JUGAL KISHORE, A.M. ORDER appeal filed by assessee is directed against order passed by learned CIT(A)-VII, Kolkata, dt. 23rd, Aug., 2006 for asst. yr. 2003-04 on following grounds : (1) That learned CIT(A)-VII, Kolkata erred in arbitrarily confirming inclusion and assessment of Rs. l4,49,14,951, as alleged short-term capital gains arising to appellant company on sale of 4th to 7th floors of Wing of premises, being land and building situate at B-148, Barakhamba Road, New Delhi, in terms of four separate and distinct agreements for sale, all executed on 22nd Oct., 2001 in favour of M/s Prity Portfolio (P) Ltd., Nahid Finlease (P) Ltd., Bist Hotels (P) Ltd. and Sagari Secfin (P) Ltd., respectively. (2) That learned CIT(A)-VII, Kolkata erred in arbitrarily alleging and/or holding that it was impossible to bifurcate aggregate sale consideration of Rs. 16,99,85,636 received by appellant company in respect of aggregate area of 1,656.79 sq. mtrs. of office space along with proportionate undivided indivisible share in land underneath, as also proportionate share in all common areas and facilities, etc. sold by appellant company to said four buyer companies named in ground No. 1 hereinabove. (3) That learned CIT(A)-VII, Kolkata erred in arbitrarily alleging and/or holding that by virtue of development agreement dt. 24th Feb., 1988 entered into between appellant company, owners and M/s Ansal Properties & Industries (P) Ltd., developers, appellant company s rights in whole of land measuring about 1.805 acres equivalent to 7,307 sq. mtrs. or 78,645 sq. feet, and in two Wings and B situate at premises No. B-148, Barakhamba Road, New Delhi got extinguished, and that even so-called purchase consideration, being development costs of 43.2 per cent of newly built aggregate office area, being owner s share/allocation forming part of Wing therein, was impossible to bifurcate. (4) That learned CIT(A)-VII, Kolkata erred in arbitrarily alleging and/or holding that in absence of any separate agreement for sale of land and buildings/structures thereon, bifurcation of aggregate sale consideration of Rs. 16,99,85,636 receivable by appellant company from said four buyers into Rs. 12,31,42,645 for land and Rs. 4,68,42,991 for buildings, as carried out into Rs. 12,31,42,645 for land and Rs. 4,68,42,991 for buildings, as carried out by appellant company for purposes of computing its tax liability, for year under appeal, was wholly hypothetical, imaginary and artificial. (5) That learned CIT(A)-VII, Kolkata should have held that aggregate gains in sum of Rs. 6,55,59,433 arising on sale of 1,656.79 sq. mtrs. of aforesaid office premises, were assessable as long-term capital gains, as same were attributable to proportionate share of land underneath superstructures in terms of said four agreements for sale, and balance sum of Rs. 2,49,38,557 only was chargeable to tax in hands of appellant company as short-term capital gains, in terms of computation of capital gains filed by it along with its return of total income for year under appeal. (6) That learned CIT(A)-VII, Kolkata, erred in confirming levy of interest under s. 234B in sum of Rs. 6,46,584 and under s. 234D in sum of Rs. 1,97,933 for year under appeal, in terms of order dt. 25th Jan., 2006 passed by learned Asstt. CIT, Circle-7, Kolkata under s. 154/143(3) of said Act. (7) That impugned appellate order dt. 23rd Aug., 2006 as well as impugned assessment order dt. 21stNov., 2005 passed by learned CIT(A)- VII, Kolkata and learned Asstt. CIT, Circle-7, Kolkata respectively, are wholly against facts and evidences on record, illegal, invalid, unreasonable and/or otherwise perverse in respect of matters covered by ground Nos. 1 to 6 hereinabove. 2 . main issue involved in this appeal filed by assessee company relates to question as to whether capital gains arising on sale/transfer of assessee company s rights, title and interests in 4th to 7th floors of newly constructed multistoried building situated at B-148, Barakhamba Road, New Delhi, should be bifurcated, in between proportionate undivided portion of land underneath said building, on one hand, and superstructure forming part of said four floors, on other, so that gains attributable to transfer of proportionate undivided land can be assessed to tax as long-term capital gains, and gains attributable to transfer of superstructure forming part of said four floors, can be assessed to tax as short-term capital gains. 3. relevant facts relating to this case are that assessee company is engaged, inter alia, in business of printing and publishing renowned daily newspaper named "The Statesman" from both Kolkata and New Delhi for very long time. assessee company owned and held on perpetual lease, immovable property situated at B-148, Barakhamba Road, New Delhi measuring in all about 1.805 acres i.e. equivalent to 7,307 sq. mtrs.. assessee got said property developed through M/s Ansal Properties & Industries (P) Ltd., reputed builder and developer of New Delhi, vide agreement deed dt. 24th Feb., 1988. In pursuant to agreement, M/s Ansal Properties & Industries (P) Ltd. constructed superstructures on such land in two blocks called Wing and Wing B . Wing was handed over to assessee company on 24th Aug., 2001 and Wing B was retained by developers in terms of said development agreement dt. 24th Feb., 1988. newly constructed two wings contained in all 25,835.82 sq. mtrs. of built-up area as under : Wing B Total Wing allotted/belonging newly allotted/belonging to Particulars constructed/ to appellant developers, M/s of construction built-up area in assessee Ansal Properties sq. mtrs. company (sq. & Ind. (P) Ltd. (100%) mtrs.) (43.2%) (sq. mtrs.) (56.8%) Ground to 14,866.70 6,422.55 8,444.15 16 floors Mezzanine 376.51 162.65 213.86 floor Three 10,592.61 4,575.00 6,016.62 basements Total 25,835.82 11,161.19 14,674.63 assessee apart from above Wing also received Rs. 6.95 crores through bank drafts from M/s Ansal Properties & Industries (P) Ltd. apart from additional charge for newly constructed area forming part of Wing of Rs. 45,44,000 for transfer of 56.8 per cent of said land to developers, M/s Ansal Properties & Industries (P) Ltd. 4 . assessee company thereafter got said land as also newly built superstructure valued by M/s G.S. Mehendirata, Government approved registered valuer in terms of two valuation reports, one dt. 12th Aug., 2002 and other dt. 26th Aug., 2002, which are also appearing at pp. 109 and 115, respectively in paper book filed by assessee. abovesaid valuation reports were obtained by assessee company, both for purposes of necessary accounting entries in its books of account and also for purposes of filing of IT returns and as per such valuation report, fair market value of 43.2 per cent of land retained by assessee company as on 1st April, 1981 came to Rs. 8,68,06,944 and estimated market value of newly built superstructure forming part of Wing as allotted to assessee company in August, 2001 came to Rs. 14,76,04,000. 5. Based upon aforesaid two valuation reports, assessee company filed its return for financial year ending 31st March, 2002, corresponding to asst. yr. 2002-03 declaring assessable long-term capital loss of Rs. 28,99,11, 595 arising on transfer of 56.8 per cent of said land to developers, M/s Ansal Properties & Industries (P) Ltd., which was transferred in terms of letter dt. 24th Aug., 2001. While claiming such capital loss, assessee company valued fair market value of 56.8 per cent of land transferred to M/s Ansal Properties as on 1st April, 1981 at Rs. 11,41,35,056 on basis of valuation report by Shri G.S. Mahendirata and after claiming benefit of indexation in terms of second proviso to s. 48 of IT Act, computed indexed cost of acquisition of such 56.8 per cent land at Rs. 48,62,15,339 (Rs. 11,41,35,056 x 426/100). 6. AO processed said return filed by assessee company for asst. yr. 2002-03 in terms of intimation under s. 143(1), dt. 11th Feb., 2003 by accepting return filed by assessee. assessee in meantime capitalized fair market value of 43.2 per cent of said land at Rs. 58,28,71,000 and superstructure at Rs. 14,76,04,000. However, no depreciation whatsoever was claimed by assessee company for tax purposes in respect of such capitalized value of building, save and except in respect of Rs. 3,84,211, which related to office portion of said building. 7 . During current financial year, i.e. financial year 2002-03 corresponding to asst. yr. 2003-04, assessee company sold/transferred four floors, namely, 4th to 7th floors forming part of said newly constructed Wing by executing four distinct and independent agreements with four different buyer companies, copy each of said four agreements have been filed in paper book by assessee. total area forming part of said floors including 18 car parking garage space situated in basements, as were sold during year under appeal came to 1,656.79 sq. mtrs., which is 14.84 per cent of total area of 11,161.19 sq. mtrs. allotted to assessee company in Wing . aggregate consideration for such sale of said four floors came to Rs. 16,99,85,636. 8. While filing its IT return for asst. yr. 2003-04, assessee company declared long-term capital gains of Rs. 6,55,59,433, arising on transfer of 14.84 per cent of proportionate undivided portion of said land attributable to said four floors and another sum of Rs. 2,49,38,557 by way of short-term capital gains arising on transfer of built-up superstructures area measuring about 1,656.79 sq. mtrs. forming part of said four floors, as sold and transferred by assessee company during year. assessee company while filing such return of income claimed set off of long-term capital gains in sum of Rs. 6,55,59,433 attributable to land against long-term capital loss of Rs. 28,99,11, 595 as was brought forward from asst. yr. 2002-03 and included in its total taxable income, short-term capital gains of Rs. 2,49,38,557. It is important to note that while working out proportionate land area, assessee applied ratio of 2.6288 : 1. 9. AO while completing assessment, after taking into consideration submission of assessee and deed of agreement between assessee and M/s Ansal Proprieties & Industries (P) Ltd., observed that assessee company though previously owned land and structure thereon, same was extinguished and new property was constructed and in lieu of consideration of old land and building assessee owned Wing including space at 4thfloor to 7thfloor. AO further observed that as soon as multistoried building was constructed and sold to different parties, right of earlier assets was extinguished and assessee was no more owner of land but was in fact owner of space received in lieu of consideration of old building structure vide development agreement with M/s Ansal Properties & Industries (P) Ltd. AO further observed that assessee was claiming depreciation on said building. Based on above observation AO rejected contention of assessee that as per terms of agreement 43.20 per cent of share of entire land would remain with company and balance would be transferred to developer and it was not claiming depreciation on such said building observing that from perusal of statement of depreciation, it was evident that depreciation was being claimed on building and assessee became owner of 43.2 per cent space of Wing only it was handed over to it after construction by M/s Ansal Properties. 10. AO also rejected contention of assessee that since land is capital asset which was acquired much earlier, long-term capital gain was rightly computed on same and it had rightly made apportionment of sale consideration between land and building on basis of Tribunal decision in case of ITC Ltd. vs. Dy. CIT (2003) 80 TTJ (Kol) (TM) 15 : (2003) 86 ITD 135 (Kol)(TM). 11. AO has finally rejected claim of assessee to have long-term capital gains on sale of such four floors so far as sale of proportionate land portion, which was eligible for set off against brought forward long-term capital loss and has recomputed profit on such sale of four floors by observing as under : "The aforesaid fact of assessee s submission is not applicable in assessee s case, as assessee company apportioned share of land and building was extinguished as soon as same was handed over to developer for development of multistoried building and received space at 4th to 7th floors. So, old assets extinguished and new assets in form of building viz., office space at 4th to 7th floors came into existence. assessee during year owned office space in multistoried building at 4th to 7th floors, which was utilized by company as its own space. During year assessee sold entire 4th to 7th floors of said business assets. It is clear from facts that purchaser who acquired business space was acquiring office space at 4th to 7th floors and not land and building. Therefore, apportionment was not correct. Therefore, as per IT Act during year assessee company sold office space 4th to 7th floors at Delhi which is business asset and, therefore, income arises thereon will be short-term capital gain and claim of assessee as long-term capital loss by taking valuation as on 1st April, 1981 and indexation thereon cannot be considered. Therefore, profit on sale of fixed assets as taken by company in P&L a/c amounting to Rs. 14,49,14,951 on account of sale of fixed assets, viz. office space at 4th to 7floors at Delhi is assessed under head short-term capital gain. aforesaid detail of sale of building was submitted by Authorised Representative vide Annex. 12, dt. 6th Oct., 2005 which clearly shows as under : Asset category Building Description of 4th to 7th floors of Delhi high rise and 18 asset garage spaces Cost Rs. 2,57,18,814 Depreciation Rs. 6,48,129 Sale proceeds Rs. 16,99,85,636 Profit on sale Rs. 14,49,14,951 From said detail it is clearly established that assessee sold office premises viz., depreciable business assets and thereby on sale earned short- term capital gain of Rs. 14,49,14,951. Therefore, said income is taxable under head short-term capital gain and accordingly considered thereof." 12. Aggrieved with such order of AO, assessee preferred appeal before learned CIT(A), wherein it has placed reliance on agreement and valuation report as discussed above and has contended that it had received composite sum for transfer/sale of office premises and while computing capital gains, said amount has been apportioned as consideration received towards sale of building and proportionate portion of land attributable to such four floors. assessee has also filed computation of capital gains on sale of such building before learned CIT(A), which is being reproduced hereunder for sake of reference : Computation Amount Amount Amount of capital gains on (Rs. ) (Rs. ) (Rs. ) sale of building Consideration received for sale of 1,656.79 sq. mtrs. of building including 16,99,85,636 proportionate share of land, being 14.84 per cent of t h e company s share Ratio of indexed value of land to value of building : Value of 20,09,42,000 land as on 1.4.1981 as per valuation report dt. 12.8.2002 Statesman s share of above 8,68,06,944 (43.2 per cent) Indexed value of Statesman s 38,80,27,040 shareland = (a) x 4.47 (L) Value of 14,76,04,000 building(B) Ratio: (L)/(B) 2.6288 Land Building Particulars (Rs.) (Rs.) Consideration (Split in 12,31,42,645 4,68,42,991 ratio above) Cost of acquisition 2,19,04,434 (14,76,04,000 x 14.84%) Indexed cost of acquisition 20,09,42,000 x 43.2% x 5,75,83,213 14.84% x 4.47 Short-term capital gains 2,49,38,557 Long-term capital gains 6,55,59,433 on sale of land Less : set off against 6,55,59,433 LTCGb/fd. Long-term capital gains assessee has further relied on various decisions of different Courts and Benches of Tribunal including decision of Hon ble Madras High Court in case of CIT vs. Dr. D.L. Ramchandran Rao (1998) 147 CTR (Mad) 314 : (1999) 236 ITR 51 (Mad) and decision of jurisdictional Tribunal in case of ITC Ltd. (supra). 13. learned CIT(A) after considering order of AO, submissions of assessee and case law relied upon has upheld order of AO by observing as under : "The artificial manner of computation for tax calculation, in which efforts have been made to bifurcate purchase and sale consideration, is not amenable for scrutiny and verification. ratio of indicated value of land to value of building is based purely on hypothetical grounds, which cannot be accepted as proper bifurcation. Since appellant had sold 1,656.79 sq. mtrs. of building space at Rs. 16,99,85,636, sale is to be treated as composite sale. No separate agreement was entered for building and for land. appellant had claimed that it has received Rs. 12,31,42,645 for land and Rs. 4,68,42,991 for building by bifurcating sale consideration received purely on imaginary and hypothetical ratios. This is not admissible under IT Act. Obviously, land in question is not capable of being sold for Rs. 12,31,42,645. In fact, if appellant wants to sell land independently, it may not get any value because undivided interest in land is having no market value. In view of this, AO has rightly rejected methods of computation. cases cited by appellant are not applicable in appellant s case, as discussed above. In view of above, I do not find any infirmity in order of AO in treating whole capital gain as short-term capital gain. I do not find any merit in appellant s submission. Therefore, ground No. 1 is dismissed and AO s action in treating Rs. 14,49,14,951 as short-term capital gain is confirmed". 14. assessee is aggrieved with such order of learned CIT(A) and has now come in appeal before us by taking abovementioned grounds of appeal. 1 5 . In appeal before us, learned senior counsel, Shri N.K. Poddar, appearing for assessee company, has assailed order of learned CIT(A) and has first narrated facts of case before us, which have already been discussed in abovementioned para of this order. Shri Poddar have submitted that entire order of AO and CIT(A) is based on misappropriation (sic) of facts of case and has submitted that it is important to note that while filing its return of income for immediately preceding year, i.e. for asst. yr. 2002- 03, assessee company computed capital gain/loss arising on sale/ transfer of 56.8 per cent of said land in favour of developer M/s Ansal Properties & Industries (P) Ltd. and sum of Rs. 28,99,11, 595 i.e., loss based on said valuation reports, as per details given in computation of total income was filed by assessee company along with its IT return for asst. yr. 2002-03, which was duly processed by AO under s. 143(1) vide intimation dt. 12th Feb., 2003. He has filed copy thereof, which is available in paper book. Learned senior counsel, Shri Poddar has thereafter pointed out that during year under consideration, assessee company sold aggregate area of 1,659.79 sq. mtrs. of office space forming part of 4th to 7th floors of said premises in Wing along with proportionate undivided individual shares in land underneath as also proportionate share in common areas and facilities and 18 car parking space in basement in terms of four separate and distinct agreements for sale, all executed by assessee company vide agreement for sale dt. 22nd Oct., 2001 in favour of M/s Pritty Portfolio (P) Ltd., M/s Nahid Finlease (P) Ltd., M/s Bist Hotels (P) Ltd. and M/s Sagari Secfin (P) Ltd., all of New Delhi for aggregate consideration of Rs. l6,99,85,636, copy each of said four agreements were also placed by Shri Poddar claiming that same were filed before AO in course of impugned assessment proceedings. 16. Shri Poddar has thereafter contended that since said four floors sold by assessee came to 14.84 per cent of total area allotted to assessee in Wing by way of owned shares, assessee bifurcated such aggregate consideration of Rs. 16,99,85,636 into land and building in ratio of 2.622 : 1 on basis of aforesaid valuation report by Shri G.S. Mendiratta as under : Land -Rs. 12,31,42,645 Building - Rs. 4,68,42,991 Shri Poddar thereafter has stated that assessee has computed long-term capital gain and short-term capital gain on basis of valuation report and by taking indexation cost on basis of such valuation report and worked out such long-term capital gain attributable to said four floors at Rs. 6,55,59,433 and short-term capital gain against sale of superstructure on such land comprising of 4thto 7th floors at Rs. 2,49,38,557. 17. Shri Poddar has pointed out that AO, however, while completing assessment has not appreciated above computations of long-term and short-term capital gain by assessee and has basically observed that rights of assessee company in land and building forming part of said property situated at B-148, Barakhamba Road, New Delhi, were extinguished as soon as same were handed over to developer for development through construction of new multistoried building and assessee company received new assets in form of its space forming part of Wing . Shri Poddar has submitted that AO has basically treated such agreement for development of such land and construction of new building thereon as sold by assessee to M/s Ansal Properties & Industries (P) Ltd., against which assessee has got 43.2 per cent share on old land plus some payment by bank accounts and accordingly AO has observed that such assets were acquired by assessee only in August, 2001 by developer and such four floors sold by assessee during year under consideration were wholly assessable to tax as short-term capital gains since all four purchasers purchasing office space at 4th to 7th floors had only acquired office space and not land and building and, therefore, apportionment made by assessee was not proper and assessee could not be allowed benefit of indexation w.e.f. 1st April, 1981 as such asset was only acquired by assessee in August, 2001. 18. Shri Poddar has assailed such observation of AO, which has been confirmed by learned CIT(A) in appeal, basically agreeing with observation of AO while making impugned addition. Shri Poddar pointed out that learned CIT(A) has endorsed view of AO on basis of same analogy as observed by AO that assessee only received such assets against sale of old land and building to M/s Ansal Properties & Industries (P) Ltd. 19. Shri Poddar has stated that both AO as well as CIT(A) erred in arbitrarily treating said sum of Rs. 14,49,14,951 as short-term capital gain arising to assessee on sale of 4th to 7th floors of premises and has assailed their observations in holding that assessee company s right in whole of said land got extinguished and in further holding that allocation of consideration between land and building was not proper as same was impossible to bifurcate. 20. Learned senior counsel Shri N.K. Poddar, has pleaded that tax authorities have erred in treating said sum of Rs. 14,49,14,951 as short-term capital gain without appreciating facts and terms of agreement for developing superstructure of such building between assessee company and developer M/s Ansal Properties & Industries (P) Ltd., Shri Poddar has pointed out that assessee has computed capital gain in this case in terms of para 4B of development agreement dt. 24th Feb., 1988 executed by assessee with said developer M/s Ansal Properties, wherein assessee company has agreed to assign only 56.8 per cent share in entirety of said plot of land and such transfer eventually took place in favour of said developer in August, 2001 when completion certificate in respect of newly constructed multistoried building, with Wing and Wing B , had been obtained from New Delhi Municipal Committee and thereupon allocation of developer s portion i.e. Wing B and of owner s portion i.e. Wing was accordingly made in between assessee company and said developer M/s Ansal Properties. Shri Poddar continuing his argument has contended that on assignment of 56.8 per cent shares in said land by assessee company in favour of said developer M/s Ansal Properties in August, 2001, assessee company continued to hold 43.2 per cent shares in said plot of land and right of assessee company in said land stood extinguished only to extent of 56.8 per cent shares and no extinguishment whatsoever of rights of assessee company in respect of 43.2 per cent shares in entirety of said land took place in terms of said development agreement. 2 1 . Shri Poddar has submitted that assessee company s right in proportionate undivided individual shares in land underneath with proportionate shares in all common areas and facilities, etc. as were attributable to each of said four floors as have been sold by it in pursuant to said four separate and individual agreements for sale stood extinguished by way of transfer in favour of each of said four buyers, in pursuant to said agreement for sale and not in pursuant to development agreement dt. 24th Feb., 1988 and, therefore, it is not correct to say that four purchasers, to whom said four floors were sold, acquired only office space forming part of their respective allotted floors and not proportionate land underneath, and as also common facilities and structures attributable thereto, as wrongly and arbitrarily alleged by each of said two tax authorities below, or otherwise at all. 22. Shri Poddar has thereafter pointed out that in fact on reading of each of said four agreements for sale dt. 22nd Oct., 2001, which are available in paper book from pp. 147 to 239, it was clearly evident that what was sold to each of said buyers, was not only area forming part of respective office floors but also proportionate undivided individual shares in land underneath with proportionate shares in all common areas and facilities as detailed in Sch. C to said agreement for sale as also in equipment, plant and machinery, etc. as detailed in Sch. D . 23. Learned senior counsel, Shri N.K. Poddar has thereafter assailed observations of tax authorities in wrongly and arbitrarily alleging that these assets were treated by assessee as business asset, on which assessee was claiming depreciation. Shri Poddar has pointed out that entirety of newly constructed Wing , on reading of agreement by assessee company from developer, was all along treated as its capital asset and no depreciation whatsoever was either claimed in asst. yr. 2002-03 or in asst. yr. 2003-04 when said four floors were sold by assessee to said four buyer companies. Shri Poddar has thereafter pointed out, from perusal of depreciation chart, it is evident that assessee has not claimed any depreciation on such capital asset except depreciation on office space arising out of previous year and filed copy thereof, which is available at page No. 137 of paper book. Learned counsel has thereafter assailed observations of tax authorities in disbelieving valuation report by Shri G.S. Mendiratta and in further holding that it was not possible to bifurcate aggregate sale consideration of Rs. 16,99,85,636 received by assessee company on sale of said four floors between structure and proportionate area of land attributable to and/or underneath same. Shri Poddar submitted that Government approved registered valuer Shri G.S. Mendiratta, vide his valuation report, dt. 26th Aug., 2002 has actually carried out such bifurcation on reasonable basis and neither AO nor CIT(A) has found any defects whatsoever either in said valuation report or basis for bifurcation adopted by valuer. It has, therefore, been urged by Shri Poddar that observations of tax authorities in treating valuation report as hypothetical, imaginary, artificial is wholly baseless, unreasonable and/or otherwise perverse. 24. Shri Poddar has thereafter assailed further allegation made by tax authorities disputing determination of purchase consideration and construction cost of 43.2 per cent considering same as impossible to determine or bifurcate and has submitted that same was determined on basis of suggestion made by valuer and reiterated his submission that no defect whatsoever in said valuation report and basis of allocation as to value of construction suggested by valuer was found by tax authorities. 25. It has, therefore, been stated by Shri Poddar that learned CIT(A) erred in observing and/or in holding that undivided interest in land along with superstructure thereon, in ownership apartments, cannot be valued and/ or transferred and/or that such undivided interest in land has no market value. Shri Poddar has stated that it is not correct to say that nobody would buy rights over undivided portion of land and has contended that in matter of transfer of ownership apartments, undivided proportionate portion of land attributable to structure has to be necessarily transferred and it is common knowledge that market value of ownership apartment varies according to situation of land over which same is constructed. He has thereafter submitted that many case law fully support case of assessee which were also placed before tax authorities and same were distinguished by them without correctly appreciating them and has relied on following judgments : (1) CIT vs. Vimal Chand Golecha (1993) 110 CTR (Raj) 216 : (1993) 201 ITR 442 (Raj); (2) CIT vs. Dr. D.L. Ramachandra Rao (supra); (3) CIT vs. C.R. Subramanian (2000) 159 CTR (Kar) 218 : (2000) 242 ITR 342 (Kar); (4) ITC Ltd. vs. Dy. CIT (supra). Apart from above case law, he has also relied on following judgments contending that consideration received by assessee should be bifurcated and gains attributable to transfer of undivided portion of proportionate share in land should be separately assessed to tax as long-term capital gains : (1) CIT vs. T.C. Itty Ipe (2001) 171 CTR (Mad) 242 : (2001) 249 ITR 591 (Mad); (2) CIT vs. Estate of Omprakash Jhunjhunwala (2002) 172 CTR (Cal) 325 : (2002) 254 ITR 152 (Cal); (3) CIT vs. Citibank, N.A. (2003) 182 CTR (Bom) 635 : (2003) 261 ITR 570 (Bom); (4) CIT vs. Smt. Lakshmi B. Menon & Anr. (2003) 184 CTR (Ker) 52 : (2003) 264 ITR 76 (Ker). It has finally been pleaded by Shri Poddar that even when there is some difficulty in bifurcation/apportionment that cannot be ground for rejecting claim of assessee in view of decision of Hon ble Supreme Court in case of CIT vs. Best & Co. (P) Ltd. (1966) 60 ITR 11 (SC). He has further placed reliance on decision of Hon ble jurisdictional High Court in case of CIT vs. Estate of Omprakash Jhunjhunwala (supra) contending that above decision of Hon ble jurisdictional High Court is on all four with case of assessee company herein. He has submitted that it has been held by Hon ble High Court while upholding decision of Tribunal that when first floor of newly constructed multistoried building was sold along with proportionate interest in land, assessee had rightly claimed that sale proceeds of land should be assessed as long-term capital gain and sale proceeds attributable to building structure should be assessed as short-term capital gain. It has been submitted by Shri Poddar that fact of assessee s case is almost identical to fact of above case in case of Estate of Omprakash Jhunjhunwala (supra). It has, therefore, been pleaded by Shri Poddar while concluding his argument that orders of AO and CIT(A) should be set aside and return filed by assessee should be accepted. 26. In his rival submission, learned Departmental Representative for Revenue has relied heavily on orders of AO and CIT(A). learned Departmental Representative for Revenue has also filed written submission, which is being reproduced hereunder for sake of clarity : 1. In present case, (a) value of sale consideration for sale of undivided share or interest in land as at time of transfer of same is not available. (b) There is no splitting of consideration in sale agreements. No separate consideration for such land or undivided share or interest in land is available in conveyance instrument itself. Merely writing in agreement "undivided indivisible share" is not enough. Let us assume that value of undivided indivisible share in land can be estimated only, still no bifurcation of value of land and building is available in sale agreement. (c) Once assessee is unable to give consideration for sale of undivided share or interest in land or fair market value for land as on date of transfer claim for bifurcation of consideration has no leg to stand on its own. 2. There appears to be very long time gap between date of development agreement dt. 24th Feb., 1988 and that of valuation reports of land and building dt. 12th Aug., 2002 and 26th Aug., 2002 respectively. This is only indicative of lack of perfection of valuation report which shall be further elaborated in forthcoming paras. Secondly, all sale agreements are of one single date i.e. 22nd Oct, 2001. Similarly, all receipts are dt. 30th Sept., 2002. 3. With reference to valuation report of land p. 114 of paper book may kindly be perused. basis of adoption of value of plot @ Rs. 27,500 per sq. mtr. is not clear, rather it is without any basis, if first three paras of p. 114 of paper book are read conjointly. It may be argued here that no reasons have been given by valuer for not taking value of Rs. 10,500 as on 1st April, 1981. With reference to p. 119 of paper book, prevailing market rate of plot has been taken at Rs. 1,50,000, whereas prevailing market rate was in range of Rs. 1.25 lakh and Rs. 2 lakhs. It may be reiterated that estimate made by valuer in regard to valuation of land is without any basis and tinged with arbitrariness. 4. With reference to p. 124 of paper book, fair market value of land has been taken at Rs. 58,28,41,00, but surprisingly this value has been ignored for purpose of computation of capital gains. This is admitted fact by assessee [kindly refer to written submission made by appellant on 3rd Nov., 2006 - p. 4, para (iii)]. 5. facts and circumstances of case of Estate of Om Prakash Jhunjhunwala (2002) 172 CTR (Cal) 325 : (2002) 254 ITR 152 (Cal) are distinguishable on following counts : (a) It appears that whereas in case of Estate of O.P. Jhunjhunwala (supra) building was constructed on vacant piece of land, in instant case, old building was demolished and new building was constructed afresh. (b) Unlike case of Estate of O.P. Jhunjhunwala (supra) bifurcation or allocation of sale price as well as cost of acquisition as between land and building (superstructure) has not been done in instant case. (c) Kindly refer to observations of Hon ble High Court of Calcutta in (2002) 172 CTR (Cal) 325 : (2002) 254 ITR 152 (Cal) at 158 (supra) - "The burden will be on assessee to satisfy how much of sale proceeds should be apportioned for land and how much of sale proceeds pertained to structure". In view of fact that bifurcation or allocation between sale proceeds pertaining to land and building separately has not been done, it can be said that burden has not been discharged by assessee company. 6. Reliance is placed upon findings of AO and CIT(A) in their respective orders. Apart from above, reliance is placed upon decision of Kolkata Bench (Third Member) in ITC Ltd. vs. Dy. CIT (2003) 80 TTJ (Kol) (TM) 1 5 : (2003) 86 ITD 135 (Kol)(TM) with special reference to Hon ble AM s observation made on p. 166 (para 27). 7. It is very important to mention that report was called for from AO concerned who has submitted report vide his letter No. ACIT/Cir.7/K/2006- 07/767, dt. 8th Nov., 2006 (copy enclosed herewith). Kindly refer to paras (a) and (d) of said report which reflect that pp. 108 to 124 of paper book Vol. I were not filed before AO during course of assessment proceedings. In view of facts and circumstances stated above, it is prayed that AO may be given opportunity of submitting remand report in this connection. Alternatively, assessment may kindly be set aside to file of AO. 2 7 . In his rejoinder, Shri N.K. Poddar, learned senior counsel for assessee, has also filed written submission countering submission filed by Revenue and has submitted as under : "1. It is not correct on part of Revenue to submit and/or suggest that value of sale consideration relating to sale of undivided share or interest in proportionate land attributable to sale of 4th to 7th floors in newly developed Barakhambha Road property at New Delhi, at time of sale, is not available. (i) From four sale agreements, all dt. 22nd Oct., 2001 read with four separate agreements dt. 30thSep., 2002, relating to transfer of car parking space copies whereof are already on records of tax authorities below kindly see pp. 147-239 of paper book, Vol. II filed on behalf of appellant assessee company before learned Tribunal, it is clearly apparent that appellant assessee company had received aggregate consideration of Rs. 16,99,85,636 for transfer of four floors viz. 4th to 7thfloors together with 18 car parking garage space in newly constructed multistoried building situated at B-148 Barakhamba Road, New Delhi. (ii) appellant assessee company bifurcated said aggregate consideration in between land and superstructure forming part of said four floors in ratio of 2.6288 : 1 taking into consideration ratio in between indexed value of assessee s share of 43.2 per cent in said land and estimated fair market value of entire superstructure forming part of Wing received by it from M/s Ansal Properties & Industries Ltd., developers. This fact was clearly disclosed and set out by appellant assessee company in its computation of total income filed along with its IT return for year under appeal kindly see Annex. 2 being computation of capital gains on sale of building appearing at p. 41 of said paper book, Vol. I. (iii) On aforesaid basis, aggregate consideration of Rs. 16,99,85,636 was split up between land Rs. 12,31,42,645 and building (superstructure attributable to four floors) Rs. 4,68,42,991. (iv) In our submissions, aforesaid splitting up was done on reasonable and scientific basis, and tax authorities below never challenged such splitting up of aforesaid consideration at any time whatsoever. 2. It is true that sale agreements do not give split consideration for land and building separately, but here is nothing unusual in this respect. agreements and conveyance instruments normally give consideration in aggregate terms only. said four sale agreements read with possession letters/receipts make it quite clear that aggregate consideration of Rs. 16,99,85,636 had been received by appellant assessee company for sale/ transfer of said four floors and also along with proportionate share in land underneath as well as proportionate share in common areas, facilities including in plant, equipment, machinery, etc. 3. It is not correct on part of Revenue to submit and/or allege that appellant assessee company has not been able to give bifurcated consideration for sale of undivided share or interest in land and/or fair market value for proportionate land attributable to said four floors, as on date of transfer, as alleged in para 1 (c) of their written submissions/note, as alleged or otherwise or at all. 4. We say and submit that aggregate sale consideration of Rs. 16,99,85,636, as evident from said four sale agreements, is correct market value of said four floors including proportionate land underneath, as well as proportionate share in common areas and facilities, etc., as aforesaid, and that bifurcated sale consideration of Rs. 12,31,42,645 (land) and Rs. 4,68,42,991 (superstructure forming part of four floors), as shown in computation of total income at p. 41 of paper book, Vol. I has been done on reasonable basis as clearly indicated therein. 5. In para 2 of written submissions filed on behalf of Revenue, it has been, inter alia, alleged/submitted that there is long time gap between date of development agreement dt. 24th Feb., 1988 (p. 70 of paper book Vol. I) and that of two valuation reports dt. 12th Aug., 2002 and 26th Aug., 2002 respectively (pp. 109-124 of paper book, Vol. I). Revenue concludes that in view of aforesaid fact valuation report cannot be said to be perfect. It has been further stated that while all four sale agreements are dt. 22nd Oct., 2001, all possession letters and receipts are dt. 30th Sept., 2002. 6. It is not understood as to how adverse inference is being drawn based upon facts set out in para 2 of written submissions of Revenue, as aforesaid. 7. It may be appreciated that development agreement was executed on 24th Feb., 1988, and developers, M/s Ansal Properties & Industries Ltd., reputed builder and developer of New Delhi, had started construction activity soon after sanction of building plan by New Delhi Municipal Corporation (NDMC) which was initially sanctioned on 13th Dec., 1989 and finally it was renewed on 1st Nov., 1997. building completion certificate was granted by NDMC, vide its order passed on 19th March, 2001 and dispatched to developers on 20th Aug., 2001 fact noted in each of said four sale agreements pp. 148,169, 193 and 217 of paper book, Vol. II. allotment and allocation of respective areas in newly constructed Block and Block B in between appellant assessee company herein and said developer took place in August, 2001, as evident from developers letters dt. 24th Aug., 2001 appearing at p. 108 of paper book, Vol. I. 8. valuation of land giving estimated value as on 1st April, 1981 became relevant only for purpose of computation of long-term capital gains arising on sale of said four floors. sale agreements had been executed on 22nd Oct., 2001. At relevant time, buyer companies only paid certain amounts by way of advance. balance consideration was paid by each of said four buyers in 3 different instalments viz., 7th May, 2002, 28th May, 2002 and 30th Sept., 2002, as noted on respective receipts appearing at pp. 163, 187, 211 and 235 of paper book, Vol. II. As such, actual possession of said four floors along with proportionate share in land underneath with proportionate share in common areas and facilities, etc. had been handed over by appellant assessee company to respective buyers only on 30th Sept., 2002, on receipt of final instalment of aggregate consideration, as aforesaid. Since appellant assessee company expected that possession would be handed over to respective buyers in or around September, 2002, t h e valuers had been engaged in or around July/August, 2002, to give their valuation reports in respect of land as on 1st April, 1981 and in respect of superstructures as on August, 2001, time when appellant assessee company received its allocated portion of superstructure forming part of Block A. 9. From aforesaid facts, it is clear that there is no long time gap as arbitrarily and wrongly alleged by Revenue in para 2 of its said written submissions/note or otherwise or at all. Moreover, two valuation reports give value of land as on 1st April, 1981 and of superstructures as in August, 2001. In this view of matter, mere fact that valuation reports were obtained by appellant assessee company in August, 2001, it is respectfully submitted, is wholly irrelevant. 10. It may also be noted that accounting entries based on said valuation reports were made by appellant assessee company in its audited books of account drawn for year ending 31st March, 2002, corresponding to asst. yr. 2002-03, since allocated portion of appellant assessee company s share in newly developed properly was received by it only on 24th Aug., 2001, date falling within financial year ending on 31st March, 2002. audit report was signed by auditors on 2nd Sept., 2002 and tax audit report for said year was also given by auditors on 30th Oct., 2002 p. 129 of paper book, Vol. I. 11. It is not correct on part of Revenue to now allege for first time before learned Tribunal that valuation of land as on 1st April, 1981 given by valuer in his valuation report dt. 12th Aug., 2002 (pp. 109- 114 of paper book, Vol. I) is arbitrary and/or without any basis, as alleged or otherwise or at all. learned valuer at p. 2 of his valuation report dt. 12th Aug., 2002 (p. 114 of paper book, Vol. I) has referred to rate of Rs. 10,550 per sq. mtr. fixed by L&D.O., Ministry of Urban Development, Government of India, for Group II, Connaught Circus commercial areas for period 1st April, 1981 to 31st March, 1983. However, it is common knowledge that market rate is always 2-3 times higher than allotment rate fixed by Government authorities. learned valuer has referred to prevailing market rate to be in region of Rs. 10,000 to Rs. 30,000 per sq. mtr. instant property belonging to appellant assessee company is situated on Barakhamba Road, most prime location for commercial purposes in New Delhi. Taking these factors into consideration, valuer has fixed market value of land as on 1st April, 1981 at Rs. 27,500 per sq. mtr., which in submissions of appellant assessee company, can neither be said to be unreasonable arbitrary and or without any basis whatsoever, as wrongly alleged by Revenue in para 3 of its said written submissions. 12. Moreover, in computation of total income filed by appellant assessee company for asst. yr. 2002-03 p. 127 of paper book Vol. I, appellant assessee company had made specific references to valuation report dt. 12th Aug., 2002 based upon which total value of land as on 1st April, 1981 had been taken by it at Rs. 20,09,42,000, and proportionate share (43.2 per cent) of appellant assessee company therein was taken at Rs. 11,41,35,056, which was then indexed to Rs. 48,62,15,339 based upon then prevailing capital gain index of 426. 13. copy of each of said two valuation reports dt. 12th Aug., 2002 n d 26th Aug., 2002 made by Mr. G.S. Mendiratta, Government approved registered valuer, was duly filed by appellant assessee company before learned AO in course of assessment proceedings for asst. yr. 2003-04, and again in course of appellate proceedings before learned CIT(A)-VII, Kolkata. learned CIT(A) s order dt. 23rd Aug., 2006 passed in respect of asst. yr. 2003-04, p. 5 of said appellate order appearing at p. 8 of paper book, Vol. I clearly records filing of said valuation reports. 14. It may also be noted that appellant assessee company passed accounting entries based on approved valuers report, and this fact is also mentioned in fixed assets Sch. 5 appearing at p. 20 of printed accounts for year ending 31st March, 2002 as well as in para 11 of Sch. 23 at p. 32 of said printed accounts. aforesaid fact was again disclosed in audited printed accounts drawn for financial year ending 31st March, 2003 - at fixed assets Sch. 5 at p. 281 of paper book as well as in note No. 12 of Sch. 18 at p. 292 of paper book, Vol. II. Both aforesaid printed accounts had been admittedly filed by appellant assessee company along with its respective IT returns for two years viz. asst. yr. 2002-03 and 2003-04. copy of printed accounts for year ending 31st March, 2002 is again annexed hereto for ready reference. 15. It is humbly and respectfully submitted that neither said two valuation reports nor accounting entries based thereon had been ever challenged by tax authorities below in either of said years. 16. market value of land as on 1st April, 1981 as estimated by Government approved registered valuer through its valuation report dt. 12th Aug., 2002 (pp. 109- 114 of paper book, Vol. I) was not relevant for passing accounting entries. This report was relevant only for capital gains tax computation, and, therefore, this report was specifically referred to by appellant assessee company in each of its two computations of total income filed for asst. yrs. 2002-03 and 2003-04 at pp. 127 and 441 of paper book, Vol. I. 17. market value of land as well as superstructures as in August, 2001, as given in valuation report dt. 26th Aug., 2002 (pp. 115-224 of paper book, Vol. I) was relevant for passing accounting entries and therefore this report was specifically referred to in audited printed accounts filed by appellant assessee company for said two years along with its respective returns of total income." 28. We have given our careful consideration to rival submissions made before us and have perused orders of tax authorities. We have also considered paper book filed by learned counsel for assessee and case law relied upon by both parties. In this case, Revenue has basically disputed computation of capital gain by assessee by apportioning consideration received between value of land and building on basis of registered valuer s report and AO has disputed such computation of capital gain by assessee basically observing as under : (i) rights of assessee company herein in land and building forming part of said property situated at B-148, Barakhamba Road, New Delhi, were extinguished, as soon as same were handed over to developer for development through construction of new multistoried building, and assessee company received new assets in form of office space in new multistoried building forming part of Wing . assessee company became owner of newly constructed office space received by way of consideration from developers under development agreement dt. 24th Feb., 1988, in lieu of its share in old land and building. In fact, in lieu of its 43.2 per cent share in old land and building structures, assessee company received by way of its entitlement, 43.2 per cent share in newly constructed multistoried building, which included inter alia said four floors. (ii) four purchasers, who purchased office space at 4th to 7th floors of said Wing , acquired office space, and not land and building. Therefore, apportionment made by assessee company herein was not correct. (iii) said four floors were part of its business assets, and assessee company had duly claimed depreciation thereon as part of buildings. (iv) Since said four floors, being depreciable business assets, which had been received by it from developers only in August, 2001 had been sold b y assessee company during year under appeal, profits arising on s u c h sale were wholly assessable to tax as short-term capital gains. assessee company cannot be allowed benefit of taking market value thereof as on 1st April, 1981 and/or benefit of indexation in respect thereof. As such, entire profit of Rs. 14,49,14,951, as credited by it to its P&L a/c for year under appeal, is assessable to income-tax in its hands as short-term capital gains. (v) decision of Kolkata Bench of learned Tribunal in case of ITC Ltd. vs. Dy. CIT (supra), is not applicable to instant case of assessee company herein. 29. learned CIT(A) in appeal has endorsed finding of AO holding that it was impossible to bifurcate aggregate sale consideration of Rs. 16.99 crores in respect of office space forming part of 4th to 7th floors, sold and transferred by assessee company during year under appeal and has further approved action of AO in holding that assessee company s rights in whole of land measuring about 1.805 acres got extinguished and that even so-called purchase consideration being development costs of 43.2 per cent of newly built aggregate office area, being owner s share/ allocation therein was impossible to bifurcate. learned CIT(A) has further observed that bifurcation of sale consideration between land and superstructures was wholly hypothetical, imaginary and artificial. 30. assessee has disputed such action of AO, as confirmed by learned CIT(A), contending that it is absolute owner of 43.2 per cent of land on which building is constructed and only 14.84 per cent of total area was sold in form of sale of 4th to 7th floors along with right of superstructures and proportionate portion of land thereto. It has further been contended by assessee that 14.2 per cent of land was never sold by assessee to developer as alleged by Revenue and superstructure thereon was made available by developer by virtue of agreement and by transferring 56.8 per cent of land to them. It has further been contended by learned counsel for assessee that assessee has rightly apportioned sales consideration of these four floors on basis of Government approved valuer and by allocating proportionate value of land and building sold to respective purchasers on basis of such report of valuer, which has not been doubted or contradicted by Revenue at any stage. 31. We after carefully perusing facts and circumstances involved in this case and find that first objection by AO while treating sale of four floors as income from short-term capital gains is based on observation that rights of assessee company in land and building forming part of said property situated at B-148, Barakhamba Road, New Delhi, were extinguished, as soon as same were handed over to developer for development through construction of new multistoried building. Though AO has held that assessee company was no longer owner of land and building and in fact it only got 43.2 per cent shares by way of its entitlement in lieu of old land and building, however, in our considered opinion, such action of tax authorities does not hold any merit in view of relevant clauses of terms of agreement between assessee and developer M/s Ansal Properties & Industries (P) Ltd. perusal of development agreement dt. 24th Feb., 1988 executed in between assessee company and M/s Ansal Properties & Industries (P) Ltd. shows that assessee has never transferred 100 per cent of right in land to M/s Ansal Properties and in fact only 56.8 per cent share in said leasehold land was to be transferred to builder that is only after completion of development of land. above fact is clearly mentioned in cl. (4) and cl. (21) of agreement, which is available at page Nos. 78, 79 and 89 of paper book and is being reproduced for facility of reference hereunder : 4. transfer as defined by Chapter XX-C of IT Act, 1961, contemplated by this agreement comprised following : (a) right of developers to build upon land aforesaid in accordance with terms of this agreement and to own as property to belong to developers, or to dispose of developers allocation (referred to hereafter and described in Second Schedule hereunder written) at will of and as may be decided by developers, from time to time (but subject to obligation of developers to construct for owners and as property belonging to owners, owners allocation referred to hereafter and more particularly described in Third Schedule hereunder written) in proposed building to be built by developers. (b) When development of said land as contemplated by this agreement is completed, right of developers to obtain from owners assignment of undivided 56.80 per cent share in said leasehold land described in First Schedule hereunder written in favour of developers and/or in favour of such person or persons as may be selected by developers, i.e. person to whom developers may sell, on what is known as ownership basis, different units in developers allocation. 21. It is hereby expressly clarified, declared and confirmed that alloWing developers to enter upon said land contemplated by cl. 19 and/or 20 above is not intended to be and shall not be construed to be nor claimed by developers to imply that owners have allowed developers to enter into possession or given to developers possession of said land or allowed developers to retain possession of said land or of any part thereof in part performance of contract referred to in s. 53A of Transfer of Property Act, 1882 nor is it intended to be nor will it be construed to be transfer as defined by Chapter XX-C or s. 2(47) of IT Act, 1961. 32. From above clauses of terms of agreement, fact that emerges is that assessee at no point of time has relinquished or transferred right of ownership on such land to extent of 43.2 per cent land and assessee always held ownership of 43.2 per cent of land as evident from plain reading of terms of agreement between assessee company and developer. Therefore, first objection by Revenue while denying computation of capital gain by assessee does not hold any merit. 33. second objection by Revenue in this case is basically disputing apportionment of sales consideration by assessee company between value of land and superstructures. However, such objection raised by Revenue is without any concrete and sound reasoning, whereas we find force in argument of learned counsel for assessee that undivided proportionate portion of land attributable to structure has to be necessarily transferred and it is common knowledge that market value of ownership of apartment varies according to situation of land over which same is constructed. above argument of learned counsel for assessee gets support from various case law relied by him, as in case of CIT vs. Vimal Chand Golecha (supra), Hon ble Rajasthan High Court held as under : "If price of two capital assets has been charged at one consolidated price, then assessee is entitled to bifurcate same. situation may arise where gain from one of capital assets is short-term capital gain while from other is long-term capital gain and in such situation benefit to assessee cannot be denied in respect of gain arising from sale of asset which could be considered as long-term capital gain." In another case in CIT vs. Dr. D.L. Ramachandra Rao (supra), Hon ble Madras High Court while dealing with similar issue had held that : "The definition of capital asset includes property of any kind and land held by assessee is also capital asset and it is possible to bifurcate capital gain arising with reference to sale of land and building even if they are sold as unit, if lands are held by assessee for period more than that prescribed under s. 2(42A) of IT Act, 1961, namely, 36 months. It is not possible to say that by construction of building, land which was long- term capital asset, has ceased to be long-term capital asset. land is independent and identifiable capital asset even after construction of building." Similar principle had also been reiterated by Hon ble Karnataka High Court in case of CIT vs. C.R. Subramanian (supra) and also by jurisdictional Tribunal in case of ITC Ltd. vs. Dy. CIT (supra). Since in present case also, assessee is owner of 43.2 per cent o f building and land on which such building had been constructed, assessee has rightly apportioned sales consideration in its books of account on disposal of 4th to 7th floors as per principle laid down by various High Courts. We also find that for purpose of apportionment, assessee has rightly taken market value of land as on 1st April, 1981, since land was acquired before 1981 and gain arising on disposal of land was long- term capital gain and gain on disposal of above four floors of building has rightly been treated as short-term capital gain. We also find that fact in present case clearly reveals that assessee has also transferred proportionate undivided individual shares in land to purchasers of such floors as evident from agreement for sale between assessee and M/s Pritty Portfolio (P) Ltd., copy of which has been placed in paper book at page Nos. 147 to 167, and at page No. 149, it has been clearly mentioned that assessee is transferring undivided individual shares in land underneath to purchasers. relevant portion of such agreement is being reproduced hereunder for facility of reference : "And whereas vendor is desirous of transferring and vendee is desirous of purchasing 4,617.76 sq. ft. FAR (capital area) being entire allocation of vendor in 4th floor in "Statesman House" at B-148, Barakhamba Road, New Delhi, as detailed in Sch. B written hereunder along with proportionate undivided indivisible share in land underneath with proportionate share in all common areas and facilities as detailed in Sch. C and equipment, plant and machinery as detailed in Sch. D written hereunder and hereinafter referred to as said apartment". 