N LAND ACQUISITION ASSESSEE CLAIMED THAT THEY WERE ENTITL ED TO COMPENSATION THE VALUE OF SUB-LEASE RIGHTS OF ASSE SSEE WAS ASCERTAINED AND COMPENSATION WAS ASSESSED AND P AID. THE ASSESSEE CONTENDED THAT THE ENHANCE COMPENSATIO N IS NOT LIABLE TO CAPITAL GAINS. THE HIGH COURT HELD TH AT THE RATIO OF THE SUPREME COURT DECISION IN CIT V. D.P. SANDU BROS. CHEMBER (P.) LTD. [2005] 273 ITR 1 (S.C.) HAS TO BE APPLIED AND THE COURT HAS TO PROCEED ON THE BASIS T HAT COST OF ACQUISITION OF LEASEHOLD RIGHTS COULD BE DETERMINED AND WAS CAPABLE OF BEING ASCERTAINED AND THIS WAS THE POSITION EVEN BEFORE SECTION 55(2) WAS AMEN DED BY FINANCE ACT 1994 WITH EFFECT FROM 1ST APRIL 19 95. APPLYING THE RATIO OF THE DECISION OF THE SUPREME C OURT IN D.P. SANDU BROS.'S CASE (SUPRA) IT HAS TO BE HELD THAT THE TENANCY RIGHT HAD COMPUTABLE COST OF ACQUISITION AN D THEREFORE THE CONSIDERATION RECEIVED ON SURRENDER OR ACQUISITION WAS TAXABLE AS CAPITAL GAINS EVEN PRIOR TO 1ST APRIL 1995. THE COURT NOTED THAT IN THIS CASE THE SUB- LEASE WAS FOR 17 YEARS AND EVEN CONSTRUCTION HAD BE EN RAISED BY THE PREDECESSORS OF THE RESPONDENT ASSESS EE.IN D.P. SANDU'S BROS. CASE (SUPRA) SUPREME COURT IN CATEGORICAL TERMS HAS HELD THAT THE COST OF ACQUISI TION COULD BE COMPUTED IN CASE OF ACQUISITION OF TENANCY RIGHTS. IN THE PRESENT CASE SUB-LEASE IN QUESTION WAS FOR A PERIOD OF 17 YEARS AND THE RESPONDENT ASSESSEE ALSO HAD CONSTRUCTED A SUPER-STRUCTURE A FACTORY WHICH WAS CONSTRUCTED BY THE PREDECESSOR OF THE RESPONDENT ASSESSEE. THE COURT NOTED THAT THE ASSESSEES WERE E NTITLED TO COMPENSATION ON ACQUISITION OF THEIR LAND UNDER THE I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 8 OF 12 SUB-LEASE AND THEY WERE PAID ACCORDINGLY TOO. THE C OURT HELD THAT THIS INDICATES THAT THE TENANCY RIGHT HAD VALUE AND THEREFORE COMPENSATION WAS PAID AND ONCE IT I S HELD THAT IT WAS POSSIBLE TO ASCERTAIN THE COST OF ACQUI SITION OF TENANCY RIGHTS THEN IT FOLLOWS THAT CAPITAL GAINS C OULD BE COMPUTED AND SHALL BE PAYABLE. APPLYING THE ABOVE CASE LAWS IT IS HELD THAT THE APPEAL OF THE ASSESSEE IN THIS CONNECTION CANNOT BE ACCEPTED FOR SEVERAL REASONS. THE GRANT OF LAND AS A PUTTAH TO CERTAIN LOYALISTS WAS DIRECTLY CONNECTED TO PAYMENT OF CONSIDERATION AND ECONOMIC BENEFIT TO TH E ERSTWHILE OCCUPIERS OF INDIA. THE PUTTAH WAS GIVEN TO ONE GOKOOL CHAND KHETTRY AND ITS TRANSMISSION TO RAM NARAYAN KSHETTRY IS NOT EXPLAINED. FURTHER WHEN HIS SON SHIB NARAYAN KHETTRY FILED A SUIT FOR PARTITION AN AWARD WAS PASSED IN HIS FAVOUR IN RESPECT OF ONLY ONE PLO T OF LAND I.E. PREMISES NO. 9 AMRATOLLA STREET. THE MANN ER IN WHICH THE OTHER HEIRS OR CLAIMANTS WERE PAID OFF (I N KIND OR IN CASH OR THROUGH PORTION OF ESTATE ETC) HAS NO T BEEN SPELT OUT. THE COST OF LITIGATION IS NOT GIVEN EITH ER. SUBSEQUENTLY SHIB NARAYAN KSHETTRY CONSTRUCTED A PROPERTY ON THE SAID PLOT WHICH IS AN INDICATOR OF COMPLETE OWNERSHIP. THESE INCIDENTS INDICATE THAT T HE PUTTAH HAD A COST AND THE SAME CAN BE ESTIMATED ON MANY BASIS. FURTHER THE SUPREME COURT IN THE CASE OF CIT VS. D.P. SANDU BROS. CHEMBUR (P) LTD. [2005] 273 ITR 1 (SC) HAS HELD THAT TENANCY RIGHTS ALSO HAVE A COST OF ACQUISITION. THE AMENDMENTSIN SECTION 55(2) OF THE ACT WHEREIN CLAUSE 55(2)(B) OF THE ACT AS WELL AS THE PROVISIONS OF SECTION 55(3)OF THE ACT HAVE LARGELY MADE THE ISSUE OF CAPITAL GAINS ON TRANSFER OF LAND FREE OF THE RULING IN THE CASE OFB.C. SRINIVASA