Tota Srinivas., Secunderabad V. Income Tax Officer, Ward-5(1)., Hyderabad

ITA 1159/Hyd/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2585 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: NALIN SHAH
• Keywords: Capital asset
• Section: 143(3); 2(14); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1159/HYD/2017 ASSESSMENT YEAR: 2009-10 TOTA SRINIVAS, HYDERABAD [PAN: AETPT4818C] VS THE INCOME TAX OFFICER, WARD-5(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI NALIN SHAH, AR FOR REVENUE : SMT. SUMAN MALIK, DR DATE OF HEARING : 30-01-2018 DATE OF PRONOUNCEMENT : 09-02-2018 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, HYDERABAD, FOR THE AY. 2009-10. 2. THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO TAXA BILITY OF GAINS ON SALE OF LANDS, CLAIMED TO BE AGRICULTURAL L ANDS BY ASSESSEE. ASSESSEE FILED RETURN OF INCOME ON 31-07-2 009 DECLARING TOTAL INCOME OF RS. 92,920/-. DUE TO RECEIPT OF INFORMATION OF CASH DEPOSITS, CASE WAS SELECTED UNDER CASS AND IN THE SCRUTINY, ASSESSEE EXPLAINED THE SOURCE AS SALE OF LANDS. THE ASSESSMENT WAS DONE U/S. 143(3) OF THE I NCOME TAX ACT [ACT] DT. 07-12-2011 BY ADDING AN AMOUNT OF RS. 21,000/- BEING INTEREST RECEIVED ON FD/BANK A/C. THUS , ASSESSEES INCOME WAS DETERMINED AT RS. 1,13,920/-. LATER, THE I.T.A. NO. 1159/HYD/2017 :- 2 -: CASE WAS REOPENED U/S. 147 AND AO TREATED THE SALE OF LANDS AS SALE OF URBAN LANDS U/S. 2(EA)(V) OF THE WEALTH TAX ACT. AO BROUGHT THE DIFFERENCE OF RS. 25,55,000/- AS SHORT TE RM CAPITAL GAIN. IT WAS EXPLAINED BY ASSESSEE THAT HE PUR CHASED AGRICULTURAL LAND IN DASARALAPALLY VILLAGE, KANDUKU R MANDAL, RANGA REDDY DIST., OF ABOUT 3.5 ACRES (3 ACRE 20 KUN TAS) ON 29-06-2006 FOR A CONSIDERATION OF RS. 5,25,000/- AND SOLD THE SAME ON 30-04-2008 FOR A CONSIDERATION OF RS. 30,80, 000/- AND THE SAID LANDS ARE 35 KMS., AWAY FROM MUNICIPAL LIMITS AND POPULATION OF THE VILLAGE WAS LESS THAN 10,000. E VEN THOUGH ASSESSEE HAS NOT DISCLOSED ANY AGRICULTURAL INC OME, THE NATURE OF LANDS IT WAS CLAIMED, ARE AGRICULTURAL LAN DS AND SO CAPITAL GAINS DOES NOT ARISE. AO REJECTED THE CONTENTION S. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD.CIT(A) AND REITERATED THE CONTENTIONS AND RELIED ON THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF C WT VS. SHASHIBEN [288 ITR 319] (GUJ). LD.CIT(A), HOWEVER, REJECTED THE CONTENTIONS AND UPHELD THE ORDER OF AO, STATING AS U NDER: 6. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R AND SUBMISSIONS OF THE APPELLANT. IT IS OBSERVED FROM T HE SALE DEED DATED 30-04-2008 SUBMITTED DURING THE APPEAL PROCEEDINGS, THE APPELLANT HAS SOLD THE AGRICULTURAL LAND THEREFORE, THE CAPIT AL GAINS ARE NOT ATTRACTED, IN THIS REGARD, THE RELIANCE IS PLACED O N THE HON'BLE ITAT, CHENNAI ORDER IN THE CASE OF ABOOBUCKER, CHENNAI VS . ITO, INTERNATIONAL TAXATION-I(1), CHENNAI, WHEREIN IT WA S HELD AS UNDER: IF WE CONSIDER THE ABOVE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE AS A WHOLE AND AN OVERALL VIEW IS TO BE TAKEN IN DECIDIN G WHETHER THE LAND WAS AN AGRICULTURAL LAND, WE WOULD COME TO A CONCLUSION TH AT THE PROPERTY CANNOT BE CONSIDERED AS AGRICULTURAL LAND. THOUGH THE CIRCUM STANCES THAT THE LAND IS CLASSIFIED AS AGRICULTURAL IN THE REVENUE RECORDS AND THE VILL AGE PANCHAYAT PRESIDENT, NAVALLUR, HAS CERTIFIED THAT THE LAND IS AWAY FROM MUNICIPALI TY. IN OUR VIEW THE OTHER CIRCUMSTANCES POINTED OUT ABOVE OUTWEIGHTS ALL OF T HE CIRCUMSTANCES IN FAVOUR OF THE I.T.A. NO. 1159/HYD/2017 :- 3 -: REVENUE AND ON THE BASIS OF THOSE CIRCUMSTANCES, WE ARE INCLINES TO CONCLUDE THAT THE PROPERTY WAS NOT AN AGRICULTURAL LAND. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE HON'BLE ITAT IN THE ABOVE CASE, I AM IN AGREEMENT WITH THE REASO NS OF THE ASSESSING OFFICER AND THE ADDITION MADE BY THE ASSE SSING OFFICER CONFIRMED AND THE GROUND OF APPEAL IS DISMISSED. 4. REITERATING THE CONTENTIONS, IT WAS THE SUBMISSION OF LD. COUNSEL THAT THE LANDS-IN-QUESTION ARE AGRICULTURAL IN NATURE. 5. LD.DR, HOWEVER, SUBMITTED THAT ASSESSEE DID NOT DO ANY AGRICULTURAL OPERATIONS AND THE CAPITAL GAINS CANNO T BE TREATED AS AGRICULTURAL IN SOURCE. LD.DR, RELIED ON THE FOL LOWING CASE LAW: I. SMT. SARIFABIBI MOHAMED IBRAHIM VS. CIT [204 ITR 631 ] (SC); [70 TAXMAN 301] (SC); II. UNION OF INDIA VS. S. MUTHYAM REDDY [106 TAXMAN 501 ] (SC); III. CHEMMANCHERRY ESTATES CO VS. ITO [28 SOT 18] (CHENNAI); IV. INCOME TAX OFFICER, IT-I(1), CHENNAI VS. ABOOBUCKER [67 TAXMANN.COM 114] (CHENNAI TRIB); V. G.M. OMER KHAN VS. ADDITIONAL COMMISSIONER OF INCOME TAX [63 TAXMAN 533] (SC); VI. GOPAL C SHARMA VS. COMMISSIONER OF INCOME TAX [209 ITR 946] (BOMBAY); [72 TAXMAN 353] (BOMBAY HIGH COURT); I.T.A. NO. 1159/HYD/2017 :- 4 -: 6. IN REPLY, LD. COUNSEL FILED WRITTEN SUBMISSION AS UNDER: FACTS: THE ASSESSEE HAS SOLD AGRICULTURAL LAND TO TAL ADMEASURING AC 3-20 GTS. SITUATED AT SURVEY NO.265, 264/1, 265, 265/1,276 AND 276/1, DASARALAPALLY VILLAGE, KANDUKU R MANDAL, RANGA REDDY DISTRICT VIDE REGISTERED SALE DEED DATE D 30 TH APRIL, 2008. THE