M/s Galaxy Builders, Calicut v. ITO, Calicut

ITA 466/COCH/2008 | 1998-1999
Pronouncement Date: 21-05-2010

Appeal Details

RSA Number 46621914 RSA 2008
Bench Cochin
Appeal Number ITA 466/COCH/2008
Duration Of Justice 2 year(s) 2 month(s) 14 day(s)
Appellant M/s Galaxy Builders, Calicut
Respondent ITO, Calicut
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 21-05-2010
Date Of Final Hearing 21-04-2010
Next Hearing Date 21-04-2010
Assessment Year 1998-1999
Appeal Filed On 07-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO.466/COCH/2008 ASSESSMENT YEAR:1998-99 M/S. GALAXY BUILDERS CALICUT. PA NO.AFIPK 2299G VS. THE INCOME - TAX OFFICER WARD-1(3) CALICUT. (APPELLANT) ( RESPONDENT ) APPELLANT BY SHRI CBM WARRIER CA RESPONDENT BY SHRI T.J. VINCENT JR.DR O R D E R PER N.VIJAYAKUMARAN J.M: THIS IS AN APPEAL BY THE ASSESSEE VIZ. M/S. GALAX Y BUILDERS CALICUT. THE APPEAL IS DIRECTED AGAINST T HE APPELLATE ORDER DATED 15-01-2008 OF CIT(APPEALS)-I CALICUT PERTAINING TO THE ASSESSMENT YEAR 1998-99. THE APP EAL ARISES OUT OF THE ASSESSMENT COMPLETED U/S.143(3) O F THE ACT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM M/S. GALAXY BUILDERS CALICUT WAS ORIGINALLY CONSTITUTED AS PER THE DEED OF PARTNERSHIP DATED 15-03-1996 WITH THREE PAR TNERS CONSISTING OF - ITA NO. 466/COCH/2008 2 1. SHRI P.M.KUNHAMMED 35% 2. SHRI C.T. BASHEER 30% 3. SHRI ABDULGAFOOR 35% THE FIRM WAS ENGAGED IN THE REAL ESTATE DEVELOPMENT . 3. THE FIRM WAS DISSOLVED ON 31-05-1997 AND THE BUS INESS WAS CONVERTED INTO A PROPRIETARY CONCERN OF THE ERS TWHILE PARTNER SHRI P.M.KUNHAMMED. THE CONSTRUCTION OF T HE APARTMENT CORNISH CASTLE IS FROM THE YEAR 1997 TO 31-03- 2001. 4. THE ASSESSEE DID NOT FILE THE RETURN FOR THE PER IOD. MEANWHILE THERE WAS A SEARCH AND SEIZURE ACTION U/ S.132 OF THE I.T.ACT AT THE RESIDENTIAL PREMISES AS WELL AS BUSINESS PREMISES OF THE FIRM AND ITS PARTNERS ON 01 ST MARCH 2001. THE DEPARTMENT SEIZED MATERIALS EVIDENCING UNDISCLO SED INCOME WHICH ARE FOUND DURING THE COURSE OF SEARCH . THE BOOKS OF ACCOUNTS EVIDENCING THE PAYMENTS WERE ALSO SEIZED. 5. ON THE BASIS OF INFORMATION 148 NOTICE WAS ISSU ED AND IN RESPONSE THE ASSESSEE FIRM FILED ITS RETURN OF I NCOME ONLY ON 17-11-2004 SHOWING NIL INCOME. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE FIRM HAD PAID RS.28 50 000/ - TO ITA NO. 466/COCH/2008 3 PARTNER SHRI C.T. BASHEER ON HIS RETIREMENT FROM T HE FIRM AS PER THE STATEMENT GIVEN BY THE MANAGING PARTNER SH RI P.M. KUNHAMMED. THEREFORE THE ASSESSING OFFICER WAS OF THE VIEW THAT CAPITAL GAINS TAX IS LEVIABLE IN THE HAND S OF THE ASSESSEE FIRM U/S.45(4). 6. THE ASSESSING OFFICER PERUSED THE DEED OF DISSOL UTION DATED 31-05-1997 AND AS PER CLAUSES 4 5 6 11 AND 12 OF THAT DEED HE WAS OF THE VIEW THAT THE EXISTENCE OF THE ASSESSEE FIRM WAS FOR 15 MONTHS AND 16 DAYS. HENCE THE GAIN IS A SHORT TERM CAPITAL GAIN. HE TOOK THE SA LE VALUE OF THE ASSETS AS ON 31-03-1997 ON THE BASIS OF MARKET VALUE ON DISSOLUTION. 7. THE ASSESSING OFFICER FURTHER NOTICED THAT AS PE R THE SEIZED MATERIAL (A-21) THE ASSESSEE FIRM HAD ACCOUN TED RS.31 71 000/- AS THE VALUE OF ASSETS AS ON 31-03-1 997 THAT THE ACTUAL SALE CONSIDERATION RECEIVED AS ON T HE DATE IS RS.50 26 736/-. THEREFORE THE ASSESSING OFFICER ADOPTED THIS AS THE ACTUAL MARKET VALUE OF THE ASSETS AS ON THE DATE OF DISSOLUTION. FROM THIS VALUE THE ASSESSING OF FICER ALLOWED EXPENSES TOWARDS CONSTRUCTION COST AND ADMINISTRATIVE EXPENSES FOR COMPUTING THE ACTUAL SA LE CONSIDERATION FOR THE PURPOSE OF SHORT TERM CAPITAL GAIN. ITA NO. 466/COCH/2008 4 THIS CAPITAL GAIN IS WITH RESPECT TO THE BUILDING A ND LAND. WE WILL GIVE THE FACTS IN THE PARAS. RELATING TO TH E ISSUE OF CAPITAL GAINS ON LAND. 8. THE ASSESSEE CHALLENGED THIS ADDITION BEFORE THE LD. CIT(APPEALS). THE ASSESSEES CONTENTION BEFORE TH E LD. CIT(APPEALS) WAS THAT THERE WAS NO DISTRIBUTION OF ASSETS ON THE DISSOLUTION OF THE FIRM AS ON 31-05-1997 TO ANY OF THE PARTNERS. HENCE NO CAPITAL GAIN AROSE SO AS TO C HARGE U/S.45(4). IN OTHER WORDS THE ASSESSEES CONTENT ION WOULD BE THAT THERE IS NO CESSATION OF BUSINESS AND THE F IRM CONTINUED ITS BUSINESS AS A GOING CONCERN BY ONE OF THE ERSTWHILE PARTNERS AS A PROPRIETARY CONCERN AFTER T HE DISSOLUTION. WHEN THE BUSINESS CONTINUED EVEN AFT ER THE DISSOLUTION AS A GOING CONCERN THE VALUE OF THE AS SETS HAS TO BE VALUED AT THE COST PRICE AND THERE WAS NO REQUIR EMENT TO VALUE THE CLOSING STOCK AT MARKET PRICE AS THE BUSI NESS WAS CONTINUED BY THE SURVIVING PARTNER AFTER THE DISSOL UTION OF THE FIRM. IT WAS ALSO PLEADED BEFORE THE LD. CIT( APPEALS) THAT THE CLOSING STOCK HAS TO BE VALUED AT THE COST OR MARKET PRICE WHICHEVER IS LOWER ON THE BASIS OF ESTABLISHE D PRINCIPLES OF COMMERCE AND ACCOUNTANCY. ITA NO. 466/COCH/2008 5 9. THE LD. CIT(APPEALS) REJECTED THE SUBMISSIONS MA DE BY THE ASSESSEE BOTH UNDER THE APPLICABILITY OF SECTIO N 45(4) OF THE ACT AND ON THE QUANTUM OF CAPITAL GAIN. THIS MADE THE ASSESSEE TO PREFER APPEAL BEFORE THE TRIBUNAL URGIN G THE SAME IN THE GROUNDS OF APPEAL. 10. THE FIRST OBJECTION OF THE ASSESSEE IS THAT THE ADOPTION OF RS.50 26 736/- AS MARKET VALUE OF THE FLAT AS ON 31-03- 1997. BY ADOPTING THIS FIGURE THE ASSESSING OFFI CER ARRIVED AT THE SHORT TERM CAPITAL GAIN AT RS.21 43 353/-. 11. THE LD. COUNSEL BY INVITING OUR ATTENTION TO TH E SEIZED BOOK A21 SUBMITTED THAT THE ACTUAL SALE CONSIDERA TION TAKEN AS ON 31-03-1997 AT RS.50 26 736/- IS NOT COR RECT. AS PER THE SEIZED BOOKS THE CORRECT AMOUNT IS OF RS.31 71 000/-. HOWEVER THIS AMOUNT IS RECEIVED FROM THE CUSTOMERS AND IN THE NATURE OF LIABILITY TILL THE C ONSTRUCTION IS COMPLETED AND THE POSSESSION IS HANDED OVER TO T HE CUSTOMERS. THE LD. COUNSEL FURTHER EXPLAINED THAT UPTO THE DATE OF DISSOLUTION THE CONSTRUCTION OF THE BUILDI NG IS ONLY IN THE PRELIMINARY STAGE OF MUD AND MORTAR AND THE TOT AL AMOUNT SPENT UPTO THE DATE OF 31-3-1997 IS ONLY RS.28 10 731/-. OBVIOUSLY THERE IS NO MARKET VALUE FOR THE SO CALLED FLAT AT THAT STAGE OF CONSTRUCTION AND TH E LD. ITA NO. 466/COCH/2008 6 ASSESSING OFFICER HAS TOTALLY WRONG IN FIXING RS.50 26 736/- INCLUSIVE OF ADVANCE RECEIVED EVEN AFTER 31-03-1997 TILL THE YEAR 2001 AS THE MARKET VALUE OF THE INCOMPLETE BUI LDING. THE ADVANCE RECEIVED FROM THE CUSTOMERS CANNOT BE T HE MARKET VALUE UNDER ANY STRETCH OF IMAGINATION IS T HE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. IF T HAT VALUE RECEIVED FROM THE CUSTOMERS ARE CONSIDERED AS MARKE T VALUE THEN THE CORRECT VALUE AS PER THE BOOKS IS ONLY RS.31 71 000/- AND NOT THAT OF RS.50 26 736/- EVEN AS PER THE SEIZED BOOK A-21. AS PER A-21 THE AMOUNT RE CEIVED FROM FOUR PERSONS UPTO 31-03-1997 IS ONLY RS.9 71 0 00/- AS AVAILABLE IN THE PER BOOK AT PAGES 81-83. 12. THE ADVANCE RECEIVED FROM THE CUSTOMERS UPTO TH E DISSOLUTION IS RS.31 71 000/- AS PER PAPER BOOK PA GES 79 & 80. THIS AMOUNT REPRESENTS THE VALUE OF SUPER STR UCTURE TO BE BUILT AND THIS AMOUNT WILL NOT UNDER ANY IMAGINA TION REPRESENTS THE MARKET VALUE AS AT THE TIME OF DISSO LUTION OF THE FIRM. IT WAS AT THE STAGE OF MUD AND MORTAR A ND NOT ON A CONSTRUCTION STAGE. 13. THE CASH FLOW STATEMENT EXPLAINING THIS POSIT ION WERE MADE AVAILABLE BEFORE THE ASSESSING OFFICER WITH CO PY WHICH IS IN THE PAPER BOOK AT PAGES 126 TO 131. IT CLE ARLY SHOWS ITA NO. 466/COCH/2008 7 THAT THE AMOUNTS ARE RECEIVED FROM CUSTOMERS AND SP ENT ON CONSTRUCTION. IN OTHER WORDS THE AMOUNT RECEIVED F ROM THE CUSTOMERS WAS ATTACHED WITH A LIABILITY TILL THE CO NSTRUCTION IS COMPLETED AND POSSESSION IS GIVEN TO THE CUSTOME RS. AT THE COST OF REPETITION IT IS NOT DISPUTED THAT UPTO THE DATE OF DISSOLUTION THE CONSTRUCTION OF THE BUILDING IS ONL Y IN THE PRELIMINARY STAGE. THERE CANNOT BE A MARKET VALUE FOR THE FLAT AT THIS PRELIMINARY STAGE. THEREFORE THE MAR KET VALUE ADOPTED BY THE ASSESSING OFFICER AT RS.50 26 736/- IS OBVIOUSLY WRONG. FURTHER IT IS ALSO CLEARLY ESTAB LISHED THAT THE ABOVE AMOUNT INCLUDES THE ADVANCES RECEIVED EVE R AFTER THE DISSOLUTION TILL THE YEAR 2001 AND THIS WAS TAK EN BY THE ASSESSING OFFICER AS THE MARKET VALUE OF THE INCOMP LETE BUILDING. TO ADD FURTHER THE FULL COST OF CONSTRUC TION OF RS.28 10 731/- AND ADMINISTRATIVE EXPENSES OF RS.7 2 613/- WERE ALSO REDUCED AS PER BALANCE-SHEET AS AT 31-03- 1997. THIS WAS NOT PROPERLY APPRECIATED AT THE LEVEL OF T HE ASSESSING OFFICER. HENCE THE QUANTUM ARRIVED AS M ARKET VALUE FOR THE PARTLY UNDER CONSTRUCTION APARTMENT W HICH WAS REMAINED IN A PRELIMINARY STAGE AND THE LIABILITY F ASTENED WITH THE ADVANCE RECEIVED FROM THE CUSTOMERS CANNO T REPRESENT THE MARKET VALUE OF THE SO CALLED BUILDIN G. ITA NO. 466/COCH/2008 8 14. TURNING TO THE LAND AND OWNERSHIP THE LAND IS TO AN EXTENT OF 29 CENTS. THIS LAND WAS PURCHASED BY TH REE LADIES VIZ. A.P.SAKEENA W/O. P.M. KUNCHAMMED MRS . P.S. KALMBAI W/O. C.T. BASHEER AND MRS. C.E.V.IMBICHAMIN ABI W/O. S. ABDUL GAFOOR. THIS PURCHASE WAS IN THE AS SESSMENT YEARS 1995-96 AND 1996-97. THE SHARE RATIO IS 65% 30% AND 5% RESPECTIVELY. THEN MRS. P.S. KALMABIS 30% WAS PURCHASED BY MRS. C.E.V. IMBICHAMINABI AS PER SALE DOCUMENT NOS.330 AND 376/97 DATED 31-05-1997. SHRI P.M. KUNCHAMMED HUSBAND OF MRS. A.P. SAKEENA HAS GIVEN RS.22 206 550/- FOR THE 30% SHARE OF THE LAND SOLD BY MRS. P.S. KALMBAI W/O. C.T. BASHEER. THIS AMOUNT IS I NCLUDED IN THE PAYMENT OF RS.28 50 000/- PAID TO SHRI C.T. BASHEER AND HIS WIFE MRS. P.S. KALMABI EVEN AFTER 132(4) S TATEMENT DATED 01-03-2001 IN QUESTION AND ANSWER NO.6. THI S AMOUNT IS ALLOWED AS EXPENDITURE IN THE COMPUTATION OF INCOME FROM THE PROJECT CORNISH CASTLE IN THE ASS ESSMENT ORDER U/S.158BC BLOCK ASSESSMENT. THE AMOUNT OF BROKERAGE OF RS.90 000/- WAS ALSO FOUND MENTIONED B Y HIM. 15. THE CONTENTION OF THE ASSESSEE WOULD BE THAT FI RSTLY THE LAND DOES NOT BELONG TO THE FIRM. AS THE FIRM IS NOT THE OWNER THE FIRM CANNOT DISTRIBUTE AN ASSET AMONG TH E PARTNERS WHICH IS NOT BELONGING TO THE FIRM. THE OWNERSHIP ITA NO. 466/COCH/2008 9 IS A CONDITION PRECEDENT TO ENABLE A VALID DISTRIBU TION. THE ENTIRE VALUE OF THE LAND AT THE RATE OF RS.1 57 000 /- PER CENT FOR THE TOTAL EXTENT OF 29 CENTS IS NOT THE MARKET VALUE BUT THE COST OF ACQUISITION OF THE THREE OWNERS OF THE PROPERTY WHICH IS ALSO AVAILABLE AS AN EXPLANATION TO THE QU ESTION NO.6 OF 132(4) STATEMENT OF MR. P.M. KUNCHAMMED. THE VALUE TAKEN BY THE ASSESSING OFFICER AS COST OF ACQ UISITION IS ONLY THE SALE VALUE OF THE LAND RIGHT RECEIVED FROM BUYERS OF THE APARTMENTS BY THE ERSTWHILE TWO LADY OWNERS OF THE PROPERTY. HENCE IT IS WRONGLY TAKEN AS COST OF TH E LAND AT RS.14 58 000/- BOTH BY THE LD. CIT(APPEALS) AS WELL AS ASSESSING OFFICER. 16. ADDING FURTHER THE TWO LADIES SHOWN THE SALE P ROCEEDS OF THE SAID LAND AS THEIR INCOME IN THEIR TAX RETUR N AND PAID TAX ON THAT ALSO. THOUGH IT WAS FILED AFTER THE S EARCH THERE WAS NOTHING WRONG ON THE PART OF THE LADIES TO SHOW THE MALAFIDE AS THE RETURN WAS FILED WITHIN THE TIME AN D ACCEPTED BY THE DEPARTMENT AS SUCH. 17 IN THE BLOCK ASSESSMENT ALSO THE LAND RIGHT OF RS.14 58 000/- IS DECLARED FROM THE SALE PROCEEDS O F THE APARTMENTS WHICH IS AVAILABLE IN THE PAPER BOOK PAG ES 9 AND 12. THE BLOCK ASSESSMENT ORDER IS DATED 31-03-2003 . THE ITA NO. 466/COCH/2008 10 REASON FOR DEDUCTION IS VERY OBVIOUS. THE GROSS VALUE OF THE SALE OF APARTMENTS INCLUDING THE LAND RIGHT WAS RECEIVED BY P.M. KUNCHAMMED TO THE EXTENT OF RS.4 72 94 386/ - AND THE COST OF THE LAND COLLECTED FROM THE BUYERS OF T HE APARTMENT IS RS.14 58 000/- IS PAID TO MRS. A.P. SA KEENA AND MRS. C.E.V. IMBICHAMINABI. TO MAKE IT CLEAR THIS DEDUCTION IS GIVEN NOT FOR THE COST OF PURCHASE OF PROPERTY OF 29 CENTS AS IT BELONGED TO THE LADIES ONLY AND NOT TO THE FIRM AS STATED EARLIER. HENCE IT IS CLEARLY ESTABLISH ED THAT THE LAND WHICH WAS SOLD TO THE BUYERS OF THE APARTMENT UPTO THAT POINT OF TIME AND EVEN NOW IT NEVER BELONGED T O THE FIRM. THE FIRM WAS DISSOLVED ADMITTEDLY ON 31-05- 1997. THE SALE OF LAND RIGHTS TO THE BUYERS ARE MADE IN T HE ASSESSMENT YEARS 2000-01 AND 2001-02 NOT BY THE FIR M BUT BY THE TWO LADY OWNERS MRS. A.P. SAKEENA AND MRS. C.E.V. IMBICHAMINABI. THIS IS CLEARLY BORNE OUT OF RECORD S. HENCE UNDER THE ABOVE FACTS AND CIRCUMSTANCES THE LAND A ND OWNERSHIP NEVER BELONGED TO THE FIRM AND THIS HAS T O BE EXCLUDED FROM THE TOTAL CONSIDERATION DISTRIBUTED T O THE PARTNERS AND WE ACCEPT THE CONTENTION OF THE LD. CO UNSEL TO THAT EXTENT. 18. TURNING AGAIN ON THE SUBJECT OF COMPUTATION OF CAPITAL GAINS IN RESPECT OF THE BUILDING RS.31 71 000/- IS THE ITA NO. 466/COCH/2008 11 AMOUNT OF ADVANCE RECEIVED FROM THE BUYERS OF THE APARTMENTS AND IT COULD NOT BE THE MARKET VALUE OF THE BUILDING FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. THE CONSTRUCTION IS DONE AS PER THE AGREEMENT AGAINST T HE ADVANCE RECEIVED FROM THE FLAT PURCHASERS AND THEY ARE NOT MARKETABLE AS THE PROJECT IS BEING IN THE PRELIMINA RY STAGE ONLY AND AT THAT STAGE AS ON 31-03-1997 THEY ARE NO T MARKETABLE. THE EXPENSES TOWARDS SALARY AND COST OF BROCHURE ETC. HAVE TO BE DEDUCTED FOR ARRIVING AT T HE ACTUAL QUANTUM FOR THE PURPOSE OF COMPUTATION OF CAPITAL G AIN WHICH WAS NOT DONE BY THE AUTHORITIES. IT IS ALSO NOT BORNE OUT OF RECORDS WHETHER THIS AMOUNT WAS ALREADY CLAI MED BY THE FIRM AS DEDUCTION WHILE COMPUTING THE TAXABLE I NCOME. HENCE THE COMPUTATION HAS TO BE RE-WORKED OUT AT T HE LEVEL OF ASSESSING OFFICER FOR ARRIVING AT THE QUANTUM OF CAPITAL GAIN ON THIS BUILDING. 19. THE LD. COUNSEL FOR THE ASSESSEE AGAIN INVITED OUR ATTENTION TO SECTION 45(4) AND CONTENDED THAT THIS PROVISO IS ATTRACTED ONLY WHEN THE DISTRIBUTION OF CAPITAL ASS ET TOOK PLACE ON THE DISSOLUTION OF THE FIRM. THE LD. COU NSEL CONTENDED THAT THE BUSINESS OF THE FIRM IS CONSTRUC TION OF APARTMENTS AND SALE THEREOF. THEREFORE THE INCUR RED CONSTRUCTION EXPENSES FOR THE PARTLY CONSTRUCTED ST RUCTURE IS ITA NO. 466/COCH/2008 12 ONLY A STOCK-IN-TRADE AND NOT A CAPITAL ASSET AS DEFINED IN SECTION 2(14) R/W 45(4). SEC.2(14) SPECIFICALLY EX EMPTS STOCK-IN-TRADE. 19. THE FIRM AT THAT TIME HAS POSSESSED ONLY MARKET ABLE VALUE FOR THIS INCOMPLETE CONSTRUCTION WHICH IS ONL Y IN THE PRELIMINARY STAGE SINCE THE INVESTMENTS ARE MADE SPECIFICALLY AGAINST THE ADVANCES MADE BY THE BUYER S OF THE APARTMENTS. THE CONSTRUCTION OF THE APARTMENT WAS MADE SPECIFICALLY AS PER THE AGREEMENTS WITH 8 BUYERS AG AINST THE SPECIFIC ADVANCE RECEIVED FROM THEM TO THE EXTENT O F RS.31 71 000/-. THE LD. JR.D.R. RELIED ON THE ORD ERS OF THE AUTHORITIES AND CONTENDED THAT THE ARGUMENT IS UNTE NABLE IN LAW IN VIEW OF THE DECISION OF THE HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. SOUTHERN TUBES (2008) 306 ITR 216 (KER.). THE COPY OF THE SAME IS PRODUCED FOR OUR PERUSAL. ON IDENTICAL SET OF FACTS THE HONBL E KERALA HIGH COURT HAS HELD THAT SEC.2(47) (VI) IS APPLICAB LE AND HENCE IT IS TRANSFER. 20. IN HIS REJOINDER THE LD. COUNSEL FOR THE ASSES SEE REITERATED THAT THE DECISION OF ALA FIRM IS NOT APP LICABLE IN THE FOLLOWING CASES: ITA NO. 466/COCH/2008 13 1. KWALITY STEEL SUPPLIERS VS. CIT 271 ITR 40 (GUJ.) ; 2. SAKTHI TRADING CO. VS. CIT 250 ITR 871(SC). THE CASE LAWS RELIED BY THE LD. COUNSEL ARE THAT IT ON CONTINUATION OF BUSINESS OR ON THE DEATH OF PARTNER S AND NOT OTHERWISE. THEY ARE CLEARLY DISTINGUISHABLE FROM T HE FACTS OF THE CASE UNDER APPEAL BEFORE US. HENCE HERE THE RETIREMENT OF TWO PARTNERS AND THE OTHER PARTNER TO OK OVER THE ASSETS AT BOOK VALUE. WHEN ONE OF THE PARTNER S ACCEPTS THE STOCK-IN-TRADE AT BOOK VALUE AND THE OTHER PART NER ACCEPTS HIS CREDIT BALANCE AT THE TIME OF DISSOLUTI ON OF FIRM AND IT CLEARLY AMOUNTS TO DISTRIBUTION BY RELINQUIS HMENT AND IT IS TRANSFER SIMPLICITER ONLY. THEREFORE THE C APITAL GAIN WAS LIABLE TO BE CHARGED. 21. THE LD. COUNSEL TOOK ONE MORE STAND THAT IN THE CASE OF INDIRA BALAKRISHNA 30 ITR 320 THE HONBLE BOMBAY HIGH COURT HAS HELD THAT THE JUDGMENT OF THE TRIBUNAL IS NOT EXTENDING BEYOND THE SUBJECT MATTER OF THE APPEAL B EFORE THAT BENCH. THE POSSIBILITY OF AN ALTERNATIVE MET HOD OF ASSESSMENT AND CONSIDERATION OF LAW IS OUTSIDE THE POWERS OF ITA NO. 466/COCH/2008 14 THE TRIBUNAL IS THE OBJECTION RAISED ON BEHALF OF THE ASSESSEE. 22. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE OBJECTION OF THE ASSESSEE WOULD BE THAT IN VIE W OF THE COURT DECISION THE CONSIDERATION OF THE POSSIBLE A PPLICATION OF THE LAW LAID DOWN IN THE CASE OF ALA FIRM BY THE HONBLE SUPREME COURT AS AN ALTERNATIVE METHOD OF ASSESSMEN T BY THE ASSESSING OFFICER SHOULD NOT BE ENTERTAINED AT THIS STAGE BY THE TRIBUNAL. WE FAIL TO AGREE WITH THAT OBJEC TION. THE TRIBUNAL CANNOT BE MADE AS PARTY TO MIS-CARRIAGE OF JUSTICE. THE TRIBUNAL CAN MOULD THE RELIEF WITHIN THE POWERS ENVISAGED. ONLY ENHANCEMENT IS STRICTLY PROHIBIT ED. THIS MOULDING RELIEF AND APPLICATION OF CORRECT PROVISIO NS OF LAW WILL NOT AMOUNT TO ENHANCEMENT. THE CHARGEABILITY ALONE SPOKEN TO BY THE TRIBUNAL AND IT NEVER AMOUNTED TO ANY ENHANCEMENT. HENCE WE REJECT THE SAME. 23. UNDER THE ABOVE FACTS AND CIRCUMSTANCES WE SET ASIDE THE ORDERS OF THE AUTHORITIES AND ASSESSEES ARGUME NT IS ACCEPTED IN RESPECT OF LAND PORTION AS IT IS NOT SU BJECTED TO CAPITAL GAIN IN THE HANDS OF THE FIRM. ITA NO. 466/COCH/2008 15 24. SO FAR AS THE BUILDING VALUE IS CONCERNED THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF COMPUTATION OF ACTUAL CAPITAL GA IN AFTER ALLOWING ALL DEDUCTIONS AS ENVISAGED UNDER THE COMP UTATION SECTION. THE ADVANCE RECEIVED FROM THE CUSTOMERS UP TO 31- 3-1997 RS.31 71 000/- IS ALONE TO BE CONSIDERED INS TEAD OF RS.50 26 738/- WHICH AS PER RECORDS AVAILABLE INCLU DES RECEIPTS FROM BUYERS SUBSEQUENT TO DISSOLUTION INCL UDING UPTO THE PERIOD 31-3-2001. THE ASSESSING OFFICER SHOULD AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. 25. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM DATED THE 21 ST MAY 2010. PM. COPY FORWARDED TO: 1. M/S. GALAXY BUILDERS R.C. ROAD CALICUT. 2. THE INCOME-TAX OFFICER WARD-1(3) CALICUT. 3. CIT(A)-I CALICUT. 4. CIT CALICUT. 5. D.R.