ITO, Pune V. Shri Pravin Babubhai Shah, Pune

ITA 1047/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56565 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 14-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Capital asset; Benefit of exemption

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 1047/PN/2010 (ASSTT. YEAR: 2006-07) INCOME TAX OFFICER, ... APPELLANT WARD 8(4), AKURDI, PUNE V. SHRI. PRAVIN BABUBHAI SHAH RESPONDENT AT POST CHAKAN TALUKA KHED, PUNE-410501 PAN : AAKNPS1700Q APPELLANT BY : MS. ANN KAPTHUAMA RESPONDENT BY : NONE DATE OF HEARING :14.11.11 DATE OF PRONOUNCEMENT: .11.11 ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER RAISING THE ISSUE AS TO WHETHER LD CIT(A) HAD ERRED IN ALLOWING EXEMPTION U/S. 10(37) TO THE ASSESSEE WITHOUT ASCERTAINING THE APPLICABILITY OF SUB-SECTI ON (II) AND (IV) OF SECTION 10(37) TO THE ASSETS ON WHICH EXEMPTION WAS CLAIMED BY THE AS SESSEE. THE LD D.R. HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER O N THE ISSUE. 2. RELEVANT FACTS ARE THAT THE A.O DISALLOWED THE C LAIMED EXEMPTION U/S. 10(37) OF THE ACT ON THE BASIS THAT THE LAND BELONGING TO THE ASSESSEE WHICH WAS COMPULSORILY ACQUIRED WAS LOCATED WITHIN 8 KMS FROM THE BOUNDARY OF THE PUNE MUNICIPAL CORPORATION. THE LD CIT(A) HAS, HOWEVER, GIVEN RELIEF BY ALLOWING THE CLAIMED EXEMPTION ON THE BASIS OF PROPER INTERPRETA TION OF SECTION 10(37) OF THE ACT. 3. HAVING GONE THROUGH THE ORDERS OF THE LOWER AUTH ORITIES, WE FIND THAT THE CONTENTION OF THE ASSESSEE BEFORE LD CIT(A) REMAINE D THAT THE AGRICULTURAL LAND AT ITA . NO 1047/PN/2010 SHRI PRAVIN BABUBHAI SHAH. A.Y. 2006-07 PAGE OF 3 2 GAT NO. 199, KHARABWADI, TAL. RAJGURUNAGAR, DIST. P UNE, OWNED BY THE ASSESSEE, WAS COMPULSORILY ACQUIRED BY MAHARASHTRA STATE GOVE RNMENT FOR MIDC AGAINST PAYMENT OF COMPENSATION TO THE TUNE OF RS. 21,62,54 1/-. IT WAS CONTENDED THAT THE PURPOSE OF EXEMPTION PROVIDED U/S. 10(37) IS TO EXE MPT CAPITAL GAIN ON COMPULSORY ACQUISITION OF AGRICULTURAL LAND FALLING UNDER THE DEFINITION OF CAPITAL ASSET AND OBSERVATION OF THE A.O THAT FOR EXEMPTION UNDER TH E SAID PROVISION, LAND SHOULD BE OUTSIDE THE 8 KMS. LIMIT OF MUNICIPAL CORPORATION I S INCORRECT. IT WAS FURTHER SUBMITTED THAT THE LAND SITUATED OUTSIDE THE LIMIT OF 8 KMS. FROM BOUNDARIES OF THE MUNICIPALITY ARE NOT CAPITAL ASSET AT ALL AND CONSE QUENTLY DO NOT ATTRACT CAPITAL GAINS WHEREAS SECTION 10(37) WAS INSERTED TO SPECIFICALLY EXCLUDE AGRICULTURAL LAND WHICH ARE COVERED UNDER THE DEFINITION OF CAPITAL ASSET I .E. LAND WHICH IS WITHIN THE LIMIT OF 8 KMS. FROM THE MUNICIPAL LIMITS. DISCUSSING THE CASES OF THE PARTY, THE LD