LAND IS SITUATED ABOUT 35 KMS AWAY FROM MUNICIP AL LIMITS AND THE TOTAL POPULATION OF THE DASARLAPALLY VILLAGE AS PER THE LATEST CENSUS DATA IS 1,844 ONLY. (COPY ATTACHED). THE LAND IS AN AGRICULTURAL LAND AS DEFINED U/S 2(14) OF THE INCOME TAX ACT, 1961 AN D IS NOT A CAPITAL ASSET. THE LEARNED DR HAS FILED VARIOUS CASE LAWS, THE FAC TS OF THOSE CASES ARE NOT RELEVANT TO OUR CASE AS FACTS ARE NOT IDENT ICAL. WE SUBMIT OUR REPLY FOR EACH CASE SEPARATELY AS UNDER: 1) SMT SARIFABIBI MOHAMED IBRAHIM VS COMMISSIONER O F INCOME TAX, 70 TAXMAN 301 (SC): IN THE RELEVANT CASE LAW THE LA ND SOLD TO A HOUSING COOPERATIVE SOCIETY FOR COMMERCIAL PURPOSE AND HENCE THE RELEVANT CASE LAW IS NOT APPLICABLE TO THE ASSESSEE . 2) UNION OF INDIA VS S MUTHYAM REDDY, 106 TAXMAN 50 1 (SC): IN THE ABOVE CASE LAW, IT WAS VIEWED THAT INCOME ARISING F ROM TRANSFER OF AGRICULTURAL LANDS CANNOT BE TREATED AS AGRICULTURA L INCOME. THE QUESTION REMAINS THAT THE LAND USED FOR AGRICULTURA L PURPOSES WHETHER SITUATED IN AREAS MENTIONED IN SECTION 2(14)(III)(A ) OR (B) IS AN CAPITAL ASSET. 3) CHEMMANCHERRY ESTATES CO VS INCOME TAX OFFICER, 28 SOT 18 (CHENNAI) (URO): IN THE RELEVANT CASE THE IMPUGNED LAND WAS NOT FIT FOR AGRICULTURAL OPERATIONS AS IT WAS A BARREN LAND HAVING NO IRRIGATION FACILITIES AND WAS SITUATED IN A DEVELOPED AREA WHE RE INDUSTRIES WERE COMING UP AND THE ASSESSEE SOLD THE LAND TO COOPERA TIVE HOUSING SOCIETY FOR CONSTRUCTION OF HOUSES, AND HENCE THE R ELEVANT CASE LAW IS NOT APPLICABLE TO THE ASSESSEE. 4) INCOME TAX OFFICER, IT -1(1), CHENNAI VS ABOOBUC KER REPORTED IN 67 TAXMANN.COM 114 (CHENNAI - TRIB): IN THE RELEVANT C ASE THE LAND WAS SITUATED IN THE DEVELOPING AREA OF CHENNAI AND IN M IDST OF DEVELOPMENT ACTIVITIES BEING CARRIED OUT BY THE BUI LDERS IN PROMOTING HOUSING/ INFORMATION TECHNOLOGY CORRIDORS AND HENCE THE RELEVANT CASE LAW IS NOT APPLICABLE TO THE ASSESSEE. 5) G M OMER KHAN VS ADDITIONAL COMMISSIONER OF INCO ME TAX, 63 TAXMANN 533 (SC) : IN THE RELEVANT CASE, THE AGRICU LTURAL LAND WAS COMPULSORILY ACQUIRED BY THE GOVERNMENT WHICH WAS S ITUATED IN THE I.T.A. NO. 1159/HYD/2017 :- 5 -: AREA WITHIN THE MUNICIPALITY LIMITS OF HYDERABAD, A ND HENCE THE RELEVANT CASE LAW IS NOT APPLICABLE TO THE ASSESSEE . 6) GOPAL C SHARMA VS COMMISSIONER OF INCOME TAX, 72 TAXMAN 353 (BOMBAY HIGH COURT). : IN THE RELEVANT CASE, THE LA ND IS NOT TREATED AS AGRICULTURAL LAND AS DEFINED U/S 2(14) OF THE IT AC T, 1961 AS THE SAME WAS SOLD OR COMPULSORILY ACQUIRED BY A COMPANY LARS EN & TOUBRO AND HENCE THE RELEVANT CASE LAW IS NOT APPLICABLE T O THE ASSESSEE. 7. I HAVE PERUSED THE DOCUMENTS PLACED ON RECORD, THE CASE LAW RELIED AND CONSIDERED THE RIVAL CONTENTIONS. THE CASE LAW RELIED ON BY THE LD.DR OF VARIOUS HIGH COURTS AND HO N'BLE SUPREME COURT ARE GIVEN IN THE CONTEXT OF LANDS SITUATED WITHIN MUNICIPAL LIMITS AND ARE CONSIDERED AS URBAN LANDS BY WAY OF PROVISIONS OF SECTION 2(14) AND EXPLANATION TH EREON. HERE THE LANDS IN QUESTION ARE AWAY FROM MUNICIPAL LI MITS AND CANNOT BE TREATED AS URBAN LANDS UNDER W.T. ACT OR UN DER IT ACT. BE THAT AS IT MAY, WHAT IS NOTICED FROM THE AGREEME NT OF SALE-CUM-GPA AND SALE DEED ENTERED BY ASSESSEE IS THAT ASSESSEE NEVER BROUGHT THE SAID LANDS IN HIS NAME. T HE AGREEMENT OF SALE-CUM-GPA IS FROM THE ORIGINAL OWNERS AND ASSESSEE SOLD THE SAME AS GPA HOLDER ONLY. THUS, THE OWNERSHIP OF LAND HAS TO BE EXAMINED. THE MUTATION OF LAND IN ASSESSEE NAME WAS NOT PLACED ON RECORD. IT IS ADMITT ED THAT ASSESSEE HAS NOT EARNED ANY INCOME FROM THE LAND. WHE THER ANY AGRICULTURAL/ DEVELOPMENT ACTIVITY WAS UNDERTAKEN ON THE LAND WAS ALSO NOT EXPLAINED OR EXAMINED. AS SEEN F ROM THE RECORD, THERE IS A RECTIFICATION DEED DT. 30-04-2008, TH E CONTENTS OF WHICH ARE NOT AVAILABLE. IN CASE THE LAND S WERE NOT MUTATED IN ASSESSEE NAME, WHAT ASSESSEE HAS SOLD AS GP A HOLDER WAS ONLY ASSESSEES RIGHT TO PROPERTY. THEN, IT CAN ALSO BECOME AN ADVENTURE IN NATURE OF TRADE, IF THE INTENTIO N IS I.T.A. NO. 1159/HYD/2017 :- 6 -: ONLY FOR SUBSEQUENT SALE ON PROFIT. AS THESE ASPECTS ARE NOT EXAMINED, I AM OF THE OPINION THAT THE AO AND CIT(A) H AVE ERRED IN TREATING THE SAME AS SALE OF URBAN LAND. IN ORDER TO EXAMINE AND ARRIVE AT THE CORRECT NATURE OF TRANSACTION, I HEREBY SET ASIDE THE ORDERS OF AO AND CIT(A) AND RES TORE THE ISSUE TO THE FILE OF AO TO EXAMINE AFRESH AND TO DETE RMINE THE NATURE OF TRANSACTION AND TO DETERMINE WHETHER THE SAME IS TAXABLE OR NOT BASED ON FACTS AND LAW. ASSESSEE SHOU LD BE GIVEN DUE OPPORTUNITY. 8. IN THE RESULT, APPEAL OF ASSESSEE IS CONSIDERED AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH FEBRUARY, 2018 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 9 TH FEBRUARY, 2018 TNMM I.T.A. NO. 1159/HYD/2017 :- 7 -: COPY TO : 1. TOTA SRINIVAS, C/O NALIN SHAH & CO., CHARTERED ACCOUNTANTS, 4-3-41/1, 1 ST FLOOR, HILL STREET, RANIGUNJ, SECUNDERABAD. 2. THE INCOME TAX OFFICER, WARD-5(1), HYDERABAD. 3. CIT (APPEALS)-4, HYDERABAD. 4. PR.CIT-4, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.