Commissioner of Income Tax vs Hotel Vaibhav

K.S. Jhaveri, J.—This appeal u/s. 260A of the Income Tax Act, 1961 is filed against the judgment and order dated 28.01.2005 passed by the Income Tax Appellate Tribunal, Rajkot Bench in ITA No. 304/RJT/2000 whereby, both the appeal filed by the Revenue and the Cross Objection filed by the assessee were dismissed.

Briefly stated, the facts are that the respondent-assessee was carrying on the business of a Hotel since 1978. During the relevant year, it sold the Hotel building along with furniture and fixtures and claimed to have received sale consideration of Rs. 33,00,000/- as per the sale deed.

The assessee filed the return of income on 31.08.1997 declaring total income at Rs. 8,200/-. Assessment scrutiny was undertaken and ultimately, the Assessing Officer passed the order u/s. 143(3) dated 27.03.2000 by which the total income under the head of capital gains was assessed at Rs. 64,72,825/-. Aggrieved by the said order, the assessee filed appeal before the CIT(A). Vide order dated 28.09.2000, the CIT(A) partly allowed the appeal of the assessee. Being aggrieved by the order of CIT(A), the Revenue filed appeal and the assessee filed cross objections before the Tribunal. The Tribunal heard both the matters together and thereafter, vide impugned order dated 28.01.2005, the Tribunal dismissed both, the appeal filed by the Revenue and the cross-objections of the assessee. Hence, this appeal by the Revenue.

The appeal was admitted in respect of the following substantial question of law;

"Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the provisions of Section 55A of the Income Tax Act, 1961 would apply only to computation of income under the head Capital Gains?"

We have heard learned counsel for both the sides. The question raised in this appeal is already answered in the decision of the Apex Court in the case of Amiya Bala Paul Vs. Commissioner of Income Tax, Shillong, wherein, the Apex Court made the following observations in Paras - 16 & 17 of the judgment;

"16. The AO in this case had made a reference under S. 55A of the Act. This action cannot be supported by reference to S. 131(1) of the Act r/w Order 26, R. 9 of the Code since the consequences of reference to a Valuation Officer u/s. 55A of the Act and of a commission issued u/s. 75 r/w. Order 26, R. 9 of the Code are different. It is not, therefore, a case of correction of an error in mentioning the section by the AO, an error which could be ignored by referring the action to the appropriate source of power.

Besides S. 55A having expressly set out the circumstances under and the purposes for which a reference could be made to a Valuation Officer, there is no question of the AO invoking the general powers of enquiry to make a reference in different circumstances and for other purposes. See Padam Sen and Another Vs. The State of Uttar Pradesh, ; Arjun Singh Vs. Mohindra Kumar and Others, . It is noteworthy that S. 55A was introduced in the Act by the Taxation Laws (Amendment) Act, 1972, when S. 131(1), 133(6) and 142(2) were already on the statute book. Learned counsel for the appellant has correctly submitted that if the power to refer any dispute to a Valuation Officer were already available in ss. 131(1), 133(6) and 142(2), there was no need to specifically empower the AO to do so in certain circumstances under S. 55A."

Learned counsel for the Revenue was not in a position to controvert the proposition of law laid down in the above referred-case or any subsequent decision where a contrary view has been taken.

Since we are applying the view taken in the above decision of the Hon''ble Apex Court, no elaborate reasons are assigned while disposing off the present appeal. The reasoning''s of the Tribunal are also elaborate and well-reasoned and we are not persuaded to take a contrary decision.

Hence, the question of law as to whether the Tribunal was right in law in holding that the provisions of Section 55A of the Income Tax Act, 1961 would apply only to computation of income under the head Capital Gains is answered in the affirmative in favour of the assessee and against the Revenue.

The appeal is, accordingly, dismissed.