K.Ramulu, Hyderabad V. ACIT, Hyderabad

ITA 1281/HYD/2013

• Counselvise Citation: 128122514 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: P BALAKRISHNA
• Keywords: Capital asset; Cost of acquisition; Fair market value; Wrong claim; Ignorance of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1281/HYD/2013 ASSESSMENT YEAR 2008-2009 MR. K. RAMULU, HYDERABAD PAN AMCPR8243E VS. ACIT, CIRCLE 8 ( 1 ) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. P. BALAKRISHNA FOR REVENUE : MR. K.E. SUNIL BABU DATE OF HEARING : 18 .11.2015 DATE OF PRONOUNCEMENT : 30 .11.2015 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2008-09. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE OR DER OF THE LD. CIT(A) IN CONFIRMING THE CAPITAL GAINS BROU GHT TO TAX ON THE COMPENSATION RECEIVED ON ACQUISITION OF THE AGRICULTURAL LANDS OF THE ASSESSEE BY GOVERNMENT OF ANDHRA PRADESH FOR THE OUTER RING ROAD PROJECT (IN SHORT ORRP) DURING THE RELEVANT ASSESSMENT YEAR. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL AND AN AGRICULTURIST BY PROFESSION. F OR THE RELEVANT A.Y. 2008-09, THE ASSESSEE FILED HIS RETUR N OF INCOME DECLARING NIL INCOME. DURING THE ASSESSMENT 2 ITA.NO.1281/HYD/2013 MR. K. RAMULU, HYDERABAD. PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT, T HE A.O. ASKED THE ASSESSEE TO FURNISH DETAILS RELATING TO T HE INCOME DECLARED BY THE ASSESSEE. THE ASSESSEE VIDE HIS LETTER DATED 14.09.2010 SUBMITTED THAT HE OWNS AGRICULTURAL LANDS OF AC.3.15 GTS IN SURVEY NOS.117 , 118, 119, 121, 122, 123, 124 AND 146 OF TONDAPALLI (V), SHAMSHABAD (M), RANGA REDDY DISTRICT AND THAT DURIN G THE YEAR, THE SAME WAS ACQUIRED BY THE GOVERNEMNT F OR THE ORRP AND HAD RECEIVED LAND ACQUISITION COMPENSATION OF RS.43,23,346 FROM THE PROJECT DIREC TOR AND SUB-COLLECTOR, LAND ACQUISITION OF ORRP, HUDA, HYDERABAD AND TDS OF RS.4,89,835 HAD BEEN MADE BEFO RE MAKING SUCH PAYMENT. IT WAS SUBMITTED THAT SINCE TH E AGRICULTURAL LANDS WERE ACQUIRED BY THE PROJECT DIR ECTOR, THERE WOULD NOT BE ANY CAPITAL GAIN AND THAT HIS CL AIM OF CAPITAL LOSS OF RS.11,86,654 WAS FICTITIOUS AND MAD E OUT OF IGNORANCE OF LAW AND THE SAME IS IN ELIGIBLE. IN SUPPORT OF HIS CLAIM THAT THE LANDS WERE AGRICULTURAL LANDS , COPIES OF PAHANIES AND RYOT PATTADAR PASS BOOKS WERE FURNI SHED. FURTHER, VIDE HIS LETTER DATED 23.09.2010, THE ASSE SSEE REITERATED HIS SUBMISSIONS THAT THE LAND WAS AGRICU LTURAL LAND AS HE DID NOT ENTER INTO AGREEMENT FOR LEASE, HIRE PURCHASE, LOANS ETC., AND THAT HE STILL OWNS AC.1.2 3 GTS OF LAND AFTER ACQUISITION MADE BY THE PROJECT DIRECTOR , LAND ACQUISITION OF ORRP, HUDA, HYDERABAD. HOWEVER, EVEN AFTER CONSIDERING ASSESSEES SUBMISSIONS, THE A.O. WAS NOT CONVINCED AND HELD THAT THE LAND IN QUESTION W AS A CAPITAL ASSET AND THAT INDEXED COST OF ACQUISITION OF THE SAME AMOUNTING TO RS.11,86,654 IS INCORRECT. HE HEL D 3 ITA.NO.1281/HYD/2013 MR. K. RAMULU, HYDERABAD. THAT THE ASSESSEES CONTENTION IS AN AFTERTHOUGHT A S THE LANDS WERE ACQUIRED AND THE CAPITAL GAINS WAS ATTRA CTED IN HIS CASE. HE HELD THAT THE LAND OWNED BY THE ASSESS EE IS WITHIN THE LIMITS OF HYDERABAD METROPOLITAN DEVELOP MENT AUTHORITY AND HAS BEEN ACQUIRED UNDER COMPULSORY ACQUISITION FOR THE ORRP. HE THEREFORE HELD THAT TH E GAIN FROM THE TRANSFER OF THE LAND WAS CLEARLY CAPITAL G AINS AND ACCORDINGLY IT HAS TO BE BROUGHT TO TAX. HE FURTHER OBSERVED THAT THE ASSESSEE RECEIVED A TOTAL CONSIDE RATION OF RS.43,23,346 AND THAT THE ASSESSEE COULD NOT FUR NISH ANY EVIDENCE WITH REGARD TO THE LANDS IN QUESTION T HAT THEY WERE USED FOR CULTIVATION AND THAT ANY CROPS H AVE BEEN LAID BEFORE SUCH ACQUISITION. IN VIEW OF THESE FACTS, HE HELD THAT THE CLAIM OF LOSS OF RS.11,86,654 AFTE R INDEXATION OF COST IS NOT ACCEPTABLE. THEREAFTER, H E PROCEEDED TO ARRIVE AT THE FAIR MARKET VALUE OF THE LANDS IN THE HANDS OF THE ASSESSEE AT RS.2 PER SQ. YARD AND ACCORDINGLY COMPUTED CAPITAL GAINS. AGGRIEVED, ASSE SSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFI RMED THE ORDER OF THE A.O. AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE, WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BE FORE THE AUTHORITIES BELOW SUBMITTED THAT ON RECEIPT OF COMPENSATION ON COMPULSORY ACQUISITION OF ASSESSEE S AGRICULTURAL LANDS FOR THE ORRP, THE ASSESSEE HAD F ILED RETURN OF INCOME BY OFFERING THE SAID AMOUNT TO TAX AFTER CLAIMING THE LOSS OF CAPITAL GAINS OF RS.11,86,654 BEING 4 ITA.NO.1281/HYD/2013 MR. K. RAMULU, HYDERABAD. THE INDEXED COST OF ACQUISITION AS THE LANDS WERE A NCESTRAL PROPERTIES INHERITED BY HIM PRIOR TO 01.04.1981. HE HAS DRAWN OUR ATTENTION TO THE RETURN OF INCOME FILED B Y THE ASSESSEE WHICH IS PLACED AT PAGE NO.34 OF THE PAPER BOOK TO ALSO CONVINCE US THAT IN THE RETURN OF INCOME IT SELF, THE ASSESSEE HAD CLAIMED THAT THE TRANSFER WAS OF AGRIC ULTURAL LANDS SITUATED BEYOND THE MUNICIPAL LIMITS AND THER EFORE, CANNOT BE BROUGHT TO TAX. THUS, THE COMPUTATION OF INCOME FROM THE CAPITAL GAINS ON TRANSFER OF AGRICU LTURAL LAND WAS SHOWN AT NIL. IN THE ALTERNATIVE, THE AS SESSEE HAD ALSO CLAIMED THE LOSS OF INDEXED COST OF ACQUIS ITION FROM THE COMPUTATION RECEIVED AND CLAIMED THE CAPIT AL LOSS. THUS, ACCORDING TO THE LD. COUNSEL FOR THE AS SESSEE, THE LOSS WAS ERRONEOUSLY CLAIMED UNDER THE MISTAKEN IMPRESSION UNDERSTANDING OF LAW AND THE SAME WAS AL SO THEREAFTER BROUGHT TO THE NOTICE OF THE A.O. BY FIL ING A LETTER DATED 14.09.2010 DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT. H E HAS ALSO DRAWN OUR ATTENTION TO THE CERTIFICATE ISSUED BY THE O/O. TAHSILDAR, SHAMSHABAD (M) DATED 30.12.2010 WHEREIN IT WAS CERTIFIED THAT THE AGRICULTURAL LAND S IN SY.NOS. 117 TO 119, 121 TO 124 AND 146 TOTAL EXTENT AC.3.15 GTS SITUATED AT TONDAPALLY (V), WHICH WAS A CQUIRED BY THE OUTER RING ROAD AUTHORITIES, IS NOT COVERED UNDER GREATER HYDERABAD MUNICIPAL CORPORATION. THUS, ACCORDING TO HIM, THE AGRICULTURAL LANDS ARE NOT CA PITAL ASSETS UNDER THE INCOME TAX ACT. HE HAS ALSO DRAWN OUR ATTENTION TO THE PAHANIES FOR THE RELEVANT PERIOD W HEREIN THE LANDS ARE SHOWN AS AGRICULTURAL LANDS AND THE 5 ITA.NO.1281/HYD/2013 MR. K. RAMULU, HYDERABAD. ASSESSEE IS SHOWN AS THE CULTIVATOR. HE SUBMITTED T HAT THE ASSESSEE WAS A SENIOR CITIZEN AND AN AGRICULTURIST BY PROFESSION AND THEREFORE, ON A MISTAKEN ADVISE, HAD FILED THE RETURN OF INCOME, WHEREAS, THE ASSESSEE WAS, IN FACT, ENTITLED TO REFUND OF THE TDS MADE BY THE AUTHORITI ES BELOW. HE SUBMITTED THAT ALL THESE FACTS WERE BROUG HT TO THE NOTICE OF THE A.O. AS WELL AS THE LD. CIT(A) BU T BOTH OF THEM DID NOT DEAL WITH THE EVIDENCE FILED BY HIM IN SUPPORT OF THE CONTENTION. THUS, ACCORDING TO HIM, THE ASSESSEE HAS SUFFERED GRAVE INJUSTICE AND THE COMPENSATION RECEIVED ON COMPULSORY ACQUISITION OF LAND WAS ERRONEOUSLY BROUGHT TO TAX AS CAPITAL GAINS. HE THUS PRAYED FOR QUASHING OF THE ASSESSMENT ORDER AS WELL AS FOR A DIRECTION TO REFUND THE TDS AMOUNT DEDUCTED BY TH E ORRP AUTHORITIES. 4. THE LD. D.R., ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTI ONS AND THE MATERIAL ON RECORD BEFORE US, WE FIND THAT THE FACT THAT THE ASSESSEES AGRICULTURAL LANDS WERE ACQUIRED BY THE ORRP BY COMPULSORY ACQUISITION IS NOT IN DISPUTE. IT IS ALSO NOT IN DISPUTE THAT THE TDS HAS BEEN MADE BEFORE MAKING THE PAYMENT OF THE COMPENSATION. AS SEEN FROM THE RETUR N OF INCOME FILED BY THE ASSESSEE, THE ASSESSEE HAD ALSO CLAIMED THAT THE LANDS WHICH WERE ACQUIRED BY THE O RRP FOR WHICH ASSESSEE HAS RECEIVED COMPENSATION ARE AGRICULTURAL LANDS AND THEREFORE, THERE IS NO CAPIT AL GAIN 6 ITA.NO.1281/HYD/2013 MR. K. RAMULU, HYDERABAD. TO BE TAXED. IT IS THE DUTY OF THE A.O. TO PERUSE T HE RETURN OF INCOME FILED BY THE ASSESSEE AND ADVISE THE ASSE SSEE IN CASE THERE IS A WRONG CLAIM MADE OR WRONG OFFERING OF INCOME. IN