The Pr. Commissioner Of Income Tax2, Chandigarh v. M/S Quark Media House India Pvt. Ltd. Mohali

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ������������������������������������� DATE OF DECISION: 24.01.2017 -The Pr. Commissioner of Income Tax2, Chandigarh. versus …..Appellant M/s Quark Media House India Pvt. Ltd. Mohali. .....Respondent CORAM:- HON'BLE MR.JUSTICE S.J.VAZIFDAR, CHIEF JUSTICE HON’BLE MR. JUSTICE DEEPAK SIBAL, JUDGE. Present: Ms. Urvashi Dugga, Advocate for the appellant Mrs. Radhika Suri, Senior Advocate with Ms. Rinku Dahiya, Advocate, for the respondent .. S.J.VAZIFDAR,CHIEFJUSTICE: This is an appeal against the order of the Income Tax Appellate Tribunal dismissing the appeal against the order of the Commissioner of Income Tax (Appeals) allowing the assessee’s appeal against the order of the Assessing Officer. The matter pertains to the assessment year 2006-07. 2. According to the appellant, the following substantial questions of law arise:- i)Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in deleting the addition by holding that the transaction with a related party was not in terms of provisions of Section 40A(2)(b) of the Income Tax Act whereas the provisions of this Section were clearly applicable to the facts of the case? case, the Hon’ble ITAT is right in deleting the addition by holding that the transaction with a related party was not in terms of provisions of Section 40A(2)(b) of the Income Tax Act whereas the provisions of this Section were clearly applicable to the facts of the case? ii)Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in holding that reference made under section 55A of the Income Tax Act was bad in law whereas the Assessing Officer in the surrounding circumstances, had rightly invoked the case, the Hon’ble ITAT is right in holding that reference made under section 55A of the Income Tax Act was bad in law whereas the Assessing Officer in the surrounding circumstances, had rightly invoked the provisions of this section to determine the fair market value of the capital asset sold? iii)Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in holding that the Hon’ble Supreme Court’s decision rendered in the case of McDowell & Co. Ltd. v. CTO 154 ITR 148 is not applicable on the facts of the case? iv)Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is perverse in not deciding the specific ground of appeal taken by the appellant at Ground No.2 which is regarding passing of appellate order by the learned CIT(A) without affording an opportunity of being heard to the Assessing Officer which was specifically requested for in the ITNS-51 submitted to the CIT(A)? However, only questions-2 and 3 were argued before us. The appeal is accordingly admitted in respect of questions No.2 and 3. 3. The respondent-assessee filed its return of income declaring income from other sources at � 37,13,113/- after claiming exemptions in the sum of about ��13.50 crores under section 10-B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). The case was selected for compulsory scrutiny pursuant to which notices under section 143(2) and 142(1) of the Act were issued. A reference was made to the Transfer Pricing Officer (TPO) in view of an international transaction between the assessee and one of its associate enterprises which exceeded � 5 crores. During the course of the assessment proceedings the Assessing Officer noticed that M/s Quark Media House (India) Pvt. Ltd. i.e. the assessee by a sale deed dated 29.04.2005 transferred to M/s Quark City India Pvt. Ltd. land admeasuring 24000 sq. yards in the industrial area of Mohali together with the building constructed thereon for a consideration of � 25.10 crores. The building comprised of a built up area of 13520.27 sq. meters complete with infrastructure and modern facilities permanently embedded including HVAC system, electrical installation, networking equipment, office equipment, drinking water plant, water treatment plant and a swimming pool. During the course of the assessment proceedings the Assessing Officer noticed that M/s Quark Media House (India) Pvt. Ltd. i.e. the assessee by a sale deed dated 29.04.2005 transferred to M/s Quark City India Pvt. Ltd. land admeasuring 24000 sq. yards in the industrial area of Mohali together with the building constructed thereon for a consideration of � 25.10 crores. The building comprised of a built up area of 13520.27 sq. meters complete with infrastructure and modern facilities permanently embedded including HVAC system, electrical installation, networking equipment, office equipment, drinking water plant, water treatment plant and a swimming pool. 4. It is not necessary to consider two aspects which the Assessing Officer dealt with in detail, namely, the valuation of the land and the building and the relationship between the assessee and the purchaser thereof viz. M/s Quark Media House (India) Ltd. These aspects were not questioned on behalf of the assessee. We have for the purpose of this appeal proceeded on the basis that the market value of the property sold by the assessee to M/s Quark City India Pvt. Ltd. is about 70 crores and that the assessee and the vendee M/s Quark City India Pvt. Ltd. are inter-connected group companies. In this regard, it is sufficient, therefore to note two things. By a letter dated 22.10.2009 the Assessing Officer made a reference to the District Valuation Officer (DVO) under section 55-A of the Act to ascertain the fair market value of the land and the building. The D.V.O. by his report forwarded under cover of a letter dated 31.12.2009 estimated the value of the property at � 70.08 crores. Secondly, the Assessing Officer accordingly for the purpose of capital gains valued the property at �70,08,70,000/- after considering in detail the nature of the property and other expenses of sale. The Assessing Officer also dealt with the issue of the two entities being closely related in detail. For the purpose of this appeal it is sufficient to note that the assessee is a fully owned subsidiary of M/s Quark Media House SARL, Switzerland and M/s Quark City India Pvt. Ltd. i.e. the vendee is a 100% subsidiary of another foreign company, namely, F.E. Holdings Mauritius Ltd. The two foreign companies are part of Quark group, the holding company of which is Quark Inc. USA. 5. The question that falls for consideration is whether for the purpose of calculating the capital gains arising on account of the said transaction, the sale price ought to be taken as � 25 crores as mentioned in the sale deed or � 70 crores which is the value of the property arrived at by the Assessing Officer. The answer to this question also requires a consideration as to whether the Assessing Officer rightly made a reference to the D.V.O. under section 55A to ascertain the fair market value of the property. 6. The Assessing Officer after noting the contentions on behalf of the assessee observed that a good case had been made out on behalf of the assessee that the full consideration received by the assessee for the sale of the property is the value stated in the sale deed. He, however, observed that the assessee had failed to address the real issue that because the assessee and the purchaser are related parties with common Directors and management, the sale transaction was not carried out at the market price. In other words according to him the price mentioned in the sale deed was not the market value and this was in view of the relationship between the parties. He disbelieved the assessee’s contention that the transaction was a bona fideone having been entered into as per the bargain negotiated keeping in view all the market circumstances prevalent at the relevant time. According to him, this is a case where the business substance of the matter should be considered over the form. He held that the transaction was not entered into at the market rate but was so arranged and structured that the assessee had no tax liability on account thereof and was therefore a colourable device to avoid the tax liability. the form. He held that the transaction was not entered into at the market rate but was so arranged and structured that the assessee had no tax liability on account thereof and was therefore a colourable device to avoid the tax liability. 7. The Commissioner of Income Tax (Appeals) held that the expression “full value of consideration” used in Section 48 cannot be construed as having a reference to the market value of the asset transferred; that the question of market value does not arise; that what is to be seen is the consideration actually arrived at between the parties for the transaction and that the adequacy or inadequacy of the price bargained between the parties is not relevant. The CIT(A) concluded that the Assessing Officer had erred in considering the fair market value for the purpose of computing the capital gain and that the Assessing Officer had not shown that the assessee had received any consideration other than that mentioned in the sale deed. The CIT(A) further held that the Assessing Officer had unnecessarily emphasized that the price was below the market price as the vendee and the assessee were closely related as this issue is not relevant for the purpose of computing the capital gain. The CIT(A) further held as follows: The only factor on the basis of which the Assessing Officer made the assessment was that the assessee sold the assets below the market price and that this factor was inapplicable for the purpose of computation of capital gain under section 48 of the Act. The Assessing Officer failed to establish that the assessee had received any consideration other than that stated in the sale deed. In the absence thereof the conclusion that the assessee had structured the transaction to avoid income tax or to minimize it is without basis and justification. It is not necessary for us to consider the findings of the CIT(A) regarding the mode of computation for that issue as already mentioned was not raised before us. Section 55A does not entitle the Assessing Officer to disturb the sale consideration as stated in the sale deed. It was not necessary to compute the fair market value and therefore, the Assessing Officer could not have referred the matter to the D.V.O. 8. The Tribunal agreeing with the CIT(A) observed as follows: The full value of consideration is the full sale price actually paid and cannot be construed as having a reference to the market value of the asset/property transferred. What is to be determined is the consideration bargained for and not the market value in the case of sale while computing the capital gains. The Assessing Officer has no authority to substitute the fair market value of consideration actually paid unless it is demonstrated that the assessee had received more than what was declared by him. In the present case it was not the case of the Assessing Officer that the assessee had received any consideration more than what was mentioned in the sale deed. Therefore, there was no necessity for computing the fair market value and the Assessing Officer accordingly could not have referred the matter to the D.V.O. 9. Ms. Dugga, the learned counsel appearing on behalf of the appellant-revenue, contended that for the purpose of computing the capital gains the Assessing Officer is entitled to ignore the consideration stated in the sale deed if he is satisfied that the same is far less than the fair value or the market value thereof. She further submitted that for the purpose of determining the actual consideration it was always open to the Assessing Officer to refer the matter under section 55A to the D.V.O. She further submitted that even if section 48 does not permit the reference to the D.V.O. under section 55A, the respondent’s case is covered by Section 50C. The Assessing Officer could have arrived at the true valuation of the property under section 50C. The submission that the Stamp Authority is bound by the circle rate is erroneous. The circle rates are only indicative and not determinative. the market value thereof. She further submitted that for the purpose of determining the actual consideration it was always open to the Assessing Officer to refer the matter under section 55A to the D.V.O. She further submitted that even if section 48 does not permit the reference to the D.V.O. under section 55A, the respondent’s case is covered by Section 50C. The Assessing Officer could have arrived at the true valuation of the property under section 50C. The submission that the Stamp Authority is bound by the circle rate is erroneous. The circle rates are only indicative and not determinative. 10. Mrs. Suri, the learned senior counsel appearing on behalf of the respondent on the other hand submitted as follows:- i) The reference to the D.V.O. under section 55A in the present case was without jurisdiction. It is only where the provisions of Chapter-IVrequire determination of the fair market value, can the reference be made to the D.V.O. Section 48 requires determination of the full value of the consideration received or accruing and not the determination of the fair market value. the present case was without jurisdiction. It is only where the provisions of Chapter-IVrequire determination of the fair market value, can the reference be made to the D.V.O. Section 48 requires determination of the full value of the consideration received or accruing and not the determination of the fair market value. ii) The full value of consideration received or accruing is the actual amount bargained for between the parties and not the fair market value of the asset that is transferred. iii)The value of the asset/transaction can be computed under section 50C only at the instance of the assessee by the authorities under the Indian Stamp Act. If the valuation under the Indian Stamp Act is higher then that would be the valuation under section 50C. In the case before us the transaction is higher then that would be the valuation under section 50C. In the case before us the transaction iv) value is more than the circle rate and the rate assessed by the Stamp Valuation Authority. In any event there is no finding in the present case that the assessee received any consideration than that shown in the sale deed. 11. Sections 48, 50C and 55A of the Act in so far as they are relevant and applicable to the assessment years 2006-07 read as under:- Mode of computation. 43. Tne income cnargeable under the head Capital gains|Shall be computed, by deducting from the full value of tne|consideration received or accruing as a result of the transferof the capital asset the following amounts, namely :— (i)expenditureincurred|whollyand.exclusively In.connection with such transfer; (il) tne cost of acquisition of the asset and the cost of any|improvement thereto: Special provision for full value of consideration in.certain cases. 50C. (1) Where the consideration received or accruing as a.result of the transfer by an assessee of a capital asset, beingland or building or potn, is less than the value adopted or assessed or assessable by any authority of a StateGovernment (hereafter in this section referred to as the|“stamp valuation authority) for the purpose of payment of |stamp duty in respect of such transfer, the value so adoptedOr assessed or assessable shall, for the purposes of section.48, be deemed to be the full value of the consideration.received or accruing as a result of such transfer. Foliowing provisos shall be inserted to sub-section (1) of section 50C by the Finance Act, 2016, w.e.f. 1-4-2017 : Provided that where the date of the agreement fixingthe amount of consideration and the date of registration for|tne transfer of the capital asset are not the same, the value|adopted or assessed or assessable by the stamp valuation|authority on the date of agreement may be taken for thepurposes of computing full value of consideration for such|transfer: Foliowing provisos shall be inserted to sub-section (1) of section 50C by the Finance Act, 2016, w.e.f. 1-4-2017 : Provided that where the date of the agreement fixingthe amount of consideration and the date of registration for|tne transfer of the capital asset are not the same, the value|adopted or assessed or assessable by the stamp valuation|authority on the date of agreement may be taken for thepurposes of computing full value of consideration for such|transfer: Provided furtner that the first proviso snall apply onlyin a case where the amount of consideration, or a part|tnereof, has been received by way of an account payee|cheque or account payee bank draft or by use of electronic|clearing system through a bank account, on or before thedate of the agreement for transfer. (2) Without prejudice to the provisions of sub-section (1),|where— (a) the assessee claims before any Assessing Officer that thevalue adopted or assessed or assessable by the stamp|valuation authority under sub-section (1) exceeds the fair|market value of the property as on the date of transfer; (bp) the value so adopted or assessed or assessable py tnestamp valuation authority under sub-section (1) has notbeen disputed in any appeal or revision or no reference has_been made before any otner authority, court or the High|Court, the Assessing Officer may refer the valuation of the capitalasset to a Valuation Officer and where any such reference is_made, tne provisions of sub-sections (2), (3), (4), (5) and|(6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7/7) of section 23A, sub-section (5) osection 24, section 34AA, section 35 and section 37 of theWeailtn-tax Act, 1957 (27 of 1957), snall, with necessarymodifications, apply in relation to such reference as theyapply in relation to a reference made by the AssessingOfficer under sub-section (1) of section 16A of that Act. Explanation 1.—For tne purposes of this section, Valuation|Officer’ shall have the same meaning as in clause (r)|of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2.—For the purposes of this section, theexpression assessable means the price wnicn the stamp|valuation autnority would nave, notwithstanding anything to the contrary contained in any other law for the time being in.force, adopted or assessed, if it were referred to such.autnority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2),|where the value ascertained under sub section (2) exceeds|the value adopted or assessed or assessable by the stamp.valuation authority referred to in sub-section (1), the value|so adopted or assessed or assessable by sucn authority shalbe taken as the full value of the consideration received or|accruing as a result of the transfer. Note: The words “value” and “assessable” used throughout.Section 50C and explanation-2 were inserted by Finance|(No.2) Act, 2009 with effect from 01.10.2009. Reference to Vaiuation Officer. 55A. Witn a view to ascertaining the fair market value of a|capital asset for the purposes of this Chapter, the AssessingOfficer may refer the valuation of capital asset to a ValuationOfticer— (a) in a case where the value of the asset as claimed by theassessee is In accordance with the estimate made by ajregistered valuer, if the Assessing Officer is of opinion that.tne value so claimed is less than its fair market value; (bd) in any other case, if the Assessing Officer is of opinion— (i) that the fair market value of the asset exceeds tne valueof the asset as claimed by the assessee by more than such.percentage of the value of the asset as so claimed or by.more than sucn amount as may be prescribed in this benalf;OF (il) that having regard to the nature of tne asset and otner|relevant circumstances, it is necessary so to do, (a) in a case where the value of the asset as claimed by theassessee is In accordance with the estimate made by ajregistered valuer, if the Assessing Officer is of opinion that.tne value so claimed is less than its fair market value; (bd) in any other case, if the Assessing Officer is of opinion— (i) that the fair market value of the asset exceeds tne valueof the asset as claimed by the assessee by more than such.percentage of the value of the asset as so claimed or by.more than sucn amount as may be prescribed in this benalf;OF (il) that having regard to the nature of tne asset and otner|relevant circumstances, it is necessary so to do, and where any such reference is made, the provisions of |sub-sections (2), (3), (4), (5) and (6) of section 16A, clauses—(na) and (i) of sub-section (1) and sub-sections (3A) and (4)of section 23, sub-section (5) of section 24, section 34AA,section 35 and section 37 of the Wealth-tax Act, 1957 (27 of1957), snall with the necessary modifications, apply in.relation to sucn reference as tney apply in relation to ajreference made by the Assessing Officer under sub-section.(1) of section 16A of tnat Act. Explanation.—In this section, “Valuation Officer" has theSame meaning, as in clause (r) of section 2 of the Wealth-tax|Act, 1957 (27 of 1957). Note: The concluding words in Section 50A(a) “is less than.its fair market value” were substituted by the words “is atvariance with its fair market value by tne Finance Act, 2012|with effect from O1.0/7.7012.— Re: Question (ii) 12. The first and the main question concerns the ambit and the meaning of the words “full value of the consideration received or accruing as a result of the transfer of the capital asset”. On behalf of the assessee it is contended that these words and especially the words “full value of the consideration received or accruing”refer to the consideration arrived at between the parties and not the fair market value thereof. On behalf of the revenue it was contended otherwise. 13. Mrs. Suri, firstly relied upon the judgment of the Supreme Court in Commissioner of Income Tax, West v. George Henderson and Co. Ltd. (1967) 66 ITR 622 where section 12B of the 1922 Act fell for consideration. Section 12B of the 1922 Act as it was in force on April, 1, 1947 read as under:- “Section 12-B of the Income Tax Act as it was in force|on April 1, 1947 provided as follows: “12-B. (1)Capital Gains.— The tax shall be payable byan assessee under the head ‘Capital gains’ in respect|of any profits or gains arising from the sale, exchange|or transter of a capital asset effected after the 31st day|of March, 1946 and before the first day of April, 1948,and such profits and gains shall be deemed to be|income of the previous year in which the sale,exchange or transfer took place: “KK (2) The amount of a capital gain shall be computed|alter making the following deductions from the full|value of the consideration for which the sale exchangeor transfer of the capital asset is made, namely: #1) expenditure incurred solely in connection with such|sale, exchange or transfer; ul) the actual cost to the assessee of the capital asset,including any expenditure of a capital nature incurred|and borne by him in making any additions or'alterations thereto, but excluding any expenditure in|respect of which any allowance is admissible under|any provisions of Section 8, 9, 10 and 12. “KK (2) The amount of a capital gain shall be computed|alter making the following deductions from the full|value of the consideration for which the sale exchangeor transfer of the capital asset is made, namely: #1) expenditure incurred solely in connection with such|sale, exchange or transfer; ul) the actual cost to the assessee of the capital asset,including any expenditure of a capital nature incurred|and borne by him in making any additions or'alterations thereto, but excluding any expenditure in|respect of which any allowance is admissible under|any provisions of Section 8, 9, 10 and 12. Provided that where a person who acquires a capital|asset from the assessee, whether by sale, exchange or transfer, 1S a person with whom the assessee isdirectly or indirectly connected, and the Income Tax|Officer has reason to believe that the sale exchange or transfer was effected with the object of avoidance or reduction of the lability of the assessee under this|section, the full value of the consideration for which|the sale, exchange or transfer is made shall with the|priorapprovalOT|theInspecting|Assistant.Commissioner of Income Tax, be taken to be the fair|market value of the capital asset on the date on whichthe sale, exchange or transfer took place: “KK Provided further that where the capital asset became|the property of the assessee or of the previous owner|where the cost of the capital asset to the previous|owner is to be taken in accordance with sub-section (3)before the lst day of January, 1939, he may, on proofof the fair market value thereof on the said date to thesatisfaction of the Income Tax Officer, substitute for|the actual cost such fair market value which shall be|deemed to be the actual cost to him of the asset, and|which shall be reduced by the amount of depreciation,if any allowed to the assessee after the said date and|increased or diminished as the case may be by any'adjustment made under clause (Vu) of sub-section (2)|ot Section 10: | wR OR This section was inserted in the Income Tax Act, 1922.by|the.Income.TaxandKXCeCSSProfitsTax(Amendment) Act, 1947 (22 of 1947) which received|the assent of the Governor-General on April 18, 1947, but the amending Act was deemed to have come into|force on March 31, 1947. Sub section (2) provided that the amount of the capital gain shall be computed after making deductions mentioned therein from the full value of the consideration for which the sale, exchange or transfer of the capital asset is made. The words though not identical to those in Section 48 of the Act are similar. In that case prior to 01.01.1939, the respondent purchased 1500 shares of a company during the accounting year ending 31.03.1937. On 01.04.1946, the respondent transferred these shares to one Girdhari Lal Mehta at the rate of 4 136/- per share although the market value on that date was 4 620/- per share. On the same day, Girdhari Lal Mehta in turn sold the shares to Jardine Skinner & Co. at the rate of 4 100/- per share but retained the share scrips with blank transfer forms until May, 1946 when the shares were registered in the name of Jardine Skinner & Co. In March, 1947, Jardine Skinner & Company transferred the shares to Jardine Henderson & Co. at the rate of 4 493-10-0 per share. The Assessing Officer while assessing the respondent to tax for the assessment year 1947-48 held the capital gain to be 4 484/- per share being the difference between the market price of v 620/- per share and the sale price of v 136/- per share. The Appellate Assistant Commissioner affirmed the order but varied the quantum of capital gain holding that on the date of acquisition of the shares by the respondent i.e. 1.1.1939 the market value of the share was v 153/- per share and that this figure should be taken as the actual cost in view of the third proviso to Section 12B(2). The Appellate Assistant Commissioner also held that the sale was effected with the object of avoidance of tax. The Tribunal dismissed the appeal but on the ground adopted by the Appellate Assistant Commissioner, a reference was made to the High Court. A majority of the Judges of the High Court answered in favour of the assessee-respondent. The Supreme Court held as under:- doThe question therefore arises in the present case.as to what is precisely the finding of fact arrived at by|the Tribunal as regards the full value of the’consideration. It is necessary to state at the outsetthat the Income Tax Officer and the Appellate|Assistant Commissioner assessed the tax on the.footing that the first proviso to Section 12-B(2) applied|and therefore the market value ot the shares must be.taken to be the full value of the consideration for the.transfer. The Appellate Tribunal, however, rejected thecontention of the appellants that the first proviso to section 12-B(2) applied to the case, but nevertheless|proceeded to affirm the order of the Appellate AssistantCommissioner. In para 7 of the order dated August 23,1951 the Appellate Tribunal stated that “these shares|were transferred by the assessee company to one|Giridharilal Mehta on lst April, 1946 at the book valueof Rs 136 per share, though the market value of thoseshares on that date was admittedly Rs 620 per share’.In para 8 of the order the Appellate Tribunal has|remarked that the assessee refused to give any further|facts to explain why it sold shares to Giridharilal|Mehta at Rs 136 per share when the market price of|the shares stood at Rs 620 per share and also why'Giridharilal Mehta again sold the shares on the same|date at Rs 100 per share at a loss of Rs 54,000, and|then again within a few months thereafter why Jardineokinner & Co. sold the shares at Rs 493/10 per share.In para 9 the Appellate Tribunal recorded the finding|that prima faciethe transactionwas not a bona fide'|one, and proceeded to say that “if the assessee refusesto disclose all the facts leading to the transaction, andthe facts immediately after the transaction, we musthold that it will react to the prejudice of the assessee’”.In para 10 the Appellate Tribunal has observed that| under Section 12-B(2) of the Income Tax Act, the)Income Tax Officer has to compute the capital gains|alter making certain deductions from the full value of|the consideration tor the sale and he therefore has a.right to know the full value. The Appellate Tribunal|added: “The assesses cannot shut out the Income Tax Officer|from finding out what is the full value of the assettransferred by merely putting a figure on the)document of transfer. The Income Jax Officer in this|case took the value to be the market price of theshares. There is no dispute that the market price of)the shares was Rs 620 per share. We cannot say'therefore that in the circumstances the Income Tax.Officer was in any way wrong in determining the full|value ot the shares.” In para 11 the Appellate Tribunal held that the first|proviso to Section 12-B (2) did not apply to the case|and the sale was not effected with the object ofavoidance or reduction of the liability of the assessee|under that section, and then observed as follows: “But the right of the Income Tax Officer to|determine the full value of the assets is always|there specially in a case where the assesseerefuses to give all the information to the Income|Tax Officer and the value of the assets given by him is so suspiciously low. We therefore think|there is no substance, in the points raised by MrIssac”. In para 11 the Appellate Tribunal held that the first|proviso to Section 12-B (2) did not apply to the case|and the sale was not effected with the object ofavoidance or reduction of the liability of the assessee|under that section, and then observed as follows: “But the right of the Income Tax Officer to|determine the full value of the assets is always|there specially in a case where the assesseerefuses to give all the information to the Income|Tax Officer and the value of the assets given by him is so suspiciously low. We therefore think|there is no substance, in the points raised by MrIssac”. It was contended by Mr Asoke Sen on behalf of the|respondent that there was no express finding of the|Appellate Tribunal that the respondent actually sold|the shares at the market price of Rs 620 per share andthat the respondent received that market price of the|shares as consideration for the transfer. Reference wasmade to para 7 of the order of the Appellate Tribunal|wherein there is an express finding that the shares|were transferred by the respondent to Giridharilal|Mehta on April 1, 1946 at the book value of Rs 136 per|share, though the market value on that date was Rs|620 per share. Mr Asoke Sen further submitted that it could not be argued from paras 8 to 11 of the order ofthe Appellate Tribunal that there was an inferential|finding that the shares were actually sold at Rs 620|per share by the respondent. On behalf of the)appellants Mr Narsaraju pointed out that in the)statement of the case dated July 29, 1952 the)Appellate Tribunal has said that by the previous order|dated August 23, 1951 the Appellate Tribunal had|come to the conclusion that the sale had been effected|at Rs 620 per share and that the market price of the|shares must have been paid. It was, however, pointed|out on behalf of the respondent that the statement ofthe case was not an agreed statement and that it was|drawn up by the Appellate Tribunal whose constitution was different from that of the Appellate Tribunal which|made the order dated August 23, 1901. It is true that|the Court is bound to proceed normally on the findingsot fact which are mentioned in the statement of the.case. But it the statement otf the case does notcorrectly summarize or interpret the finding recorded|in the order of the Appellate Tribunal which has been|made part of the case, the Court is entitled to look at)the order itself in order to satisfy itself what was|actually the finding of the Appellate Tribunal. 6.After having heard Counsel for both the parties andhaving scrutinized the order of the Appellate Tribunal|dated August 23, 1951 and the statement of the case|dated July 29, 1952, we have reached the conclusion|that the question of law referred to the High Court!cannot be answered as the language used by the|Appellate Tribunal in recording its finding as to the|actual contract price paid to the respondent by|Giridharilal Mehta for the sale oft 1500 shares isobscure and its import cannot be determined. In thesecirclimstances we consider that the best course is forthe Appellate Tribunal to rehear the appeal and record|a clear finding after hearing the parties and after|giving an opportunity to the respondent to explain theunusual nature of the transaction and the conduct of.the parties concerned therein. After recording a clear|finding as to what was the actual price received by therespondent for the sale of the shares to Giridharilal|Mehta the Appellate Tribunal will finally dispose of theappeal. On behalf of the respondent Mr Asoke Sen said|that his client will give a proper explanation of the|transactions and of the conduct of the parties involvedbetore the Appellate Tribunal at the time of the further|hearing of the appeal. If the assessee gives explanationof the transaction the Tribunal will be entitled to call|upon it to produce documentary or other evidence in support of the explanation. The Tribunal will also be|entitled to call for elucidation of the explanation or theevidence. The appellant will be entitled to give evidencein rebuttal 14.Considering the language of sub section (2) of Section 12B of the 1922 Act, we are of the opinion that the judgment applies to Section 48 of the 1961 Act. The language of sub section (2) in this regard is similar to the language of the opening part of Section 48 of the Act. 15. The judgment undoubtedly holds that the expression “full value of the consideration” cannot be construed as the market value but as the price bargained for by the parties to the sale. It is necessary for the Assessing Officer to ascertain as to what was the price bargained for by the parties to the sale. 16. The judgment, however, does not support Mrs. Suri’s further submission that the price stated in the sale-deed must irrespective of anything also be considered to be the sale price for the purpose of computing the capital gain. In our view this absolute proposition is not well founded. The Assessing Officer must determine whether the price stated in the agreement for sale is infact the price bargained for by the parties thereto. In other words, the full value of the consideration is neither the market value nor necessarily the price stated in the document for sale but the price actually arrived at between the parties to the transaction. If therefore it is found that the price actually arrived upon between the parties is not the price reflected in the document, it is the price bargained for by the parties to sale that must be considered for determining the capital gain under section 48. The Supreme Court did not hold that inferences cannot be drawn by the Assessing Officer from the facts established. In fact in paragraph-5 the Supreme Court observed that there was no inferential finding that the shares were sold at the market price of � 620/- per share. This read with the operative part of the order in paragraph-6 remanding the matter to record a finding as to the actual price received makes it clear that the finding can be based on inferences as well. In paragraph-6 the assessee is given an opportunity to explain the unusual nature of the transaction. It cannot be suggested that even if there was no explanation by the assessee, the Assessing Officer was bound not to draw an adverse inference. 17. Even on principle we see no reason to denude the Assessing Officer the right to draw an inference especially an irresistible inference. Take for instance a case where the property worth crores of rupees is sold for merely 4 1 lakh and there is no explanation for the same despite the parties being at arms length. The Assessing Officer is not bound to accept the statement in the sale deed unless he can prove that additional consideration was paid. The initial burden to prove the same is undoubtedly on the Department. But in such a case the onus clearly shift upon the assessee. If the assessee is unable to offer an explanation, the Department must be taken to have discharged the burden. The judgment certainly does not hold that the price mentioned in the document is sacrosanct and that the same must be considered to be the price bargained between the parties to the transaction. That would indeed result in an absurdity for the parties could then by merely stating an incorrect price in the sale deed avoid the tax on capital gains altogether. 18. Mrs. Suri then relied upon the judgment of the Supreme Court in Commissioner of Income Tax, Calcutta v. Gillanders Arbuthnot & Co. (1973)87 ITR 407 where the Supreme Court held:- The judgment certainly does not hold that the price mentioned in the document is sacrosanct and that the same must be considered to be the price bargained between the parties to the transaction. That would indeed result in an absurdity for the parties could then by merely stating an incorrect price in the sale deed avoid the tax on capital gains altogether. 18. Mrs. Suri then relied upon the judgment of the Supreme Court in Commissioner of Income Tax, Calcutta v. Gillanders Arbuthnot & Co. (1973)87 ITR 407 where the Supreme Court held:- “Now let us see what is the impact of Section 12-B(2) on that transaction? Under that provision, the amountof capital gains has to be computed aiter making certain|deductions from the full value of the consideration for|which the sale is made. What exactly is the meaning ofthe expression “full value of the consideration for which|sale is made?” Is it the consideration agreed to be paid or is it the market value of the consideration? In the case ofsale for a price, there is no question of any market value|unlike in the case of an exchange. Therefore in cases of|sales to which the first proviso to sub-section (2) of.section 12-B is not attracted, all that we have to see is.what is the consideration bargained for. AS mentioned|(2) on that transaction? Under that provision, the amountof capital gains has to be computed aiter making certain|deductions from the full value of the consideration for|which the sale is made. What exactly is the meaning ofthe expression “full value of the consideration for which|sale is made?” Is it the consideration agreed to be paid or is it the market value of the consideration? In the case ofsale for a price, there is no question of any market value|unlike in the case of an exchange. Therefore in cases of|sales to which the first proviso to sub-section (2) of.section 12-B is not attracted, all that we have to see is.what is the consideration bargained for. AS mentioned| earlier to the facts of the present case, the first proviso is.not attracted. As seen earlier, the price bargained for the|sale of the shares and securities was only rupees seventy-five lakhs. The facts of this case squarely fall within the|Rulelaiddownby|this|Court1n C.LT.VioGeorgeHenderson & Co. Ltd It may be noted that in that case the market valueof the shares which were allotted at Rs. 136 per share|was Rs. 620 per share.” Our observations with respect to CIT v. George Henderson & Co. Ltd. (1967)66 ITR 622, apply equally to this judgment. 19. Mrs. Suri relied upon a judgment of the Delhi High Court in Commissioner of Income Tax v. Smt. Nilofer I.Singh 2008 SCC (Delhi) 1522. This was a case under the 1961 Act. In that case the assessee sold two properties, one being a residential flat in Mumbai for v 10 lacs and the other a building in New Delhi for v 23.50 lacs. The Assessing Officer was of the view that the sale consideration did not reflect the fair market value and therefore, referred the matter to the Valuation Officer. The fair market value arrived at by the Valuation Officer was far higher than the prices declared by the assessee. The dispute centred upon the expression “full value of consideration”. The revenue contended that the expression refers to the full market value whereas the assessee contended that the expression cannot have any reference to the fair market value. The Division Bench held:- “6. This controversy has already been settled by the Supreme|Court in the case of CIT v. George Henderson and Co. Ltd., [1967] 66 ITR622, the very expression “full value of consideration” was underconsideration of the Supreme Court though in the context of theprovisions of the Indian Income-tax Act, 1922. The provisions of section12B of the 1922 Act pertain to capital gains. Sub-section (1) was in parimateria to section 45(1) of the present Act and sub-section (2) of section “6. This controversy has already been settled by the Supreme|Court in the case of CIT v. George Henderson and Co. Ltd., [1967] 66 ITR622, the very expression “full value of consideration” was underconsideration of the Supreme Court though in the context of theprovisions of the Indian Income-tax Act, 1922. The provisions of section12B of the 1922 Act pertain to capital gains. Sub-section (1) was in parimateria to section 45(1) of the present Act and sub-section (2) of section 12B of the 1922 Act was in pari materia to the provisions of section 48 ofthe present Act. The Supreme Court was of the view that the expression“Tull value of consideration” in the main part of section 12B(2) of the Actcannot be construed as having a reference to the market value of theasset transferred but the expression only meant, the full value of aconsideration received by the transieror in exchange of the capital assettransierred by him. The Supreme Court also observed that in the case ofasale the full value of consideration is the full sale price actually paid. It wasfurther of the view that the expression “full value” means the whole pricewithout any deduction, whatsoever, and it cannot refer to the adequacy orinadequacy of the price bargained for. Nor did it have any necessaryreference to the market value of the capital asset which is the subject-matter ofthe transfer. 7.|In CIT v. Gillanders Arbuthnot and Co., |1973] 87 ITR 407, the|supreme Court while considering the provisions of section 12B of the1922 Act again observed that in the case of a sale price of an asset, therewould be no question of any market value, unlike in the case of anexchange and the Supreme Court also observed that, in the case ofa sale,all that one had to see was—What was the consideration bargained for? 8.|These decisions make it more than clear that the expression “Tullvalue of consideration” that is used in section 48 of the present Act doesnot have any reference to the market value but only to the considerationreferred to in the sale deeds as the sale price of the assets which havebeen transferred... Q.With regard to the arguments of the learned counsel for the|appellant based on the provision of section 955A of the said Act, it isimmediately to be noticed that the said provision begins with theexpression “with a view to ascertaining the fair market value of a capitalasset’. In other words, the reference to a Valuation Officer under sectionOA Is for the object ofascertaining the fair market value ofa capital asset.It is only when the Assessing Officer is required to ascertain the fairmarket value of a capital asset that the provisions of section 55A can beinvoked. There may be certain situations where the Assessing Officer isrequired to determine the fair market value. One of the situations isindicated in section 45(4) of the said Act where the profits or gains arising Q.With regard to the arguments of the learned counsel for the|appellant based on the provision of section 955A of the said Act, it isimmediately to be noticed that the said provision begins with theexpression “with a view to ascertaining the fair market value of a capitalasset’. In other words, the reference to a Valuation Officer under sectionOA Is for the object ofascertaining the fair market value ofa capital asset.It is only when the Assessing Officer is required to ascertain the fairmarket value of a capital asset that the provisions of section 55A can beinvoked. There may be certain situations where the Assessing Officer isrequired to determine the fair market value. One of the situations isindicated in section 45(4) of the