CIT(A) HAS COME TO THE FOLLOWING CONCLUSION VIDE PARA NOS. 9 & 10 OF ITS ORDER, REPRODUCED HEREUNDER FOR A READY REFERENCE : 9. I HAVE GIVEN CAREFUL CONSIDERATION TO THE MATTE R UNDER DISPUTE. IN MY VIEW THE LEARNED AO HAS MISREAD THE PROVISION OF S ECTION 10(37). I AM IN AGREEMENT WITH THE LEARNED A.R. OF THE APPELLANT A S REGARDS THE TRUE MEANING AND PURPOSE OF THE SAID PROVISION. UNDER SECTION 10(37), CAPITAL GAIN ARISING TO AN INDIVIDUAL OR AN HUF ON TRANSFER BY WAY OF COMPULSORY ACQUISITION OF URBAN AGRICULTURAL LAND IS NOT CHARG EABLE TO TAX FROM THE ASSESSMENT YEAR 2005-06 IF SUCH COMPENSATION IS REC EIVED AFTER MARCH 31, 2004 AND THE AGRICULTURAL LAND WAS USED BY THE ASSE SSEE (OR BY HIS PARENTS) FOR AGRICULTURAL PURPOSES DURING TWO YEARS IMMEDIAT ELY PRIOR TO THE TRANSFER. THAT, IN SHORT, IS THE IMPORT OF THE SAID PROVISION OF THE ACT. HOWEVER THE AO DENIED THE BENEFIT OF EXEMPTION TO THE APPELLANT IN THIS CASE BASED ONLY ON THE FACT THAT THE LAND IS LOCATED WITHIN THE 8 KM L IMIT, WHICH FACT WAS NEITHER IN DISPUTE, NOR WAS IT IN ANY WAY A DISQUALIFICATIO N FOR CLAIMING THE BENEFIT OF THE SAID PROVISION. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LEARNED A.R. OF THE APPELLANT SUBMITTED COPIES OF THE NOTIC E OF COMPULSORY ACQUISITION AND TALATHIS CERTIFICATE IN EVIDENCE OF USE OF THE LAND FOR PURPOSES OF AGRICULTURE, WHICH ALSO SHOWS THE APPELLANT TO BE P ART OWNER OF THE SAID PIECE OF AGRICULTURAL LAND. ITA . NO 1047/PN/2010 SHRI PRAVIN BABUBHAI SHAH. A.Y. 2006-07 PAGE OF 3 3 10. THUS, UPON CAREFUL CONSIDERATION OF THE FACTUAL AND LEGAL POSITION, I AM OF THE VIEW THAT DENIAL OF THE BENEFIT OF THE SECTI ON 10(37) TO THE APPELLANT IN THIS CASE WAS BASED ON A WRONG READING OF THE RELEV ANT LEGAL PROVISION, AND, AS SUCH, IS NOT SUSTAINABLE. ACCORDINGLY, THESE GR OUNDS OF APPEAL ARE ALLOWED. 4. HAVING GONE THROUGH THE PROVISIONS OF SECTION 10 (37), PRINCIPALLY WE DO NOT FIND REASON TO INTERFERE WITH THE FINDING OF THE L D CIT(A) ON THE ISSUE ESPECIALLY WHEN THE FACT THAT ASSESSEE HAD RECEIVED COMPENSATI ON ON THE DATE AFTER MARCH 31, AGAINST THE COMPULSORY ACQUISITION OF AGRICULTURAL LAND IN QUESTION, AS NARRATED IN STATEMENTS OF FACTS BEFORE THE LD CIT(A) HAS NOT B EEN REBUTTED. THE ISSUE IS THUS DECIDED AGAINST THE REVENUE. 5. IN RESULT, APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30TH NOVEMBER 2011. SD/- SD/- ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER (I.C . SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 30TH NOVEMBER, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -V, PUNE 4. THE CIT(A)-V, PUNE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE