TMI Blog1986 (3) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... n regard to each of the other assessees. The reasons given for the decision on the applications preferred by Smt. Shakuntala Rajeshwar will be applicable mutatis mutandis in the cases of the other applicants as well. In the case of Smt. Shakuntala Rajeshwar, there are twelve applications which arise out of three orders passed by the Income-tax Appellate Tribunal in relation to the assessment years 1972-73 to 1975-76. These applications arise in the following circumstances: The applicants are six out of the seventeen co-sharers of property No. 24, Barakhamba Road, New Delhi. The above property consisting of land as well as a bungalow constructed thereon had originally been leased out by the Secretary of State for India in favour of M/s. Badri Nath Diwan Chand under a perpetual lease deed dated February 4, 1938. M/s. Badri Nath Diwan Chand conveyed their interest in the land as well as the bungalow to Sri Prem Nath by a deed of conveyance dated May 16, 1938. Thereafter, there were various partitions and settlements in the family of Sri Prem Nath with the details of which we are not concerned. It is sufficient to say that by December 24, 1971, the property came to be owned by se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual 1/4th interest that was conveyed by each of the documents. On the above transactions, the Income-tax Officer came to the conclusion that there had been a " transfer " on March 27, 1972, by each of the co-owners of his interest in the property. According to him, therefore, the entire capital gains on the transfer of the interest of each of the sharers in the property had to be assessed in the assessment year 1972-73. This was the first aspect of the assessment. The second aspect of the assessment was that the Income-tax Officer did not agree that the full value of the consideration for which the property was sold was only Rs. 18,00,000. He found that a multi-storeyed building with twelve floors had been put up on the property and worked out the market value of 30 per cent. of its carpet area at Rs. 71,00,000. He worked out the proportionate consideration in respect of each of the transfers on this footing and he included the capital gains computed on this basis in the assessment for the assessment year 1972-73. He, however, also made a protective assessment having regard to the claim of the assessee that only 1/4th of the interest of each of the assessees had been transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution and registration of a sale deed. Having regard to the terms of the sale deeds dated March 27, 1972, March 23, 1973, April 16, 1973, and July 31, 1974, only one-fourth of each of the assessee's interest in the said property passed in each of the relevant previous years and capital gains was assessable on this footing in the assessment years 1972-73 to 1975-76. On the second question, the Tribunal held that as there was no dispute that the tenant vacated the premises on April 18, 1972, after he had received the payment of Rs. 1 lakh on October 4, 1971, before the sale took place on July 23, 1972, the sum of Rs. 1 lakh could not be treated as consideration for the sale and was allowable in the computation of the capital gains. So far as the third contention was concerned, the matter was disposed of in the following manner: " In the appeals before us, Shri Ganeshan, the learned representative of the assessee, invited our attention to the order of the Commissioner of Income-tax (Appeals), Chandigarh, Camp-Panipat, dated January 16, 1979, in the case of Shri Rajeshwarnath, another co-owner, of this very property. In that order, the Commissioner of Income-tax (Appeals) had adopte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market value at Rs. 42,50,000. We are in entire agreement with the conclusion and reasonings of the Commissioner of Income-tax (Appeals), Chandigarh, and would direct that the market value of the carpet area should be adopted at Rs. 42,50,000." This order, as already mentioned, was passed on July 7, 1980. Subsequently, the assessees came to know that the concession made before the Tribunal and recorded in the above two paragraphs of the appellate order proceeded on the basis of a mistake. Actually, the order of the Commissioner of Income-tax (Appeals) at Chandigarh was the subject matter of an appeal to the Tribunal at Chandigarh not by the Department but by the assessee. The Tribunal at Chandigarh had gone into the matter in detail and had arrived at the value of the consideration for the transfer at Rs. 18,00,000. When this came to the knowledge of the assessee, an application was made to the Tribunal under section 254(2) seeking a rectification of the original appellate order dated July 7, 1970. The Tribunal, by its order dated March 18, 1981, accepted the application. It was observed : " The assessee had now pointed out that appeals were actually filed against the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectively, raised for consideration therein. The questions are as follows: ------------------------------------------------------------------------------------------------------------------------------------------------- S. No. Question Assessee Case No. Assessment ITCs. year -------------------------------------------------------------------------------------------------------------------------------------------------- 1. Whether, on the facts Smt. Shakuntala 120/82 1974-75 and in the circumstances Rajeshwar 123/82 1973-74 of the case, the 125/82 1975-76 Tribunal was correct 126/82 1972-73 in law in holding that the Income-tax Officer 137/82 1972-73 was not right in coming to the conclusion that Jatinder Nath 139/82 1973-74 there was a transfer of the whole property in Smt. Aruna Devi 145/82 1972-73 the accounting period relevant to assessment year 1972-73 ? 2. Whether, on the facts 147/82 1975-76 and in the circumstances of the case, the Smt. Nirmala 151/82 1972-73 Tribunal was correct Rani in law in holding that 152/82 1975-76 a sum of Rs. 1 lakh received by the tenant is deductible under section 48 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of the property situated at 24, Barakhamba Road, New Delhi, should be taken at Rs. 18 lakhs. (iii) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the Income-tax Officer was not right in coming to the conclusion that there was a transfer of the whole property in the accounting period relevant to the assessment year 1972-73 ? (iv) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that a sum of Rs. 1 lakh received from the tenant is deductible under section 48 for the purpose of computing the capital gain ?" (v) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the Income-tax Officer was not right in coming to the conclusion that there was a transfer of the whole property in the accounting period relevant to assessment year 1972-73 ? (vi) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that a sum of Rs. 1 lakh received from the tenant is deductible under section 48 for the purpose of computing the capital gain ? " These are substantially the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question, we are of the opinion that this is a question of valuation and hence one of fact. The value of Rs. 71 lakhs taken by the Income-tax Officer and the value of Rs. 64 lakhs taken by the Commissioner of Income-tax (Appeals), in these appeals as well as the value of Rs. 42,50,000 taken by the Commissioner of Income-tax (Appeals) at Chandigarh and adopted by the Tribunal here in the first order represent their estimate of the market value of 30% of the constructed carpet area of the multi-storeyed building that was eventually put up on the land. It has been pointed out by the Tribunal that the true consideration for the transfer was not the market value which the property put up eventually could fetch but only the market value of the right, which the assessees got, to a conveyance of 30% of the carpet area as and when the structure came into existence. This consideration had been evaluated by the parties at Rs. 18 lakhs and it was for the Revenue to prove that its value, at that point of time, was not Rs. 18 lakhs but much more than that. According to the Tribunal, the value of Rs. 18 lakhs had not been shown to be an understatement or undervaluation of the future right which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reference. There is an apparent plausibility about the argument urged on behalf of the Department but we think it cannot be accepted. A perusal of the orders of the Tribunal and a consideration of the circumstances in which the appeals were heard by the Tribunal will clearly show that what transpired was not really a concession or admission but the inevitable acceptance of a situation under an erroneous impression and this error was not only on the part of the assessee's representative but also on the part of the Tribunal. It will be remembered that there were cross-appeals before the Tribunal, the assessees seeking a reduction, and the Department an enhancement, of the estimate of Rs. 61,00,000 adopted by the Commissioner of Income-tax (Appeals). The assessee's representative thought that the order of the Commissioner of Income-tax (Appeals) at Chandigarh had not been appealed against and his argument was that this figure which had become final in the case of the co-sharers should be taken in this case also. No doubt, in his statement, as extracted in the original order, the reference is only to the absence of an appeal by the Department but there can be no doubt and this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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