Banda Mallesh, R.R. Dist, Hyderguda Village V. ACIT, Circle-8(1), Hyderabad

ITA 1014/HYD/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6127 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 28-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Capital asset
• Section: 54F; 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER S.NO. ITA NO. AY ASSESSEE RESPONDENT 1. 1010/H/13 2007-08 KONDE JANGAIAH YADAV, HYDERABAD. PAN BJSPK 7139J ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 8(1), HYDERABAD. 2. 1014/H/12 2007-08 BANDA MALLESH, RR DISTRICT. PAN ASAPB9736E -DO- 3. 927/H/12 2007-08 BANDA NIRMALA, RR DIST. PAN ASAPB9417C -DO- 4. 1811/H/13 2007-08 KONDE ANJAMMA, HYDERABAD. PAN AYWPK 0259K -DO- ASSESSEE BY : SHRI A.V. RAGHU RAM REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING 25-08-2016 DATE OF PRONOUNCEME NT 21-10-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: ALL THESE APPEALS ARE PERTAINING TO VARIOUS ASSESS EES DIRECTED AGAINST THE ORDERS OF CIT(A). AS IDENTICAL ISSUES ARE INVOLVED IN ALL THESE APPEALS, THEY WERE CLUBBED AND HEARD TOGETHER , THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. IN THE ABOVE FOUR APPEALS, APPEALS LISTED AT SL. NOS. 1, 2 & 3 ARE HAVING SIMILAR ISSUE, WHICH IS WHETHER THE LAND SOLD BY THE ASSESSEE IS COVERED U/S 2(14) OF THE ACT. 2 ITA NO. 1010/H/13 AND OTHERS OTHERS KONDE JANGAIAH AND OTHERS 3. DURING THE CURRENT YEAR ASSESSEE SOLD THE LAND W HICH IS SITUATED AT PEERAMCHERUVU, RAJENDRA NAGAR MANDAL, RANGA REDD Y DISTRICT. ALL THE ASSESSEES DID NOT FILE THE RETURN OF INCOME STA TING THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND AND, THEREFORE, NOT LIABLE FOR CAPITAL GAINS. THE MUTE QUESTION IN THESE APPEALS ARE, WHET HER THE AGRICULTURAL LAND SITUATED IN RAJENDRA NAGAR MUNICI PALITY, WHICH IS ADMITTEDLY NOT A NOTIFIED MUNICIPALITY, BUT, THE AB OVE SAID LAND IS SITUATED WITHIN THE RADIUS OF 8 KILOMETERS OF HYDER ABAD MUNICIPALITY CORPORATION. THEREFORE, IT IS A NOTIFIED AREA AS PE R SECTION 2(14) OF THE ACT. 4. AS PER THE EARLIER DECISION OF THE COORDINATE BE NCH OF THIS TRIBUNAL IN THE CASE OF SRINIVASA PANDIT (HUF) VS. ITO, [2010] 39 SOT 350, IT WAS HELD THAT THE PROPERTY SITUATED IN NON-NOTIFIED AREA, EVEN THOUGH, THE LAND IS WITHIN 8 KILOMETERS FROM T HE NOTIFIED AREA IS NOT A CAPITAL ASSET AS PER SECTION 2(14) OF THE ACT . IN THE MEANTIME, THE COORDINATE BENCH OF THIS TRIBUNAL HAS DEALT WIT H SIMILAR ISSUE AND TOOK AN OPPOSITE VIEW IN THE CASE OF SMT. GOUSIA BE GUM AND OTHERS IN ITA NOS. 1024 TO 1027/HYD/2011, VIDE ORDER DATED 16/01/2012. SUBSEQUENTLY, THE DEPARTMENT WENT TO HIGH COURT IN THE CASE OF SRINIVASA PANDIT(HUF) (SUPRA) AND IN THAT THE CASE, THE HONBLE HIGH COURT HAS OBSERVED AS UNDER: .THE LEARNED TRIBUNAL WHILE RENDERING THE DECISION HAS FOLLOWED THE DECISION OF AMRITSAR BENCH OF THE TRIB UNAL IN THE CASE OF DCIT VS. CAPITAL LOCAL AREA BANK LTD., REPO RTED IN [2009] 123 TTJ(ASR) 918. THERE IS NO STATEMENT IN THE APPE AL PAPERS THAT THE AFORESAID JUDGEMENT AND ORDER OF THE AMRIT SAR BENCH OF THE TRIBUNAL HAS CHALLENGED OR UPSET. THEREFORE, WE CANNOT ADMIT THE APPEAL TO UNSETTLE THE SETTLED ISSUE. THE APPEAL IS ACCORDINGLY DISMISSED. NO ORDER AS T O COSTS. FROM THE ABOVE OBSERVATIONS, THE HONBLE HIGH COURT HAS NOT DISCUSSED ANYTHING ON THE MERITS, BUT, IT HAS EXPRE SSED THAT THERE IS NO STATEMENT IN THE APPEAL PAPERS THAT THE AFORESAI D JUDGEMENT AND ORDER OF THE AMRITSAR BENCH OF THE TRIBUNAL HAS CHA LLENGED OR UPSET. 3 ITA NO. 1010/H/13 AND OTHERS OTHERS KONDE JANGAIAH AND OTHERS THEREFORE, WE CANNOT ADMIT THE APPEAL TO UNSETTLE T HE SETTLED ISSUE. SINCE THE HONBLE HIGH COURT HAS GIVEN ITS DECISION IN FAVOUR OF THE ASSESSEE, APPLYING THE PRINCIPLE OF DOCTRINE OF MER GER, THE DECISION OF TRIBUNAL IN THE CASE OF SRINIVASA PANDIT (HUF) (SUP RA) WILL MERGE IN THE HIGHCOURTS ORDER. 5. CONSIDERING THE ABOVE DEVELOPMENT, IN OUR VIEW, THE DECISION OF THE TRIBUNAL IN THE CASE OF SRINIVASA PANDIT (HUF) (SUPRA) HOLDS GOOD AND APPLYING THE RATIO LAID DOWN IN THAT CASE, THE APPEALS UNDER CONSIDERATION ARE ALLOWED. SINCE WE ALLOWED THE MAI N GROUNDS/GRIEVANCE OF THE ASSESSEES, THE OTHER GROUN DS RAISED BY THE ASSESSEES ARE ACADEMIC IN NATURE. ACCORDINGLY, WE D ISMISS THE OTHER GROUNDS. 6. IN THE RESULT, APPEALS OF THE ASSESSEES, NAMELY, KONDE JANGAIAH YADAV, BANDA MALLESH AND BANDA NIRMALA ARE PARTLY ALLOWED. ITA NO. 1811/H/13 IN CASE OF KONDE ANJAMMA 7. GROUND NOS. 1 & 6 ARE GENERAL IN NATURE. GROUND NO. 5 HAS NOT PRESSED, THEREFORE, DISMISSED AS NOT PRESSED. HENCE , THE GROUNDS ARE LEFT FOR ADJUDICATION ARE GROUND NOS. 2, 3 & 4. 8. IN GROUND NO. 2, THE GRIEVANCE OF THE ASSESSEE I S THAT THE AO HAS REJECTED THE CLAIM OF ASSESSEE U/S 54F, EVEN TH OUGH, SHE HAS FILED ALL THE RELEVANT INFORMATION FOR CONSTRUCTION OF THE HOUSE. THE AO HAS REJECTED THE CLAIM OF THE ASSESSEE MAINLY ON TH E GROUND THAT AS PER SECTION 54F(4), THE ASSESSEE IS SUPPOSED TO DEP OSIT THE NET CONSIDERATION IN A BANK OR INSTITUTION BEFORE FILIN G THE RETURN OF INCOME IN CASE HE/SHE FAILS TO UTILIZE THE SUCH NET CONSID ERATION BEFORE FILING THE RETURN OF INCOME. THE ASSESSEE HAS, IN FACT, UT ILIZED AN AMOUNT OF RS. 19.08 LAKHS FOR CONSTRUCTION OF THE HOUSE AFTER FILING THE RETURN OF 4 ITA NO. 1010/H/13 AND OTHERS OTHERS KONDE JANGAIAH AND OTHERS INCOME WITHOUT MAKING ANY DEPOSIT IN A BANK. SINCE THE ASSESSEE HAS UTILIZED THE NET CONSIDERATION WITHOUT MAKING A DEP OSIT IN A BANK, IN OUR VIEW, SECTION 54F IS A BENEFICIAL PROVISION AND ALSO ASSESSEE HAS NOT FILED RETURN OF INCOME CONSIDERING THE ABOVE TR ANSACTION AS EXEMPT FROM CAPITAL GAINS. CONSIDERING THE SITUATIO N OF THE ASSESSEE, WE FIND IT PROPER TO REMIT THIS ISSUE TO THE FILE O F THE AO TO DETERMINE WHETHER THE ASSESSEE HAS UTILIZED THE AMOUNT AS CLA IM IN CONSTRUCTION OF THE HOUSE AND, IF SO, THE SAME SHOULD BE ALLOWED AS DEDUCTION U/S 54F. 9. WITH REGARD TO INVESTMENT IN PURCHASE OF LAND AN D CONSTRUCTION OF COMPOUND WALL U/S 54F, THE AO IS RIGHT IN DENYIN G DEDUCTION U/S 54F, BUT, THE DEDUCTION CAN BE ALLOWED U/S 54B. WE REMIT THIS ISSUE ALSO TO THE FILE OF THE AO TO DETERMINE WHETHER THE LAND PURCHASED BY THE ASSESSEE IS AGRICULTURAL, IF IT IS AGRICULTURAL LAND, DEDUCTION CAN BE ALLOWED U/S 54B. IT IS THE DUTY OF THE AO TO HELP T HE ASSESSEE TO UNDERSTAND THE PROVISIONS OF LAW PROPERLY. 10. GROUND NO. 3 IS IN RESPECT OF AGRICULTURAL DEVE LOPMENT EXPENSES AMOUNTING TO RS. 6,50,000/-. THE ASSESSEE CLAIMED THAT SHE HAS INCURRED THIS EXPENDITURE ON DEVELOPMENT AC TIVITIES, FOR WHICH SHE HAS NOT FILED ANY INFORMATION BEFORE THE AO. AO HAS REJECTED THE SAID EXPENDITURE AS NO INFORMATION FILED BEFORE HIM WITH REGARD TO THE SAID EXPENDITURE. IN OUR CONSIDERED VIEW, THE ASSES SEE HAS INCURRED THE EXPENDITURE ON DEVELOPMENT ACTIVITIES, THEREFOR E, WE DIRECT THE AO TO DETERMINE THE DEVELOPMENT EXPENDITURE INCURRED B Y THE ASSESSEE AND ACCORDINGLY ALLOW AFTER VERIFICATION AS PER LAW . 11. IN GROUND NO. 4, THE ASSESSEE HAS CLAIMED DEDUC TION OF RS. 6,22,000/- CONSISTING OF THREE PAYMENTS, I.E. RS. 1 ,50,000/- PAID AS BROKERAGE, RS. 1,72,000/- PAID AS LEGAL EXPENSES AN D RS. 3 LAKH PAID TO HER DAUGHTERS. 5 ITA NO. 1010/H/13 AND OTHERS OTHERS KONDE JANGAIAH AND OTHERS 12. ASSESSEE HAS SOLD THE PROPERTY AND THERE IS A C HANCE THAT ASSESSEE MIGHT HAVE INCURRED SOME EXPENDITURE ON BR OKERAGE AND LEGAL EXPENSES. ASSESSEE HAS PAID RS. 1,50,000/- AS BROKERAGE, WHICH IS EQUAL TO 0.5% OF THE SALE CONSIDERATION, W HICH IS NOMINAL. WITH REGARD TO LEGAL EXPENSES, ASSESSEE MIGHT HAVE INCURRED CERTAIN EXPENDITURE ON LEGAL. HENCE, WE REMIT THESE TWO ISS UES TO THE FILE OF THE AO TO DETERMINE THE REASONABLE EXPENDITURE AND ALLOW IN ACCORDANCE WITH LAW. 13. WITH REGARD TO RS. 3 LAKHS PAID TO THE DAUGHTER S OF THE ASSESSEE, WE FIND IT INAPPROPRIATE TO CLAIM THE SAM E AS DEDUCTION AND CANNOT BE CONSIDERED AS PROPER PAYMENT AND CANNOT B E CLAIMED AS EXPENDITURE ON SALE OF LAND. ACCORDINGLY, THIS EXPE NDITURE CANNOT BE ALLOWED. THUS, GROUND NO. 4 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 15. TO SUM UP, APPEALS IN ITA NOS. 1010, 1014/HYD/1 3 AND 927/H/12 ARE PARTLY ALLOWED AND APPEAL IN ITA NO. 1 811/HYD/13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2016. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN ) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED: 21 ST OCTOBER, 2016 KV 6 ITA NO. 1010/H/13 AND OTHERS OTHERS KONDE JANGAIAH AND OTHERS COPY TO:- 1. BANDA NIRMALA C/O B. NARSING RAO & CO., CAS., PLOT NO. 554, ROAD NO. 92, JUBILEE HILLS, HYDERABAD 500 096. 2. KONDA JANGAIAH YADAV 3. BANDA MALLESH 4. KONDA ANJAMMA 5. ACIT, CIRCLE 8(1), HYDERABAD. 10. CIT(A) III, HYDERABAD 11 CIT II, HYDERABAD 12. DR, ITAT, HYDERABAD ` 13. GUARD FILE