K.M. Bopanna (HUF), Kodagu V. DCIT, Hassan

ITA 1118/BANG/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8570 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 30-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SWAPNA DAS J
• Assessee Lawyers: V SRINIVASAN
• Keywords: Capital asset
• Section: 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, B E NGAL U R U BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 1083/ BANG/20 1 5 (ASSESSMENT YEAR: 20 11 - 12 ) DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 1, HASSAN. APPELLANT VS. K.M.BOPANNA (HUF), SCHOOL ESTATE, KODAGU. PAN: AAGHK 1695 D RESPONDENT AND ITA NO. 1 118 / BANG/20 15 (ASSESSMENT YEAR: 2011 - 12 ) K.M.BOPANNA (HUF), SCHOOL ESTATE, KODAGU. VS. APPE LLANT DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 1, HASSAN. RESPONDENT A SSESSEE BY : SHRI V.SRINIVASAN, ADVOCATE. REVENUE BY : SMT. SWAPNA DAS, JCIT(DR) DATE OF HEARING : 01/12/2016 DATE OF PRONOUNCEMENT : 01/ 0 3 /2017 O R D E R PER I NTURI RAMA RAO, AM : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF ITA NO S . 1083 & 1118 /BANG/201 5 PAGE 2 OF 7 INCOME - TAX (APPEALS) [CIT(A)], MYSORE, DATED 17/03/2015 FOR THE ASSESSMENT YEAR 2011 - 12. 2. BRIEFLY FACTS O F THE CASE ARE AS UNDER: THE ASSESSEE IS AN HUF. RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011 - 12 WAS FILED ON 26/10/2011 DECLARING TOTAL INCOME OF RS.4,51,640/ - APART FROM AGRICULTURAL INCOME OF RS.13,74,685/ - . AGAINST SAID RETURN OF INCOME, ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] VIDE ORDER DATED 24/01/2014 , BY THE DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 1, HASSAN AT TOTAL INCOME OF RS.81,70,316/ - AFTER MAKING ADDITION OF RS.76,6 1,165/ - ON ACCOUNT OF SALE OF PROPERTY OF 3 ACRES AND 10 GUNTAS LOCATED AT ANKANAHALLI VILLAGE, BILIKERI HOBLI, CLAIMED TO BE AGRICULTURAL LAND BY THE ASSESSEE. 3. BRIEF FACTS SURROUNDING THE ADDITION ARE AS UNDER: THE ASSESSEE HAD SOLD 3 ACRES AND 10 GUN TAS OF LAND LOCATED AT ANKANAHALLI VILLAGE, BILIKERI HOBLI ON 23/11/2010. THIS LAND WAS PURCHASED BY THE ASSESSEE ON 24/04/1986 AND MANGO TREES WERE GROWN ON THE LAND. SUBSEQUENTLY, BY ORDER DATED 14/06/1988 PASSED BY THE ASST. COMMISSIONER, LAND REVENUE , LAND WAS CONVERTED FOR INDUSTRIAL PURPOSE FOR THE PURPOSE OF SILK REELING INDUSTRY. FOR SOME REASON, INDUSTRY COULD NOT BE PUT UP ON THE LAND AND THE ASSESSEE WAS CONTINUING TO USE THE LAND FOR AGRICULTURAL PURPOSE BY GROWING MANGO FARM. IT IS UNDISPUT ED ITA NO S . 1083 & 1118 /BANG/201 5 PAGE 3 OF 7 FACT THAT THE LAND WAS SITUATED BEYOND THE PRESCRIBED LIMIT OF MYSORE CITY CORPORATION FOR TREATING IT AS CAPITAL ASSET. WHEN THIS WAS SOLD, IT WAS CLAIMED AS AGRICULTURAL LAND. HOWEVER, THE AO REJECTED THE CLAIM HOLDING THAT THE LAND WAS CONVERTED FOR INDUSTRIAL PURPOSE AND BROUGHT TO TAX AFTER ALLOWING DEDUCTION OF RS.15 LAKHS WHICH IS INVESTED IN REC BONDS. THE BALANCE SUM OF CONSIDERATION I.E. 93,75,000/ - - 15,00,000/ - WAS BROUGHT TO TAX. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, AN APPEAL WAS PR EFERRED BEFORE THE CIT(A). THE CIT(A) CONFIRMED THE ADDITION. HOWEVER, ALLOWED DEDUCTION U/S 54F IN RESPECT OF INVESTMENT MADE IN THE PURCHASE OF APARTMENT BEARING NO.1A - 101 IN R&S RIVIERA AT KR PURAM, BANGALORE, OF RS.70,81,120/ - . 5. BEING AGGRIEVED BY THAT PART OF THE ORDER OF THE CIT(A) WHICH IS AGAINST THE ASSESSEE, ASSESSEE IS IN APPEAL BEFORE US IN ITA NO.1083/BANG/2015 . THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO S . 1083 & 1118 /BANG/201 5 PAGE 4 OF 7 6. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT THOUGH THE LAND WAS CONVERTED FOR INDUSTRIAL PURPOSE, AGRICULTURAL OPERATIONS WERE CONTINUED TO BE CARRIED ON IN THE LAND AND THEREFORE, SAME SHOULD HAVE BEEN TREATED AS AGRICULTURAL LAND. IN SUPPORT OF THIS PROPOSITION, LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISI ON OF THE CO - ORDINATE BENCH IN THE CASE OF M.R.SEETHARAM IN ITA NO. 1654/BANG/2012 DATED 13/06/2014 WHEREIN IT WAS HELD THAT WHERE AGRICULTURAL OPERATIONS WERE CARRIED ON THE LAND EVEN AFTER CONVERSION, THE SAME CONTINUED TO BE AGRICULTURAL LAND. 7. AFTER H EARING THE RIVAL SUBMISSIONS, WE ARE OF THE CONSIDERED OPINION THAT IT IS NOT DISPUTED FACT THAT THE LAND WAS SITUATED BEYOND THE PRESCRIBED LIMITS OF THE MYSORE CITY ITA NO S . 1083 & 1118 /BANG/201 5 PAGE 5 OF 7 CORPORATION AND ALSO THAT THE LAND WAS CONVERTED FOR NON - AGRICULTURAL PURPOSE BY THE COM PETENT AUTHORITY , THE CONVERSION WAS SOUGHT BY THE ASSESSEE HIMSELF. THEREFORE, THE INTENTION OF THE ASSESSEE IS MANIFEST FROM THE CONDUCT OF CONVERSION OF THE LAND INTO NON - AGRICULTURAL LAND AND THE LAND CEASED TO BE AGRICULTURAL LAND . EVEN THE CHARACTER OF LAND IS SHOWN AS NON - AGRICULTURAL IN THE REVENUE RECORDS . THEREFORE, SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE LAND CONTINUES TO BE AGRICULTURAL LAND CANNOT BE ACCEPTED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISS ED. 9. THE REVENUE HAS COME UP IN APPEAL BEFORE US IN ITA NO.1083/BANG/2015 CHALLENGING THE DIRECTION OF THE CIT(A) TO ALLOW DEDUCTION U/S 54F IN RESPECT OF INVESTMENT MADE IN APARTMENT BEARING NO.1A - 101 IN R&S RIVIERA AT KR PURAM, BANGALORE, OUT OF SALE P ROCEEDS OF THE LAND SITUATED AT ANKANAHALLI VILLAGE, BILIKERI HOBLI. 10. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEA L: ITA NO S . 1083 & 1118 /BANG/201 5 PAGE 6 OF 7 11. THE UNDISPUTED FACTS RELATING TO ALLOWING THE BENEFIT OF 54F ARE THAT THE ASSESSEE HAD NOT MADE ANY CLAIM BEFO RE THE AO FOR GRANT OF BENEFIT U/S 54F. IT IS ONLY BEFORE THE CIT(A) THAT THIS GROUND WAS RAISED PRAYING FOR BENEFIT OF SECTION 54F. NO DOUBT, LAW IS QUITE SETTLED TO THE EXTENT THAT NEW CLAIM CAN ALWAYS BE MADE DURING THE COURSE OF ASSESSMENT PROCEEDIN GS EVEN THOUGH NOT MADE IN THE RETURN OF INCOME. BUT NO NEW CLAIM CAN BE MADE FOR THE FIRST TIME BEFORE THE APPELLATE AUTHORITY , THOUGH POWERS OF THE CIT(A) ARE CO - TERMINUS WITH THAT OF THE AO , I T IS EQUALLY SETTLED LAW THAT THE CIT(A) CANNOT DO WHAT THE AO HIMSELF COULD NOT HAVE DONE. KEEPING IN VIEW THIS SOLITARY PRINCIPLE OF LAW, WE HOLD THAT THE CIT(A) OUGHT NOT TO HAVE ENTERTAINED NEW CLAIM WHICH ALSO REQUIRES VERIFICATION OF CERTAIN FACTS AS TO INVESTMENT IN NEW HOUSE ETC. WHETHER THE INVESTMENT WAS MAD E WITHIN PRESCRIBED TIME OR NOT . MOR E SO , WITHOUT AFFORDING AN OPPORTUNITY TO THE AO. THIS ACTION OF CIT(A) O FFENDS RULE 46A AND ALSO IT AMOUNTS TO CIT (A) ACTING BEYOND THE POWERS VESTED WITH HIM U/S 250 OF THE ACT OR BEYOND THE SUBJECT MATTER OF APPEA L. ITA NO S . 1083 & 1118 /BANG/201 5 PAGE 7 OF 7 1 2 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 ST MARCH , 201 7 S D/ - S D/ - (VIJAY PAL RAO) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : B EN GAL URU D A T E D : 01 /0 3 /2017 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE