TaxTMI 
TaxTMI 
2011 (12) TMI 41
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....st of the land at Rs.100 per cent for computing the capital gains? 2. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding and directing the assessing officer to delete Rs.5,51,000/- which was included as income of the assessee under the head other sources, even though the assessee diverted it to the trust in which he and his wife have full control of the trust with a view to reduce higher income of the assessee? 3. Whether on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was right in law in holding and directing the assessing officer to delete Rs.7,53,412/- which was included as income of the assessee under the head other sources even though the assessee diverted it to the trust in which he and his wife have full control of the trust with a view to reduce higher income of the assessee? 4. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in directing the assessing officer to compute the cost of the agricultural lands (WYDRA) as on 01.04.1981 should be at Rs.1,500/- per cent even though the assessing of....
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.... raising the abovesaid questions of law. 4. The learned counsel appearing for the Revenue submitted that the order of the Tribunal holding against the Department is wrong, illegal, without basis and justification. He further submitted that the Tribunal is wrong in fixing the fair market value of the land as on 01.04.1981 at Rs.500/- per cent in respect of Kurinchi land and in respect of cost of the WYDRA land, the Tribunal has fixed the fair market value of the land at Rs.1,500/- per cent. He further contended that the Tribunal is wrong in deleting the addition of Rs.5,51,000/- on the ground that there is diversion by overriding title. He further contended that the Tribunal was wrong in deleting addition of Rs.7,53,412/-, which was added as an income of the assessee and the same was wrongly deleted by both the appellate authorities. He further contended that the Tribunal erred in deleting the notional interest income of Rs.28,07,605/- made by the assessing officer, which is without any basis and justification and hence, the order passed by the Tribunal is not in accordance with law and sought to set aside the same. 5. The learned counsel appearing for the assess....
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....ng that period was not filed. In view of the above, we are of the view that the Tribunal is wrong in fixing the market value at Rs.500/- per cent and the same is without any basis and justification and no useful purpose would be served to remand the matter since the assessment year involved in this case is 1995-1996. Considering the facts and circumstances of the case, it is reasonable to fix the value of the land by averaging the cost given by the assessee as well as the market value fixed by the assessing officer. In the present case, the assessee claimed the value of the land as on 01.04.1981 at Rs.500/- per cent, whereas the assessing officer fixed the value at Rs.100/-; the first Appellate Authority fixed it at Rs.200/- per cent and the Tribunal fixed the same at Rs.500/-. After considering the facts and circumstances of the case, we are of the view that it is reasonable to fix the market value of the land by averaging the value given by the assessee and the assessing officer respectively Rs.500/- + Rs.100/- = Rs.600/2=Rs.300/-. In view of the same, we direct the assessing officer to fix the market value of the land as on 01.04.1981 at Rs.300/- per cent and the first question ....
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....e view that there is no material to show that the said amount was siphoned off by the assessee at any stage. Therefore, the first appellate authority directed the assessing officer to exclude the amount from the income of the assessee. On further appeal to the Income Tax Appellate Tribunal by the Revenue, the Tribunal without considering any of the relevant material, merely relied on the decision of this Court in the case of VELLORE RADHA JAYALAKSHMI HOTELS (P) LTD., V. COMMISSIONER OF INCOME TAX reported in (1984) 147 ITR 480, wherein it has been held that there was diversion of income and no re-routing of the amount from the Trust to the assessee and therefore, deleted the addition. The learned counsel appearing for the Revenue contended that the authorities below had not examined the relevant factor as to how this amount has to be assessed and the following factors are relevant for the purpose of assessing it:- 1. How the amount was paid to M/s Jeyaraj Chelladurai Trust; 2. At whose instance, the amount was paid; 3.How the amount was donated to the Trust; 4. If the assessee is entitled to the receive the sale consideration, how the amount ....
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...." It is pertinent to note that this question of law is connected with the second question of law and since both the counsel have agreed to remand the matter to the assessing officer in respect of second question of law on the ground that the authorities below had not considered the issue in detail and though the Tribunal has relied on the decision of this Court, it has not dealt with how far the judgment is relevant to the facts of the present case, we set aside the order of the authorities below and remand the matter back to the assessing officer to re-hear the matter afresh in respect of the second and third questions of law and decide the matter in accordance with law after giving opportunity to the assessee and the third question of law is answered accordingly. 11. In respect of fourth question of law, the dispute is regarding fair market value fixed as on 01.04.1981 with regard to WYDRA property. The assessee claimed that the cost of the property should be taken at Rs.2,500/- per cent. To support his contention, the assessee filed a certificate dated 27.05.1996, which is supposed to have been issued by the Sub Registrar, Kodaikanal, wherein the market value....
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....ional interest income of Rs.28,07,605/-. During the previous year, the assessee lent substantial amounts to M/s.Jeyaraj Chelladurai Trust as interest free advances. The said M/s.Jeyaraj Chelladurai Trust was started in the year 1989 by the trustee, the assessee and his wife. The objects of the Trusts are construction and maintenance of School and Colleges, Hospitals and other educational institutions. The said Trust was started with initial corpus of Rs.1000/-. The assessing officer was of the view that the assessee used to deposit huge amount in the bank out of the surplus money available with him and received from the such deposit. He further held that the assessee all of a sudden resorted to shifting of the deposit standing in his name and other surplus to M/s Jeyaraj Chellaudrai Trust, wherein the assessee and his wife are the trustees and hence, the assessing officer was of the view that the said trust is enjoying the benefit of exemption and the assessee for the purpose of reducing the tax liability, invested the amount with the Trust without charging any interest and hence, it was only device for evading tax. Therefore, he estimated the notional interest on the money advance....
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....ited it in the Trust only with a view to avoid payment of tax. He further contended that the assessee ought not to have deposited the amount without charging interest. The argument of the learned counsel appearing for the assessee is that the assessee can deposit the amount wherever he prefers and it is for the assessee to decide whether to deposit or not and whether to charge interest on the deposited amount or not. Normally the interest income can be charged on accrual or receipt basis. In the present case, there is no income received or earned by the assessee. Only the assessing officer was of the view that instead of depositing the amount in the fixed deposit, the assessee for reducing the tax liability, deposited the same with the Trust without charing interest. It is not the case of the Revenue that the assessee was unable to prove the source of deposit. Per contra, the assessing officer has given a finding that the assessee deposited the excess amount on various deposits with the bank. So it indicates that the deposited amount already suffered tax and it is not the case of the assessee that the assessee borrowed money and diverted it for non-business purpose. Therefore, the ....