TMI Blog2013 (10) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to defeat or escape out from the statutory provisions under the Act and, at the same time, claim another value to avoid tax. Such a conduct is not only hit by principles of estoppels, but is also unreasonable and against the principle of equity, justice and good conscience. It is settled position of law that a person who seeks equity must do equity. In our view, such a conduct of the assessee is not appreciable. - Decided against the assessee. - ITA Nos.7413/Mum/2007 & ITA Nos.1860,1315/Mum/2010 - - - Dated:- 7-6-2013 - R S Syal And Sanjay Garg, JJ. For the Appellant : Mr. Subodh Ratnaparkhi For the Respondent : Mr. S.D.Srivastava ORDER:- PER : Sanjay Garg With this common order, we shall dispose off three appeals i.e. two filed by the assessee relevant to A.Ys 2004-05 and 2006-07 respectively and one filed by the revenue relevant to A.Y. 2006-07. For the sake of convenience we shall take up the facts of the case from ITA No.7413/Mum/20 relevant to A.Y. 2004-05. ITA No. 7413/Mum/2012 for A.Y. 2004-05 2. This appeal has been filed by the assessee against the order of the CIT(A) dated 08.11.2007 relevant to A.Y. 2004-05. The first ground of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to tax in the year in which stock in trade is sold. While computing capital gain/loss u/s. 45(2) of the I.T.Act, the assessee had taken the fair market value of the land as on the date of conversion from capital asset to stock in trade. The assessee adopted the valuation report dated 17.07.2000 of the architect namely Mr. Babubhai P Rathod, wherein the fair market value of the said plot was stated to be Rs.6,38,55,800/-. The assessee had computed his income under two heads i.e. capital gains and business income. It was claimed by the assessee that fair market value of the land, as on the date of conversion, minus cost of indexation etc., was assessable as capital gains whereas difference between sale price received on account of sale of 2/3rd of the land (0.67%) and the fair market value as on the date of conversion, was taxable as business income. The assessee thus computed his income accordingly. The assessee in support of his claim of deduction of Rs.4,25,00,000/- towards cost of land/compensation paid to the tenants, furnished a copy of agreement dated 28.03.1994 vide which it was claimed that the said compensation was paid by the assessee to its tenant M/s. Magnum Ferrome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide order dated 10.11.1997 dismissed the appeal of the other party viz. M/s. Magnum Ferrometal Pvt. Ltd and, thus, sustained the addition. However, in second appeal, the learned E Bench of the Tribunal vide order dated 08.01.2002 passed in ITA No.401/Mum/1998 for A.Y.1994-95 allowed the appeal of M/s. Magnum Ferrometal Pvt. Ltd, relying upon certain judicial decisions which went in its favour. So from the above facts and circumstances, it is clear that in consequence of the agreement dated 28.03.1994, compensation payment of Rs.4,25,00,000/- was not only entered into the accounts of the assessee firm but also entered as receipt in the accounts of the tenant. During the assessment proceedings u/s. 143(3) of the I.T.Act, the revenue not only admitted the transaction in question as correct, but also tried to tax the receipt made through the said transaction. However, the tenant got relief from the ITAT, which found that the receipt was not taxable. However upto the stage of second appeal, there was no challenge by the revenue to the genuineness of the transaction. Such transaction has being admitted and acted upon by the revenue in the case of the tenant, now the revenue is esto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, the assessee had transferred 0.67% of the land in question to M/s. Minal Properties Pvt. Ltd. vide agreement dated 01.06.2001 with deed of conveyance dated 21.08.2003 in consideration of the developers bearing the construction cost on 33% portion of the land retained by the assessee. As per the prevalent laws, the assessee was required to take permission of the appropriate authority under the I.T. Act for affecting the said transfer as prescribed under Chapter XXC of the I.T.Act. The assessee applied to the appropriate authority for getting No objection Certificate for transfer of immovable property u/s. 269UC of the I.T.Act, 1961. As per the documents furnished to the appropriate authority, copies of which have been placed in the paper-book from page 86 to 89, reveal that the parties to the agreement i.e. transferor and transferee declared the value of consideration i.e. the estimated cost of consideration/development of the remaining 1/3rd area at Rs.6,60,14,520/-. A detailed working of the project cost was submitted by the assessee and the purchaser to the statutory authorities. The appropriate authorities thereafter treating the said amount of Rs.6,60,14,520/- as sale con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee at this stage that the actual cost of construction was in fact about 1/3rd of the estimated amount is wrong and false. Even if, for the sake of argument, we admit the claim of the assessee with the actual worked out cost after the completion of the project was Rs.2,86,80,000/- and the assessee thus received the sale consideration of the above said amount, then in view of the express provisions of Chapter XXC, which are applicable in relation to the transfer of any immovable property effected before 1st day of July 2002, we will be left with no option then to refer the case back to the appropriate authority giving it opportunity u/s. 269UD of the I.T. Act to purchase the same by paying the amount of consideration at Rs.2,86,80,000/- to the assessee and in that event the transfer affected between the parties vide agreement dated 03.08.2000 [vide development agreement dated 01.06.2001] will have to be treated as sham transaction entered into between the parties and the government will have a right to purchase the said property at the consideration claimed by the assessee now, as per its valuation report. However, in that even opportunity of hearing will also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is not only hit by principles of estoppels, but is also unreasonable and against the principle of equity, justice and good conscience. It is settled position of law that a person who seeks equity must do equity. In our view, such a conduct of the assessee is not appreciable. The assessee has wrongly and illegally forced the other party into litigation on this ground which is all the more against the principles of judicial ethics as well as natural justice also. Hence, the assessee is not entitled to any relief on this ground and the same is decided in favour of the revenue. 5. The third ground of appeal raised by the assessee reads as under: 3. Re: Estimating lower fair market value of the plot of land 3.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not deciding the contention of the appellant that the Assessing Officer estimating lower fair market value of the land as on 1st April 1981 The learned AR before us has submitted that the learned CIT(A) has not given any finding on this ground, which fact can also be noticed from the order of the CIT(A). Under such circumstances, we remand the case file back to the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isition should be considered as fair market value of the plot of land as on the date of introduction of the capital asset into the partnership firm by the original owner Mr. Narayan Dev Kunder. It may be observed that the assessee itself had taken the fair market value as on the date of conversion of capital asset of the firm into stock in trade, in its return of income, filed for the A.Y. 2004-05. Now in A.Y. 2006-07 the assessee is estopped from its own act and conduct to claim something else in contrary to its own stand taken for A.Y. 2004- 05. Even otherwise, there is no merit in this ground of the assessee and the same is rejected. 8. In the alternate contention in ground no. 1.3, the assessee has claimed that indexation on cost for the purpose of capital gain is to be accounted upto the year of sale and not up to the year of conversion. As per the provisions of the I.T.Act, capital gains has to be computed on the date of conversion of the same into stock in trade, however, the tax is payable on the sale of the asset. The indexation on cost thus can be computed upto the date of conversion only. Even otherwise, the assessee itself had claimed indexation upto the date of conve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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