ITO, Latur V. Shri Abdul Rahman Hydersab Shaikh, Latur

ITA 1174/PUN/2012

• Counselvise Citation: 117424514 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-09-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 07-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N O N E
• Assessee Lawyers: Y K BHASKAR
• Keywords: Capital asset
• Section: 2(14); 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1173/ P N/ 20 12 ASSESSMENT YEAR : 2005 - 06 L.M. RAKSHASE, INCOME TAX OFFICER, WARD - 3(3), LATUR VS. SHRI AMIR HYDERSAB SHAIKH, NEAR BUS STAND, MAIN ROAD, CHAKUR, DIST. - LATUR (APPELLANT) (RESPONDENT) PAN NO. BOCPS9853L ITA NO. 1174/ PN/20 12 ASSESSMENT YEAR : 2005 - 06 L.M. RAKSHASE, INCOME TAX OFFICER, WARD - 3(3), LATUR VS. SHRI ABDUL RAHMAN HYDERSAB SHAIKH, NEAR BUS STAND, MAIN ROAD, CHAKUR, DIST. - LATUR (APPELLANT) (RESPONDENT) PAN NO. DAZPS1774P APPELLANT BY: SHRI Y.K. BHASKAR RESPONDENT BY: N O N E DATE OF HEARING : 12 - 09 - 2013 DATE OF PRONOUNCEMENT : 27 - 09 - 2013 ORDER P ER R.S. PADVEKAR , JM : - TH ESE TWO APPEALS ARE FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDERS OF THE LD. CIT(A), AURANGABAD DATED 13 - 03 - 2012 FOR THE A.Y. 2005 - 06. THE REVENUE HAS TAKEN THE FOLLOWING TWO GROUNDS WHICH ARE COMMON IN BOTH T HE APPEALS SAVE THE AMOUNT OF ADDITIONS MENTIONED IN GROUND NO. 2: 1. IN THE INSTANCE CASE THE LAND WAS UNDER CONSIDERATION FOR ACQUISITION BY APMC, CHAKUR FROM FY 1992. DUE TO NON AVAILABILITY OF FUNDS WITH APMC THE SAID LAND COULD NOT BE ACQUIRED BY APMC AN D SUBSEQUENTLY IT WAS CANCELLED. LATER ON THE SAID LAND IS ACQUIRED BY MSEB. AS PER SPECIAL LAND ACQUISITION OFFICER'S ORDER DATED 31/07/2003 THE SAID LAND IS ALSO NOT COVERED UNDER AGRI. LAND. THEREFORE, THE SAID LAND IS COVERED UNDER THE PURVIEW OF CAPIT AL ASSET I.E. NON AGRICULTURAL LAND. THEREFORE, THE PLEA TAKEN BY THE ASSESSEE THAT THE LAND IS NOT CAPITAL ASSET I.E. AGRI. LAND AND CAPITAL GAIN ARISING FROM SUCH TRANSFER OF AGRI. LAND IS EXEMPT FROM TAX IS NOT ACCEPTABLE. IT IS CRYSTAL CLEAR FROM 7/12 EXTRACTS, PROPOSED ACQUISITION BY APMC AND SPECIAL LAND ACQUISITION OFFICERS ORDER DATED 31/07/2003, THE SAID LAND WAS NEVER BEING USED FOR AGRI. 2 ITA NOS. 1173 & 1174/PN /2012, SHRI AMIR HYDERSAB SHAIKH & SHRI ABDUL RAHMAN HYDERSAB SHAIKH, LATUR PURPOSES DURING THE PERIOD OF TWO YEAR IMMEDIATELY PRECEDING THE DATE OF TRANSFER, THEREFORE, THE CAPITAL GAIN ARISING FROM SAID LAND IS NOT ELIGIBLE FOR EXEMPTION U/S 10(37). HENCE ADDITIONS MADE BY THE A.O. ON ACCOUNT OF CAPITAL GAIN MAY PLEASE BE RESTORED. 