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TMI Blog2010 (9) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... nto existence with effect from 08.8.1970 under a deed of partnership executed on the said date between late Shri H.R. Vadera and Mrs. Pushpa Vadera. Two minor children of Mrs. Pushpa Vadera were also admitted to the benefits of the said partnership. As per the said partnership, the business of the assessee was of a constructing a multi-storeyed commercial building on the land situated at 15-Barakhamba Road, New Delhi after demolishing the existing structure. The firm M/s. Naraindass Hans Raj had been dissolved and the lease-hold land was allotted, to late Shri Hansraj Vadera. On 08.8.1970 (the date on which the assessee firm was constituted) late Shri H.R. Vadera brought in the aforesaid lease-hold property and the building situated thereon as his capital contribution in the capital of the said firm. This was done in terms of Clause 3 of the said Partnership Deed. Thereafter on 31.8.1970, the capital account of late Shri H.R. Vadera was credited by Rs. 2,01,000 and the same amount was debited in the assessee's books as the value of the said property which had been brought in by Shri H.R. Vadera in the said new firm. The building plans for developing the aforesaid property for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings by valuing the said land at Rs. 45,23,800 as revised by the legal heir. The Income Tax Officer, in his draft order, rejected the revised figure of the cost of land at Rs. 36,61,625 debited by the assessee to its revised consolidated Profit and Loss Account and held that the assessee was entitled only to a deduction of Rs. 2,01,000 as the cost of the land in computing its profit from the venture. This was the order for Assessment Years 1972-73 and from 1974-75 to 1977-78. The assessment order was framed to the same effect after obtaining the approval of the Inspecting Assistant Commissioner. 4. The Commissioner of Income Tax (Appeals) also held that the assessee was entitled to a deduction of Rs. 2,01,000 only as the cost of land in computing its profit from the venture. 5. Thereafter, the matter came up before the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal'). It was submitted on behalf of the assessee before the Tribunal that in terms of Clause 3 of the Partnership Deed, the correct amount to be credited to the capital account of late Shri H.R. Vadera and debited in the assessee's account as the cost of the land was not Rs. 2,01,000 (being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Partnership Agreement, (b) The land having been brought in by late Shri H.R. Vadera as a stock-in-trade or as a capital asset, and (c) If brought in as a capital asset, then on its being converted into stock-in-trade. 2) Whether there is any evidence of money being charged or so whether addition sustained by the Judicial Member is justified. 6. The Special Bench vide its order dated 15.04.1983, agreed with the view taken by the learned Judicial Member. In conformity with the decision of the Special Bench, the Bench thereafter passed an order dated 28.07.1983. 7. It is in the aforesaid background, the following two questions are formulated and referred for opinion of this Court: 1) Whether the Tribunal was right in holding that in computing the profits and gains of the firm on the sale of the properties in question, the value of the plot brought in by one the partners M/s. Vadera by way of capital contribution, should be taken as figure with which he was initially credited in respect of that plot, viz., Rs. 2,01,000 or should the value be taken on some other basis? If so, what basis? 2) Whether on the facts and in the circumstances of the case, the Tribunal was right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in question was finally taxed at a value of Rs. 36,61,625. Same was the value taken in proceedings under Gift Tax Act as well as Estate Duty assessment while leaving the duty on the estate levy by Mr. Vadera. 13. Notwithstanding the fact that for the purpose of wealth tax charge into the hands of Mr. Vadera, the value of this property was treated at Rs. 36,61,625, and this fact was pleaded before the AO, the AO refused to accept the same. The AO was of the opinion that when the aforesaid property was brought by the assessee in the form of his contribution as capital, value in the books of account was shown as 2,01,000 and therefore, for the purpose of the income tax that was the value which was to be taken into consideration, moreso when the capital account of Mr. Vadera was credited with this amount. He was of the opinion that the assessment under the Income Tax Act was to be framed on the basis of provisions contained in the Act and was not to be influenced by other Direct Tax. This is the view, which is accepted by the CIT(A) as well as the Tribunal and the proprietary or correctness of this view is the subject matter of dispute. 14. No doubt, the Income Tax Authorities are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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