TMI Blog2007 (9) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... h of imagination, be said to be the fair market value of the asset. Obviously one acts not only contrary to the statutory provisions but also advance injustice. Therefore, we see no justification for not taking the fair market value of Cinema building as on 1-4-1981 on which no dispute has been raised. We further see no justification why above market value of the Cinema should not be adopted in taking the value of the unquoted shares of the company. There is no justification for taking only a fraction of market value on some technical grounds. Thus, we are of view that value as adopted in other cases of Sri H.R. Anand, Shri Pawan Anand, Shri Ramesh Anand and Smt. Neeru Anand as on 1-4-1981 and, thereafter indexed, be adopted in all the appeals now under discussion. We order accordingly. Deduction claimed u/s 54F - During the course of hearing of appeals, it was contended that membership of housing society was purchased for acquiring a residential house. This was clear from the Brochure issued by Baroda House NRGE Co-operative Group Housing Society Ltd. Copy of Brochure is placed at Supplementary Paper Book. It was contended that for claiming relief u/s 54F, it was not necessary tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j Cinema at Moti Nagar, New Delhi. Prior to 1-4-1981, these persons or their predecessors had the following shares of above company of face value of Rs. 1,000 : ( a ) Shri H.R.Tyagi 41 ( b ) Smt. Geeta Tyagi 30 ( c ) Shri Sagar Tyagi 06 ( d ) Smt. Madhu Tyagi 30 ( e ) Shri Shekhar Tyagi 06 ( f ) Shri Ramphal Tyagi 12 2.1 The balance shares were held by persons of Anand family. Above persons, jointly with persons of Anand family disposed of their shares at the rate of Rs. 1,83,250 per share to sell Natraj Cinema on 28-9-2000 to M/s. E-Citi Entertainment (I) (P.) Ltd., Mumbai. Long-terms capital gains, which arose on above sale of shares, was shown in the income-tax returns for assessment year 2001-02. There is no dispute on the sale consideration received. While computing capital gains, these shareholders had also claimed deduction on account of "cost of acquisition" of shares sold and as assets were held much before 1-4-1981, all the shareholders exercised option and sought deduction of indexed fair market value of shares as on 1-4-1981. In the assessment, the Assessing Officer got valuation of Cinema building through the Departmental Valuation Officer (DVO) and the said value was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of same shares as on 1-4-1981 of M/s. Tyagi Anand Co. (P.) Ltd. having been accepted in the case of Shri H.R. Anand, Shri Pawan Anand, Shri Ramesh Anand and Smt. Neeru Anand, it was not open for the revenue to take value of same shares for same purposes at some other rate. He emphasized that revenue has to have a consistent approach in all the cases and it is not possible to value the same asset at different price on the same date. In support of above proposition, Shri Sapra relied upon the following decisions: 1. Jaswant Rai v. CWT [1977] 107 ITR 477 (Punj. Har.). 2. CIT v. Smt. Chandrakala Lal [1978] 111 ITR 185 (Cal.) wherein as per the Head Note, the Court observed as under: "Held that the market value of the share cannot vary from person to person or from assessee to assessee." 3. Gulab Rai Hanuman Bux v. CWT [1992] 198 ITR 131 (Gauhati), wherein the Court observed as under: "If during the same assessment year the same quantity of wealth in the possession of one co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax and if such action on the part of the assessing authorities is sancti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w with ours." Shri Sapra further relied upon the following decisions: 1. Smt. B. Subhadra L/R of B. Paparaju v. ITO [2005] 92 ITD 285 (Hyd.), 2. Addl. CIT v. Smt. Indira Bai [1985] 151 ITR 692 (AP), and 3. Asstt. CIT v. Mrs. Rekha Mathur [2005] 98 TTJ (Delhi) 900 . 4. The learned Departmental Representative, on the other hand, placed full reliance on the impugned order of learned CIT (Appeals). He further relied upon decision of Income-tax Appellate Tribunal in the case of Smt. Kaushaliya Rani Anand dated 11-8-2006. 5. We have given careful thought to the rival submissions of parties and examined facts and circumstances of the case. It is settled law that revenue authorities are required to have a consistent approach and cannot take different value of same share as on 1-4-1981. Therefore, on principle there was no justification for revenue authorities to take value of share of M/s. Tyagi Anand Co. Pvt. Ltd. as on 1-4-1981 at the rate of Rs. 46,274 in the case of Shri H.R. Anand, Shri Pawan Anand, Shri Ramesh Anand and Smt. Neeru Anand and take some different value in other cases. The value taken in the case of Shri H.R. Anand and others should have been adopted in other cases and v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( supra ) wherein their Lordship held that rule 1D of Wealth-tax Rules was mandatory. It is not in dispute that aforesaid decision of Hon ble Supreme Court was given under the Wealth-tax Act having regard to the statutory provisions and rules made therein. The learned CIT (Appeals) has also held that application of rule 1D was also mandatory under the Income-tax Act for computing value of unquoted shares of a private limited company. He rejected the argument that rule 1D had no application under the Income-tax Act, particularly for determining the fair market value of an asset like the one in hand. He refused to apply decision of Tribunal in the case of Smt. B. Subhadra ( supra ) and Smt. Vasavi Pratap Chand v. Dy. CIT [2004] 89 ITD 73 (Delhi). He held that above cases were distinguishable. He found and applied certain other cases of Tribunal and of High Court where application of provisions of rule 1D were justified. We find that apart from the cases relied upon by learned CIT (Appeals), there are two other cases where Benches have held that rule 1D of the Wealth-tax Rules can be applied for determining fair market value of shares sold while computing capital gain. One is decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x law like any other laws will have to be interpreted reasonably and whenever possible in consonance with equity and justice. Therefore, the fact that the Legislature has deliberately and significantly not used the expression "assets owned by the assessee" but "assets belonging to the assessee", in our opinion, is an aspect which has to be borne in mind." This way the decisions given under the Income-tax Act were not applied under the Wealth-tax Act and vice versa. 7.2 The value determined under the Wealth-tax Rules does not represent the fair market value but the position under the Income-tax Act is quite different. Although the term "fair market value" is not defined, it has to be the market value of the property, which is fair and reasonable. It must appear to be as close to the market value as possible. It must be intrinsic value. As rightly observed in the case of Smt. B. Subhadra ( supra ), in most of the cases value so arrived by applying Schedule III are totally different from the fair market value as understood under the Wealth-tax Act. This is apparent from reference to rules 8 and 20 of Schedule III to the Wealth-tax Act. Rule 8 excludes application of rule 3 in certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hania ( supra ) is relevant for assessment under the wealth-tax but not for assessment under the income-tax. The aforesaid decision is binding on us and in the light of that decision; it is not possible for us to adopt a different view. ( b )That as noted above M/s. Tyagi Anand Co. Pvt. Ltd. owns Natraj Cinema. Its market value is admittedly several times of the written down value reflected in the relevant balance sheet. In the cases decided by other Benches, it is not shown that the companies had similar assets in the balance sheets, which were required to be re-valued. ( c )Under section 48 of the Income-tax Act for computing income chargeable under the head "Capital gain", from the full value of consideration received, the amount of cost of acquisition of the asset and cost of any improvement thereto is required to be deducted. Thereafter the indexed cost of acquisition is to be applied. There is no dispute that cost of acquisition of same asset is required to be deducted. It is not possible to take some different asset. In this case, shares have been sold at the rate of Rs. 1,83,250 per share. That value has been accepted but if value of the shares sold on the date of sale as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly Smt. Madhu Tyagi is held to have sold 30 shares of the company. 10. Likewise, in the case of Shri Shekhar Tyagi and Shri Sagar Tyagi, it is contended that these persons inherited 4 shares each on the death of their grand father Shri Khajan Singh Tyagi in 1989 and two shares each on the death of their grand mother Smt. Phoolwati Tyagi who died in 1985. M/s. Tyagi Anand Co. Pvt. Ltd., as per certificate dated 30 September, 1989 have duly confirmed transfer of six shares in the name of Shri Shekhar Tyagi and Shri Sagar Tyagi. It is also not in dispute that original owner of shares late Shri Khajan Singh Tyagi and Smt. Phoolwati Tyagi held shares of company prior to 1-4-1981. Therefore, deduction towards cost of acquisition of shares sold by these persons was to be allowed by taking fair market value of shares as on 1-4-1981. We do not find any substance in the objection of the revenue. All the above-mentioned persons are entitled to deduction of value of shares as on 1-4-1981. We, order accordingly. The learned CIT (Appeals) on facts of the case was not justified in raising above objection when the same was not raised by the Assessing Officer. 11. Next issue raised in these appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adeep Kumar [2006] 153 Taxman 138 (Mad.) relied upon by learned CIT (Appeals) could not be traced. On the other hand M.P. High Court judgment in the case of Smt. Shashi Varma v. CIT [1997] 224 ITR 106 has held that in case of allotment of flat under the self-financing scheme is to be treated as case of construction of house for claiming exemption under the capital gains. Further definition of transfer under section 2( 47 )( vii ) clearly support that transaction would involve obtaining acquisition of share in a Co-operative Society. The learned counsel for the assessee also relied upon transfer deed between Shri Sagar Tyagi and Smt. Madhu Tyagi dated 12-3-2001, copy of which is available at pages 93-94 of the Supplementary paper book. It was accordingly contended that learned CIT (Appeals) erroneously denied claim of exemption to the assessee. 14. We have given careful thought to rival submissions of the parties. In our considered opinion, documentary evidence and relevant case law now placed before us was not considered by the lower authorities. Entire evidence was not made available to them. In other words claim of assessees under section 54F is required to be reconsidered object ..... X X X X Extracts X X X X X X X X Extracts X X X X
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