Shri Hirkude Datta Shivappa., Kolhapur V. ITO, Ichalkaranji

ITA 106/PUN/2013

• Counselvise Citation: 10624514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K KULKARNI SHRI P S WALIMBE
• Keywords: Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.106/PN/2013 (ASST. YEAR: 2008-09) SHRI HIRKUDE DATTA SHIVAPPA NEAR JAYSINGHPUR NAGARPALIKA NOUKAR SOCIETY, BY PASS ROAD, NEAR CHURCH, JAYSINGHPUR, TAL. SHIROL, DIST. KOLHAPUR. PAN: ADWPH5089F APPELLANT VS. ITO, WARD-1, ICHALKARANJI RESPONDENT APPELLANT BY : SHRI M.K. KULKARNI RESPONDENT BY : SHRI P.S. WALIMBE DATE OF HEARING : 07-02-2014 DATE OF PRONOUNCEMENT : 21-02-2014 ORDER PER R.S. PADVEKAR, JM: IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE IM PUGNED ORDER OF THE LD. CIT(A), KOLHAPUR DATED 17-10-2012 FOR THE A SSESSMENT YEAR 2008- 09. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW AND IT BEING AN UNDISPUTED POSITION OF LAND AS 'INAM LAND' AND A LSO RECORDED AS 'INAM LAND' IN REVENUE RECORDS AND IN THE ABSENCE O F ANY EVIDENCE AVAILABLE IN FAVOUR OF THE FACT THAT THE ASSESSEE H AD PURCHASED THE LAND ON PAYMENT, NO CAPITAL GAIN AROSE TO THE A SSESSEE. THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTI ON OF THE A.O. THOUGH MODIFYING THE GROUNDS REDUCING THE QUANTUM O F TAXABLE CAPITAL GAIN. THE LD. CIT(A) BY MISTAKE MENTIONED A S 'APPEAL ALLOWED'. THE APPELLANT'S PLEA THAT THERE WAS NO TA XABLE CAPITAL GAIN UNDER THE ACT BE ACCEPTED. 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) WAS NOT JUSTIFIED IN ADOPTING THE COST OF ACQUISITI ON OF THE LAND AS ON 1-4-1981 REDUCED BY 34% TAKEN AT RS. 29.04 PER S Q MTR AS AGAINST RS.45 ADOPTED BY ASSESSEE. THE SETTLED LAW IS THE OPTION OF THE FAIR MARKET VALUE ON SPECIFIED DATE (1-4-81) IS ALLOWED FOR THE TAX PAYER WHICH IS THE CONCESSION GRANTED TO THE AS SESSEE TO AVOID ABNORMAL LIABILITY, AND IS NOT ALLOWED FOR TH E REVENUE. IT CANNOT BE THRUST ON THE ASSESSEE AS HAS BEEN DONE B Y AUTHORITIES BELOW. IT BE HELD ACCORDINGLY. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE REFERENCE MADE TO SUB-REGISTRAR - KOLHAPUR FOR VALU ATION AFTER THE APPROVED VALUER'S REPORT WAS SUBMITTED IS INVAL ID AND NOT ACCORDING TO LAW. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEVY OF INTEREST U/S 234B AND 234C IS NOT JUSTIFIED AND IN THE CIRCUMSTANCES IT BE DELETED. 2. BRIEFLY STATED FACTS AS ARE UNDER. THE ASSESSEE IS AN INDIVIDUAL AND IT IS STATED THAT HE IS A FARMER AND ONLY SOURCE OF IN COME IS AGRICULTURE. THE ASSESSEE IS ALSO A SENIOR CITIZEN. THE ASSESSEE WA S CO-OWNER OF AGRICULTURAL LAND AT JAYSINGPUR NAGAR, DIST. SANGLI . THE ASSESSEE AND THE OTHER CO-OWNERS HAVE SOLD THE AGRICULTURAL LAND BEA RING S.NO.H.NO.70/A/2/1/4 WITHIN THE CITY LIMITS OF JAYS INGPUR ADMEASURING 44350 SQ. MTRS. FOR THE CONSIDERATION OF 1.22 CRORES. THE ASSESSEE STATED BEFORE THE ASSESSING OFFICER THAT THE LAND WAS INHE RITED BY THE ASSESSEE FROM HIS FATHER SHRI SHIVAPPA NIJLINGAPPA HIRIKUDE. AFTER DEMISE OF SHRI SHIVAPPA NIJLINGAPPA HIRIKUDE THE LAND WAS BECOME P ROPERTY OF SHRI DATTA SHIVAPPA HIRIKUDE, SHRI BABU SHIVAPPA HIRIKUDE & SH RI ANNA SHIVAPPA HIRIKUDE. MEANWHILE SHRI BABU SHIVAPPA HIRIKUDE EXP IRED AND HIS WIFE SMT. CHABUTAI BABU HIRIKUDE AND HER DAUGHTER SMT. L ATA AJIT MATHALE HAVE BECOME THE LEGAL HEIRS OF LATE BABU SHIVAPPA HIRIKU DE. THE PROPERTY AS PER THE SALE DEED IS NIYANTRIT SATTA PRAKAR. AS PER 7/12 EXTRACT, THE ASSESSEE WAS PROHIBITED FROM MORTGAGING, MAKING PAR TITION TO MAKE ANY LIEN OVER THE PROPERTY, ETC. IT WAS ALSO MENTIONED THAT IF THESE CONDITIONS ARE VIOLATED THEN THE GOVT. WILL TAKE BACK THE POSS ESSION OF THE PROPERTY. 3 LATER ON THE ASSESSEE ALONGWITH OTHER CO-OWNERS OF THE PROPERTY HAD APPLIED TO THE COMMISSIONER OF REVENUE, PUNE FOR PE RMISSION TO SALE THE SAID LAND FOR NON-AGRICULTURAL PURPOSE. THE COMMISS IONER OF REVENUE, PUNE HAS PERMITTED TO SALE THE SAID LAND SUBJECT TO PAYMENT OF 75% OF 'ANARJIT UTPANNA' I.E. RS.41,57,813/-, WHICH WAS PA ID BY THE ASSESSEE & CO- OWNERS. THEN THE ASSESSEE ALONGWITH OTHER CO-OWNER S ENTERED INTO DEVELOPMENT AGREEMENT WITH M/S. PRATHAMESH DEVELOPE RS, NERUL, MUMBAI ON 22.05.2007 FOR TOTAL CONSIDERATION OF RS. 1,22,00,000/-. THE STAMP DUTY PURPOSE VALUE OF THE SAID PROPERTY WAS R S. 1,50,00,000/-. APART FROM SALE CONSIDERATION, AS PER CLAUSE NO. 18 OF THE SALE' DEED THE DEVELOPER HAS TO GIVE 21,000 SQ. FT. PLOT TO THE AF ORESAID PERSONS WITHOUT ANY CONSIDERATION. 3. AFTER PERMISSION OF THE REVENUE COMMISSIONER, TH E ASSESSEE AND OTHER CO-OWNERS HAVE ENTERED INTO A DEVELOPMENT AGR EEMENT WITH M/S. PRATHAMESH DEVELOPERS, MUMBAI ON 22.05.2007 FOR A T OTAL SALE CONSIDERATION OF 1.22 CRORES. FOR THE PURPOSE OF STAMP DUTY VALUAT ION, THE SAID PROPERTY WAS VALUED AT 1.50 CRORES. AS PER THE TERMS OF THE DEVELOPMENT AGREEMENT AS NOTED BY THE ASSESSING OFF ICER, APART FROM THE SALE CONSIDERATION, THE DEVELOPER HAS TO GIVE 21,00 0 OF PLOT JOINTLY TO THE CO- OWNERS WITHOUT ANY CONSIDERATION. IT APPEARS THAT THE ASSESSEE HAS GOT PROPERTY VALUED FROM THE GOVERNMENT APPROVED VALUER (GAV) WHO HAS VALUED THE SAID PROPERTY AS ON 01.04.1981 AT 19,94,962/-. ON THE BASIS OF FAIR MARKET VALUE (FMV) AS ON 01.04.1981, THE AS SESSEE HAS WORKED OUT THE CAPITAL GAIN IN RESPECT OF HIS SHARE IN THE SAI D LAND BY FILING THE INDEX COST OF ACQUISITION. IT APPEARS THAT THE ASSESSING OFFICER HAS REFERRED THE MATTER OF FAIR MARKET VALUE OF THE SAID LAND AS ON 01.04.1981 TO THE ASST. REGISTRAR GRADE I, KOLHAPUR WHO INTIMATED THE ASS ESSING OFFICER THAT THE FAIR MARKET VALUE OF THE SAID PROPERTY AS ON 01.04. 1981 SHOULD BE TAKEN AS 40% OF THE RATES AS ON 01.04.1981 AS PER THE READY RECKONER. THE ASSESSING OFFICER DID NOT CONSIDER THE SUBMISSIONS OF THE ASSESSEE THAT THE SAID LAND WAS INAM LAND AND AS PER THE RULES AT T HE TIME OF EACH SALE, THE LAND OWNER HAS TO PAY MINIMUM 75% OF THE PURCHASE P RICE TO THE 4 GOVERNMENT AS NAZARANA FEES. IT APPEARS THAT THE A SSESSING OFFICER ALSO ASKED THE ASSESSEES GOVERNMENT APPROVED VALUER TO JUSTIFY THE VALUATION OF THE SAID LAND MADE AS FAIR MARKET VALUE AS ON 01 .04.1981. IT IS SEEN THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE R EQUEST OF THE ASSESSEE FOR REFRAINS THE MATTER OF THE VALUATION TO THE GOV ERNMENT VALUATION OFFICER AS THE SAME REQUEST WAS MADE AT THE FLAG END OF THE ASSESSMENT YEAR. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT DETERMIN ING THE LONG TERM CAPITAL GAIN WORKING OUT THE FAIR MARKET VALUE AS G IVEN BY THE ASST. REGISTRAR GRADE-I, KOLHAPUR. AT THIS STAGE, THE AS SESSEE DID NOT CLAIM ANY EXEMPTION FROM THE CAPITAL GAINS. WHEN THE MATTER TRAVELLED BEFORE THE LD. CIT(A), THE ASSESSEE HAS TAKEN THE FOLLOWING PLEA A S ALTERNATE GROUND. A) THE BASIC PRINCIPLE REGARDING LEVY OF CAPITAL GA IN IS THAT WHERE THERE IS NO COST OF ACQUISITION FOR THE ASSET THERE CANNOT BE LEVY OF CAPITAL GAIN UNDER SECTION 45 OF THE I T .ACT 19 61 AND AS THE PROPERTY I. E. AGRICULTURAL LAND WAS ACQUI RED BY SHIVAPPA HIREKUDE WITHOUT ANY COST; THE SALE OF THIS AGRICUL TURAL LAND DOES NOT ATTRACT CAPITAL GAIN. THE LIABILITY TO TAX ON CAPIT AL GAIN WOULD ARISE IN RESPECT OF ONLY THOSE CAPITAL ASSETS IN THE ACQU ISITION OF WHICH AN ELEMENT EITHER ACTUALLY PRESENT OR IS CAPABLE OF BE ING RECKONED AND NOT IN RESPECT OF THOSE ASSETS IN THE ACQUISITION OF WHICH THE ELEMENT OF COST ALTOGETHER INCONCEIVABLE. HENCE WORKING OF CAPITAL GAIN IN THE APPELLANT'S' CASE IS UNWARRANTED AND UN JUSTIFIABLE AND THE SAME IS REQUIRED TO BE CANCELLED. B) THE ENTIRE EXERCISE AND APPROACH OF THE INCOME T AX OFFICER IN THE MATTER IS UNWARRANTED AND UNJUSTIFIED. 4. IN SUM AND SUBSTANCE, IN ADDITION TO RAISING THE GRIEVANCE FOR THE FAIR MARKET VALUE ADOPTED BY THE ASSESSING OFFICER AS ON 01.04.1981, THE ASSESSEE HAS ALSO CLAIMED THAT THERE WAS NO COST OF ACQUISITION BEING IT IS AN INAM LAND, HENCE, NO CAPITAL GAIN WAS AT ALL TAX ABLE U/S.45(1) OF THE I.T. ACT. THE LD. CIT(A) CONSIDERED THE ISSUE OF THE VA LUATION I.E. THE FAIR MARKET VALUE AS ON 01.04.1981 BUT DID NOT ADJUDICAT E THE ALTERNATE PLEA OF THE ASSESSEE THAT THERE IS NO TAX LIABILITY ON THE ASSESSEE IN VIEW OF THE FACT THAT THE LAND SOLD BY THE ASSESSEE AND OTHER CO-OWN ERS BEARS THE CHARACTER OF THE INAM LAND AND THERE IS NO COST OF ACQUISITIO N. THE ALTERNATE PLEA TAKEN BY THE ASSESSEE GOES TO THE ROOTS OF THE MATT ER. WE ACCORDINGLY, REMIT THE MATTER BACK TO THE CIT(A), KOLHAPUR FOR D ECIDING THE ALTERNATE 5 PLEA OF THE ASSESSEE AFTER EXAMINING THE EVIDENCE F ILED BY THE ASSESSEE IN SUPPORT OF HIS CONTENTION. NEEDLESS TO SAY, THE BU RDEN IS ON THE ASSESSEE TO ESTABLISH THAT THE PROPERTY IN CONSIDERATION IS AN INAM LAND AND HENCE, THERE IS NO COST OF ACQUISITION WHEN THE ANCESTORS OF THE ASSESSEE GOT THE SAID LAND AS INAM. THE LD. CIT(A) IS DIRECTED TO G IVEN AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SO FAR AS THE ISSUE OF VALUATION IS CONCERNED, WE ARE KEEPING THE SAID ISSUE OPEN. ACCORDINGLY, T HE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THE MATTER IS REMITTED TO T HE FILE OF CIT(A), KOLHAPUR FOR DECIDING AND ADJUDICATING THE ALTERNAT E PLEA. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 21 ST DAY OF FEBRUARY, 2014. SD/- SD/- (R.K. PANDA) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED 21 ST FEBRUARY, 2014 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT, 3) THE CIT(A), KOLHAPUR 4) THE CIT, KOLHAPUR 5) THE DR, B BENCH, I.T.A.T., PUNE 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY ITAT PUNE BENCHES, PUNE