S. Ranganathan, J.:— These 41 ITCs can be disposed of by a common order. They arise out of assessments of the six applicants to income-tax for the assessment years 1972–73, 1973–74, 1974–75 and 1975–76, the relevant previous years being the immediately preceding financial years. It seems that all the applications preferred by the six applicants have not been placed before us and it is likely that some of their applications are still pending in this court but not yet listed or at earlier stages. However, the applications in the case of one of them, viz., Smt. Shakuntala Rajeshwar, are complete and, since the question involved in the case of all the applicants arises out of similar facts, we shall refer, in disposing of these applications, to the facts in the case of Smt. Shakuntala Rajeshwar, without discussing separately the position in regard to each of the other assessees. The reasons given for the decision on the applications preferred by Smt. Shakuntala Rajeshwar will be applicable mutatis mutandis in the cases of the other applicants as well.

2. In the case of Smt. Shakuntala Rajeshwar, there are twelve applications which arise out of three orders passed by the Income-tax Appellate Tribunal in relation to the assessment years 1972–73 to 1975–76. These applications arise in the following circumstances: The applicants are six out of the seventeen co-sharers of property No. 24, Bara-khamba Road, New Delhi. The above property consisting of land as well as a bungalow constructed thereon had originally been leased out by the Secretary of State for India in favour of M/s. Badri Nath Diwan Chand under a perpetual lease deed dated February 4, 1938. M/s. Badri Nath Diwan Chand conveyed their interest in the land as well as the bungalow to Sri Prem Nath by a deed of conveyance dated May 16, 1938. Thereafter, there were various partitions and settlements in the family of Sri Prem Nath with the details of which we are not concerned. It is sufficient to say that by December 24, 1971, the property came to be owned by seventeen co-owners.

3. Some time in 1970, an arrangement was entered into between the coowners (represented by one of them) and a concern known as Diwan Chand Builders under which the latter were authorised, on certain terms and conditions, to develop the property by constructing thereon a multi-storeyed building. Necessary sanctions were also obtained from the NDMC, the Chief Architect and the Land & Development Officer and a portion of the building was also handed over to the builders for this purpose.

4. On August 19, 1971, the builders formed a company, M/s. Diwan Chand Builders P. Ltd. (hereinafter referred to as “the construction company”). On February 24, 1972, the seventeen co-owners formed a company known as M/s. Ashoka Estate P. Ltd. (hereinafter referred to as “the Ashoka Company”). On March 1, 1972, an agreement was entered into between the seventeen co-owners and the construction company. By this agreement, the seventeen co-owners agreed to convey their respective interests in the property abovementioned to Ashoka Company in four stages in lieu whereof the Ashoka Company was to grant in their favour a perpetual, heritable and transferable licence in respect of 30 per cent, of the area of the superstructure to be put up on the plot of land by the construction company. The construction company was authorised to retain, let out or sell the balance of 70 per cent, of the constructed area. The co-owners had been paid Rs. 4,00,000 by the construction company and the total consideration for the four conveyance deeds that were to be executed by the co-owners was fixed at Rs. 18,00,000.

5. In pursuance of the above agreement, each of the seventeen coowners transferred ¼th of his undivided interest in the property in Ashoka Company by a separate conveyance deed dated March 27, 1972. This deed also contained an agreement to transfer the remaining three-fourths of the interest of the transferor in the property in three different stages. Three deeds of sale, each again in respect of one-fourth of the interest of the transferor, were executed by each co-owner on March 23, 1973, April 16, 1973, and July 30, 1974. The consideration for the entire transfer under all the documents put together was fixed, as mentioned above, at Rs. 18,00,000 and this was divided in each conveyance deed pro rata qua the interest of the person which was conveyed and also qua the actual ¼th interest that was conveyed by each of the documents.

6. On the above transactions, the Income-tax Officer came to the conclusion that there had been a “transfer” on March 27, 1972, by each of the co-owners of his interest in the property. According to him, therefore, the entire capital gains on the transfer of the interest of each of the sharers in the property had to be assessed in the assessment year 1972–73. This was the first aspect of the assessment. The second aspect of the assessment was that the Income-tax Officer did not agree that the full value of the consideration for which the property was sold was only Rs. 18,00,000. He found that a multi-storeyed building with twelve floors had been put up on the property and worked out the market value of 30 per cent, of its carpet area at Rs. 71,00,000. He worked out the proportionate consideration in respect of each of the transfers on this footing and he included the capital gains computed on this basis in the assessment for the assessment year 1972–73. He, however, also made a protective assessment having regard to the claim of the assessee that only ¼th of the interest of each of the assessees had been transferred in the assessment year 1972–73. Thus, in the case of Smt. Shakuntala Rajeshwar, he assessed Rs. 3,16,133 as the capital gain in the assessment year 1972–73. But he also assessed Rs. 76,596, Rs. 76,596 and Rs. 87,404, respectively, as capital gains, in the subsequent three assessment years.

7. On appeal, the Commissioner of Income-tax (Appeals) upheld the contention on behalf of the assessee that the transfer of interest in respect of each of the years was to the extent of only of ¼th of the interest belonging to each of the co-sharers. He was, therefore, of opinion that the capital gains should be assessed in each of the four years on this footing. He, however, agreed with the Income-tax Officer in principle regarding the consideration for the transfer. Only, he worked out the market value of 30 per cent, of the carpet area of the multi-storeyed building at Rs. 64,19,200 in place of Rs. 71,00,000 taken by the Income-tax Officer and he directed the reassessments to be made on the above basis.

8. From the orders of the Commissioner of Income-tax (Appeals), both the assessees and the Department preferred appeals to the Income-tax Appellate Tribunal. The Appellate Tribunal dealt with 20 of such appeals preferred by four of the parties before us, namely, Smt. Shakuntala Rajeshwar, Smt. Aruna Devi, Smt. Nirmala Rani and Shri Jatinder Nath by a common order dated July 7, 1980. In these cases, several points were in issue but so far as we are concerned, three of these points are relevant: (1) whether the capital gains in respect of the transaction in question were to be assessed in the assessment year 1972–73 or in the assessment years 1972–73 to 1975–76 and, if so, in what manner; (2) whether the assessees could claim that a payment of Rs. 1 lakh made to a tenant in respect of a portion of the property for vacating the same was an admissible deduction in computing the capital gains; and (3) the basis on which the full consideration for the transfer should be taken into account for purposes of determining the capital gains.

9. So far as the first contention is concerned, the Tribunal upheld the view taken by the Commissioner of Income-tax (Appeals). It pointed out that there could have been no transfer of any interest in the immovable property under the agreement dated March 1, 1972, as any transfer of interest in immovable property could arise only on the execution and registration of a sale deed. Having regard to the terms of the sale deeds dated March 27, 1972, March 23, 1973, April 16, 1973, and July 31, 1974, only one-fourth of each of the assessee's interest in the said property passed in each of the relevant previous years and capital gains was assessable on this footing in the assessment years 1972–73 to 1975–76. On the second question, the Tribunal held that as there was no dispute that the tenant vacated the premises on April 18, 1972, after he had received the payment of Rs. 1 lakh on October 4, 1971, before the sale took place on July 23, 1972, the sum of Rs. 1 lakh could not be treated as consideration for the sale and was allowable in the computation of the capital gains. So far as the third contention was concerned, the matter was disposed of in the following manner:

“In the appeals before us, Shri Ganeshan, the learned representative of the assessee, invited our attention to the order of the Commissioner of Income-tax (Appeals), Chandigarh, Camp—Panipat, dated January 16, 1979, in the case of Shri Rajeshwarnath, another co-owner, of this very property. In that order, the Commissioner of Income-tax (Appeals) had adopted the market value of the 30% carpet area earmarked for the co-owners by the builders at Rs. 42,50,000 as against the market value of Rs. 64,19,200 adopted by the Commissioner of Income-tax (Appeals), Delhi. Shri Ganeshan submitted that the order of the Commissioner of Income-tax (Appeals), Chandigarh, has been accepted by the Department and no appeal against the same has been filed. It was, therefore, urged that to cut short the matter, the assessee would be satisfied if the market value of Rs. 42,50,000 is adopted in this case as well. The learned departmental representative supported the order of the Commissioner of Income-tax (Appeals) but could not controvert the factual position that the Department has not filed any appeal against the order of the Commissioner of Income-tax (Appeals), Chandigarh, determining the market value at Rs. 42,50,000.

We have carefully gone through the orders of both the Commissioner of Income-tax (Appeals) mentioned above. The Commissioner of Income-tax (Appeals), Chandigarh, has adopted the market value of the said carpet area as follows:

Rs. First floor 11,448 sq. ft. @ 135 15,45,480 IInd floor 7,620 sq. ft. @ 135 10,28,700 IIIrd floor 10,444 sq. ft. @ 135 19,09,940 12th floor 3,928 sq. ft. @ 135 4,32,080 Storage Loft 3,160 sq. ft. @ 80 2, 52,800 Parking share (20 Nos.) @ 5,000 1,00,000 ————— 47,69,000 —————

The above market value was adopted on the basis of the actual sales of the carpet area of 24, Barakhamba Road. The Commissioner of Income-tax (Appeals), Chandigarh, accepted the assessee's contention that in view of the fact that the market value of the flats in 24, Barakhamba Road, New Delhi, was available, there was no justification for not adopting the same in the case of the assessee and resorting to the market value in the case of 24, Barakhamba Road, New Delhi, as done by the Income-tax Officer. The market value so worked out was further discounted by the assessee to Rs. 37,47,328 on the ground that if the instalments were to be paid in five years and if the compound interest rate was assumed to be 20%, the discount factor would be 100/12704 (i.e, 274) being the compound interest. The Commissioner of Income-tax (Appeals) found certain discrepancies in the working of the discount and taking into account the major and minor defects mentioned in this order, he estimated the market value at Rs. 42,50,000. We are in entire agreement with the conclusions and reasonings of the Commissioner of Income-tax (Appeals), Chandigarh, and would direct that the market value of the carpet area should be adopted at Rs. 42,50,000.”

10. This order, as already mentioned, was passed on July 7, 1980.

11. Subsequently, the assessees came to know that the concession made before the Tribunal and recorded in the above two paragraphs of the appellate order proceeded on the basis of a mistake. Actually, the order of the Commissioner of Income-tax (Appeals) at Chandigarh was the subject-matter of an appeal to the Tribunal at Chandigarh not by the Department but by the assessee. The Tribunal at Chandigarh had gone into the matter in detail and had arrived at the value of the consideration for the transfer at Rs. 18,00,000. When this came to the knowledge of the assessee, an application was made to the Tribunal under section 254(2) seeking a rectification of the original appellate order dated July 7, 1970. The Tribunal, by its order dated March 18, 1981, accepted the application. It was observed:

“The assessee had now pointed out that appeals were actually filed against the order of the Commissioner of Income-tax (Appeals), Chandigarh, in the case of the other co-sharer, Smt. Rajeshwar Nath, and the above concession was made by the authorised representative of the assessee under a bona fide mistake of fact. Copy of the order of the Chandigarh Bench of the Tribunal in the case of Rajeswar Nath deciding the appeals of the Department and the assessee dated November 17, 1980, had also been filed. The Chandigarh Bench has taken the value of 30% carpet area in the case of Rajeshwar Nath at Rs. 18 lakhs.

In the above circumstances, we are of the view that the concession was made by the authorised representative of the assessee under a bona fide mistake—the fact that no appeal had been filed against the order of the Commissioner of Income-tax (Appeals), Chandigarh, in the case of Shri Rajeshwar Nath. The correct factual position is that appeals were filed and the Chandigarh Bench decided the same, vide order dated November 17, 1980. It is, therefore, a case in which concession was made by the authorised representative under a bona fide mistake of fact and, consequently, there is a mistake apparent from the record with requires rectification.”

12. In consequence of the above, the Tribunal posted the original appeals for re-hearing and disposed of the matter again by an order dated September 18, 1981. After hearing both sides, the Tribunal agreed with the view taken by the Tribunal at Chandigarh and determined the value of the property for purposes of computation of capital gains at Rs. 18 lakhs instead of Rs. 42,50,000 which had been fixed originally as the market value on the basis of the “concession” made on behalf of the assessee.

13. There are thus three orders of the Appellate Tribunal with which the Department is aggrieved and we have before us applications filed under section 256(2) raising four questions said to be questions of law arising out of the three orders of the Tribunal. These applications have been filed after the applications preferred in the first instance to the Tribunal, under section 256(1), were rejected for reasons which it is not necessary to detail, at this stage. All the four questions arise only in the case of the applications preferred by Smt. Shakuntala Rajeshwar and the questions raised in the other cases are only some of these four questions. We indicate below the various applications and the questions, respectively, raised for consideration therein. The questions are as follows:

S. No. Question Assessee Case No. ITCs. Assessment year 1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the Income-tax Officer was not right in coming to the conclusion that there was a transfer of the whole property in the accounting period relevant to assessment year 1972–73? Smt. Shakuntala 120/82 1974–75 Rajeshwar 123/82 1973–74 125/82 1975–76 126/82 1972–73 137/82 1972–73 Jatinder Nath 139/82 1973–74 Smt. Aruna Devi 145/82 1972–73 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that a sum of Rs. 1 lakh received by the tenant is deductible under section 48 for the purpose of computing the capital gains? 147/82 1975–76 Smt. Nirmala 151/82 1972–73 Rani 152/82 1975–76 3. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the value of the property situated at 24, Barakhamba Road, New Delhi, should be taken at Rs. 18 lakhs for the purpose of the computation of capital gains by basing its Smt. Shakuntala 127/82 1975–76 Rajeshwar 128/82 1974–75 130/82 1973–74 131/82 1972–73 Jatinder Nath 133/82 1972–73 Smt. Aruna Devi 141/82 1975–76 142/82 1973–74 144/82 1972–73 Smt. Nirmala 150/82 1975–76 Rani 154/82 1972–73

S. No. Question Assessee Case No. ITCs. Assessment year judgment on the order of the ITAT, Chandigarh, in the case of the other co-owners of the said property? 4. Whether, On the facts and in the circumstances of the case, the Tribunal was justified in recalling part of its own order dated July 7, 1980, in so far as it relates to the market value of 24, Bara-khamba Road, New Delhi? Smt. Shakuntala 121/82 1973–74 Rajeshwar 122/82 1975–76 124/82 1974–75 129/82 1972–73 Jatinder Nath 132/82 1974–75 134/82 1975–76 135/82 1973–74 136/82 1972–73 Smt. Aruna Devi 138/82 1974–75 140/82 1973–74 143/82 1975–76 146/82 1972–73 Smt. Nirmala 148/82 1974–75 Rani 149/82 1973–74 153/82 1972–73 155/82 1975–76

14. In the case of Rabindra Nath (ITC Nos. 194-197 of 1982) and Virendra Nath (ITC No. 198 of 1982), the cross-appeals of the assessees and the Department were disposed of by a consolidated order dated July 19, 1982. Rabindra Nath has filed two sets of two applications, one each pertaining to the assessment years (1972–73 and 1975–76) and Virendra Nath has preferred ITC No. 198 of 1982, in relation to the assessment year 1975–76. These assessees have posed six questions for reference as follows:

“(i) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that for the purpose of working out the capital gain, the value of the property situated at 24, Barakhamba Road, New Delhi, should be taken at Rs. 18 lakhs?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that for the purpose of working out the capital gain, the value of the property situated at 24, Barakhamba Road, New Delhi, should be taken at Rs. 18 lakhs.

(iii) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the Income-tax Officer was not right in coming to the conclusion that there was a transfer of the whole property in the accounting period relevant to the assessment year 1972–73?

(iv) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that a sum of Rs. 1 lakh received from the tenant is deductible under section 48 for the purpose of computing the capital gain?

(v) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the Income-tax Officer was not right in coming to the conclusion that there was a transfer of the whole property in the accounting period relevant to assessment year 1972–73?

(vi) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that a sum of Rs. 1 lakh received from the tenant is deductible under section 48 for the purpose of computing the capital gain?”

15. These are substantially the same as the four questions set out in the other applications and we shall dispose of all the applications on the same footing.

16. It is very clear that questions Nos. 1 and 2 need not be referred to this court. So far as question No. 1 is concerned, it is absolutely clear that there can be a transfer of property only when the relevant sale deeds were executed and registered. On the terms of each sale deed, what was transferred was only one-fourth of the interest of the transferor. The entirety of the interest of each of the transferors was transferred in four portions in the four sale deeds which became effective in four different years. There is also no exchange of property as held by the Tribunal earlier to these dates. There is, therefore, no tenable ground at all for suggesting that capital gains in respect of the entire property can be taxed in only one of the assessment years, namely, assessment year 1972–73. The answer to this question is obvious, clear and self-evident. So we decline to call for a reference on this question.

17. So far as the second question is concerned, from the order of the Commissioner of Income-tax (Appeals), it is seen that a sum of Rs. 1 lakh was paid by the assessee to a tenant to persuade him to vacate the property in order to facilitate the development. If this be so, it is clear that the sum of Rs. 1 lakh will be an allowable deduction. There appears to be, however, some doubt regarding the facts. The finding of the Tribunal that the sum of Rs. 1 lakh could not form part of the consideration and never came to the assessees seems to suggest that the sum of Rs. 1 lakh had been paid by the purchasers to the tenant directly. But even this makes no difference. For, if the purchaser had paid Rs. 1 lakh to the tenant directly out of the consideration of Rs. 18,00,000, it still follows that the sum of Rs. 1 lakh could not be included as part of the income of the assessees and the Tribunal was clearly right in its conclusion that the sum Rs. 1 lakh has to be left out of account in computing the capital gains-There is no suggestion anywhere that the sum of Rs. 1 lakh was paid over and above the consideration of Rs. 18,00,000 mentioned in the document to the assessee. The answer given by the Tribunal to this question is, therefore, correct and no reference is justified on the facts and circumstances of the case.

18. Taking up the third question, we are of the opinion that this is a question of valuation and hence one of fact. The value of Rs. 71 lakhs taken by the Income-tax Officer and the value of Rs. 64 lakhs taken by the Commissioner of Income-tax (Appeals), in these appeals as well as the value of Rs. 42,50,000 taken by the Commissioner of Income-tax (Appeals) at Chandigarh and adopted by the Tribunal here in the first order represent their estimate of the market value of 30% of the constructed carpet area of the multi-storeyed building that was eventually put up on the land. It has been pointed out by the Tribunal that the true consideration for the transfer was not the market value which the property put up eventually could fetch but only the market value of the right, which the assessees got, to a conveyance of 30% of the carpet area as and when the structure came into existence. This consideration had been evaluated by the parties at Rs. 18 lakhs and it was for the Revenue to prove that its value, at that point of time, was not Rs. 18 lakhs but much more than that. According to the Tribunal, the value of Rs. 18 lakhs had not been shown to be an understatement or undervaluation of the future right which the assessees had thus bargained for. In addition to the above factor, the Tribunal (following the decision of the Chandigarh Bench of the Tribunal) has taken into account the following relevant circumstances:

(i) The market value on the basis of sales of flats which actually took place much later was Rs. 42,50,000;

(ii) The right to be evaluated was a contingent right in respect of a property to be put up in future;

(iii) The transfer was of an undivided fraction of one of seventeen co-owners of property;

(iv) The transferors were not the owners but only the lessees of the land; and

(v) Value of Rs. 18 lakhs was reasonable considering similar transactions in neighbouring properties.

19. In the circumstances, the finding of the Tribunal is purely one of fact and it is difficult to spell out a question of law therefrom.

20. We are of the opinion that the fourth question need not also be referred. Whether, in passing the original order, the Tribunal had made a mistake or not is normally a question of fact. But, even assuming that it is a question of law in this case as it may involve an interpretation of the Tribunal's order, we think that the answer to the question in this case is clear and self-evident.

21. Under section 254(2) of the Act, the Tribunal has the power to rectify any mistake apparent from the record before it. Counsel for the Department says that this requirement is not fulfilled for two reasons. Firstly, it is pointed out that when the appeals were originally heard, the representative of the assessee had referred to the order of the Commissioner of Income-tax at Chandigarh and the absence of any appeal by the Department therefrom and expressed his willingness to accept the value of Rs. 42,50,000. This was and is quite correct for, in fact, the Department had not filed any appeal. There was thus no mistake which vitiated the acquiescence of the counsel in that figure. Secondly, he says, even if there was any mistake, that was a mistake of the assessee's representative and not of the Tribunal. In fact, the Tribunal did not merely accept the statement of the representative but proceeded to consider independently the basis for the estimate of Rs. 42,50,000 before accepting it. In the circumstances, counsel urges, the Tribunal has actually reviewed its earlier order for which it has no power to do and this is a question of law which calls for reference.

22. There is an apparent plausibility about the argument urged on behalf of the Department but we think it cannot be accepted. A perusal of the orders of the Tribunal and a consideration of the circumstances in which the appeals were heard by the Tribunal will clearly show that what transpired was not really a concession or admission bat the inevitable acceptance of a situation under an erroneous impression and this error was not only on the part of the assessee's representative but also on the part of the Tribunal. It will be remembered that there were cross-appeals before the Tribunal, the assessees seeking a reduction, and the Department an enhancement, of the estimate of Rs. 61,00,000 adopted by the Commissioner of Income-tax (Appeals). The assessee's representative thought that the order of the Commissioner of Income-tax (Appeals) at Chandigarh had not been appealed against and his argument was that this figure which had become final in the case of the co-sharers should be taken in this case also. No doubt, in his statement, as extracted in the original order, the reference is only to the absence of an appeal by the Department but there can be no doubt—and this is how the Tribunal has also understood it—that the reference was to the finality of the conclusion in the co-sharers' cases. For, it is inconceivable that if he had been aware that appeals had been filed by the assessees against the orders of the Commissioner of Income-tax (Appeals) at Chandigarh, he would have been willing to accept the figure of Rs. 42,50,000. Clearly, the tenor of his argument was “the Commissioner of Income-tax (Chandigarh) has taken a figure of Rs. 42,50,000. The Department has also accepted this figure. It has become final. So I cannot object to the same figure being adopted here also.” The reference to the Department not having filed an appeal was to emphasise that, not having done that, the Department could not ask for the acceptance of Rs. 61,00,000 or its enhancement. The Tribunal has accepted the position —and, we think, correctly—that the earlier order was founded on a mistaken assumption on the part of all concerned, including the Tribunal, that the decision of the Commissioner of Income-tax (Appeals) at Chandigarh had become final, an assumption which is clearly wrong. It is no doubt true that the Tribunal has also attempted to indicate the reasonableness on the basis of Rs. 42,50,000 but this is only by way of support to their basic conclusion that the figure, which had become final in the co-sharers' case, should be adopted here also. We have no doubt in our minds that, while deciding the appeal originally, the Tribunal had based itself on the order of the Commissioner of Income-tax (Appeals), Chandigarh, on the assumption that it had become final. When that assumption, apparent from its appellate order and record, was found to be erroneous, the Tribunal was justified in invoking its powers under section 254(2) and in reconsidering: the issue afresh. For these reasons, we think that the answer to the fourth question is clear and self-evident and that, therefore, a reference is not called for. As already pointed out, the same is the position in I.T Cs. Nos. 194-198 of 1982, though the questions are somewhat differently worded.

23. In the result, all the 41 I.T.Cs are dismissed. But, in the circumstances, we direct the parties to bear their own costs.

24. Petitions dismissed.