1. These appeals are by the assessee and Revenue and pertain to Assessment Year 1997-98.
2. The only objection by the assessee is against the order of the CIT(A) in confirming the order of the Assessing Officer that the auction sale of its plot of land at Aundh had given rise to capital gain exigible to tax.
Assessee filed the return on 27/06/1997 declaring income at Rs. 7,98,51,710/-. Assessment was completed under Section 143(l)(a) on 19/02/1998 accepting the returned income. Subsequently assessee filed a revised return on 17/12/1997 declaring income at Rs. 7,90,70,840/-.
The reason for the revised return is recorded vide para 1 of the assessment order which reads as under: In order to return the correct amount of interest on Bank Fixed Deposits. In this case it must be noted that State Bank, of India -Pune Branch with which an amount of Rs. 92,500,135/- has been placed as fixed deposit for 117 days has not deducted, any taxed, at source as laid down in Section 194A. Whereas at the time of filing the original return it was presumed, that the rate of interest on the fixed deposit was 10% and the Bank had deducted tax from the interest @ 20% thereby giving a net interest income of Rs. 23,72,058. The factual position was ascertained by the assessee through its advocate, who in turn ascertained the facts by making the relevant application to Principal Civil Judge, Senior Division, Civil Court Pune.
4. Subsequently the case was selected for scrutiny. Notice under Section 143(2) was issued. Assessee's source of income being capital gain, interest from bank, dividend on shares, etc. A show cause notice was issued dated 1 1/12/1999, which is reproduced below: i) During the course of assessment proceedings of income tax A.Y. 1997-98, it is noticed from the records and valuation report dated 15/06/1996 obtained from the Government Approved Valuer, the land at Shringanda and Limper Gaon, at AUNDH, has been valued Rs. 99,00,000/- as on 01.04.1981.
ii) On perusal of the' wealth tax return for A.Y. 1981-82 it is noticed that the value of the land at Shringanda and Limper Gaon at AUNDH was shown at Rs. 80,000/- as on 31.03.1981.
iii) While finalizing the Wealth Tax assessment order for A. Y. 1981-82, the assessing officer assessed the value of the land at Shringanda Rs. 8,784/ - and land at Limper Gaon at Rs. 1,41,620/- as on 31.03.1981 (Total Rs. 1,50,404/-) iv) The valuation adopted by A.O. in assessment has not been challenged by you.
v) It can be observed from the above valuation that the Government Approved Valuer has valued the said property about 124 time more than the value shown by the assessee and about 60 times more than assessed value in the Assessment Order.
vi) In the circumstances, the valuation report of the Government Approved Valuer is not logical and cannot be accepted.
vii) You are, therefore, requested to show cause as to why the valuation made by the Government Approved Valuer should not be rejected that as assessed by A.O. in Wealth tax Assessment Order be accepted while computing Capital Gain for A.Y. 1997-98.
viii) Your explanation should reach this office within 15 days of receipt of this letter with supporting evidences, if any, to substantiate your claim, failing which the value of the Aundh property will be taken at Rs. 1,50,404/ - as on 01.04.1981 for the purpose of computing capital gain for the A.Y. 1997-98.
5. In response to the above notice assessee filed a letter dated 28/02/2000, which reads as under: Under instruction from Maharaja Madhavarao Scindia - Karta of the Hindu Undivided Family of His Late Highness Sir J.M. Scindia we refer to your captioned communication calling upon our client to show cause as to why the valuation made by' the Government approved valuer giving the valuation of the property transferred during the year as on March 31, 1981 should not be rejected and the value as assessed by the Assessing Officer in the wealth-tax Assessment Order for assessment year 1981-82 be while computing the capital gains for assessment year 1997-98.
i. During the year ended March 31, 1997a plot situated at S. No. 169/H 1, Aundh, Pune -411 007 owned by the assessee was auctioned by the income-tax department for a total sale consideration of Rs. 107,700,000/-.
ii. For the purpose of computation of capital gains of any asset the cost of acquisition has to be determined in terms of the provisions of Section 48 r.w.s 49 and 55 of the Income-tax Act, 1961.
