M.Naasaymma, Visakhapatnam V. THE ITO , WARD - 1(1), Visakhapatnam

CO 157/VIZ/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9498 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 13-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KOMALI KRISHNA
• Keywords: Capital asset
• Section: 2(14)

Judgement Text

ITA NOS.355/VIZAG/2012 SRI MANCHUKONDA SHYAM, VSKP ITA NO.423/VIZAG/2012 NIRMALA JAIN, VSKP ITA NO.620/VIZAG/2013 MANCHUKONDA NARASAYAMMA, VSKP IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.355/VIZAG/2012 ASSESSMENT YEAR : 2007-08 ACIT CIRCLE-1(1) VISAKHAPATNAM VS. MANCHUKONDA SHYAM VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AFQPM 0217A ITA NO.423/VIZAG/2012 ASSESSMENT YEAR : 2007-08 ACIT CIRCLE-1(1) VISAKHAPATNAM VS. NIRMALA JAIN VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AALPJ 9479K I TA NO.620/VIZAG/2013 ASSESSMENT YEAR : 2007-08 ITO WARD-1(1) VISAKHAPATNAM VS. MANCHUKONDA NARASAYAMMA VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AAHPN 8411D CO NO.157/VIZAG/2013 ASSESSMENT YEAR : 2007-08 MANCHUKONDA NARASAYAMMA VISAKHAPATNAM VS. ITO WARD-1(1) VISAKHAPATNAM (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SMT. KOMALI KRISHNA, ADDL. CIT DATE OF HEARING : 04.03.2014 DATE OF PRONOUNCEMENT : 07.03.2014 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:- THESE ARE THREE APPEALS OF THE DEPARTMENT IN CASE OF THREE DIFFERENT ASSESSEES AGAINST SEPARATE ORDERS OF CIT(A), VISAKH APATNAM PERTAINING TO THE ASSESSMENT YEAR 2007-08. THERE IS ALSO A CO BY ONE OF THE ASSESSEES. THE ONLY COMMON ISSUE IN ALL THE APPEALS OF THE DEPARTM ENT IS WITH REGARD TO THE CIT(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ITA NOS.355/VIZAG/2012 SRI MANCHUKONDA SHYAM, VSKP ITA NO.423/VIZAG/2012 NIRMALA JAIN, VSKP ITA NO.620/VIZAG/2013 MANCHUKONDA NARASAYAMMA, VSKP 2 CAPITAL GAIN ON SALE OF AGRICULTURAL LAND. SINCE F ACTS ARE IDENTICAL IN ALL THE APPEALS, WE WILL DEAL WITH THE FACTS AS INVOLVED IN ITA NO.620/VIZAG/2013. 2. BRIEFLY, THE FACTS ARE THE ASSESSEE AN INDIVIDUA L FILED HER RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR DECLARING T OTAL INCOME OF RS.15,07,846/-. THE RETURN OF INCOME WAS INITIALLY PROCESSED U/S 143(1) OF THE INCOME-TAX ACT. DURING RE-ASSESSMENT PROCEEDIN G THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE ALONG WITH 6 OTHER PERSON S HAD PURCHASED 27.02 ACRES OF LAND FOR A TOTAL CONSIDERATION OF RS.22,04 ,500/-. THE SAID LAND OF 27.02 ACRES WERE SOLD BY THE ASSESSEE AND OTHER CO- OWNERS TO M/S. RAHUL AND BINDU PROPERTY DEVELOPERS PVT. LTD. FOR A CONSI DERATION OF RS.5.60 CRORES I.E. @ RS.20,71,772/- PER ACRE DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE. THE ASSESSEE FOR HE R 1/8 TH SHARE OF LAND RECEIVED AN AMOUNT OF RS.70 LAKHS TOWARDS HER SHARE OF SALE CONSIDERATION. HOWEVER, THE ASSESSEE CLAIMED THE AMOUNT AS EXEMPT ON THE GROUND THAT THE LAND SOLD WAS AGRICULTURAL LAND. THE ASSESSING OFF ICER IN COURSE OF ENQUIRY CONDUCTED WITH MRO ACHUTAPURAM OBTAINED INFORMATION AS PER WHICH THE ENTIRE LAND WAS KEPT VACANT AND THE LAND OWNERS HAV E ALSO NOT PAID LAND REVENUE TAX FROM FINANCIAL YEAR 2004-05 TO FINANCIA L YEAR 2007-08. THE AO WAS ALSO INFORMED THAT THERE WAS NO CULTIVATION IN THE SAID LAND SINCE 2004. THE ASSESSING OFFICER THEREFORE WAS OF THE VIEW THA T THE LAND WHICH WAS PURCHASED IN FEBRUARY, 2006 AND SOLD IN NOVEMBER, 2 006 AT AN ASTRONOMICAL PRICE OF RS.20.71 LAKHS PER ACRE CANNOT BE CONSIDER ED AS AGRICULTURAL LAND. THOUGH, IN COURSE OF THE ASSESSMENT PROCEEDING, THE ASSESSEE SUBMITTED THAT THE LAND IS AGRICULTURAL AND AS THE SAME IS BEYOND 8 KMS. FROM THE MUNICIPAL LIMIT, HENCE, WILL NOT COME UNDER THE DEFINITION OF CAPITAL ASSET U/S 2(14) OF THE ACT. THE ASSESSING OFFICER HOWEVER DID NOT ACC EPT THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO COMPUTE CAPITAL GAIN ON T HE SALE CONSIDERATION RECEIVED BY THE ASSESSEE ON SALE OF LAND. 3. BEING AGGRIEVED OF THE ASSESSMENT ORDER SO PASSE D, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). ITA NOS.355/VIZAG/2012 SRI MANCHUKONDA SHYAM, VSKP ITA NO.423/VIZAG/2012 NIRMALA JAIN, VSKP ITA NO.620/VIZAG/2013 MANCHUKONDA NARASAYAMMA, VSKP 3 THE CIT(A) FOLLOWING THE ORDER PASSED BY HIM IN CAS E OF ONE OF THE CO-OWNER SHRI SURESH KUMAR JAIN ALLOWED THE APPEAL OF THE AS SESSEE BY HOLDING THAT THE LAND SOLD IS IN THE NATURE OF AGRICULTURAL LAND , HENCE, CANNOT BE CONSIDERED TO BE A CAPITAL ASSET IN TERMS OF SECTIO N 2(14) OF THE ACT. 4. BEING AGGRIEVED OF THE AFORESAID ORDER OF THE CI T(A), THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD. THE LD. A.R. AS WELL AS LD. D.R. HAVE SUBMITTED BEFORE US THAT THE ISSUE IN THESE APPEALS ARE IDENTICAL TO THE ISSUE DECIDED IN DEPAR TMENTS APPEAL IN CASE OF SURESH KUMAR JAIN IN ITA NO.349/VIZAG/2011. IT IS A FACT, THAT IN CASE OF SURESH KUMAR JAIN IN ITA NO.349/VIZAG/2011, THE TRI BUNAL HAS DISMISSED THE APPEAL OF THE DEPARTMENT BY HOLDING AS UNDER: 7. HAVING CONSIDERED THE SUBMISSIONS OF THE PARTIES IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS AND FACTS AND MATERIALS ON RECORD, WE ARE OF THE VIEW THAT THE CONCLUSION DRAWN BY THE CIT(A) IS WEL L FOUNDED AND DO NOT CALL FOR ANY INTERFERENCE. IT IS NOT DISPUTED THAT THE L AND IN QUESTION IS 18 KMS. AWAY FROM THE BOUNDARY OF THE NEAREST MUNICIPALITY. IT IS ALSO A FACT ON RECORD THAT IN THE LAND REVENUE RECORDS, THE NATURE OF LAND IS RECORDED AS AGRICULTURAL LAND. THE ASSESSEE HAS ALSO NOT APPLI ED FOR CONVERSION OF THE LAND TO NON AGRICULTURAL USE. NO DEVELOPMENT ACTIV ITY HAS ALSO BEEN UNDERTAKEN BY THE ASSESSEE ON THE LAND. NEITHER TH ERE IS ANY DEVELOPMENT ACTIVITIES IN THE SURROUNDING LAND WHICH HAS BEEN B ROUGHT ON RECORD BY THE ASSESSING OFFICER. ONLY BECAUSE THE ASSESSEE HAS S OLD THE LAND AFTER A GAP OF 9 MONTHS OR THE FACT THAT IT IS SOLD FOR A HIGH PRI CE WOULD NOT CHANGE THE NATURE AND CHARACTER OF THE LAND. IT IS ALSO NOT R ELEVANT THAT THE LAND WOULD BE UTILIZED FOR NON-BUSINESS PURPOSE IN THE FUTURE. WHAT IS RELEVANT IS NATURE AND CHARACTER OF LAND WHEN IT IS SOLD. AS HAS BEEN ELABORATELY DISCUSSED BY THE CIT(A), THERE ARE ENOUGH MATERIAL ON RECORD WHI CH ARE INDICATIVE OF THE FACT THAT THE NATURE AND CHARACTER OF LAND AT THE T IME OF PURCHASE BY THE ASSESSEE AS WELL AS AT THE TIME OF SALE IS THE SAME I.E. AGRICULTURAL LAND. THE REASON SHOWN BY THE ASSESSEE FOR SALE OF THE PROPER TY AFTER 9 MONTHS OF PURCHASE ALSO CANNOT BE SAID TO BE NOT BELIEVABLE. SIMILARLY, IT IS ALSO A FACT THAT INITIALLY THE ASSESSEE HAD NOT ENTERED INTO TH E TRANSACTION. ONLY AFTER ONE OF THE CO-OWNERS EXPRESSED HIS INTENTION TO SEL L OFF HIS SHARE OF LAND, THE ASSESSEES CAME FORWARD TO PURCHASE THE LAND SINCE T HE REST OF THE PORTIONS WERE PURCHASED BY THE FAMILY MEMBERS OF THE ASSESSE ES OR CLOSE RELATIVES AND THEY DID NOT WANT ANY STRANGER TO PURCHASE A P ORTION OF THE PROPERTY. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AN D CIRCUMSTANCES OF THE CASE, AND APPLYING THE TESTS LAID DOWN BY THE HONBLE SUP REME COURT IN CASE OF SHARIFABIBI MOHD. IBRAHIM VS. CIT (SUPRA), WE ARE OF THE VIEW THAT THE CIT(A) ITA NOS.355/VIZAG/2012 SRI MANCHUKONDA SHYAM, VSKP ITA NO.423/VIZAG/2012 NIRMALA JAIN, VSKP ITA NO.620/VIZAG/2013 MANCHUKONDA NARASAYAMMA, VSKP 4 WAS JUSTIFIED IN ACCEPTING THE ASSESSEES CONTENTIO N THAT THE LAND BEING AN AGRICULTURAL LAND CANNOT BE SUBJECT TO CAPITAL GAIN S TAX. SO FAR AS THE ADDITIONAL GROUND RAISED BY THE DEPARTMENT WITH REG ARD TO THE CIT(A)S OBSERVATION AS TO WHETHER THE INCOME IS TO BE TREAT ED UNDER THE HEAD BUSINESS OR CAPITAL GAINS, IN OUR VIEW, THE ISS UE RAISED IS TOTALLY IRRELEVANT CONSIDERING THE FACT THAT THE ASSESSING OFFICER THO UGH INITIALLY HAD OBSERVED THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE I S ADVENTURE IN THE NATURE OF TRADE BUT ULTIMATELY TREATED IT AS INVESTMENT BY BRINGING THE SALE CONSIDERATION TO TAX AS SHORT TERM CAPITAL GAIN. T HAT BEING THE CASE, THE GROUND RAISED BY THE DEPARTMENT DESERVES TO BE DISM ISSED. 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED. 6. ISSUE IN THE PRESENT APPEAL BEING MATERIALLY IDEN TICAL TO THE ISSUE DECIDED IN ITA NO.349/VIZAG/2011, FOLLOWING THE DEC ISION THEREIN, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS RAI SED BY THE DEPARTMENT. CO NO.157/VIZAG/2013: 7. THE CROSS OBJECTION OF THE ASSESSEE IS ONLY SUPP ORTING THE ORDER OF THE CIT(A). CONSIDERING THE FACT THAT WE HAVE UPHELD T HE ORDER OF THE CIT(A), THE CROSS OBJECTION HAS BECOME INFRUCTUOUS. HENCE, IS DISMISSED AS SUCH. ITA NOS.423/VIZAG/2012 & 355/VIZAG/2012: 8. SINCE ISSUE IN THESE TWO APPEALS ARE ALSO IDENTI CAL TO THE ISSUE DECIDED IN ITA NO.620VIZAG/2013, FOLLOWING OUR FINDING THER EIN, WE UPHOLD THE ORDER OF THE CIT(A) BY DISMISSING THE GROUNDS RAISED. 9. IN THE RESULT, ALL THE APPEALS OF THE DEPARTMENT AS WELL AS ASSESSEES CO ARE DISMISSED . PRONOUNCED IN THE OPEN COURT ON 7 TH MAR14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 7 TH MARCH, 2014 ITA NOS.355/VIZAG/2012 SRI MANCHUKONDA SHYAM, VSKP ITA NO.423/VIZAG/2012 NIRMALA JAIN, VSKP ITA NO.620/VIZAG/2013 MANCHUKONDA NARASAYAMMA, VSKP 5 COPY TO 1 SRI MANCHUKONDA SHYAM, D.NO.25-8-45, MAIN ROAD, V ISAKHAPATNAM. 2 NIRMALA JAIN, D.NO.18-95-3/12, FLAT NO.301, SRI S AMBHAVA TOWERS, MAHARANIPETA, VISAKHAPATNAM 3 MANCHUKONDA NARASAYAMMA, D.NO.49-20-02/1, LALITHA NAGAR, VISAKHAPATNAM 4 ACIT CIRCLE-1(1), VISAKHAPATNAM 5 ITO WARD-1(1), VISAKHAPATNAM 6 THE CIT, 7 THE CIT(A), 8 THE DR, ITAT, VISAKHAPATNAM. 9 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM