TaxTMI 
TaxTMI 
2012 (5) TMI 149
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.... holding that Fair market Value of the disputed jewellery as on 1 st April 1974 should be arrived at by reverse indexation from the sale price of December 1991 and not from the Fair Market Value of 31 st March 1989 on the basis of which the Revenue had imposed Wealth Tax upon the assessee." 4. The facts giving rise to the filing of this Appeal may be summed up thus: 4.1 The assessee is the mother of erstwhile ruler of Baroda, late Srimant Fatehsinh Rao-I, Gaekwad. During the year under consideration, the assessee had sold certain jewellery/valuable articles made of gold diamonds and pearls which she inherited from her son. The sale consideration was of Rs. 9,05,09,176. The assessee, by following the method of reverse indexation worked out the fair market value of the said jewellery at Rs. 3,47,25,492/- as on April 1, 1974 and computed the capital gains at Rs. 2,78,84,432/-. The Assessing Officer noted that the details of the jewellery sold and the details of the jewellery acquired did not match and therefore, according to the Assessing Officer, all the items of jewellery were not sold during the year under consideration. He, accordingly, estimated the value of the items as on....
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....diamonds and pearls as on April 1, 1974 was worked out by the assessee at Rs. 2,95,18,222/- and Rs. 4,15,600/- respectively. As against this, the Assessing Officer worked out the value at Rs. 1,39,48,363/- and Rs. 3,72,000/- respectively. Nevertheless, both, the assessee and the Assessing Officer agreed that the method of reverse indexation should be adopted. The assessee had adopted the base as the value worked out on March 31, 1989 on the basis of valuation done by a registered Valuer, whereas the Assessing Officer had taken the actual sale price in December, 1991 as the basis. As there was no dispute about the method of reverse indexing adopted by the Assessing Officer and the assessee, the only dispute was as to whether its valuation should be the valuation done by the assessee based on March 31 1989 or on the basis of the sale price on the date of sale viz. December, 1991. 4.5 The CIT [Appeals] held that the cost of acquisition as per fair market value as on April 1, 1974 should be Rs. 1,39,48,363/- instead of Rs. 5,11,44,000/- adopted by the assessee. 4.6 Being dissatisfied, the present Appeal has been preferred. 5. Therefore, the only question that arises for determ....
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....here the capital gain arises from the transfer of a long-term capital asset (hereafter in this section referred to, respectively, as long-term capital gain and long-term capital asset) by making the further deductions specified in subsection (2). (2) The deductions referred to in clause (b) of sub-section (1) are the following, namely:- (a) where the amount of long-term capital gain arrived at after making the deductions under clause (a) of sub-section (1) does not exceed ten thousand rupees, the whole of such amount; (b) in any other case, ten thousand rupees as increased by a sum equal to,- (i) in respect of long-term capital gain so arrived at relating to capital assets, being buildings or lands or any tights in buildings or lands or gold, bullion or jewellery,- (A) in the case of a company, ten per cent of the amount of such gain in excess of ten thousand rupees; (B) in the case of any other assessee, fifty per cent of the amount of such gain in excess of ten thousand rupees; (ia) in respect of long-term capital gain so arrived at relating to equity shares of venture capital undertakings,- (A) in the case of a company, other than venture capital company, th....
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....tances so require, by way of advancing loans to such undertakings, and is approved by the Central Government in this behalf; (b) "venture capital undertaking" means such company as the prescribed authority may, having regard to the following factors, approve for the purposes of subclause (ia) of clause (b) of sub-section (2), namely:- (1) the total investment in the company does not exceed ten crore rupees or such other higher amount as may be prescribed; (2) the company does not have adequate financial resources to undertake projects for which it is otherwise professionally or technically equipped; and (3) the company seeks to employ any technology which will result in significant improvement over the existing technology in India in any field and the investment in such technology involves high risk. (3) The deductions specified in sub-section (2) shall be made also for the purposes of computing any loss under the head "Capital gains" in so far as it pertains to any longterm capital asset and, for this purpose, any reference in that sub-section to the amount of long- term capital gain arrived at after making the deductions under clause (a) of subsection (1) shall be ....
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....capital gain arising from the transfer of a capital asset referred to in clause (iv) or, as the case may be, clause (v) of section 47 is deemed to be income chargeable under the head "Capital gains" by virtue of the provisions contained in section 47A, the cost of acquisition of such asset to the transferee-company shall be the cost for which such asset was acquired by it." 7. After hearing the learned counsel for the parties and after going through the provisions contained in the Act for calculation of the capital gain, we find that according to the provisions of the Act, 1 st April, 1974 should be treated to be the date in the present case on which the disputed jewellery was deemed to have been acquired by the assessee. There is no dispute that although the property was transferred to a third party in the month of December, 1991, the assessee herself gave a declaration of fair market value of the selfsame jewellery as on 31 st March, 1989 based on the report of a Valuer for the purpose of Wealth Tax Act as required under the said Act. It is admitted position that the Revenue has accepted the said valuation and has not disputed the same for the purpose of Wealth Tax Act. 8. ....
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....December, 1991, the date of actual sale. 11. Moreover, the mode of valuation of jewellery under the Wealth Tax Act as it appears from Rule 18 of Schedule III of the said Act is also the fair market value, which is adopted in calculating the capital gain as indicated below: "18. Valuation of jewellery (I) The value of the jewellery shall be estimated to be the price which it would fetch if sold in the open market on the valuation date (hereafter in this rule referred to as fair market value). (2) The return of net wealth furnished by the assessee shall be supported by,- (i) a statement in the prescribed form, where the value of the jewellery on the valuation date does not exceed rupees five lakhs; (ii) a report of a registered valuer in the prescribed form, where the value of the jewellery on the valuation dale exceeds rupees five lakhs. (3) Notwithstanding anything mentioned in sub-rule (2), the Assessing Officer may, if he is of opinion, that the value of the jewellery declared in the return,- (a) is less than its fair market value by such percentage or such amount as is prescribed under sub-clause (i) of clause (b) of sub-section (1) of section 16A; (b)....