In the instant case the said plot of land was owned by His Late Highness Sir J.M. Scindia from whom it devolved upon the assessee.
The said plot of land, we are being informed, became the property of the Scindia family on the marriage of their ancestor Jivajirao Scindia (one of the forefathers Sir, J.M. Scindia) at the time of his marriage to one 'Chimnibai' daughter the then ruler of the Deccan viz. The Peshwa, and the said property was given to Chimnibai as a 'choli bangdi'. 'Choli bangdi' according to the custom prevailing in those days amongst the then royal families was the gift made to a daughter at the time of her marriage. In this connection it is submitted that neither the then rulers - viz. The Peshwas nor the Scindias incurred any cost for acquiring this property.
iii. In view of the above mentioned facts and circumstance it is clearly evident that the said plot does not have any cost of acquisition and attention. In this regard is invited to the following judicial pronouncements: a. Karnataka High Court judgement in the case of Syndicate Bank Ltd. v. Addl. CAT (1995) reported in 155 ITR on page 681.
b. Supreme Court judgement in the case of CAT v. B.C. Srinivasa Setty (1981) reported in 128 ITR page 294 In view of the propositions made by the above mentioned ^pronouncements it is clearly evident that since in the instant case there is no cost of acquisition of the said plot the charging section (Section 48) loses its applicability and by applying the ratio of the above mentioned, judicial pronouncements the computation provisions also fail.
iv. Under the circumstances we would, like to submit that the said transaction of acquisition of the said plot by the income tax department falls outside the purview of the charge of capital gains as there is no cost of acquisition.
v. Without prejudice to the above it is submitted that the value taken in accordance with the provisions of the Wealth Tax Act, 1957 cannot be utilized for the purposes of computation of capital gains to be charged in accordance with the provisions of the Income-tax Act, 1961 because the value of the immovable property as determined in the wealth-tax assessment is binding on the assessee under the Wealth-tax Act, 1957.
6. The claim of the assessee was rejected by the learned Assessing Officer mainly on the following reasons: He held that the report of the approved Valuer cannot be relied upon. The plot visited by the Valuer on 21/05/1996 had undergone a lot of change. The report was based on the site visit made way back on 21/05/1996. The sale instances cited by the approved Valuer related to a much smaller plots which cannot be compared with the plot of land in the instant case of the assessee. The deduction of 25% for open space, etc. is illogical. He held that any buyer has to split the plot into several parts for constructing residential buildings and to provide open space for each building. The deduction towards such space in the comparative case would be 50% and not 25% as taken by the Valuer. The plot of the assessee is away from bus route, almost by 1 1/2 km. and value cannot be more than Rs. 300/- per sq. mt. particularly because the plot was only slowly developing as per the Valuer himself. He further noted that, for the plots reserved for museum, public buildings, etc. the value was taken at Rs. 320/- per sq. mt. in 1981. He held that it is highly illogical and Rs. 350/- per sq. mt. is illogical for shops, etc. He further noted that for wealth tax assessment for the assessment year 1981-82 the value of the plot was taken at Rs. 1,50,404/-, which was not objected by the assessee. Hence he had taken the same value against the valuation of the property submitted by the assessee at Rs. 90,00,000/-. Aggrieved by the above order assessee approached the first appellate authority.
7. It was contended before the CIT(A) that the value of the property has been taken as Nil. It was further submitted that the plot of land was owned by Sir J.M. Scindia from whom it devolved upon the assessee.
This property became the property of Scindia family on marriage of their ancestor Jivajirao Scindia (one of the forefathers of Sir J.M.Scindia) at the time of his marriage to Chimnibai, daughter of the ruler of Deccan. i.e., the Peshwa. The property was given as choli bangdi. Choli bangdi, as per the custom prevailing in those days amongst the royal families, was a gift to the daughter at the time of marriage. Consequentially, it was submitted that neither the Peshwas nor the Scindias incurred any cost of acquisition on this property.
Hence it was reiterated that in the light of the decision of the Honnle Karnataka High Court in the case of Syndicate Bank Ltd. Vs. ACIT and CIT v. B.C. Srinivasa Setty (supra), since there was no acquisition cost there could not be any capital gain tax either. Since there is no acquisition cost, the plot cannot be brought into charge under Section 45. Without prejudice it was again reiterated that the value taken in accordance with the provisions of Wealth Tax Act, 1957 cannot be utilized for the purpose of computation of capital gains for the reasons that the value of immovable property determined in the Wealth Tax assessment is binding on the assessee for the reasons stated in para 5. The Assessing Officer rejected the valuation report of the approved Valuer and adopted the fair market value of the plot as on 01/04/1988 at Rs. 1,50,404/- and computed the capital gains which the assessee objected.
8. It was contended that since the plot was received as a gift by the assessee's forebears and inherited by their progeny, its cost in the hands of the assessee is nil. Section 55(3) does state that where the cost in the hands of the previous owner cannot* be ascertained, the cost of acquisition in the hands of the previous owner means the fair market value on the date on which the capital asset became the property of the previous owner. It was submitted that even this provision pose no difficulty as the cost in the hands of the Peshwas, who gifted the land and the Scindias, who received it, was nil. The old revenue records were obtained from the government archives as evidence. CIT(A) states that these records merely show that the land in Aundh village of Pune was Inam' land and that the tenure was permanent. It is further recorded vide para 5.1 of his order that report (translation) of the Inam Commission was furnished to show that as far back as 01/12/ 1885 the land was recorded as Inam land which was received by way of choli bangdi. However, there was no confirmation of Inam, on whom and by whom and when it was conferred and whether there was or was not any cost to the Peshwas at all. Before the CIT(A) assessee further relied upon the decision of the Tribunal dated 23/08/1976 in assessee's own case for the assessment years 1967-68 to 1969-70 wherein the Tribunal held that the assessee had many lands which were received as gift from various Kings at different points of time. The basis for this finding was the Gwalior State Gazetteer complied in 1908 by Capt. C.E. Lurad, Superintendent of Gazetteer in Central India, which includes the text of the Treaty of Peace and Friendship entered into between the English East India Company and Maharaja Daulat Rao Scindia (an ancestor the assessee) in 1803. The Treaty mentions Inam lands, the list of which also includes six village of Pune. Assessee contended that this indicate that the Aundh land was also an Inam land. The CIT(A) opined that there is nothing to show that the six villages of Pune included in the Aundh land and this contention, he held, runs contradictory to the earlier claim that the Aundh land was received by way of gift by Chimnibai from the Peshwas. He held that the Aundh land could not have been included in the six villages of Pune as Inam by Daulat Rao for the simple reason that Daulat Rao genealogically is two generations after Jivajirao to whom Chimnibai was married. He further held that the lands listed in Article 8 of the Treaty are thus not gifted to Scindias by various Kings of Hindustan. These other lands were separately listed in Article 7 of the Treaty and comprise the districts of Dholepore, Baree and Raja Kerrah.
9. Assessee reiterated the submission that since there was no acquisition cost either in the hands of the Peshwas or in the hands of Scindias it is not exigible to tax. For the above proposition assessee relied upon the decision of the Hon'ble Madhya Pradesh High Court in the case of CIT v. H.H. Maharaja Sahib Shri Lokendrasinghji (1980) Taxman 80(3)-230. In that case assessee was an ex-ruler of the state of Ratlam founded by late Maharaja Ratansinghji. A jagir was conferred upon Shri Ratansinghji, a forefather of the assessee, as a gift for some daring feat by the then Emperor Shahjehan. The property was passed down from generation to generation by inheritance, which was sold in 1976. The ITO took the cost of the property at its FMV as on 01/01/1954 for computing the capital gains. The Court held that there was no cost in the hands of Shri Ratansinghji from whom the property was passed down and therefore there could not be capital gains either in the hands of Shri Lokendrasinghji. It was contended that this decision squarely covers the issue in the instant case of the assessee.
10. It was contended without prejudice to the above that the transfer of Aundh land is not exigible to capital gains, the alternate contention raised before the CIT(A) was that if at all the transfer is charged to capital gains, the FMV of the land as on 01/04/1981 should be taken at Rs. 99,00,000/- and not Rs. 1,50,404/- which was the amount treated in Wealth Tax. The value taken in Wealth Tax was subjective estimate of the Assessing Officer which was not based on any empirical criteria. No valuation of the land was ever insisted upon or ordered by the Wealth Tax Officer though it was the duty of the officer to take the value correctly. Relying upon the decision of the Madras High Court in the case of T.K. Pillai v. CWT 51 ITR 146 wherein it was held that the burden to determine the correct value of the asset in accordance with the terms of the statute is on Revenue whereas the assessee would endeavour to underestimate the value. It was further submitted that in the Wealth Tax matter the value adopted by the Wealth Tax Officer was suited to the assessee, hence the assessee did not agitate. However, in the instant appeal assessee has exercised its option in terms of Section 55(2)(b)(ii) and obtained a valuation report of the property from an approved Valuer. The Assessing Officer has not even tried to rebut the valuation in any manner whatsoever in spite of having relevant machinery and infrastructure.
11. Assessee also objected application'of Wealth Tax principles in the income tax case of the assessee. Reliance was placed upon the decision of the Kerala High: Court in the case of Saraswathi Estate v.Commissioner of Agricultural Income Tax 251 ITR 168 wherein it was held that the interpretation of the wordings in a particular section cannot be made automatically applicable in the context of interpretation of another enactment though both the provisions under the two enactments may be meant for levying penalties. It was further contended that there was no condition precedent to the application of Section 55(2)(b)(ii).
For the above proposition assessee relied upon the following decisions: (c) CIT v. Oriental Govt. Security Life Assurance Co. Ltd. 141 ITR 215 (Bom).
In principle, in these cases it was held that determining the market value of the asset as on 01/01/1954 for the purpose of computing capital gains/compensation cannot be taken as a basis to adopt the compensation for other assts as well. It was further submitted that when Section 55(2)(b)(ii) lays down that at the option of the assessee the cost should be considered to be the FMV as on 01/04/1981 and hence there cannot be estoppel against the opportunity given to the assessee by the statute.
12. However the contention of the assessee was rejected by the learned CIT(A).
13. Assessee's contention that the plot of land became the property of the Scindia family by gift on the marriage of their ancestor Jivajirao to Chimnibai was rejected firstly, as there was no evidence to that effect. He held, even otherwise on merit also assessee has no case. He held, there is no direct or indirect credible evidence to establish that there was no cost to Peshwas. Assessee himself has admitted lack of cogent evidence in this regard. Assessee's case hangs on dubious generalization that medieval monarchs always acquired territory either by wresting it by force or arms or through matrimony. CIT(A) held that history is replete with examples of rulers acquiring lands in exchange for goods Or munitions, towards arrears of land revenue, as compensation for military or other services rendered and even by outright purchase as well. The territories acquired as spoils of wars were those of the enemy. In the instant case the land is in Pune - the Peshwas' home turf. Besides turning history on its head, assessee's contention offends the principle that evidence has to be specific to the facts at issue. Sweeping generalizations cannot be paraded to prove the particular facts at issue. He held that the decision relied upon by the assessee in the case of H.H. Lokendrasinghji (supra) is not applicable. Land in that case was bestowed upon the assessee's ancestor as jagir by the Emperor Shahjehan. In the instant case it is gift by Peshwa to his daughter. Peshwa thus became the ancestor of the subsequent Scindias. This is a clear distinction, he held. In the case cited the forebears of Lokendrasinghji did not incur any cost for the acquisition of the land but not so in the instant case as Peshwa was the ancestor of the assessee and assessee failed to prove that the land had no cost in the hands of Peshwa. Hence he decided the issue against the assessee. Assessee's alternative plea was accepted by the CIT(A) vide para 9.1 to 10 of his order observing as under: 9.I As regards the FMV of the lands as on 1.4.1981, it is manifest from even a cursory perusal of the assessment order under appeal that the AO has disposed of the matter without due and proper consideration and requisite judiciousness. Several statements of the AO indicate this. The AO has caviled that one of the reasons why the report of the Approved valuer could not be relied upon was that he visited the plot on 21.05.1996 "when the entire situation is changed". This, to my mind, is queer logic. It was only on sale of the land in 1996-97 that FMV as on 1.4.1981 was required to be valued. Obviously the, the valuer could not have visited the site any earlier. Again, the AO carps that the valuation report is ex-parte because it is based on the documents made available and the information given by the assessee to the valuer. The question is, could it be any other way? Where else will any valuer get the documents and the basic information in respect of the land? 9.II On the technical aspects the AO has debunked the report for all the wrong reasons. He had held that the deduction of 25% for open spaces etc. for the whole plot made by the valuer is illogical. "Any buyer has to split the plot into several parts for constructing residential buildings and open space will have to be provided around each building: Deduction towards could be as much as 50% and not 25% as taken by the valuer. The AO did not realize that open spaces and set-backs have to be provided as per the municipal and town planning rules and deduction has to be factored accordingly. The AO also did not realize that it is the FSI of the land, which holds value and.
not the physical size of the land. The deduction has to be made from the gross permissible FSI to arrive at the usable FSI. Further, the AO has faulted the rates adopted, by the valuer without indicating as to what according to the AO should be the correct rates. He has adopted, a. puerile give-all-or-take-all approach according to which if the valuation report does not provide a correct estimate of FMV it has to be rejected in-toto and the value as assessed in Wealth Tax is then to be adopted. It does not require any explanation to demonstrate, the naivety of an approach which recognizes only the extremities and ignores the entire range in between. It is of a piece with the notion that only the two poles exist and not the world between them. If the AO was not satisfied with the report of the valuer, he could have, as explained in the CBDT circular No. 96 dated 25.11.1972 referred the matter to the Valuation Officer Under Section 55A(b)(ii). But instead the AO rejected the report for apparently untenable reasons.
10. So far as the valuation is concerned the following important facts need to be appreciated. The land in question is about 3 k.m.
from the main gate of Pune University and even lesser from its periphery. It is not more than 2.5 k.m. from the Governor's House.
Thus, even in 1981 the plot was not far out from the urban agglomeration. At the time development in the area was in its nascent stage. The plot Hs an elongated rectangular strip abutting along its entire length on an 80 ft. wide D P road which connects to the Pune-Mumbai highway. The value of the land as assessed in Wealth Tax is Rs. 1,50,404 for AY 1981-82. This translates to an abysmally low and absolutely absurd rate of Rs. 2.37 per sq. mi. (Rs. 150505/63474 sq. mt.) or Paise 22 per sq. ft.! From the value of Rs. 1.50 lakh in 1981 to the sale price of Rs. 10.77 crore in 1996 is a fantastic leap of 716 times in 15 years! Such phenomenal appreciation in value in such short time is well nigh impossible in a middle/upper middle class locality. If the FMV or Rs. 99 lakh estimated by the valuer in 1981 is taken, the appreciation would be a more reasonable, though still high, 1 7 times. This indicates that the value estimated by the valuer is reasonable. This conclusion is reinforced if the ratio of cost inflation index is inversely applied to the sale price of Rs. 10.77 crore. This index in 1981 was 100 and in 1996 it was 305. Accordingly, the value of Rs. 10.77 crore in 1996 will translate to Rs. 3.53 crore (Rs. 10.77 crore x 100/305) in 1981. The value estimated by the valuer, therefore, appears to be quite in order. The report is based on actual sale instances. The rats and ratios taken by the valuer appear reasonable and the valuer's approach conservative. In my opinion, therefore, the report did not deserve to be rubbished as unreliable.
Aggrieved by the above order assessee as well Revenue is in appeal before the Tribunal.
14. The learned Counsel for the assessee reiterated the submissions made before the Revenue authorities. Heard the DR.15. Considering the rival submissions, we are of the view that the issue has to go in assessee's favour. CIT(A) records vide para 5.1 of his order that the land was received in gift by the forebears and inherited by their progeny and its cost was nil. In support of the above proposition assessee produced old revenue records obtained from the government archives. The above records were rejected by the CIT(A) for the reason that these records "merely shows that the said land in Aundh village of Poona was 'Inam' land and that the tenure thereof was permanent. A translation of the report of the Inam Commission has been furnished which shows that as far back as 1.12.1885 the said land was recorded as an Inam land received by way of Choli Bangdi. However, the extracts furnished state that the Inam documents in respect of the said land are not available." It was recorded that the extracts of the Inam documents were not available. Assessee/s stand was rejected by CIT(A) on that count alone. But we are of the view that prima facie assessee has established that the land was received by way of choli bangdi by their ancestor Chimnibai as accepted by the Tribunal in its order dated 23/08/1976 in assessee's own case for the assessment years 1967-68 to 1969-70. Another reason for rejection of assessee's contention by the CIT(A) was that the Aundh land was received in gift by Chimnibai from Peshwa was that, Chimnibai was given on marriage to Jivajirao who in genealogical table of Scindias figures two generations after Daulat Rao. The Gwalior Gazetteer was complied in 1908 by Capt. C.E. Luard, Superintendent of Gazetteer in Central India, which includes the text of the Treaty of Peace and Friendship entered into between the English East India Company and Maharajah Daulat Rao Scindia, ancestor of the assessee in 1803. If that be so, according to the CIT(A), an incident that took place two generations after, i.e. during the period of Jivajirao could not be recorded and cannot be mentioned by Maharaja Daulat Rao Scindia. We are unable to subscribe to this view for the simple reason that, first of all the life span of any of these persons is not recorded and secondly, there could be a third generation in all probabilities within the span of 60 to 70 years. Assuming that Chimnibai was given in marriage to Jivajirao when Jivajirao was in 20s, third generation ancestor Daulat Rao could be alive possibly in the late 60s. Of course, we are giving this conclusion only on the basis of probabilities because none of the parties have produced before us any evidence to show the exact age and period of any of the Maharajas and Maharanies involved in the disputed land of choli bangdi. Hence these reasons of the CIT(A) cannot be the sole base to reject assessee's contention and the recording of the Gwalior Gazetteer, which was accepted by the Tribunal in deciding assessee's own case for assessment years 1967-68 to 1969-70.
16. Coming to the contention of the assessee that either in the hands of the Scindias or in the hands of Peshwas there is no cost of acquisition and as such there cannot be capital gains, it also is to be accepted. In the absence of any evidence to show that the land was purchased by paying cash, assessee's contention dated 13/03/2002 which is recorded vide para 5.III which reads as under is to be accepted: 3. In so far as the evidence that neither the Peshwas nor the Scindia had incurred any cost towards acquiring the said land of Aundh is concerned, it is submitted that save and except the historical and factual background it is very difficult, if not impossible, to adduce documentary evidence in respect of the same.
Be that as it may it is too well known a fact that the rulers of yester years did not acquire their kingdoms by paying any consideration and the same was acquired by them by the force of their, strength and in battles and wars, and in other cases by dowry, etc., like in the instant case.CIT v.Manoharsinghji P. Jadeja Gujarat High Court Though Section 45 of the Income-tax Act, 1961, is a charging section the Legislature has enacted detailed provisions in order to compute the profits or gains under that head and no provision at variance with such computation provisions can be applied for determining the chargeable profits and gains. The asset referred to in Section 45 of the Act has to be one: (i) in the acquisition of which it is possible to envisage a cost; (ii) in the acquisition whereof the assessee had incurred a cost, and the onus of showing that the assessee had incurred cost is on the Revenue. If the Revenue fails to show that the assessee had incurred a cost, it would be impossible to compute the income chargeable to tax under the head "Capital gains". By the Finance Act, 1987, with effect from April 1, 1988, the amendment to Section 55 of the Act only ropes in taxability of goodwill on transfer of the same even if there is no cost of acquisition. Similarly, Section 55 has been amended from tune to time to enable the taxation of other assets wherein no cost of acquisition is envisaged. Therefore, even if the amendment is taken into consideration Section 55 can be invoked in cases of nil cost of acquisition for the purpose of bringing to tax the entire sale consideration only in relation to the specified assets.
From a reading of this it is clear that it is for the Revenue to show that the assessee had incurred a cost in acquiring the land whereas the CIT(A) had rejected the assessee's prima facie evidences for the reason that the Inam documents in respect of the land was not available though a translation of the report of the Inam Commission was furnished which clearly shows that as far back as 01/12/1885 the said land was recorded as Inam land received by way of choli bangdi.CIT v.H.H. Maharaja Sahib Shri Lokendra Singhji, Madhya Pradesh High Court - Indore Bench reported in 162 ITR 93, it was clearly held that "the liability to tax on capital gains would arise in respect of only those capital assets in the acquisition of which an element of cost is either actually present or is capable of being reckoned and not in respect of those assets in the acquisition of which the element of cost is altogether inconceivable. In a case where cost cannot be ascertained, the fair market value cannot be taken into consideration under Section 55 of the Income-tax Act, 1961, because the very basis of capital gains is that at some point of time the person who initially acquired the property did so at some cost in terms of money." While coming to the above conclusion the Hon'ble High Court has considered the decision of the jurisdictional High Court in the case of CIT v. Home Industries and Co. 107 ITR 609 and the decision of the Hon'ble Supreme Court in the case of CIT v. Srinivasa Setty (B.C.) 19. The learned CIT(A) had not agreed to assessee's contention that the issue is covered in the case of Shri Lokendrasinghji in assessee's favour for the reason that assessee failed to prove that the land had no cost for the Peshwas. In the light of the decision of the Hon'ble High Court wherein the Lordships held that the Revenue to prove the other wav, this reasoning of the CIT(A) is to be rejected.
20. The learned CIT(A) vide para 8.1 of his order rejected assessee's production of new evidences in the form of old revenue records obtained from the government archives as it was not produced before the Assessing Officer observing as under: As brought out in para 3 above, before the AO the assessee's AR in their last communication dated 28.2.2000 merely made a bald statement that "the said plot of land, we are being informed, became the property of the Scindia family" by gift on the marriage of their ancestor Jivajirao to Chimnibai. Not even a shred of evidence was furnished before the AO in support of the same. Nor was any time sought for the purpose. The assessment proceedings had stretched over eight months. So, non furnishing of evidence could certainly not be for lack of opportunity. Nor is it the case that the evidence, subsequently produced in appeal, was not available earlier. On these facts Rule 46A will operate with full force to bar admission of evidence on the point at the appellate stage.
21. Again vide para 8.2 assessee's contention on merit was also rejected by the CIT(A) on the following lines: Without prejudice to the above statutory bar, on merits also there is no case. There is neither any direct, or even credible circumstantial evidence,,, to establish that the land had no cost to the Peshwas. As brought out in para 5.Ill above, the assessee expressly concedes the lack of cogent evidence in this regard. The case of the assessee hangs tenuously from the slim strand of a dubious generalization that medieval monarchs always acquired territory either by wresting it by force or arms or through matrimony. History is replete with examples of rulers acquiring lands in exchange of goods or munitions, towards arrears of land revenue, as compensation for military or other services rendered and even by outright purchase. Territories acquired as spoils of wars were those of the enemy. In the instant case the land in question is in Pune - the Peshwas' home turf. Thus, besides turning history on its head, the assesee's contention offends the principle that evidence has to be specific to the facts at issue. Sweeping generalizations cannot be paraded to prove the particular facts at issue.
22. We are unable to appreciate the above reasoning of the CIT(A) either. As mentioned earlier, in the light of the decision of the Gujarat High Court in the case reported in 281 ITR 19 the burden is on the Revenue to prove that the assessee had incurred the cost for acquiring the land and not vice-versa. Appeal by the assessee is allowed., Since we have allowed assessee's appeal on the above point, it is not necessary for us to discuss the issue on the alternate ground.
23. Incoming to Revenue's appeal, Revenue is objecting the direction of the CIT(A) to recompute the capital gains arising on sale of the land at Pune by adopting FMV as on 01/04/1981 at Rs. 99 lakh (based on the valuation report of a government approved Valuer) as against the value adopted by the assessing officer at Rs. 1,50,404/- (as assessed in the Wealth Tax assessment for assessment year 1981-82).
24. Since we have allowed assessee's appeal, this ground becomes infructuous and it is not necessary for us to deal with it on merit.
Appeal by the Revenue is dismissed.
25. In the result, appeal by the assessee is allowed and that of the Revenue is dismissed. Order pronounced in the open court on 22/08/2007.