Commissioner Of Income Tax, Jalandhar-I, Jalandhar v. M/S Marketers, Basti Danishmandan Road, Jalandhar

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-359-2014 (O&M) Date of decision:- 09.07.2015 Commissioner of Income Tax, Jalandhar-I, Jalandhar. Versus ...Appellant M/s Marketers, Basti Danishmandan Road, Jalandhar. ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE G.S. SANDHAWALIA Present: Mr. Vivek Sethi, Advocate, for the appellant. * * * * S.J. VAZIFDAR, A.C.J. (ORAL) This is an appeal against the order of the Tribunal dated 30.04.2013 directing the Assessing Officer to compute the capital gains on the basis of the valuation indicated in the order. The matter pertains to the assessment year 2002-2003. 2.The appellant contends that the following issues raise substantial questions of law:- “(i) Whether on the facts and in thecircumstances of the case and in law theHon’ble ITAT has erred in directing theAssessing Officer to adopt the value as on01.04.1981 at the rate of Rs. 2,833/- per marlawithout appreciating the material on recordand without taking into account the report ofthe Valuation Officer who took 12 instancesincluding 2 sale instances given by the assesseein arriving at value of 1118 per marla of theland as on 01.04.1981 and thus vitiating itsdecision? (ii) Whether on the facts and in thecircumstances of the case and in law theHon’ble ITAT has erred in directing the A.O. toadopt the value of the factory building landsold on 01.04.2002 @ Rs. 12,500/- per marlawhich is a rate of agriculture land whereas thesale was of commercial property?” Re: Question (i) 3.The assessee was a firm constituted w.e.f. 04.07.1981 under thePartnership Act, 1932. On 19.12.2001, the firm stood dissolved under the deedof dissolution. One of the partners took over the assets and liabilities of thefirm. Another firm was constituted under the deed of partnership dated21.12.2001 comprising one of the erstwhile partners and his son. 4.We proceed on the basis that the erstwhile firm is liable to capitalgains on account of the transfer of the immovable properties. The Tribunal hasrightly valued the properties as in the year 1981 and in the year 2001 for thoseare the years in which the properties are deemed to have been acquired andtransferred respectively. The Tribunal while considering the valuation at thetime of acquisition i.e. in the year 1981 observed that the valuation arrived atby the Valuation Officer and the Assessing Officer cannot be accepted as theinstances of sale were not provided to the assessee for rebuttal. The Tribunalaccepted the instances of sale furnished on behalf of the assessee on the groundthat they were in respect of the properties in close proximity to the land ownedby the assessee. Copies of registered sale deeds were relied upon in this regard.The Tribunal's reliance upon the instances of sale furnished by the assesseecannot be said to be perverse or irrational. Absent anything else, proximity ofthe land in question is not only an important, but a relevant factor. TheTribunal, therefore, accepted the valuation of Rs. 2833/- per marla ascontended by the assessee and rejected the valuation of Rs. 1118/- per marla ascontended on behalf of the department. 5.The Tribunal thereafter valued the land as on 19.12.2001 i.e. the dateon which the land was transferred by the assessee/erstwhile firm upon thedissolution of the firm. In this regard, the Tribunal accepted the rate ofRs. 12,500/- per marla as contended by the assessee and did not acceptthe rate of Rs. 45,350/- per marla as computed by the Valuation Officer and 5.The Tribunal thereafter valued the land as on 19.12.2001 i.e. the dateon which the land was transferred by the assessee/erstwhile firm upon thedissolution of the firm. In this regard, the Tribunal accepted the rate ofRs. 12,500/- per marla as contended by the assessee and did not acceptthe rate of Rs. 45,350/- per marla as computed by the Valuation Officer and accepted by the Assessing Officer. The Tribunal rightly noted that the saleinstances relied upon by the Assessing Officer were irrelevant as theypertained to small piece of lands admeasuring from 1.5 marlas to 6 marlas,whereas the land in question was 150 marlas. The Tribunal was justified intaking into consideration the fact that the assessee had purchased landadmeasuring 170 marlas at the rate of Rs. 12,500/- per marla on 04.01.2002,which was just after a fortnight from the date of the dissolution of the firm.Two important factors, namely, the area of the land and the proximity of thedates of the transactions were taken into consideration by the Tribunal. Thefinding of the Tribunal on this ground cannot be said to be perverse. 6.Question (i), therefore, raises not a question of law, but a question ofappreciation of facts. 7.The appeal in this regard is, therefore, dismissed. Re: Question (ii) 8.The aforesaid land had standing on it factory sheds. Considering theage of the factory sheds, the Tribunal came to the conclusion that the writtendown value as declared in the books of account ought to be taken intoconsideration. The Tribunal set aside the addition of Rs. 14,75,292/- onaccount of short term capital gains observing, inter alia, that the AssessingOfficer had failed to take into consideration the relevant factors such as the ageof the building and the condition thereof. 9.Question (ii) also does not raise a question of law. 10.The appeal is, therefore, dismissed.10.The appeal is, therefore, dismissed. (S.J. VAZIFDAR) ACTING CHIEF JUSTICE 09.07.2015Amodh (G.S. SANDHAWALIA) JUDGE