2. THE HON'BLE CIT(A), AURANGABAD HAS ERRED IN TREATING THE LAND TRANSFERRED IS SITUATED MORE THAN 35 KILOME TERS AWAY FROM THE LOCAL LIMITS OF THE LATUR MUNICIPALITY AND DELETED ADDITIONS OF RS. 1048530/ - IS NOT ACCEPTABLE AS THE SAID LAND IS NON AGRICULTURAL LAND, THEREFORE, IT COVERS UNDER CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14) OF THE IT ACT. 2. IN B OTH THESE CASES THE NOTICES WERE SENT TO THE ASSESSEES BUT THE SAME HAVE BEEN RETURNED BY THE POSTAL AUTHORITIES WITH REMARK THAT THE RESPONDENT - ASSESSEES HAVE NOT ACCEPTED THE NOTICES. WE, THEREFORE, PROCEED TO DISPOSE OF BOTH THE APPEALS OF THE REVENUE AFTER HEARING THE LD. DR. 3. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. BOTH THESE ASSESSEES ARE INDIVIDUAL. THE ASSESSING OFFICER GATHERED THE INFORMATION FROM THE ITO (CIB) IN RESPECT OF THE CASH DEPOSITS IN THE SAVING BANK ACCOUNT OF TH ESE ASSESSEES. IN THE CASE OF SHRI ABDUL RAHMAN HYDERSAB SHAIKH, THE ASSESSING OFFICER ISSUED THE NOTICE U/S. 148 OF THE INCOME - TAX ACT. ON ENQUIRY, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE CASH DEPOSITS IN THE SAVING BANK ACCOUNT ARE OUT OF COMP ENSATION RECEIVED ON ACCOUNT OF COMPULSORY ACQUISITION OF THE LAND OWNED BY THE ASSESSEE BY THE MSEB, EHV CIVIL CONSTRUCTION DIVISION, AURANGABAD. THE SAID LAND WAS OWNED BY THE ASSESSEE AND HIS SONS JOINTLY SITUATED AT GUT NO. 466, SURVEY NO. 194, CHAKUR , DISTRICT - LATUR. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS. NIL BY CLAIMING THAT THE TRANSFER OF THE ABOVE MENTIONED AGRICULTURAL LAND WAS NOT LIABLE TO ANY TAX. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSES SEE THAT THE LAND WHICH WAS SUBJECTED TO ACQUISITION WAS AN AGRICULTURAL LAND AND IT WAS NOT A C APITAL ASSET WITHIN THE MEANING OF SEC. 2(14)(III) OF THE INCOME - TAX ACT. IT APPEARS THAT THE ASSESSING OFFICER HAD RESERVATION IN RESPECT OF THE LOCATION DIST ANCE OF THE LAND ALSO A S HE HAS REFERRED TO THE ORDER OF THE SPECIAL LAND ACQUISITION OFFICER, LATUR 3 ITA NOS. 1173 & 1174/PN /2012, SHRI AMIR HYDERSAB SHAIKH & SHRI ABDUL RAHMAN HYDERSAB SHAIKH, LATUR DATED 31 - 07 - 2003 IN WHICH AS NOTED BY THE ASSESSING OFFICER THE LAND IS SITUATED WITHIN THE JURISDICTION OF CHAKUR TALUKA DIST. - LATUR. THE ASSESSING OFFIC ER ALSO REFERRED TO 7/12 EXTRACTS AND NOTED THAT THE LAND AT GUT NO. 466, SURVEY NO. 194 IS BARREN LAND I.E. PADIT LAND ON WHICH NO AGRICULTURAL ACTIVITIES HAVE BEEN CARRIED OUT. BY NARRATING ABOVE FACTS , THE ASSESSING OFFICER REJECTED THE CLAIM OF THE AS SESSEE THAT THE SAID LAND IS AGRICULTURAL LAND AND CAPITAL GAIN ARISING FROM THE TRANSFER WAS EXEMPTED U/S. 10(37) OF THE INCOME - TAX ACT. THE ASSESSING OFFICER, THEREFORE, WORKED OUT THE TAXABLE CAPITAL GAIN AT RS.26,48,685/ - . 