TMI Blog1995 (7) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... ny of face value of Rs. 1,000 each. By an agreement dated 27-10-1980 executed between the company, M/s. Panalal Silk Mills Pvt. Ltd., as vendor and M/s. Sheth Mehta Associates as purchaser, the vendor agreed to allow the purchaser to develop the company's property more particularly described in the first schedule to the said agreement and in Annexure ' A ' thereto and for that purpose the vendor company agreed to sell to the said purchaser all its available and unutilised Floor Space Index in respect of the said entire property of the company. The company also agreed to grant the purchaser a lease of 99 years in respect of the company's property described in the second schedule to the agreement and in Annexure ' B ' thereto. Disputes and difference arose between the two groups of shareholders in the matter of management of the affairs of the company. Each of the groups claimed from the company a share in part of the price receivable under the said agreement on the ground, inter alia, that each group had some interest in the properties covered by the said agreement and described in Annexures A B thereto. The first group of shareholders were contending that the second group of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging to both the groups. It was specifically agreed that the company would assign and transfer to the transferees (shareholders of the first group) its entire right, title and interest in the said property described in Annexure ' C ' to the record of settlement in consideration of the transferees irrevocably giving up and releasing of their claims against the company under the agreement dated 27-10-1980 in respect of the other properties which were required to be transferred for development to M/s. Sheth Mehta Associates. 3.2 In the light of this background, the ITO proceeded to compute the capital gains u/s 45 in respect of appellant's transfer of 231 shares for which she received 33% share in the impugned property as well as Rs. 23,100 in cash. Since the property was transferred on 18-12-1981, in order to determine the market value of the property for the purpose of wealth-tax assessment, the matter had been referred to the District Valuation Officer u/s 16A and the D. V. O. determined the value of the property at Rs. 78,71,000 as on 31-12-1981. The ITO adopted this valuation by stating that there was no need to make a fresh reference u/s 55A inasmuch as the procedures u/s 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , long-term capital gain was offered in the original return of income. Even in the first revised return, the same computation was adopted meaning thereby that the transfer was all along treated by her as exigible to capital gains tax. It was only in the second revised return filed almost after two years that she excluded from the computation the consideration received in the shape of immovable property from the company M/s. Pannalal Silk Mills Pvt. Ltd. The consideration had been shown only at Rs. 23,100 being the money received for transfer of 231 shares and taking into consideration the original cost, long-term capital loss was shown at Rs. 3,05,559. According to the CIT(A) even at this stage, there was no claim in the return or in the computation of income that the transfer was a family settlement or arrangement. After hearing the arguments of the assessee's counsel the CIT(A) was not convinced that there was any settlement giving rise to a family arrangement which according to the assessee did not involve a transfer. He noted that the two groups of shareholders though related somehow belonged to altogether different families and there was nothing common amongst themselves in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hta (daughter of the assessee) have not been subjected to capital gains tax as in their cases the contention that the shares were transferred by them pursuant to the deed of family settlement was accepted by the Revenue. 5.1 The learned counsel for the assessee further submitted that in respect of transfer of these shares the company M/s. Pannalal Silk Mills Pvt. Ltd. has been subjected to gift-tax. He drew our attention to the order of ITAT Bombay Bench " B " in G.T.A No. 24 (Bom.) of 1991 relating to assessment year 1983-84 in the case of Panalal Silk Mills (P.) Ltd. (pages 243 to 251 of the paper book) whereby the Tribunal has upheld the levy of gift tax on the said company. He submitted that in view of this position there was no justification for subjecting the assessee to capital gains tax. 5.2 Without prejudice to the above and as an alternative contention the learned counsel submitted that the computation of capital gains is erroneous. According to the learned counsel computation should be as per the calculations given at page 21 of the paper book. As per the calculations given at this page capital gains worked out to Rs. 3,89,151. 6. Shri P.N. Dixit, the learned DR re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h her husband and her daughter. She was absolute owner of 321 shares and the second group, i.e. family headed by Shri Panalal Maganlal to whom the shares were transferred had no antecedent title in these shares. The two groups of shareholders though related somehow belonged to altogether different families and there was nothing common amongst themselves in the matter of enjoyment of properties as members of the family. There was a third party too, i.e., a company (Pannalal Silk Mills (P.) Ltd.) which is a distinct legal entity and as per laws governing the companies, distinct shares were held by different members of the group in their own rights and such shares were their individual properties, which were capable of being transferred without any pre-condition or hindrance, legal or otherwise. Further the company being a corporate entity is no way concerned with the disputes amongst the shareholders. What we find that one group of shareholders imputed certain charges as regards mismanagement of the company, beyond that nothing was placed before us to show the existence of family dispute or possibility of a family dispute. Here we must say that the smooth functioning of the company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l tantamount to double taxation, we are of the opinion that the issue raised in this appeal has to be adjudicated de hors any other proceedings to which recourse might have been taken by the revenue. The proceedings under the IT Act and GT Act are distinct proceedings and it is the company in whose hand the gift tax has been levied and that does not tantamount to double taxation so far as the assessee is concerned. We accordingly reject this contention of the learned counsel for the assessee. 11. Now, we come to the alternative submission of the learned counsel for the assessee, ie., regarding computation of capital gains. We have gone through the calculations given by the assessee at page 21 of the paper book. This, according to us, does not give a clear picture. While the ITO has given detailed calculations in his order in respect of computation of capital gains. Further we find that the CIT(A) took note of the calculations made by the Assessing Officer and further gave relief to the assessee vide his finding in para 11 of his order which relief is being challenged by the Revenue in cross-appeal. Under the circumstances we do not find any infirmity in the computation of capital ..... X X X X Extracts X X X X X X X X Extracts X X X X
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