The main legal point established is that the applicability of Section 45(3) of the Income Tax Act depends on whether the transfer is of a capital asset, and the revaluation of assets must be justified by business needs and not for tax avoidance.

JUDGMENT

1. These three appeals filed by the revenue under section 260 a of the Income Tax act, 1961 (act of brevity) are directed against three separate orders the details of which are as follows:-

(i) ITaT 164 of 2017 has been filed challenging the order dated 16.11.2016 passed by the Income Tax appellate Tribunal 'B' Bench Calcutta, (tribunal) in ITa No. 2270/Kol/2013 for the assessment Year 2008-09.

(ii) ITaT No. 239 of 2017 has been filed challenging the order dated 15.03.2017 passed by the Income Tax appellate Tribunal 'C' Bench Calcutta, (tribunal) in ITa No. 2260/Kol/2013 for the assessment Year 2008-09.

(iii) ITaT No. 250 of 2017 has been filed challenging the order dated 19.10.2016 passed by the Income Tax appellate Tribunal 'a' Bench Calcutta, (tribunal) in ITa No. 2269/Kol/2013 for the assessment Year 2008-09.

2. all the three appeals were heard together as the issues arising in all the three appeals were identical though the assessee were different companies. Furthermore, the tribunal followed the decision in ITa No. 2269/Kol/2013, (impugned in ITaT No. 250 of 2017), in the other two appeals and therefore, the appeals were taken up together.

3. The revenue has raised the following substantial questions of law for consideration:-

(a) Whether on the facts and in the circumstances of the case the Learned Tribunal, erred in law in upholding the order of the CIT (appeals) in deleting the Short Term Capital Gain of Rs. 96,37,85,635/- in contravention to the provision of Section 45(3) of Income Tax act, 1961 without considering the fact that in this case the capital gain arose from transfer of land to the partnership firm by way of capital contribution as the assets was converted to Fixed Capital asset by the partnership firm on March 31, 2008?

(b) Whether on the facts and in the circumstances of the case the Learned Tribunal, erred in law in ignoring the sham arrangement between the ground concerned wherein the nomenclature of the impugned asset was intentionally shown as stock-in-trade and undervalued to escape the provision of Section 45(3) of Income Tax act, 1961 whereas it is evident from the audited accounts of the year that the asset taken over by the firm was nothing but a capital asset?

(c) Whether on the facts and in the circumstances of the case the Learned Tribunal, erred in law in deleting the revaluation profit of Rs. 37,03,36,187/- although no tax was paid either by assessee or the partnership firm on the said profit.?

(d) Whether on the facts and in the circumstances of the case conclusion arrived at by the Learned Tribunal in dismissing the appeal of the revenue, is perverse?

4. The substantial question of law raised by the revenue in ITaT No. 164 of 2017 is as follows:-

(a) Whether on the facts and in the circumstances of the case the Learned Tribunal was justified in law to upheld the order of the CIT(a) by quashing the notice issued under Section 148 of the said act;

(b) Whether on the facts and in the circumstances of the case the Learned Tribunal was justified in law to delete the additions made by the assessing Officer on account of revaluation profit of Rs. 37,03,36,187/- despite the fact that no tax was paid either by the assessee or the partnership firm on the said profit;

(c) Whether on the facts and in the circumstances of the case the Learned Tribunal was justified in law to delete short term capital gain to the tune of Rs. 96,85,635/- in contravention to the provisions of Section 45(3) of the said act despite the fact that the capital gain arose from the transfer of land to the partnership firm by way of capital contribution as the asset was converted to fixed capital assets of the partnership from 31.03.2008.

5. In ITaT No. 239 of 2017 the following substantial questions of law have been raised for consideration:-

(a) Whether on the facts and in the circumstances of the case the Learned Tribunal was justified in law to quash the notice issued under Section 148 of the said act holding, inter-alia, that the