SHETTY CASE (SU PRA). THE DECISIONS OF THE FULL BENCH OF THE HIGH COURT O F PUNJAB & HARYANA IN COMMISSIONER OF INCOME-TAX V. R AJA MALWINDER SINGH [2012] 206 TAXMAN 137 (P& H) (MAG.) IS DIRECTLY ON THE ISSUE AT HAND AND THE FACTS ARE THE SAME. THE HON'BLE HIGH COURT HAS REJECTED THE ARGUMENT TH AT THE COST IN THE HANDS OF ERSTWHILE RULER WAS NIL AN D HENCE THE MACHINERY PROVISIONS OF SECTION 48 OF THE ACT W ERE UNWORKABLE. THIS ORDER HAS BEEN REPEATED IN THE CAS E OF THAKUR DWARA SHRI KRISHANJI MAHARAJ HANDIYAYA V. COMMISSIONER OF INCOME- TAX PATIALA [2014) 366 ITR 381 (P&H). THE HIGH COURT OF DELHI ALSO IN THE CASE OF COMMISSIONER OF INCOME-TAX V. GULAB SUNDRI BAPNA[20 14] 227 TAXMAN 161 (DELHI)(MAG.) HAS ATTRIBUTED VALUE T O I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 9 OF 12 TENANCY RIGHTS. THE CASE LAWS RELIED UPON BY THE AS SESSEE ARE EITHER NOT RELATED TO LAND OR ARE CASES OF SUCC ESSION BY WILL ETC U/S 49(1)(III A) OF THE ACT. IN THE PRE SENT CASE THE ASSESSEE IS A HUF AND THE PROPERTY UNDER DISPUT E HAS BEEN CLAIMED AS A HUF PROPERTY ONLY AND IN SUCH A C ASE THERE IS NO SUCCESSION INHERITANCE OR DEVOLUTION I NVOLVED AS THE OWNERSHIP NEVER CHANGED. FURTHER THE DECISIO NS CITED ABOVE IN REVENUE'S FAVOUR ARE MORE CLOSER TO THE FACTS OF THE CASE. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS) THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GR OUNDS:- (1)THE ORDERS OF THE LOWER AUTHORITIES ARE ARBITRA RY UNREASONED VOID ERRONEOUS AND BAD IN LAW TO THE EXTENT TO WHICH THEY ARE PREJUDICIAL TO THE INTERESTS OF T HE APPELLANT. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN DISMISSING THE CLAIM OF THE APPELLANT THAT SINCE THE PROPERTY AT 9 AMRATOLA ST REET KOLKATA-70000 1 DID NOT HAVE ANY COST OF ACQUISITI ON NO CAPITAL GAINS TAX WAS CHARGEABLE ON THE TRANSFER OF SUCH PROPERTY. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN UPHOLDING THE FINDING OF TH E A.O. THAT EVEN IF THERE WAS NO COST OF THE PROPERTY SINC E THE LAND HAD BEEN ACQUIRED BY THE FOREFATHERS OF THE ME MBERS OF THE APPELLANT HUF WITHOUT PAYING ANY CONSIDERATI ON THE VALUE OF THE PROPERTY AS ON 01.04.1981 WAS TO B E CONSIDERED AS COST OF ACQUISITION FOR THE PURPOSE O F COMPUTATION OF CAPITAL GAINS ON TRANSFER OF THE PRO PERTY. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN NEGLECTING TO TAKE INTO CONSIDERATION THE FACT THAT ALTHOUGH THE VALUATION OF THE PROPERTY TRANSFERRED FOR STAMP DUTY PURPOSE WAS ORIGINALLY RS.1 69 99 800/- LATER ON HOWEVER THE SAID VALUATION WAS REDUCED BY THE ORDER OF THE GOVERNOR TO RS.61 99 950/- ONLY AS AGAINST THE VALUATION OF RS.78 01 000/- ADOPTED BY THE DISTRICT VALUATION OF FICER. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. GROUND NO. 1 RAISED BY THE I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 10 OF 12 ASSESSEE IN THIS APPEAL IS GENERAL WHICH DOES NOT CALL FOR ANY SPECIFIC ADJUDICATION AS AGREED EVEN BY THE LD. COUNSEL FOR THE ASSESSEE. 5. AS REGARDS THE ISSUE RAISED IN GROUNDS NO. 2 AND 3 CHALLENGING THE VERY TAXABILITY OF THE LONG-TERM CAPITAL GAIN ARISI NG FROM THE TRANSFER OF THE PROPERTY IN QUESTION OF THE ASSESSEE THE LD. C OUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE ME HAS RAISED THE SAM E CONTENTION AS RAISED BEFORE THE AUTHORITIES BELOW THAT SINCE THE SAID PR OPERTY DID NOT HAVE ANY COST OF ACQUISITION IT WAS NOT POSSIBLE TO DETERMI NE THE CAPITAL GAIN ARISING FROM THE SALE THEREOF AND THERE WAS NO QUES TION OF LEVY OF ANY CAPITAL GAIN TAX AS HELD BY THE HONBLE SUPREME COU RT IN THE CASE OF SRINIVASA SETTY (B.C.) (SUPRA). HOWEVER AS RIGHTLY HELD BY THE AUTHORITIES BELOW AND FURTHER REITERATED BY THE LD. D.R. AT THE TIME OF HEARING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SRINIVASA SETTY (B.C.) (SUPRA) IS APPLICABLE WHEN THE COST OF ACQUISITION OF THE PROPERTY IS NOT ASCERTAINABLE AND THIS POSITION HAS BEEN CLARIFIED BY THE HONBLE SUPREME COURT IN ITS SUBSEQUENT DECISION RENDERED IN THE CA SE OF D.P. SANDU BROS. CHEMBUR (P) LIMITED (SUPRA) BY HOLDING THAT AN ASSE T WHICH IS CAPABLE OF ACQUISITION AT A COST WOULD BE INCLUDED WITHIN THE PROVISIONS PERTAINING TO THE HEAD CAPITAL GAINS AS OPPOSED TO ASSETS IN THE ACQUISITION OF WHICH NO COST AT ALL CAN BE CONCEALED. THE RATIO OF THE VARIOUS DECISIONS OF THE HONBLE HIGH COURTS AS WELL AS THE TRIBUNAL AS REFERRED TO AND RELIED UPON BY THE ASSESSING OFFICER AND BY THE LD. CIT(AP PEALS) IN THEIR RESPECTIVE ORDERS FURTHER SUPPORTS THE CASE OF THE REVENUE ON THIS ISSUE AND RESPECTFULLY FOLLOWING THE SAME I FIND NO INFI RMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) UPHOLDING THE ORDER O F THE ASSESSING OFFICER IN BRINGING TO TAX LONG-TERM CAPITAL GAIN ARISING T O THE ASSESSEE FROM THE SALE OF ITS PROPERTY IN QUESTION. GROUNDS NO. 2 & 3 OF THE ASSESSEES APPEAL ARE ACCORDINGLY DISMISSED. 6. AS REGARDS THE ISSUE RAISED IN GROUND NO. 4 RELA TING TO THE CLAIM OF THE ASSESSEE THAT THE VALUATION AS DETERMINED FOR T HE PURPOSE OF PAYMENT OF STAMP DUTY ORIGINALLY AT RS.1.69 CRORES WAS SUBS EQUENTLY REDUCED TO I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 11 OF 12 RS.61 99 950/- BY THE ORDER OF THE GOVERNOR IT IS OBSERVED THAT THIS CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFIC ER AS WELL AS BY THE LD. CIT(APPEALS) ON THE GROUND THAT THERE WAS REDUCTION IN STAMP DUTY ONLY BY THE ORDER OF THE GOVERNOR AND NOT THE REDUCTION IN VALUE OF PROPERTY AS ADOPTED ORIGINALLY FOR THE PURPOSE OF PAYMENT OF ST AMP DUTY. A COPY OF THE RELEVANT ORDER OF THE GOVERNOR IS PLACED BY THE LD. COUNSEL FOR THE ASSESSEE AT PAGE NO. 36 OF THE PAPER BOOK ALONG WIT H THE COPY OF THE RELEVANT GAZETTE AT PAGE NO. 37. A PERUSAL OF THE S AME HOWEVER SHOWS THAT THE RELEVANT DETAILS AS REGARDS THE BASIS ON W HICH STAMP DUTY CONCESSION WAS GIVEN ARE NOT AVAILABLE. IT IS ALSO NOT CLEAR AS TO WHETHER SUCH CONCESSION WAS GIVEN BY WAY OF REDUCING THE MA RKET VALUE OF THE PROPERTY FOR THE PURPOSE OF STAMP DUTY AS CLAIMED B Y THE ASSESSEE. I THEREFORE CONSIDER IT JUST AND PROPER TO RESTORE T HIS MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER GIVING PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE AND AFTER VERIFYING THE CLAIM OF THE ASSESSEE FROM THE RELEVANT RECORD. GROUND NO. 4 IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSES. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 28 2016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA THE 28 TH DAY OF SEPTEMBER 2016 COPIES TO : (1) SHIB NARAYAN KEHETTRY-HUF 44 RAM DULAL SARKAR STREET KOLKATA-700 006 (2) INCOME TAX OFFICER WARD-38(4) KOLKATA (3) COMMISSIONER OF INCOME TAX (APPEALS)-11 KOLKA TA; (4) COMMISSIONER OF INCOME TAX- I.T.A. NO. 723/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 12 OF 12 (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES KOLKATA LAHA/SR. P.S.