34. plain reading of above clause of agreement and from ratio of decisions of different Courts, it is clear that assessee has rightly apportioned sales consideration between land and building. Even otherwise, we find that when there is some difficulty in bifurcation/ apportionment, same cannot be ground for rejecting claim of assessee as held by Hon ble Supreme Court in case of CIT vs. Best & Co. (supra). Apart from above orders, decision of Hon ble jurisdictional High Court in case of CIT vs. Estate of Om Prakash Jhunjhunwala (supra) is also squarely applicable to fact of present case, wherein Hon ble High Court held as under : "That since house was capital asset, gain on sale of house property was assessable as capital gains. leasehold interest had to be treated as separate asset and building raised subsequently constituted different asset. gains attributable to interest in land were assessable as long-term capital gains. gains attributable to building were assessable as short-term capital gains. burden was on assessee to show how much of sale proceeds should be apportioned for land and how much pertained to structure". We find that facts of present case are almost similar to facts of case disposed by Hon ble jurisdictional High Court. In above case as in present case also, assessee has rightly divided sales consideration between value of land and value of building and assessee has also discharged its liability by apportioning value between land and building as per valuation determined by Government approved valuer, which was placed before Revenue even in immediately preceding previous year and was not contradicted/rebutted by Revenue at any stage of time. 35. Apart from above decision of Hon ble jurisdictional High Court, identical issue came before this Tribunal in case of ITC Ltd. vs. Dy. CIT (supra), wherein it was held by Third Member as under : "In India, separate ownership of land and building is recognized in law. person can hold land and another person can be owner of building or superstructure constructed thereon. This is fully recognized under Act. Sec. 132 provides for depreciation on buildings, etc. From its very nature, land neither requires insurance against destruction nor any repair nor does it depreciate in value by use. (para 18) only problem in instant case was question of bifurcating cost of land and flat from sale consideration thereof which was not done by assessee. If cost of land and sale consideration of same was impossible to work out and in fact if seller and purchaser included entire cost as composite one, then view taken by AM was appropriate view and justified in law. However, if it was possible to work out cost of land and sale consideration of same on basis of material on record, it would not be justified to deny claim of long-term capital gains on undivided share in land sold along with floors. (para 20) nature of treatment of sale/purchase consideration could be verified from books of seller and purchasers. If, however, sale/purchase consideration was treated as composite and depreciation was also claimed and allowed and it was impossible to bifurcate cost/sale consideration of land from total sale consideration, then only it had to be held as composite sale. Therefore, view taken by JM on this point was justified (para 21)." 36. We, therefore, from facts and circumstances involved in this case and after perusing relevant terms and conditions between assessee and developer and assessee and purchasers of 4th to 7th floors, are of opinion that assessee has rightly computed capital gain by apportioning sale proceeds between land and building as per valuation report submitted by Government approved valuer and above computation o f capital gain by assessee is supported by various decisions of Hon ble High Courts including decision of Hon ble jurisdictional High Court in case of Om Prakash Jhunjhunwala (supra) and decision of Third Member of this Tribunal in case of ITC Ltd. (supra) and, therefore, in our considered opinion, above second objection by Revenue is devoid of any merit. 3 7 . third limb of objection by Revenue while discarding computation of capital gain by assessee is based on observation that assessee company had duly claimed depreciation thereon as part of building. However, above observation of Revenue is also without any merit as assessee never claimed depreciation on such land and building comprising in Wing as evident from details of depreciation available at p. 137 of paper book, wherein assessee has only claimed depreciation in respect of o l d office building excluding depreciation on such newly constructed capital asset and, therefore, above objection raised by Revenue is also devoid of any merit. 38. authorities below have also disputed benefit of indexation by assessee but such action of Revenue is also not tenable in view of fact that assessee has made necessary entries in books of account on basis of valuation report by Government registered valuer and Revenue has not doubted/contradicted such valuation report at any point of time. Virtually, assessee has submitted such computation of capital gain by taking into indexation of land from 1st April, 1981 while filing return for asst. yr. 2002-03, which is available at page Nos. 126 and 127 of paper book and AO accepted such claim of assessee while processing same under s. 143(1) and Department has not initiated any other proceeding on such return by assessee till date. Apart from above fact, we have already held hereinabove that assessee never relinquished right of 43.2 per cent of land to any person and, therefore, objection of tax authorities in denying claim of indexation was not found correct. 39. other objection raised by Revenue regarding disputing ratio of decision by Hon ble Third Member in case of ITC Ltd. (supra) and treating valuation by Government approved valuer as hypothetical, is also found without having any merit keeping in view fact that such observation of authorities below is without any concrete and sound reasoning, whereas assessee has duly explained reason for computing capital gain while proportionating sales consideration between land and building with help of relevant documentary evidence and explanation on record. We, therefore, do not find any merit in other objections raised by Revenue while discarding claim of assessee. 40. We, therefore, after considering facts and circumstances involved in this case, ratio of decisions laid down by various High Courts including Hon ble jurisdictional High Court, decision of Hon ble Third Member in case of this Tribunal and in light of above discussion are of considered opinion that action of AO and CIT(A) in denying bifurcation of aggregate of sale consideration received by assessee between land and building was not correct and in our considered opinion, action of assessee company in computing capital gain by apportioning sale consideration between land and building was correct in view of ratios laid down by various High Courts as discussed hereinabove and as per terms and conditions of various agreements entered by assessee with developer and purchasers. We, therefore, set aside order of authorities below and accept first five grounds raised by assessee. 41. Ground No. 6 is consequential and, therefore, same has to be computed accordingly. 42. Ground No. 7 is general in nature and, therefore, does not need any adjudication. 43. In result, appeal filed by assessee is allowed. *** STATESMAN LTD. v. ASSISTANT COMMISSIONER OF INCOME TAX