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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF SEPTEMBER, 2015
PRESENT THE HON’BLE MR. JUSTICE VINEET SARAN
AND
THE HON’BLE MR. JUSTICE B MANOHAR
ITA No.249/2010 BETWEEN:
COMMISSIONER OF INCOME TAX-III, (CENTRAL CIRCLE) CENTRAL REVENUE BUILDINGS QUEENS ROAD BANGALORE-560 001.
INCOME TAX OFFICER WARD 1, CHIKMAGALUR.
… APPELLANTS (BY SRI.E.I.SANMATHI, ADV.,)
AND:
M/S.DODDANANDI ESTATE THROUGH IT’S PARTNER SRI.RAMANATHAN CHETTIAR C/o CRM, SKR RENGANATHAN, CRM ESTATE MUDIGERE TALUK CHIKMAGALUR DISTRICT.
… RESPONDENT (BY SRI.S.P.BHAT & C. BASAVAIAH, ADVS.,)
THIS ITA IS FILED U/S 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 26-02-2010 PASSED IN ITA NO.292/BNG/2009, FOR THE ASSESSMENT YEAR 1997-98, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO:
(i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN;
(ii) ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE
ITAT BANGALORE IN ITA NO.292/BNG/2009, DATED 26-02-2010, IN THE INTEREST OF JUSTICE AND EQUITY.
THIS ITA COMING ON FOR HEARING THIS DAY, VINEET SARAN,, J., DELIVERED THE FOLLOWING:
J U D G M E N T
The assessee had purchased a coffee estate in 1961 along with standing shade trees. The said estate was sold by the assessee in the year 1997. The Jungle wood and silver oak trees were sold for a sum of Rs.1,00,00,000/- which was by way of an agreement dated 25-07-1995. The dispute in the present appeal is with regard to capital gains in respect of sale of trees only. The Assessing Officer assessed the same at 10% of the estimated value of the
estate which was taken as Rs.9,60,000/- and thus arrived at the cost of trees at Rs.96,000/-. Challenging the same, the assessee filed an appeal which was dismissed by the Appellate Commissioner. The assessee filed further appeal before the Tribunal, which has partly allowed the same and given benefit and remanded the matter to the Assessing Officer to recompute the capital gains by taking 70% of the sale proceeds as market value of the land as on 1-4-1981. Aggrieved by the said order, the Revenue has filed this appeal.
We have heard Sri.E.I.Sanmathi, learned counsel appearing for the appellants as well as Sri.S.P.Bhat along with Sri.C.Basavaiah, learned counsel appearing for the respondent-assessee and perused the records.
Learned counsel for the appellants has submitted that although, there are three questions framed in the memo of appeal, but the only question which requires consideration of this Court is first question, which is as under:
“Whether the Tribunal is correct in law in directing the Assessing Authority to re-compute the capital gains by taking 70% of the sale proceeds as the market value as on 1-4-1981 when the facts of the case does not require for such direction?”
The Assessing Officer, while passing the assessment order has, though after taking into consideration the various facts, arrived at finding of fact that the market value of the estate would be Rs.9,60,000/- as on 1-4-1981, but has given no reason whatsoever for adopting 10% thereof, as cost of trees.
On being questioned, Sri.E.I.Sanmathi, learned counsel for the appellants- Revenue could not point out from the order of the Assessing Officer, even a single reason for arriving at 10% instead of 70% as had been claimed by the assessee. The Appellate Commissioner has, on his own, recorded a finding that 10% of the estimated market value of the estate as on 1-4-1981 was arrived at by the Assessing Officer on the basis of some judgments of the High Court, which finding of the Appellate Commissioner is absolutely perverse, as no such reason
has been given by the Assessing Officer. The Appellate Commissioner further, affirming the order of the Assessing Officer, held that the same was reasonable and was based on facts, which is again wrong as the finding was not based on facts and it was arrived at without giving any reasons or considering the facts relating to the case.
The Tribunal has accepted the case of the assessee and has arrived at the cost as claimed at 70% relying on certain earlier decisions of the Tribunal, more particularly in the case of M/s.Sangameshwar Coffee Estate Limited V/S Income Tax Officer (ITA No.402/Bang/85) wherein, for valid reasons, 70% of the sale proceeds has been accepted. The said judgment in the case of Sangameshwar Coffee Estate (Supra) has been affirmed by this Court in Civil Petition No.302/1988 (Commissioner of Income Tax V/S M/s. Sangameshar Coffee Estate).
In view of the aforesaid, we are of the opinion that it cannot be said that the order of the Tribunal is improper as
it has followed its earlier decision in the case of Sangameshar Coffee Estate as well as other cases, and thus, has recorded a finding of fact, which need not be disturbed by this Court.
Learned counsel for the appellants has relied on the decision of this Court in the case of Commissioner of Income Tax and Another V/S Badra Estates & Industries Ltd. reported in (2010) 38 DTR (Kar) 308 to support his submission that the matter requires to be remanded back to the Assessing Officer for fresh decision. We have gone through the said decision, wherein the matter was remanded to the Assessing Officer because initially the Tribunal had held the value of the timber at Rs.35/- per cubic feet as on 1st April, 1981. But on a Miscellaneous petition filed by the assessee, the Tribunal allowed the claim of the assessee in toto and held that 70% of the sale proceeds be treated as cost of timber as on 1st April, 1981. In such facts and circumstances, where the
Tribunal had itself given conflicting views, this Court had directed the matter to be remanded to the Assessing Officer for fresh decision. In our view, the ratio of the said decision would not be applicable for the facts of the present case.
Learned counsel for the appellants also relied upon another decision of this Court in the case of Tata Coffee Ltd. V/S Joint Commissioner of Income Tax reported in
(2012) 211 Taxman 7 (Karnataka). In the said case, the Assessing Officer had estimated the capital gains at 30% of the sale proceeds, which was based on a decision of this Court in the case of CIT v/s PULLANGODE RUBBERS AND PRODUCTS CO. LTD. It was a case similar to the facts of the case in TATA Coffee Limited. However, the Tribunal affirmed the finding of the Assessing Officer and on an appeal filed by the assessee therein, the matter was remanded to the Assessing Officer for fresh decision. In the said case, there were some reasons given by the Assessing Officer, which could be tested by the Court, whereas, in the
present case, no reasons whatsoever have been given by the Assessing Officer and the Tribunal has, for valid reasons, given a finding of fact, which cannot be said to be improper. Thus, we are of the opinion that no interference is called for with the order of the Tribunal.
As such, in the facts and circumstances of the present case, we answer the question of law in favour of the assessee and against the revenue. Accordingly the appeal stands dismissed.
There shall be no order as to costs.
Sd/- JUDGE
Sd/- JUDGE
mpk/-*