4. SO FAR AS THE DETERMIN ATION OF THE SALE CONSIDERATION IS CONCERNED , IT IS NOT THE ISSUE BEFORE US . T HE LIMITED ISSUE IS WHETHER THE LAND IN QUESTION WHICH WAS ACQUIRED FOR THE MSEB FOR P OWER STATION IS A CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14) OF THE INCOME - TAX ACT. 5. BEFORE THE LD. CIT(A) , THE ASSESSEE CONTENDED THAT T HE LAND IN QUESTION IS NOT A CAPITAL ASSET AS THE SAME WAS SITUATED OUTSIDE THE BOU NDARIES OF GRAM PANCHYAT, CHAKUR. THE ASSESSEE CONTENDED THAT AS PER THE DEFINITION OF THE CAPITAL A SSET S IN SEC. 2 (14) OF THE ACT T HE LAND IN QUESTION CANNOT BE TREATED AS A CAPITAL ASSET. THE ASSESSEE ALSO FILED LETTER FROM THE CITY SURVEY OFFICE OF CHAKUR CONFIRMING THAT THE LAND IS SITUATED OUTSIDE THE BOUNDARIES OF GRAM PANCHYAT, CHAKUR. THE LD. CIT(A) ALSO ACCE PTED THE CONTENTION OF THE ASSESSEE THAT EVEN IF THE AGRICULTURAL ACTIVITIES ARE NOT CARRIED OUT BUT THE FACT REMAINED THAT THE SAID LAND WAS AGRICULTURAL LAND. THE LD. CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE THAT IT WAS AN AGRICULTURAL LAND AND IT WAS BEYOND THE BOUNDARIES OF GRAM PANCHYAT, CHAKUR AND WHICH WAS SITUATED 35 KILOMETERS AWAY FROM THE LOCAL LIMITS OF THE LATUR MUNICIPALITY AND HELD THAT T HE SAID LAND CANNOT BE THE CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14)(III)(B) OF THE ACT. THE LD. C IT(A) DELETED THE ENTIRE ADDITIONS. 6. IN THE CASE OF SHRI AMIR HYDERSAB SHAIKH, THE ASSESSING OFFICER INITIATED THE ASSESSMENT PROCEEDINGS O N THE BASIS OF THE ANNUAL 4 ITA NOS. 1173 & 1174/PN /2012, SHRI AMIR HYDERSAB SHAIKH & SHRI ABDUL RAHMAN HYDERSAB SHAIKH, LATUR INFORMATION RETURN (AIR). I T WAS NOTICED BY HIM THAT THERE WERE CASH DEPOSITS IN THE SA VING BANK ACCOUNT AGGREGATING TO RS.10,48,530/ - . THE ASSESSMENT WAS COMPLETED EX - PARTE U/S. 144 TREATING THE ENTIRE DEPOSITS AS INCOME OF THE ASSESSEE I.E. RS.10,48,530/ - . THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A). IN THE CASE O F THESE ASSESSEES ALSO HE RECEIVED THE COMPENSATION FOR ACQUISITION OF LAND JOINTLY HELD BY HIM AND THREE OTHER FAMILY MEMBERS SITUATED AT GUT NO. 466, SURVEY NO. 194, CHAKUR, DISTRICT - LATUR. THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT DEPOSITED IN THE SAVING BANK ACCOUNT WAS OUT OF THE COMPENSATION RECEIVED TOWARDS THE ACQUISITION OF LAND BY THE MSEB FOR THE POWER STATION. THE ASSESSEE ALSO CONTENDED THAT AS THE SAID LAND WAS AGRICULTURAL LAND WHICH WAS BEYOND DISTANCE OF 8 KIL OMETERS FROM THE LATUR LOCAL LIMITS AND IT WAS AN AGRICULTURAL LAND