TMI Blog2012 (5) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred. The full value of consideration received as a result of transfer of jewellery belonging to a royal family for the purpose of ascertaining the market value as on April 1, 1974 in order to deduct the same from actual sale price would be unsafe to base the actual sale price by the process of reverse indexation and thus the valuation accepted by Revenue as market value for the purpose of Wealth Tax Act is the safest base - AO directed to recalculate the capital gain by adopting reverse indexation based on valuation as on 31 st March, 1989 - in favour of assessee. - Tax Appeal No. 2322 of 2010 - - - Dated:- 30-4-2012 - Bhaskar Bhattacharya, J B Pardiwala, JJ. For Appellant: Mr Manish J Shah For Respondent: Mr K M Parikh JUDGEMENT Per: Bhaskar Bhattacharya, J: 1. This Appeal under Section 260A of the Income Tax Act, 1961 [ the Act ] is at the instance of the assessee and is directed against order dated January 29, 2010 passed by the Income Tax Appellate Tribunal, B Bench, Ahmedabad [ the Tribunal ] in ITA 1111/Ahd/2003 for the Assessment Year 1992-93, by which the Tribunal dismissed the appeal preferred by the appellant. 2. Being dissatisfied, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fresh were produced before the CIT[A]. In view of the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. Valimohammed Ahmedbhai 134 ITR 214 [Guj.], the CIT[A] ought to have given a reasonable opportunity of hearing to the A.O. In the light of above discussion, after considering the aspect of natural justice as required by Rule 46A of the IT Rules, we send back the issue to the file of CIT[A] to decide the issue afresh in accordance with law and after giving a reasonable opportunity of being heard to both the parties. 4.3 The Commissioner of Income Tax (Appeals) ( CIT [Appeals] ) decided the issue afresh in accordance with the directions of the Tribunal and further, admitted the additional grounds. In one of the grounds, it was contended by the assessee that the fair market value of the asset should be considered as on the date of acquisition by the assessee and not the cost of acquisition as on April 1, 1974. The assessee also contended that the reverse indexing method should be adopted by the Assessing Officer. 4.4 The CIT [Appeals] considered the calculation done by the Assessing Officer and also the one arrived at by the assessee and found that the je ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following amounts, namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii)the cost of acquisition of the asset and the cost of any improvement thereto: Provided that in the case of an assessee, who is a non-resident Indian, capital gains arising from the transfer of a capital asset being shares in or debentures of, an Indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so however, that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every re-investment thereafter in, and sale of, shares in, or debentures of, an Indian company. Explanation.-For the purposes of this clause,- (i) non-resident Indian" shall have the same meaning as in clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-clauses (i) and (ii), the deduction of ten thousand rupees shall be allowed in the following order,' namely:- (1) the deduction shall first be allowed against long-term capital gain relating to the assets mentioned in sub-clause (i); (2)thereafter, the balance, if any, of the said ten thousand rupees shall be allowed as deduction against long-term capital gain relating to the assets mentioned in sub-clause (ii), and the provisions of sub-clause (ii) shall apply as if references to ten thousand rupees therein were references to the amount of deduction allowed in accordance with clauses (1) and (2) of this proviso: Provided further that, in relation to the amount referred to in clause (b) of subsection (5) of section 45, the initial deduction of ten thousand rupees under clause (a) of this sub-section shall be reduced by the deduction already allowed under clause (a) of section 80T in the assessment for the assessment year commencing on the 1st day of April, 1987, or any earlier assessment year or, as the case may be, by the deduction allowed under clause (a) of this sub-section in relation to the amount of compensation or consideration referred to in clause (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in clause (iv) or clause (v] or clause (vi) of section 47; (iv) such assessee being a Hindu undivided family, by the mode referred to in sub-section (2) of section 64 at any time after the 31st day of December, 1969, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. Explanation.-In this sub-section the expression "previous owner of the property" in relation to any capital asset owned by an assessee means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in clause (i) or clause (ii) or clause (iii) 8[or clause (iv)] of this sub-section. (2) Where the capital asset being a share or shares in an amalgamated company which is an Indian company became the property of the assessee in consideration of a transfer referred to in clause (vii) of section 47, the cost of acquisition of the asset shall be deemed to be the cost of acquisition to him of the share or shares in the amalgamating compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue having accepted the declaration of the valuation of the selfsame jewellery given by the assessee as on 31 st March, 1989 as correct valuation for the purpose of Wealth Tax Act, there is no reason why the same valuation should not be treated to be a reliable base for the purpose of computing the capital gain under the Act by the process of reverse indexation. We do not find any reason to disbelieve the valuation given by the assessee under the Wealth Tax Act as on 31 st March, 1989 based on the valuation assessed by a Registered Valuer in terms of the said Statute. The Revenue having accepted the said valuation for the purpose of Wealth Tax Act, in our opinion, is precluded from disputing the correctness of the selfsame valuation for the purpose of assessment of capital gain, as the factor of fair market value is decisive for the purpose of both Wealth Tax Act and in ascertaining the cost of acquisition under the Income tax Act. Moreover, it appears that by reverse indexation method, which is a recognized mode of valuation, based on accepted valuation under the Wealth Tax Act as on March 31, 1989 the assessee would get benefit of about Rs. 1.5 Crore more. We, therefore, sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntially benefited. 13. We are unable to accept the contention of Mr. Parikh, the learned counsel appearing on behalf of the Revenue, that we should adopt the reverse indexation from the date of actual sale simply because in that process the Revenue will be benefited. We have already pointed out that for the purpose of taxation, it is settled law that when two equally efficacious and acceptable data for the purpose of valuations are available, the one which is beneficial to the assessee should be preferred. The Tribunal below, as it appears from record, did not at all consider this aspect and committed substantial error of law in not following the above well-settled principle of taxation law. Moreover, we have already pointed out that the date March 31, 1989 is nearer to April 1, 1974 than December 1991 and thus, there was no justification of adopting reverse indexation from a farther date. 14. Moreover, the full value of consideration received as a result of transfer of this type of jewellery belonging to a royal family is generally higher than the market value of the selfsame material, were it not a regalia. Therefore, for the purpose of ascertaining the market value of such a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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