Late Shrimati Maharani Shantadevi Gaekwad, Baroda v. The Dy. CIT Circle 5, Baroda

ITA 1111/AHD/2003 | 1992-1993
Pronouncement Date: 29-01-2010 | Result: Dismissed

Appeal Details

RSA Number 111120514 RSA 2003
Assessee PAN ADDPG7824L
Bench Ahmedabad
Appeal Number ITA 1111/AHD/2003
Duration Of Justice 6 year(s) 10 month(s) 8 day(s)
Appellant Late Shrimati Maharani Shantadevi Gaekwad, Baroda
Respondent The Dy. CIT Circle 5, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-01-2010
Date Of Final Hearing 12-11-2009
Next Hearing Date 12-11-2009
Assessment Year 1992-1993
Appeal Filed On 21-03-2003
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL B-BENCH AHMEDABAD. BEFORE: SHRI H L KARWA JUDICIAL MEMBER AND SHRI D.C.AGRAWAL ACCOUNTANT MEMBER. ITA NO.1111/AHD/2003 (ASSESSMENT YEAR 1992-1993) LATE SHRIMANT SHANTADEVI P. GAEKWAD. (THROUGH EXECUTOR DR. MRUNALINIDEVI PUAR) LAXMI VILAS PALACE BARODA. VERSUS DY. COMMISSIONER OF INCOME TAX CIRCLE-5 BARODA. (APPELLANT) (RESPONDENT) PAN: ADDPG 7824 L FOR THE APPELLANT: SMT. J.P. SHAH CA FOR THE RESPONDENT GOVIND SINGHAL SR. DR ORDER PER D C AGRAWAL (ACCOUNTANT MEMBER): THIS IS AN APPEAL FILED EXECUTOR OF ESTATE OF LATE SHRIMANT MAHARANI SHANTADEVI GAE KWAD THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 21-12-2002. THE ISSUE INVOLVED IS THE VALUATION OF JEWELRY AS ON 01-04-1974 FOR THE PURPO SES OF LEVY OF CAPITAL GAINS. 2. THE FACTS OF THE CASE ARE THAT ASSESSEE IS THE M OTHER OF ERSTWHILE RULER OF BARODA H.H. LATE SHRIMANT FATEHSINH RAO-I GAYAKWAD. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SOLD CERTAIN JEWELRY/VALUABLE ARTICLES MADE OF GOLD DIAMONDS AND PEARLS. THE SALE CONSIDERATION WAS OF RS.9 05 09 176/-. THE ASSESSE E BY FOLLOWING THE METHOD OF REVERSE INDEXATION WORKED OUT THE FAIR MA RKET VALUE OF THE SAID JEWELRY AT RS.3 47 25 492/- AS ON 01-04-1974 AND CO MPUTED THE CAPITAL GAINS AT RS.2 78 84 432/-. THE ASSESSING OFFICER O N THE OTHER HAND NOTED THAT THE DETAILS OF THE JEWELRY SOLD AND DETAILS OF THE JEWELRY ACQUIRED DO 2 ITA NO.1111/AHD/2003 (ASSESSMENT YEAR 1992-1993) NOT MATCH. THEREFORE IT IS PRESUMED THAT ALL ITEMS OF JEWELRY WAS NOT SOLD DURING THE YEAR UNDER CONSIDERATION. HE ACCORDINGL Y ESTIMATED THE VALUE OF THE ITEMS AS ON 01-04-1974 AT RS. 5 00 000/- (AS AGAINST RETURNED VALUE OF GOLD JEWELRY AT RS. 6 65 270/- AS ON 31-03-1974. ) HE ACCORDINGLY CALCULATED CAPITAL GAINS AS UNDER: TOTAL SALES CONSIDERATION. RS.9 05 09 176 LESS: COST OF ACQUISITION ESTIMATED AS ABOVE. RS. 5 00 000 RS.9 00 09 176 LESS: DEDUCTION U/S. 48 RS.15 000 50% OF BALANCE RS.4 49 92 086 RS.4 50 12 086 CHARGEABLE :: RS.4 49 97 090 --------------------- THE MATTER WENT TO THE TRIBUNAL WHICH SET ASIDE THE ISSUE BY GIVING FOLLOWING OBSERVATIONS. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PA RTIES PERUSED THE RECORD AND GONE THROUGH THE DECISION CUED. THE DECISION REFERRED TO BY THE LD. AR FOR THE ASSESSEE IS DISTI NGUISHABLE ON FACTS IT HAS BEEN FOUND THAT A NUMBER OF EXPLANAT IONS INFORMATION AND MATERIAL IN THE FORM OF FRESH WERE PRODUCED BEF ORE CIT(A). IN VIEW OF THE DECISION OF THE HON'BLE GUJARAT HIGH CO URT 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 AO. IN THE LIGHT OF ABOVE DISCUSSION AFTER CO NSIDERING THE ASPECT OF NATURAL JUSTICE AS REQUIRED BY RULE 46A O F THE IT RULES WE SEND BACK THE ISSUE TO THE FILE OF CIT(A) TO DEC IDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AND AFTER GIVING A RE ASONABLE OPPORTUNITY OF BEING HEARD TO BOTH THE PARTIES. 3 ITA NO.1111/AHD/2003 (ASSESSMENT YEAR 1992-1993) 3. THE LEARNED CIT(A) DECIDED THE ISSUE AFRESH IN A CCORDANCE WITH THE DIRECTIONS OF TRIBUNAL AND ALSO ADMITTED ADDITIONAL GROUNDS. IN ONE OF THE ADDITIONAL GROUNDS IT WAS CONTENDED BY THE ASSE SSEE THAT FAIR MARKET VALUE OF THE ASSET SHOULD BE CONSIDERED ON THE DATE OF ACQUISITION BY THE ASSESSEE ON ACQUISITION AND NOT THE COST OF ACQUISI TION AS ON 01-04-1974. THE ASSESSEE ALSO CONTENDED THAT A REVERSE INDEXING METHOD SHOULD BE ADOPTED BY THE ASSESSING OFFICER. THE LEARNED CIT( A) CONSIDERED THE WORKING DONE BY THE ASSESSING OFFICER AND THE WORKI NG DONE BY THE ASSESSEE AND FOUND THAT JEWELRY WAS ACQUIRED ON SUC CESSION AND THEREFORE ITS VALUE SHOULD BE NECESSARILY ADOPTED AS ON 01-04 -1974. SECONDLY VALUATION OF THE GOLD ITEMS IS MADE BY THE ASSESSEE ON THE BASIS OF THE PRICES OF THE GOLD PREVAILING ON 01-04-1974 IT IS ACCEPTED BY THE ASSESSING OFFICER AND THEREFORE THERE IS NO DISPUTE THEREON. THIRDLY THE FAIR MARKET VALUE OF DIAMONDS AND PEARLS AS ON 01-0 4-1974 IS WORKED OUT BY THE ASSESSEE AT RS. 2 95 18 222/- AND RS.4 15 60 0/- RESPECTIVELY AS AGAINST THIS ASSESSING OFFICER HAS WORKED OUT THIS VALUE AT RS. 1 39 48 363/- AND RS.3 72 000/- RESPECTIVELY FOR DI AMONDS AND PEARLS. FINALLY BOTH THE ASSESSEE AND THE ASSESSING OFFIC ER HAVE ADOPTED THE METHOD OF REVERSE INDEXATION. THE ASSESSEE HAS ADO PTED THE BASE AS THE VALUE WORKED OUT IN 1989 ON THE BASIS OF VALUATION DONE BY REGISTERED VALUE WHEREAS ASSESSING OFFICER HAS TAKEN THE BAS E AS ACTUAL SALE PRICE IN DECEMBER 1991. BUT THERE IS NO DISPUTE ON THE METHOD OF REVERSE INDEXING ADOPTED BY THE ASSESSING OFFICER AND THE A SSESSEE. THE DISPUTE IS ONLY AS TO WHETHER BASE VALUATION SHOULD BE THE VALUATION DONE BY THE ASSESSEE IN 1989 OR THE VALUATION TAKEN AS PER SALE PRICE ON THE DATE OF THE SALE. THE LEARNED CIT(A) AGREED WITH THE FINDINGS O F THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ACCORDINGLY TAK EN THE INDEX OF 480 PERTAINING TO YEAR 1992 WHEN THE JEWELRY WAS FINALL Y SOLD IN DECEMBER 1991. 4 ITA NO.1111/AHD/2003 (ASSESSMENT YEAR 1992-1993) 4. BEFORE US LEARNED AR FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAS GOT THE VALUATION OF THE JEWELRY DONE BY THE APPROV ED VALUER OF THE WEALTH TAX DEPARTMENT WHICH HAS VALUED THE JEWELRY IN THE YEAR 1989 AND THE REVERSE INDEXATION SHOULD BE DONE BY ADOPTING THIS VALUE. THE DEPARTMENT SHOULD NOT BE ALLOWED TO APPROBATE AND R EPROBATE. ONCE THEY HAVE ACCEPTED THE MARKET VALUE AS ON 01-04-1974 FOR WEALTH TAX PURPOSES THEN THE SAME SHOULD BE ADOPTED AS BASE FOR REVERSE INDEXATION FOR ARRIVING THE MARKET VALUE AS ON 01-04-1974. HE REF ERRED TO THE DECISION OF DELHI HIGH COURT IN SMT. KAVITA KHANDELWAL VS. C IT (2008) 173 TAXMANN 64 WHERE VALUATION REPORT WAS ADOPTED FOR D ETERMINING COST OF ACQUISITION AS ON 01-01-1964. FURTHER THE DATE OF 31-03-1989 IS CLOSER TO 01-04-1974 THEREFORE IT IS MORE REALISTIC THEN DECE MBER 1991 WHEN JEWELRY WAS SOLD. AGAINST THIS LEARNED DR SUBMITT ED THAT FAIR MARKET VALUE ADOPTED BY THE REGISTERED VALUER AS ON 31-03- 1989 IS ONLY A FAIR ESTIMATE AND IS NOT ACTUAL FAIR MARKET VALUE. IF O NE GOES BY NEAREST DATE THEN IT IS 31-03-1974 WHICH IS NEARER TO 01-04-1974 AND ON THIS DATE THE VALUATION OF THE JEWELRY WAS MUCH LOWER AS DECLARED IN THE WEALTH TAX RETURN I.E. RS. 6 63 270/-. THIS ARGUMENT IS SELF DEFEATING FOR THE ASSESSEE. FURTHER FAIR MARKET VALUE SHOULD BE THE NEAREST TO THE ACTUAL MARKET VALUE. IF THE JEWELRY IS SOLD IN DECEMBER 1991 THEN IT IS THE ACTUAL FAIR MARKET VALUE AND REVERSE INDEXING SHOULD BE DONE WI TH REFERENCE TO THIS VALUE. ONCE ACTUAL FACTS AND FIGURES ARE AVAILABL E THEN THERE IS NO REASON TO DEPEND UPON THE ESTIMATES. FURTHER VALUATION D ONE BY REGISTERED VALUER IN 1989 DOES NOT MATCH WITH FIGURES PUBLISHE D IN THE AUTHORIZED PUBLICATION OF GEM AND JEWELRY EXPORT PROMOTION COU NCIL OF INDIA. THE ASSESSEE COULD NOT FIND ANY FAULT WITH THE WORKING DONE BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE LD DR FURTHER ARGUED THAT IF ASSESSEES VALUE AS ON 01-04-1974 FO R DIAMONDS ARE TO BE 5 ITA NO.1111/AHD/2003 (ASSESSMENT YEAR 1992-1993) ADOPTED THEN THE SAME OUGHT TO HAVE FETCHED A PRICE OF RS. 10.82 CRORES AND NOT RS. 5.11 CRORES FETCHED TO THE ASSESSEE IN DECEMBER 1991. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. AFTER CAREFULLY CONSIDERING THE ARGUMEN TS OF THE TWO SIDES WE TEND TO AGREE WITH THE VIEW OF LD DR. THE REASONS ARE THAT VALUE TO BE ADOPTED AS ON 01-04-1974 IS THE FAIR MARKET VALUE T O BE TREATED AS COST OF ACQUISITION. BOTH THE SIDES HAVE AGREED THAT IT SH OULD BE CALCULATED ON THE BASIS OF REVERSE INDEXATION. THE DISPUTE IS ONLY W HETHER BASE FOR SUCH CALCULATION SHOULD BE THE VALUE ADOPTED BY THE REGI STERED VALUER AS ON 01- 04-1989 OR THE ACTUAL FAIR MARKET VALUE BEING THE S ALE PRICE IN DECEMBER 1991. IT IS NOT DISPUTED THAT WHAT THE VALUER HAS GIVEN IN 1989 IS ONLY AN ESTIMATE IN ACCORDANCE WITH HIS JUDGMENT FURTHER D ISPUTE IS MAINLY ON THE VALUATION OF THE DIAMONDS. THEIR ESTIMATION OF VALUATION DEPENDS UPON EXPERTISE OF THE VALUER AND HIS EXPERIENCE TA KING INTO CONSIDERATION 4 FAMOUS CS I.E. COLOR CARAT CUT AND CLARITY. A PROPER COMBINATION OF THE 4CS GIVES THE HIGHER VALUE AND A VALUER IN HIS OWN WISDOM DETERMINES THE VALUE BY ESTIMATING THE COMBINATION OF THESE 4CS. IN NO WAY ANY ESTIMATE OF THE VALUE OF THE DIAMOND CAN MA TCH OR CAN BE EQUAL TO THE ACTUAL SALE PRICE IT WOULD FETCH AT A GIVING POINT OF TIME. EVEN WHERE JEWELRY IS SOLD ON THE SAME DAY WHEN AN APPR OVED VALUER HAS ESTIMATED THE VALUE AND IF HIS VALUATION DIFFERS FR OM THE ACTUAL SALE PRICE THEN THE ACTUAL SALE PRICE WOULD BE THE FAIR MARKET VALUE AS COMPARED TO THE ESTIMATE MADE BY THE APPROVED VALUER. THUS AC TUAL SALE PRICE TAKES PRECEDENCE OVER THE ESTIMATE WHEN IT COMES TO CHOOS ING FAIR MARKET VALUE OUT OF THE TWO. THEREFORE IT IS NOT THE QUESTION OF PROXIMITY OF THE DATE OF ESTIMATE WITH THE DATE WHEN FAIR MARKET VALUE IS REQUIRED BUT IT IS THE FAIRER RATHER ACTUAL MARKET VALUE WHICH IS MORE IMP ORTANT. THUS FAIR MARKET VALUE AS ON 01-04-1974 WOULD HAVE A BETTER A ND STRONGER 6 ITA NO.1111/AHD/2003 (ASSESSMENT YEAR 1992-1993) RELATIONSHIP WITH THE ACTUAL MARKET VALUE AS ON DEC EMBER 1991 RATHER THEN WITH ESTIMATE AS ON 01-04-1989. THEREFORE WE APPROVE THE REVERSE INDEXATION DONE WITH REFERENCE TO ACTUAL SALE PRICE IN DECEMBER 1991 RATHER THEN WITH REFERENCE TO ESTIMATE DONE BY REGI STERED VALUER AS ON 01- 04-1989. 6. AS A RESULT APPEAL FILED BY THE ASSESSEE IS DISM ISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 29 TH JANUARY 2010. SD/- SD/- (H.L. KARWA) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; DATED: 29/01/2010 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT AHMEDABAD BENCHES AHMEDABAD.