HENCE, THE SAME WAS NOT TAXABLE. THE LD. CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE AND HAS OBSERVED THAT THE LAND TRANSFERRED IS SITUATED MORE THAN 35 KILOMETERS AWAY FROM THE LOCAL LIMITS OF THE LATUR MUNICIPALITY AND THE SAME WAS THE AGRICULTURAL LAND AND HENCE, IT IS NOT A CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14)(III) OF THE ACT. H E, THEREFORE, ALLOW ED THE PLEA OF THE ASSESSEE AND DELETED THE ADDITION. IN BOTH THESE CASES THE REV ENUE IS IN APPEAL BEFORE US. 7. PRECISELY THE ONLY SOLITARY ISSUE BEFORE US IS WHETHER THE LD. CIT(A) JUSTIFIED IN ACCEPTING THE PLEA OF THESE ASSESSEES THAT THE LAND IN QUESTION WHICH WAS SUBJECTED TO COMPULSORY ACQUISITION FOR THE MSEB POWER STATION WAS NOT A CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14) OF THE INCOME - TAX ACT AND HENCE, NOT LIABLE FOR CAPITAL GAIN TAX MORE PARTICULARLY U/S. 45 OF THE ACT. ON PERUSAL OF THE FACTS ON RECORD , WE FIND THAT THE LAND BEA R ING GUT NO. 466, SURVEY NO. 194 AT C HAKUR, DISTRICT - LATUR WAS JOINTLY OWNED BY THE FAMILY MEMBERS OF THESE ASSESSEES. BOTH THE ASSESSEES HAD INTEREST IN THE SAID LAND AND HENCE, WHEN THE SAID LAND WAS ACQUIRED BY THE GOVERNMENT FOR THE POWER STATION OF MSEB B OTH THESE ASSESSEES HAVE RECEIVE D THE COMPENSATION IN 5 ITA NOS. 1173 & 1174/PN /2012, SHRI AMIR HYDERSAB SHAIKH & SHRI ABDUL RAHMAN HYDERSAB SHAIKH, LATUR A WARD PASSED BY SPL. LAND ACQUISITION OFFICER . NOWHERE, IT IS CASE OF THE ASSESSEE THAT THE SAID LAND WAS SITUATED WITHIN THE DISTANCE OF 8 KILOMETERS FROM THE LOCAL LIMITS OF LATUR MUNICIPALITY COUNCIL. NOTHING HAS ALSO BEEN PLACED BEFORE US BY THE REVENUE TO CONTROVERT THE FINDING OF THE LD. CIT(A) THAT THE LAND IN QUESTION WHICH WAS ACQUIRED BY THE GOVERNMENT WAS SITUATED AT THE DISTANCE OF 35 KILOMETERS FROM THE LOCAL LIMITS OF THE LATUR MUNICIPALITY COUNCIL. WE ALSO FIND THAT T HE SAID LAND WAS AN AGRICULTURAL LAND. IN OUR OPINION, THE LD. CIT(A) HAS RIGHTLY HELD THAT THE LAND ACQUIRED BY THE GOVERNMENT ON WHICH BOTH THESE ASSESSEES WAS A FAMILY MEMBERS RECEIVED THE COMPENSATION IS NOT A CAPITAL ASSET AS SAID LAND IS COVERED BY SEC. 2(14)(III)(B) OF THE INCOME - TAX ACT AND HENCE, THERE CANNOT BE CAPITAL GAIN U/S. 45. WE, ACCORDINGLY, ANSWER THE ISSUE BEFORE US IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 8. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 27 - 09 - 20 1 3 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 27 TH SEPTEMBER, 20 1 3 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A), AURANGABAD 4 THE CIT, AURANGABAD 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE