Commissioner Of Income Tax, Jalandhar-Ii,Jalandhar v. Sh. Ribu Saggi, 684-R, Model Town,Distt. Jalandhar

Income Tax Appeal No.154 of 2013 IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income Tax Appeal No.154 of 2013Date of Order: 26.08.2013 Commissioner of Income Tax, Jalandhar-II,Jalandhar. ...Appellant Versus Sh. Ribu Saggi, 684-R, Model Town,Distt. Jalandhar. ..Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Mr. Vivek Sethi, Advocate for the appellant. RAJIVE BHALLA, J. By way of this order, we shall dispose of Income Tax AppealNos.154, 155, 162, 163, 164 and 165 of 2013, as they involveadjudication of same questions of facts and law. Facts are beingtaken from Income Tax Appeal No.154 of 2013. The assessees filed returns of their income. The AssessingOfficer held that “Malba” (scrap) valued at Rs.7,69,027/- cannot becomputed under the head “Capital Gain” as it is "Income from OtherSources" and valued the land sold jointly by the assessees atRs.21,000/- per marla as on 01.04.1981 and, therefore, re-workedcapital gain at Rs.37,42,991/-. The assessee filed an appeal beforethe C.I.T(Appeals), which was partly allowed by directing theAssessing Officer to re-compute capital gain on the sale of malba byreducing the rate to Rs.3,12,000/-, after indexing the cost of structure as on 01.04.1981 at Rs.56,440/-. The CIT(Appeals) also directed theAssessing Officer to assign value of Rs.83,802/- per marla as on01.04.1981 for the purpose of calculating capital gain. Aggrieved bythis order, the revenue as well as the assessee filed separateappeals. The Income Tax Appellate Tribunal (hereinafter referred toas 'the Tribunal') dismissed the appeals filed by the revenue andpartly allowed appeals filed by the assessees by confirming the reliefgranted by the CIT(Appeals) on account of addition made for malbaand directed the Assessing Officer to recalculate capital gain bytaking value of land as Rs.1,25,000/- per marla as againstRs.21,000/-, assessed by the Assessing Officer. Counsel for the revenue submits that the sale of "malba"cannot possibly be taxed under the head “Capital Gain” as it amountsto "Income from Other Sources". The finding recorded by theTribunal, to the contrary is illegal and should be set aside. It is alsocontended that addition made by the Assessing Officer on account ofcapital gain has been wrongly reversed by the Tribunal and,therefore, the following substantial questions of law arise foradjudication:- i). Whether on the facts and circumstances of thecase and in law the Hon'ble ITAT was justified inconfirming the relief allowed by the Ld. CIT(A) byholding that the sale proceed of malba will betaxable under the head “Capital Gain” and notunder the head “Income from other Sources?”.ii). Whether on the facts and circumstances of the case and in law the Hon'ble ITAT was justified inallowing the appeal of the assessee in taking thefair market value of land at Rs.1,25,000/- permarla on estimated basis without taking intoconsideration the fair market value adopted by theA.O. which was based on specific instances ofsale in the assessment order?” We have heard counsel for the revenue, perused thesubstantial questions of law and upon due consideration of theimpugned orders, passed by the Income Tax Appellate Tribunal andthe CIT(Appeals), have no hesitation in holding that there is no errormuch less an error of law that gives rise to the substantial questionsof law, framed by the revenue. case and in law the Hon'ble ITAT was justified inallowing the appeal of the assessee in taking thefair market value of land at Rs.1,25,000/- permarla on estimated basis without taking intoconsideration the fair market value adopted by theA.O. which was based on specific instances ofsale in the assessment order?” We have heard counsel for the revenue, perused thesubstantial questions of law and upon due consideration of theimpugned orders, passed by the Income Tax Appellate Tribunal andthe CIT(Appeals), have no hesitation in holding that there is no errormuch less an error of law that gives rise to the substantial questionsof law, framed by the revenue. The proceeds of malba, i.e., material left over afterdemolition of a structure has rightly been held to be taxable under thehead “Capital Gain” and not “income from other sources”. We find nolegal foundation of argument addressed by counsel for the revenuethat income from “malba” should be assessed as income from othersources. As regard the market value at Rs.1,25,000/- assessed bythe Tribunal, it is pure finding of fact based upon consideration ofmaterial on record and does not, in our considered opinion, give riseto any substantial question of law. The discretion exercised by theCIT(Appeals) and the Tribunal is neither arbitrary nor illegal so as to warrant interference. A relevant extract from the impugned orderreads as follows:- “20.In the facts and circumstances of the case, the Ld. CIT(A) on the basis of valuation of the ValuationOfficer has taken the average of the market valueof land of three properties mentioned in his order.On perusal of the same and also the argumentsmade by the assessee before the AO and the Ld.CIT(A) and considering the objections of theassessee, there appears to be not a identicalcomparable property, which could be taken asinstance to substitute a valuation to the impugnedproperty as on 1.4.81. At the same time, thevaluation made by the DVO, valuation submittedby the assessee's valuer who is govt. approvedvaluer and the objections of the assessee havebeen taken into account and to meet the ends ofjustice, if a valuation of Rs.1,25,000/- per marla issubstituted to the rate applied by the Ld. CIT(A) atRs.83,802/- per marla will meet both ends ofjustice. The orders of both the authorities beloware modified accordingly and we direct theAssessing Officer to adopt a rate of Rs.1,25,000/-per marla as on 1.4.81 and ompute the capitalgains accordingly. 21. As regard the demotion of super-structure, weconcur with the finds of the Ld. CIT(A) that therewas extinguishment of the right of the assessee inthe super structure leading to transfer of the super Income Tax Appeal No.154 of 2013 structure within the meaning of section 2(47) of theAct. The Ld. CIT(A) has rightly directed the AO tocompute capital gains on sale of malba byreducing from the sale consideration ofRs.3,12,000/- the indexed cost of the structur ason 1.4.81 at Rs.56,640/-. The contention of capitalgains arise on teh sale of factory malba of theassessee has rightly been accepted by the Ld. CIT (A)." In view of what has been stated hereinabove, and in theabsence of any error of jurisdiction or of law, the appeals aredismissed. (RAJIVE BHALLA) JUDGE August 26, 2013 (DR. BHARAT BHUSHAN PARSOON)nt JUDGE