SHRI AMITABHA CHAUDHURI,KOLKATA vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-1, DURGAPUR (WEST BENTAL), DURGAPUR

आदेश / O R D E R Per Shri S. S. Godara: This assessee’s appeal for assessment years 2001-02 arises against the Commissioner of Income Tax (A), Durgapur’s order dated 29.07.2019 passed in Case No.15/CIT(A)/DGP/2016-17 involving proceedings u/s 143(3) r.w.s 147 of the Income Tax Act, 1961 (in short ‘the Act’). Heard both the parties. Case file perused. 2. The assessee’s sole substantive grievance canvassed in the instant appeal challenges both the lower authorities’ action rejecting valuation of his share(s) held in M/s Eastern Tea Estate Pvt. Ltd. @ Rs.90284/- per unit as the cost of acquisition as on 01.04.1981 based on the registered valuer/chartered engineer’s report thereby restricting the same to that @Rs.1000/- each in the course of assessment and Rs.39,256/- each in the CIT(A)’s detailed discussion reading as under:

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri

Ground Nos.1,2,3,4,6,7and 8: The facts related to the issue under adjudication have already been stated above. Therefore, it is not necessary to reiterate the same here. The moot question that has to be decided is what was the cost of acquisition of the shares of Eastern Tea Estate (P) Ltd. as on 01.04.1981. There are three different valuations for cost of acquisition of the same shares as on 01.04.1981 in this case: (i) At Rs.55,350 as on 01.04.1982, which, if adopted on 01.04.1981 would yield the cost of acquisition at Rs.49,932. This valuation is stated to be have been made by the appellant with ‘due diligence’. This valuation was adopted in the original return of income filed by the appellant. (ii) Valuation report dated 19.04.2007 prepared by Shri Jayant Sarkar, registered valuer and chartered engineer, who estimated the value of fixed assets of Eastern Tea Estates Pvt. Ltd. as on 01.04.1981 at Rs. 1,36,97,000. This value was later adopted by Roy Subodh & Associates in their valuation of the FMV as on 01.04.1981 of the shares of Eastern Tea Estates Pvt. Ltd., who valued it at Rs. 90,284 per share. (iii) The value determined by the Id. AO during the assessment proceedings at Rs.1,000, which happened to be the face value of the shares. The value of cost of acquisition of the shares determined by the ld. AO at Rs. 1,000 per share was rejected by the predecessor CIT(A), Durgapur. I have gone through the assessment order and even I feel, the AO's view was not justified. In the set-aside proceedings too, the AO has once again held the cost of acquisition of the shares in question to Rs. 1000 per share. I find that the Id. AO has confused himself with the book value and the fair market value. The value at Rs. 1,000 per share as recorded in the books of the appellant is the face value of those shares. It certainly is not the FMV. For the purpose of computing capital gains tax, the FMV should be taken into consideration. Therefore, in my view, the Id. AO's calculation of long term capital gains in the hands of the appellant in unjustified and is rejected. All the above referred valuations, including that made by the Id. AO, of the FMV for ascertaining the cost of acquisition of shares of Eastern Tea Estates Pvt. Ltd. as on 01.04.1981 were there before the predecessor Id. CIT (A), Durgapur. In his appellate order he considered all the three valuations and found them to be unconvincing. Therefore, he analysed the facts at length and arrived at his conclusions in the following manner: We have to, for the purpose of computing the long term capital gains in this case, find out a rational and reasonable way to determine the fair market value as on 1.4.1981. It is borne out from the record that the Board of director had passed a resolution on 25.03.1996 whereby the fixed assets of the company were re-valued. The final accounts for the F.Y. 1998-99 are also on the record which gives the figures as at 31.3.1997 as well. The sum of Fixed assets (Rs.2,30,03,913/-) investment (Rs.716/-) and current assets, Loans and advances (Rs. 28,42,834/-) as on 31.3.1997/1.4.1997 comes to Rs. 2,58,47,463. The secured Loans (Rs. 36,24,648/-) unsecured loans (Rs. 31,432/-) current liabilities (Rs.15,63,182/-) and provisions (Rs. 12,39,000/-) amount to Rs. 64,58,262/-. So, the net assets value works out to Rs. 1,93,89,201 (2,58,47,463/- minus Rs. 64,58,262/-). This divided by the number (128) of shares gives the F.M.V per share as on 31.3.1997/1.4.1997 of Rs. 1,51,478. Taking into account the cost of inflation index of the F.year 1997-98 and 1981-82 (331 and 100 respectively, the cost per share as on 1.4.1981 comes to Rs. 45,763/- (Rs. 1,51,478/- multiplied by 100 and divided by 331). So, the cost of acquisition of 24.25 shares works out to Rs. 45,05,596/- (45,763/-x 24.25 x4.06) and that of the shares comes to Rs.6,53,560/- (Rs.45,763/-x7x406 divided by 199 (the cost of inflation index of F.Yr 1991-92 during which on 24.08.1991 the 7 shares were acquired.

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri

The total cost of acquisition comes to Rs.51,59,156/- (Rs.45,05,596/- plus Rs.6,53,560/-). Consequently, the long term capital gains works out to Rs.1,16,47,300/- [Rs.1,70,62,500/- (Rs.5,46,000/- x 31.25 minus Rs.51,59,156/- (Rs.45,05,596/- plus Rs.6,53,560/-) minus Rs.2,56,044/- (brokerage and other expenditure)]. To Sum up, it stands enhanced from the rectified long term. During the instant appellate proceedings, the appellant and his Id. AR argued deriding the action taken by the Id. AO and, while assailing the assessment order on different counts, they have also put forth the following arguments in support of the valuation made by Roy Subodh & Associates: Any valuation is a matter of opinion whereas a sale price is a settled fact; hence, credibility of diverse valuations for the same fixed asset(s) has to be tested. There is a mismatch between the FMV/share as on 01/04/1981 computed by Ld. CIT(A) on the basis of "book value" of assets in B/S of FY 97-98 on one hand and the FMV/ share as on 01/04/1981 computed by the assessee's CA on the basis of the valuation of fixed assets dated 19/04/2007 from the Registered Valuer on the other hand; this mismatch must be resolved. Here, the assessee begs to cite the order of Hon. ITAT, Mumbai dated 19/04/2012 in Smt. Rita B. Shah v ITO in ITA No.5363/Mum/2010. Here, Hon. ITAT, Mumbai specifically considered the declared sale price and decided the question of credibility of different valuations for identical fixed assets accordingly. Out of the 2 valuations by Ld. DVO for identical fixed assets here, one was 162.45% and the other was 90.2% of declared sale price; Hon. ITAT, Mumbai held the valuation that was closer to the sale price as credible for computation of the assessee's LTCG, discarding the estimate at 162.45% of sale price as overvalued. Hence, by application of the same yardstick adopted by Hon. ITAT, Mumbai, the assessee submits that the Company's fixed assets are undervalued in the estimate of FMV by Ld. CIT(A) as on 01/04/1981. The Company owned the same fixed assets from FY'80-'81 till sale of its 128 shares on 25/04/2000 and in terms of the sale price, the Registered Valuer's valuation of the fixed assets as on 01/04/1981 is credible. Here, the assessee also begs to cite Para 7 & 8 of the order in Smt. Mina Deogun v ITO [2008] 117 TTJ (Kol) 121, which decided valuation of a fixed asset, rejecting the lower valuation as on 01/04/1981 on the basis of the sale price; this order was upheld in CIT v Smt. Mina Deogun [2015] 375 ITR 586 (Cal.). The assessee further begs to cite Para 4.3, 4.6, 4.8 & 4.9 of the order in ACIT v Mariwala Family (No.2) Trust [2006] 8 SOT 38 (Mum.). The appellant also prepared a chart, in pursuance with the above arguments, showing different valuations in different cases by the Hon'ble ITATS at Mumbai and Kolkata and though the same, argued justifying the valuation of FMV of the shares in his case at Rs.90,284 as on 01.04.1981. The chart/ table is as under: Table = 1 Computation of FMV of all 128 unlisted equity shares of Eastern Tea Estates (P) Ltd. by the method adopted by Ld. CIT(A) Financial Book value of assets + Secured loans + unsecured Net Asset value on 31st March of each Year Investments + Current loans +Current liabilities + (1) Assets, Loans & Advances provisions as in audited B/S FY Col.(2) – Col.(3) as in Audited B/S Rs. Rs. (2) (3) (4) FY'96 - 97 23003913 +716 + 2842834 3624648+ 31432 + 25847463- = 25847463 1563182 + 1239000 6458262 = 6458262 = 19389201

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri

FY'97- '98 23247820 +716 + 3999691+ 31653+ 31962706- 8427901 5482498 8714170= 31962706 635440 + 3761117 = 23534805 +31653+ = 8427901 FY'98 - '99 24045989+716+14409546= 5482498+31653+1095755+ 38456251 - 38456251 Year5998608 = 12608514 12608514 = 25847737

Table # 2 Comparative Statement of different estimates of FMV for identical Fixed Assets and actual transaction amount as stated in the Order of Hon. ITAT, Mumbai dated 19/04/2012 in Smt. Rita Bhupen Shah v ITO, ITA No. 5363/Mum/2010 FMV estimated by Stamp Valuation Authority for a Flat sold by assessee Rs.8229144 in March, 2006 FMV of the same Flat estimated by Ld. DVO u/s 50C(2) on 28/11/2008 Rs.6368000 for above sale in March, 2006 - held to be not credible and rejected as overvalued by Hon. ITAT, Mumbai. FMV estimated by Ld. DVO u/s 50C(2) on o7/12/2009 for another Rs.3535896 identical Flat in the same Building, sold in May, 2005 – found credible by Hon. ITAT, Mumbai. Declared sale price of the Flat sold by assessee in March, 2006.- held by Rs.3920000 Hon. ITAT, Mumbai as acceptable for computation of assessee's LTCG. Table #1 Comparative Statement of the assessee's share in different estimates of FMV for fixed asset and actual sale price as stated in the Order of Hon. ITAT, Kolkata dated 03/08/2007 in Smt. Mina Deogun v ITO [2008] 117 TTJ (Kol) 121 The assessee's share of declared sale price of fixed asset sold in Rs.30000000 FY 2003-'04 The assessee's share of FMV of above fixed asset as on Rs. 1165570 01/04/1981, estimated by Ld. DVO u/s 55A(b)(i) - held as undervalued and rejected by Hon. ITAT, Kolkata. The assessee's share of FMV of above fixed asset as Rs.1840244 on01/04/1981, as per estimate by Registered Valuer u/s 55A(a) & 55(2)(b)(ii) – held as acceptable by Hon. ITAT, Kolkata. Table # 2 Comparison of commercial parameters of Eastern Tea Estates (P) Ltd. on the basis of Audited B/S of the Company for FY'81- '82, FY'97 -98 and FY'98 -'99 on record, including figures stated for "previous years" Financial Saleable Sale Proceeds Secured Secured Loan Remarks Year Production Rs. Loan from as % of Sale Kgs. United Bank Proceeds of India Page | 4

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri

Rs. FY'80 -'81 1,93,895 19,81,630 34,68,120 175% B/S Not available with assessee FY'81 -'82 1,75,323 20,53,759 47,33,776 230% Apart from hypothecation of product, Title Deed of major fixed asset was held by UBI as security against loan. FY'96-‘97 3,99,840 1,68,46,536 32,05,347 19% B/S Not available with assessee

FY'97-'98 3,82,257 2,56,38,687 36,58,330 14.2% Title Deed of major fixed asset no longer recorded to be held by UBI as security against loans/advances. FY'98-‘99 4,23,571 2,64,769,42 44,80,623 16.9% - Do -

The appellant has argued that the FMV/Cost of acquisition of the shares as on 01.04.1981 was based on valuation reports prepared by professional valuers who had technical expertise in this field. He has further stated, relying on the decisions in the case of Mina Deogun and Rita Bhupen Shah rendered by the Hon’ble ITAT Kolkata and the Hon’ble ITAT Mumbai respectively, that the valuation which is close to the sale price must be accepted and adopted. The cases relied upon by the appellant are those in which there were valuations made by the DVO vis-à-vis the valuations relied upon by the assessee in those cases. Further, the Hon'ble Tribunals in both the cases have found the valuations made by the respective DVOS to be incorrect and therefore, they have accepted the assessee's plea in each of the two cases. The facts are different here. In this case, there are two valuations, both of which were made by persons hired by the appellant or by the company (Eastern Tea Estates Pvt. Ltd.) whose management was controlled by his family, each of which valuation was accepted and adopted as correct by the appellant at different points of times. There is no valuation made by any person chosen by the Revenue, there is no report from the DVO as well. Thus, there is a conflict between the appellant's own positions at different times. The question here thus, loses the quest for truth and veers into the realm of a quest for self-interest; of what suits the appellant the most. Initially, when the appellant filed his original return of income, he adopted a valuation for cost of acquisition of shares at Rs. 55,350. He argued that the valuation at Rs. 55,350 was correct. Later, when he found a valuation more suited to him, he adopted it and rejected his own claims made in the original return of income. Thus, in his return filed in response to the notice u/s 148, he adopted his cost of acquisition at Rs. 90,284 per share and has since been arguing that this valuation is correct. Further, it may also be stated that in the referred cases, the DVO's valuation was found to be unreliable. In this case as well, the valuer's report is found to be divorced from reality. As in the referred cases, in this case too, the valuer's report is rejected.

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri

The appellant has also, taking a cue from the loans given by the bank, argued that the position of assets and their valuation were too robust in 1981 and that, this in itself would justify the cost of acquisition of shares on 01.04.1981 as high as Rs. 90,288 per share. In this vain effort, he highlighted the fact that during the FY 1980-81 the sale proceeds were Rs. 19,81,630 while secured loans were Rs.34,68,120 i.e. at 175% of the sale proceeds. Similarly, in 1981-82, the secured loans being Rs. 47,33,776 were 230% of the sale proceeds at Rs.20,53,759. The secured loans were against hypothecation of products and the Title Deed of major fixed asset was held by UBI as security against loan. It was also stated that the percentage of secured loans to sale proceeds fell steeply down to 14 to 16% during the FYs 1997-98 and 1998-1999. All this, in an attempt to justify the excessively high valuation of cost of acquisition of unlisted shares of the private limited company run and controlled by the appellant's family. The arguments put forth have been considered. The secured loans given by the bank cannot be taken as a reflection of high FMV of assets of the concern. Loans are disbursed keeping multiple factors in view, such as the concern is a going concern, it has a reasonable amount of assets, it is a profit making concern, etc. Loans cannot be the sole parameter to justify an unreasonable value adopted by the valuer. Further, the percentage of loan to the sale proceeds deceives the fact that the actual amount of loan given was roughly around 35 to 45 lakhs over the years. It never crossed even 50 lakh at any time. As would be discussed in this order later on, the value of assets of the company could not be more than 60-65 lakhs in 1981. Even if the value is assumed to be at 60-65 lakhs, I find that the secured loans were against the hypothecation of products and title deed of assets. A loan of 35 lakhs against the title deed of major fixed assets worth 60-65 lakhs is fully protected against any default. Therefore, loans being a certain percentage of sale proceeds fails to support the claim that the FMV of shares on 01.04.1981 could be as high as 90,288 per share. Coming back to the primary facts once again and moving on from here to examine the FMV of the shares on o01.04.1981, it is reiterated that the appellant had acquired 31.25 shares of Eastern Tea Estate (P) Ltd as under: (i) 7 shares were acquired on 11.04.1959 by way of gift from father (ii) 69 shares (jointly with three other siblings) were acquired on 30.06.1959 by virtue of gift from mother. The appellant's share was 69/4 = 17.25 shares (ii) 7 shares were acquired through joint application to the company by successors for registration consequent to the death of mother. During the year 1996-97 a revaluation of the assets of the company was undertaken by the Board of Directors and a valuation report was prepared by Shri Jayant Sarkar. As a result of the revaluation of assets the book value of fixed assets were taken as Rs.2,30,03,913 as on 01.04.1997, at Rs.2,32,47,820 as on 01.04.1998 and at Rs.2,40,45,988 as on 01.04.1999. Shri Jayant Sarkar also estimated the value of fixed assets as on 01.04.1981 at Rs.1,36,97,000. Roy Subodh & Associates have adopted the valuation made by Jayant Sarkar but have taken the FMV of fixed assets on 01.04.1981 at Rs.1,46,59,082 instead of Rs.1,36,97,000. If one considers the value of fixed assets at Rs.1,46,59,082 as on 01.04.1981 visa-vis the value of fixed assets at Rs. 2,30,03,913 as on 01.04.1997, or, the values as 01.04.1998 and 01.04.1999 stated above, one finds the valuation at 01.04.1981 as unreasonably high and unreal. A property or a fixed asset worth Rs. 1.46 crores would not remain contained between 2.3 or 2.4 crores even after 16-17 years have passed by. Knowing the way the prices and values have escalated during this time period one can easily, with simple common sense, infer that a property or an asset valued at 1.4 crores in 1981 would be at sense, infer that a property or an asset valued at 1.4 crores in 1981 would be at least 5

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri

crores in 1998-99. Conversely, It also means that a property whose value was 2.4 crores in 1999 would be at a far lesser value in 1981 of, let us say, Rs. 60 to 65 lakhs. This can be easily comprehended if we utilize the cost inflation index and calculate the values as on 01.4.1998 to 01.04.1981. In the case of the appellant this becomes even starker because during the years 1981-82 and 1982-83, Eastern Tea Estates Pvt. Ltd. had been incurring losses. Therefore, in my view, the valuation adopted by Shri Jayant Sarkar, and consequently, the valuation by Roy Subodh & Associates, does not provide an honest picture of reality and the value of fixed assets as on 01.04.1981 appears to be unreasonably high. The second valuation report, which has been adopted by the appellant in his return filed in response to the notice u/s 148, was prepared by Roy Subodh & Associates. This valuation has adopted the valuation of fixed assets as on 01.04.1981 made by Shri Jayant Sarkar. The valuation as on 01.04.1981 has been done keeping the "Net Asset Value" method in mind. They have referred to the company's Audited Accounts for the year ended on 01.04.1982 which also had the details related to the last year i.e. the year ending on 31.03.1981. These figures were the same as on 01.04.1981. For the valuation of FMV of landed property of the company, the valuation made by Shri Jayant Sarkar, Chartered Engineer & Govt. Registered Valuer as on 01.04.1981 has been adopted. The valuation adopted for Martycherra Tea Estate, Director's Bungalow at Itkholghat Road, Fishery Land and 2 storied building at Nagnaha Lane is Rs.1,36,97,000. The value of current assets and current liabilities have been taken at Book Value. This creates a disjunct between the valuation of assets and liabilities. Whereas the fixed assets which have been valued at Rs. 1,36,9700 by Shri Jayant Sarkar and which have been taken at Rs. 1,46,59,082 as FMV of fixed assets as on o1.04.1981 by Roy Subodh Associates, the liabilities have been taken strictly at book value and not at FMV. So, while the fixed assets have a 'projection beyond the book value, the liabilities have remained shrunk' in their presence. This means, the assets have got unduly enhanced vis-a-vis liabilities. With this lop-sided selection of values, the FMV of shares as on 01.04.1981 have got enhanced and divorced from reality. Therefore, to state that the FMV of shares of an unlisted Private Limited Company was at Rs. 90,284 even though it had incurred losses of Rs.5,63,786 as on 31.03.1981 and of Rs. 9,51,250 on 31.03.1982, (the financial statements for the later FYs are not available on record) would be to project the shadow of a lizard to the semblance of a dinosaur. For the reason of this inherent defect, the valuation rendered by Roy Subodh & Associates loses its credibility. And, for this very reason, the decisions relied upon by the ld. AR and all the arguments emanating from those decisions fail to make an impact. Hence the same is rejected. The predecessor Id. CIT (A) Durgapur has considered the values in terms of FMV and for the unavailable data, he has taken the re-valuation of assets done by the Directors as point of departure and has indexed the figures back to 01.04.1981. Although this may also not yield the correct value because at the time of revaluation being done in 1996, situations within the company and in the market were very different from that in 1981 and, therefore, the FMV as in 1996 would not yield a correct reverse projection in 1981, yet, in my view, this is the best way ahead as complete data is not available for ascertaining the FMV as on 01.04.1981. I also find that the FMV of shares as on 01.04.1981 adopted by my predecessor in office came quite close to what the appellant had declared in his original return of income. The said valuation in the original return was acceptable to him till he had another valuation which suited him more. Having examined the various valuations and keeping the facts in perspective, one still feels the need to ascertain the best and the closest-to-truth values for FMV as on 01.04.1981. The income-tax Act, 1961 has the provisions of Rule 11UA. Though the provisions are not applicable to A.Y 2001-02 and though there is no intention to apply this Rule to the estimation of FMV in the appellant’s case, a reference is being made to it

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri

in order to have a clearer picture of the correct valuation as would be required under Income Tax Act, 1961. It is reiterated that a reference to Rule 11UA is made only and only for having an idea of where the FMV in this case should stand. The reference and the working based on its is as under: Rule 11UA Determination of fair market value. The fair market value of unquoted equity shares shall be the value, on the valuation date, of such unquoted equity shares as determined in the following manner, namely:- The fair market value of unquoted equity shares = (A+B+C+D-L) x (PV)/(PE), where, A=book value of all the assets (other than jewellery, artistic work, shares, securities and immovable property) in the balance-sheet as reduced by – (i)any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any; and (ii) any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset; B= the price which the jewellery and artistic work would fetch if sold in the open market on the basis of the valuation report obtained from a registered valuer; C= fair market value of shares and securities as determined in the manner provided in this rule; D= the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property; L= book value of liabilities shown in the balance sheet, but not including the following amounts, namely:- (i)the paid up capital in respect of equity shares: (ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company; (iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation; (iv) any amount representing provision for taxation, other than amount of income-tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto; (v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; (vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares; PV= the paid up value of such equity shares; PE= total amount of paid up equity share capital as shown in the balance sheet in the present case, Fair Market Value of the unquoted shares is calculated as under: A: Book value of all the assets (other than jewellery, artistic work, shares, securities and immovable property) in the balance sheet

Value on 31st Particulars March, 1981

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri

Fixed Assets: At Head Office Motor Car 283.00 Furniture, Fixture & Fittings 5,886.00 Machinery 310.00 Library 346.00 Tea Estate Machinery 3,17,290.50 Motor Truck & Jeep 14,463.00 Tractor & Implements 14,883.00 Furniture, Fixture & Fittings 1,609.00 Electrical installation 268.00 Overhead electric line 220.00 Water 215.00 Book value of fixed assets taken over 6,06,306.81 by Smt. Arati Dutt, Ex. Jt. Managing Director Investment 716.00 Other assets 21,60,220.00 Total (A) 31,23,016.31

B: Nil C: Nil D: The value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property. The value of immovable property is calculated on the basis of the financial statement of the company for the year ending 1996-97. The said financial statement includes the schedule of fixed assets provided by the company. In the fixed assets schedule, the company-approved revaluation of assets vide Board Resolution dated 25.03.1996 have been adopted. On the basis of the revaluation, the assessable value of immovable property can be arrived at through reverse indexing or using the method of ‘calculating back’ the values as on 01.04.1981 by indexing back the figures to 01.04.1981. This has been done as under: Value on 31st Particulars March, 1997 Head Office: Landed Property 30,20,000.00 Building 8,41,382.00 Chirakundi: Block & Development 13,38,000.00 Maticherra Tea Estate: Block 20,96,500.00 Building 28,33,510.00 New Plantation 1,09,13,560.00 Tota (D) as on 31.03.97 2,10,42,952.00 By applying indexation we can arrive at assessable value of immovable property on 31.03.1981 which is as follows:

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri

Taking into account the cost inflation index of the financial year 1981-82 is 100, and for Financial Year 1997-98 is 331, the assessable value is computed as follows. 2,10,42,952*100/331 = 63,57,387.31 A+B+C+D = 39,31,149.38+0+0+63,57,387.31 = 1,02,88,536.69 L = 36,14,099.39+1,62,152.76+14,87,419.24 = 52,63,671.39 Fair Market Value of unquoted Equity Share = (A+B+C+D-L) x (PV)/(PE) [1,02,88,536.69(-) 52,63,671.39] X 1000/128000 = 39256.76 Thus, the FMV as on 01.04.1981 applying the method prescribed in Rule 11UA comes to Rs. 39,256. When this value is kept in sight with the different valuations involving the appellant’s valuation in the original return, the re-valuation in the return filed in response to notice u/s 148, the ld. AO’s valuation and that made by my predecessor ld. CIT(A), Durgapur, I find the values adopted by my predecessor stand closest to it. As such, I find myself in consonance with the valuation of FMV adopted by my predecessor. I may also add that the appeal before the Hon’ble ITAT, Kolkata, the merits of the case were yet to be examined. The case was set aside to the file of the Ld. AO on a technical issue. Therefore, since the Hon’ble ITAT Kolkata never had an occasion to examine the values adopted by my predecessor, I deem it fit to follow my predecessor with an observation that the valuation under Rule 11UA could have further reduced the appellant’s claim for FMV as on 01.04.1981. But since these provisions are not applicable to the AY under consideration, the same are left alone. As a result, I hold that the cost of acquisition of 24.25 shares is Rs. 45,05,596 and that of 7 shares acquired in FY 1991-92 is Rs. 6,53,560/- leading to the total cost of acquisition at Rs. 51,59,156. This valuation comes closest to the original values adopted by appellant at Rs. 55,350 in his original return of income. The long term capital gains are directed to be computed accordingly, taking the cost of acquisition of 24.25 shares at 45,05,596 and for Rs. 6,53,560 as on 01.04.1981. These grounds of appeal are, therefore, dismissed.” 3. We have given our thoughtful consideration to rival contentions against and in support of the CIT(A)’s action declining the cost of acquisition of assessee’s shares in above-stated company @Rs.90284 as on 01.04.1981. Suffice to say, the assessee had relied upon its registered valuer/chartered engineer’s valuation report declaring the impugned value @Rs.90284. The Assessing Officer had held the same to be Rs.1000/- per share only going by the book value thereof. The CIT(A) has gone by Rule 11UA of the Income Tax Rules on the other hand.

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri vs. Smt. Mina Deogun in ITA No.438 of 2008 dated 20.04.2015 also reiterates the very legal proposition.

Order is pronounced in the open court on 28.02.2020. Sd/ Sd/-

(J. Sudhakar Reddy) (S. S. Godara) ACCOUNTANT MEMBER JUDICIAL MEMBER कोलकाता /Kolkata; �दनांक/ Date: 28/02/2020 RS

I.T.A No.2041/Kol/2019 Shri Amitabha Chaudhuri आदेशक���त�ल�पअ�े�षत/Copy of the Order forwarded to : 1. The Appellant - Shri Amitabha Chaudhuri 2. The Respondent- DCIT, Circle-1, Durgapur 3. आयकरआयु�त(अपील) / The CIT(A), Kolkata [sent through email] आयकरआयु�त/ CIT 4. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण, कोलकाता/ DR, ITAT, Kolkata [sent 5. through email] 6. गाड�फाईल / Guard file. स�या�पत��त