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inspecting Assistant Commissioner of Income-tax Vs. N. Vajram Setty - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberIncome-tax Appeal Nos. 18, 19 and 20 of 1976
Judge
Reported in(1986)56CTR(Kar)154; [1986]159ITR742(KAR); [1986]159ITR742(Karn); [1986]24TAXMAN682(Kar)
ActsIncome Tax Act, 1961 - Sections 148, 149(1), 269C, 269D, 269F(6), 269G and 269H
Appellantinspecting Assistant Commissioner of Income-tax;inspecting Assistant Commissioner of Income-tax;insp
RespondentN. Vajram Setty;t.V. Viswanatha Gupta;k.S. Lalithamma
Appellant AdvocateK. Srinivasan, Adv.
Respondent AdvocateS.P. Bhat, Adv.
Excerpt:
- income tax act,1961[c.a.no.43/1961] -- sections 21 (1) & 31(1): [k.l. manjunath & a.s. bopanna, jj] change of sound system in a theater whether to be treated as capital expenditure or a revenue expenditure? held, it has to be seen that whether the change of sound system has increased the revenue or not. admittedly the old sound system was in existence for several years and due to use of the very same sound system for several years, the old system was worn out. if the assessee has provided certain amenities to its customers by replacing the old system with a better sound system, it cannot be said that the assessee has increased its income. instead of repairing the old stereo system, the assessee has installed the dolby stereo system. this has not benefited the assessee in any way.....puttaswamy, j.1. these appeals are filed by the inspecting assistant commissioner of income-tax, acquisition range, bangalore, and are directed against a common order made on february 4, 1975, by the income-tax appellate tribunal, bangalore bench, bangalore ('the tribunal') in appeals i.t.a. (acq) nos. 10, 11, 12/bangalore/74-75 reversing his order no. c.r. 62/1518 and 1519/73-74 made on august 28, 1974, under chapter xx-a of the income-tax act, 1961 ('the act'). 2. an immovable property bearing no. 18/2 and 1813 situated at vanivilas road, bangalore city, consisting of a building and site area measuring 80' x 140' was owned by one smt. k. s. lalithamma of bangalore (the transferor). on june 25, 1973, the transferor by two instruments of transfer, transferred different extents of the said.....
Judgment:

Puttaswamy, J.

1. These appeals are filed by the Inspecting Assistant Commissioner of Income-tax, Acquisition Range, Bangalore, and are directed against a common order made on February 4, 1975, by the Income-tax Appellate Tribunal, Bangalore Bench, Bangalore ('the Tribunal') in Appeals I.T.A. (ACQ) Nos. 10, 11, 12/Bangalore/74-75 reversing his order No. C.R. 62/1518 and 1519/73-74 made on August 28, 1974, under Chapter XX-A of the Income-tax Act, 1961 ('the Act').

2. An immovable property bearing No. 18/2 and 1813 situated at Vanivilas Road, Bangalore City, consisting of a building and site area measuring 80' x 140' was owned by one Smt. K. S. Lalithamma of Bangalore (the transferor). On June 25, 1973, the transferor by two instruments of transfer, transferred different extents of the said property as detailed in the said instruments, to Sriyuths T. V. Viswanatha Gupta and N. Vajram Setty. of Bangalore for a consideration of Rs. 59,000 and Rs. 81,000 respectively. On an examination of the apparent consideration stipulated in the said instruments, the Inspecting Assistant Commissioner on December 6, 1973, as required by section 269C of the Act, holding that the fair market value of the property exceeded the apparent consideration by 15%, directed issue of notices under section 269D of the Act which were duly effected in conformity with that provision.

3. In answer to the notices served on them, the transferor and the transferee filed their objections before the Inspecting Assistant Commissioner, inter alia, contending that they had only paid and received the amount specified in the instruments of transfer and that was the fair market value of the property, for which reason, the proceedings under the Act should be dropped.

4. At the inquiry before the Inspecting Assistant Commissioner, the transferor and the transferees also produced documentary evidence of a sale transaction of a very nearby property recorded on November 19, 1972. On an examination of the evidence available in the case, the Inspecting Assistant Commissioner in his order made on August 28, 1974, found that the fair market value of the property was Rs. 2,20,000 and the same exceeded the apparent consideration by more than 25% on which basis he directed the acquisition of the property under section 269F(6) of the Act.

5. Against the said order made by the Inspecting Assistant Commissioner, the transferor and transferees filed appeals under section 269G of the Act in Appeals Nos. 10 to 12 of 1974-75 before the Tribunal, inter alia, contending that the conclusion reached by the Inspecting Assistant Commissioner on the evidence on record was erroneous and unjustified. On this contention, the Tribunal disagreed with the conclusion of the Inspecting Assistant Commissioner and held that the fair market value of the property did not exceed the apparent consideration stipulated in the instruments of transfer. On such conclusion, the Tribunal on February 4, 1975, allowed the appeals of the transferor and the transferees. Hence, these appeals by the Inspecting Assistant Commissioner under section 269H of the Act.

6. Sri K. Srinivasan, learned senior standing counsel for the Income-tax Department, appeared for the appellant. Sri S. P. Bhat, learned counsel, appeared for the respondents.

7. On the contentions urged before us, only one point arises for our determination and that is 'Whether the determination of fair market value of the property by the Tribunal is legal and valid ?' We now proceed to examine this point.

8. Sri Srinivasan contends that the Tribunal as the final fact-finding appellate authority under the Act, merely enumerating or referring to the facts and evidence, had not critically examined them and had not recorded its conclusion on such examination as it was bound to and in so doing had committed an error of law.

9. Sri Bhat, in justifying the order of the Tribunal, contends that the finding recorded by the Tribunal was on a question of fact which cannot be corrected by this court in exercise of its limited jurisdiction under section 269H of the Act.

10. The Act permits an appeal to the Tribunal, both on questions of fact and law without placing any restriction on its power. Hence, the jurisdiction of the Tribunal is co-extensive with that of the Inspecting Assistant Commissioner and, therefore, it is open to the Tribunal to reappreciate the very evidence on which the Inspecting Assistant Commissioner had decided the question of fair market value and come to a different conclusion. But in so doing, it must do so as an appellate authority is required to do (and this) cannot also be disputed.

11. In the course of its fairly detailed order, the Tribunal noticing the rival contentions and applying the correct principle of comparable sales method of valuation as found by this court in I.T.A. No. 5 of 1976 and connected cases decided on February 27, 1985 (Premchand v. IAC : [1985]153ITR774(KAR) has examined all the material evidence bearing on the determination of the fair market value and has come to a conclusion different from the one reached by the Inspecting Assistant Commissioner. When one reads the order of the Tribunal as a whole, and properly, it is difficult to hold that the Tribunal had not critically examined all the material evidence bearing on the question with due regard to the correct principle of valuation and had reached a different conclusion by a mere reference to them as vehemently contended by Sri Srinivasan. We see no merit in this contention of Sri Srinivasan.

12. What emerges from the above is that the decision of the Tribunal is essentially on a question of fact and the appellant really asks us to interfere on a question of fact only. Section 269H of the Act empowers this court to interfere only on a question of law and not on a question of fact. We are, therefore, of the opinion that we cannot interfere with the order of the Tribunal that does not suffer from an error of law.

13. As the only contention urged for the appellant fails, these appeals are liable to be dismissed. We, therefore, dismiss these appeals. But in the circumstances of the cases, we direct the parties to bear their own costs.


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