TMI Blog2007 (8) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... with which an amount of Rs. 92,500,135 has been placed as fixed deposit for 117 days has not deducted, any taxed at source as laid down in section 194A. Whereas at the time of filing the original return it was presumed, that the rate of interest on the fixed deposit was 10 per cent. and the bank had deducted tax from the interest at 20 per cent. thereby giving a net interest income of Rs. 23,72,058. The factual position was ascertained by the assessee through its advocate, who in turn ascertained the facts by making the relevant application to Principal Civil Judge, Senior Division, Civil Court, Pune. Subsequently the case was selected for scrutiny. The notice under section 143(2) was issued. The assessee s source of income being capital gain, interest from bank, dividend on shares, etc. A show-cause notice was issued dated December 11, 1999, which is reproduced below : (i) During the course of assessment proceedings of income-tax for the assessment year 1997-98, it is noticed from, the records and valuation report dated June 15, 1996, obtained from the Government approved valuer, the land at Shringanda and Limper Gaon at Aundh, has been valued Rs. 99,00,000 as on April 1, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Department for a total sale consideration of Rs. 107,700,000. (ii) For the purpose of computation of capital gains of any asset the cost of acquisition has to be determined in terms of the provisions of section 48 read with sections 49 and 55 of the Income-tax Act, 1961. In the instant case the said plot of land was owned by his late Highness Sir J. M. Scindia from whom it devolved upon the assessee. The said plot of land, we are being informed, became the property of the Scindia family on the marriage of their ancestor Jivajirao Scindia (one of the forefathers Sir. J. M. Scindia) at the time of his marriage to one Chimnibai daughter the then ruler of the Deccan viz. The Peshwa, and the said property was given to Chimnibai as a choli bangdi . Choli bangdi according to the custom prevailing in those days amongst the then royal families was the gift made to a daughter at the time of her marriage. In this connection it is submitted that neither the then rulers viz. The Peshwas nor the Scindias incurred any cost for acquiring this property. (iii) In view of the abovementioned facts and circumstances it is clearly evident that the said plot does not have any cost of acquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, etc. the value was taken at Rs. 320 per sq. mt. in 1981. He held that it is highly illogical and Rs. 350 per sq. mt. is illogical for shops, etc. He further noted that for the wealth-tax assessment for the assessment year 1981-82 the value of the plot was taken at Rs. 1,50,404, which was not objected by the assessee. Hence, he had taken the same value against the valuation of the property submitted by the assessee at Rs. 90,00,000. Aggrieved by the above order the assessee approached the first appellate authority. It was contended before the Commissioner of Income-tax (Appeals) that the value of the property has been taken as nil. It was further submitted that the plot of land was owned by Sir J. M. Scindia from whom it devolved upon the assessee. This property became the property of Scindia family on marriage of their ancestor Jivajirao Scindia (one of the forefathers of Sir J. M. Scindia) at the time of his marriage to Chimnibai, daughter of the ruler of Deccan, i.e., the Peshwa. The property was given as choli bangdi. Choli bangdi , as per the custom prevailing in those days amongst the royal families, was a gift to the daughter at the time of marriage. Consequentially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the decision of the Tribunal dated August 23, 1976, in the assessee s own case for the assessment years 1967-68 to 1969-70 wherein the Tribunal held that the assessee had many lands which were received as gift from various kings at different points of time. The basis for this finding was the Gwalior State Gazetteer compiled in 1908 by Capt. C.E. Lurad, Superintendent of Gazetteer in Central India, which includes the text of the treaty of peace and friendship entered into between the English East India Company and Maharaja Daulat Rao Scindia (an ancestor of the assessee) in 1803. The treaty mentions inam lands, the list of which also includes six villages of Pune. The assessee contended that this indicates that the Aundh land was also an inam land. The Commissioner of Income-tax (Appeals) opined that there is nothing to show that the six villages of Pune included in the Aundh land and this contention, he held, runs contradictory to the earlier claim that the Aundh land was received by way of gift by Chimnibai from the Peshwas. He held that the Aundh land could not have been included in the six villages of Pune as inam by Daulat Rao for the simple reason that Daulat Rao ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute is on the Revenue whereas the assessee would endeavour to underestimate the value. It was further submitted that in the wealth-tax matter the value adopted by the Wealth-tax Officer was suited to the assessee, hence the assessee did not agitate. However, in the instant appeal the assessee has exercised its option in terms of section 55(2)(b)(ii) and obtained a valuation report of the property from an approved valuer. The Assessing Officer has not even tried to rebut the valuation in any manner whatsoever in spite of having relevant machinery and infrastructure. The assessee also objected application of the wealth-tax principles in the income-tax case of the assessee. Reliance was placed upon the decision of the Karnataka High Court in the case of Saraswathi Estate v. Commissioner of Agricultural Income-tax [2001] 251 ITR 168 wherein it was held that the interpretation of the wording in a particular section cannot be made automatically applicable in the context of interpretation of the provisions of another enactment though both the provisions under the two enactments may be meant for levying penalties. It was further contended that there was no condition precedent to the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in that case was bestowed upon the assessee s ancestor as jagir by the emperor Shajahan. In the instant case it is gift by Peshwa to his daughter. Peshwa thus became the ancestor of the subsequent Scindias. This is a clear distinction, he held. In the case cited the forebears of Lokendrasinhji did not incur any cost for the acquisition of the land but not so in the instant case as Peshwa was the ancestor of the assessee and the assessee failed to prove that the land had no cost in the hands of Peshwa. Hence he decided the issue against the assessee. The assessee s alternative plea was accepted by the Commissioner of Income-tax (Appeals) vide paragraphs 9.1 to 10 of his order observing as under : 9.1 As regards the fair market value of the lands as on April 1, 1981, it is manifest from even a cursory perusal of the assessment order under appeal that the Assessing Officer has disposed of the matter without due and proper consideration and requisite judiciousness. Several statements of the Assessing Officer indicate this. The Assessing Officer has caviled that one of the reasons why the report of the approved valuer could not be relied upon was that he visited the plot on May 21, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 55A(b)(ii). But instead the Assessing Officer rejected the report for apparently untenable reasons. 10. So far as the valuation is concerned the following important facts need to be appreciated. The land in question is about 3 km. from the main gate of Pune University and even lesser from its periphery. It is not more than 2.5 km. from the Governor's house. Thus, even in 1981 the plot was not far out from the urban agglomeration. At the time development in the area was in its nascent stage. The plot is an elongated rectangular strip abutting along its entire length on an 80 ft. wide D P Road which connects to the Pune Mumbai highway. The value of the land as assessed in wealth-tax is Rs. 1,50,404 for the assessment year 1981-82. This translates to an abysmally low and absolutely absurd rate of Rs. 2.37 per sq. mt. (Rs. 150505/63474 sq. mt.) or paise 22 per sq. ft. ! From the value of Rs. 1.50 lakhs in 1981 to the sale price of Rs. 10.77 crores in 1996 is a fantastic leap of 716 times in 15 years ! Such phenomenal appreciation in value in such short time is well nigh impossible in a middle/upper middle class locality. If the fair market value of Rs. 99 lakhs estimated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67-68 to 1969-70. Another reason for rejection of the assessee s contention by the Commissioner of Income-tax (Appeals) was that the Aundh land was received in gift by Chimnibai from Peshwa was that, Chimnibai was given on marriage to Jivajirao who in genealogical table of Scindias figures two generations after Daulat Rao. The Gwalior Gazetteer was compiled in 1908 by Capt. C. E. Luard, Superintendent of Gazetteer in Central India, which includes the text of the treaty of peace and friendship entered into between the English East India Company and Maharajah Daulat Rao Scindia, ancestor of the assessee in 1803. If that be so, according to the Commissioner of Income-tax (Appeals), an incident that took place two generations after, i.e. during the period of Jivajirao could not be recorded and cannot be mentioned by Maharaja Daulat Rao Scindia. We are unable to subscribe to this view for the simple reason that, first of all, the life span of any of these persons is not recorded and secondly, there could be a third generation in all probabilities within the span of 60 to 70 years. Assuming that Chimnibai was given in marriage to Jivajirao when Jivajirao was in 20s, the third generation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred a cost, it would be impossible to compute the income chargeable to tax under the head Capital gains . By the Finance Act, 1987, with effect from April 1, 1988, the amendment to section 55 of the Act only ropes in taxability of goodwill on transfer of the same even if there is no cost of acquisition. Similarly, section 55 has been amended from time to time to enable the taxation of other assets wherein no cost of acquisition is envisaged. Therefore, even if the amendment is taken into consideration section 55 can be invoked in cases of nil cost of acquisition for the purpose of bringing to tax the entire sale consideration only in relation to the specified assets. From a reading of this it is clear that it is for the Revenue to show that the assessee had incurred a cost in acquiring the land whereas the Commissioner of Income-tax (Appeals) had rejected the assessee s prima facie evidence for the reason that the inam documents in respect of the land were not available though a translation of the report of the inam commission was furnished which clearly shows that as far back as December 1, 1885, the said land was recorded as inam land received by way of choli bangdi . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eight months. So, non furnishing of evidence could certainly not be for lack of opportunity. Nor is it the case that the evidence, subsequently produced in appeal, was not available earlier. On these facts rule 46A will operate with full force to bar admission of evidence on the point at the appellate stage. Again vide paragraph 8.2 the assessee s contention on merit was also rejected by the Commissioner of Income-tax (Appeals) on the following lines : Without prejudice to the above statutory bar, on merits also there is no case. There is neither any direct, or even credible circumstantial evidence, to establish that the land had no cost to the Peshwas. As brought out in paragraph 5.3 above, the assessee expressly concedes the lack of cogent evidence in this regard. The case of the assessee hangs tenuously from the slim strand of a dubious generalisation that medieval monarchs always acquired territory either by wresting it by force or arms or through matrimony. History is replete with examples of rulers acquiring lands in exchange of goods or munitions, towards arrears of land revenue, as compensation for military or other services rendered and even by outright purchase. Te ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