THE CASE BEFORE US, THE CBDT VIDE ITS CI RCULAR NO.14 DATED 11.04.1955 HAS ISSUED GUIDELINES/ INSTRUCTIONS TO THIS EFFECT. THE COORDINATE BENCH O F THIS TRIBUNAL AT INDORE IN THE CASE OF SHRI PARAMJEET SI NGH CHABBRA VS. CIT AFTER TAKING NOTE OF THE ABOVE CIRC ULAR, HELD THAT IF DUE TO IGNORANCE A WRONG SECTION IS MENTIONED BY THE ASSESSEE, IT IS THE DUTY OF THE A. O. TO ADVISE THE ASSESSEE ABOUT THE CORRECT CLAIM AND ALS O TO ASSESS THE TAX LEGITIMATELY. WHEN THE ASSESSEE HAS CLEARLY MADE THE CLAIM THAT THE LANDS ARE AGRICULTURAL LAND S AND OUTSIDE THE AREA OF MUNICIPAL CORPORATION OF HYDERA BAD, THE A.O. OUGHT TO HAVE VERIFIED THE SAME BEFORE COM ING TO THE CONCLUSION THAT THE ASSESSEES RECEIPT OF COMPE NSATION IS EXIGIBLE TO CAPITAL GAINS TAX. IN SUPPORT OF HI S CONTENTION, ASSESSEE ALSO FILED THE CERTIFICATE OF THE TAHSILDAR, SHAMSHABAD (M) BUT NONE OF THE AUTHORITI ES HAVE TAKEN THE SAME INTO CONSIDERATION BEFORE COMIN G TO THE CONCLUSION THAT THE AGRICULTURAL LAND IS CAPITA L ASSET AND CAPITAL GAINS IS EXIGIBLE. THE LD. D.R., THOUGH AGREED THAT THE ABOVE DOCUMENTS HAVE NOT BEEN TAKEN INTO CONSIDERATION BY THE AUTHORITIES BELOW, PRAYED THAT THE ISSUE MAY BE REMANDED TO THE FILE OF THE A.O. FOR R E- CONSIDERATION AND VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE, HOWEVER , OBJECTED TO THE SAME SUBMITTING THAT THE ASSESSEE I S A SENIOR CITIZEN AND NONE OF THE OTHER LAND HOLDERS W HOSE 7 ITA.NO.1281/HYD/2013 MR. K. RAMULU, HYDERABAD. LANDS HAVE BEEN ACQUIRED BY THE ORRP HAVE BEEN TAXE D FOR CAPITAL GAINS. 5.1. TAKING ALL THE ABOVE FACTS INTO CONSIDERATION AND ALSO THE CERTIFICATE OF THE REVENUE AUTHORITIES TO STATE THAT THE LAND OF THE ASSESSEE IS SITUATED OUTSIDE T HE GHMC LIMITS AND ALSO TAKING INTO CONSIDERATION THE FACT THAT THE LANDS ACQUIRED WERE AGRICULTURAL LANDS AS RECORDED IN THE PAHANIES AND THE PATTADAR PASS BOOK ISSUED BY THE RELEVANT AUTHORITIES, WE ARE SATISFIE D THAT THE LAND OF THE ASSESSEE ACQUIRED BY THE ORRP WAS AGRICULTURAL LAND AND IS NOT A CAPITAL ASSET IN THE HANDS OF THE ASSESSEE AS PER THE INCOME TAX ACT. FURTHER, AS SESSEE IS ALSO ENTITLED TO REFUND OF THE TDS MADE BY THE O RRP AUTHORITIES BEFORE MAKING THE PAYMENT OF THE COMPENSATION. THE A.O. IS ACCORDINGLY DIRECTED TO R EFUND THE TDS MADE AND REMITTED BY THE GOVERNMENT AUTHORITIES IN RESPECT OF THE LAND OF THE ASSESSEE ACQUIRED BY THE AUTHORITIES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2015. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 30 TH NOVEMBER, 2015 VBP/- 8 ITA.NO.1281/HYD/2013 MR. K. RAMULU, HYDERABAD. COPY TO : 1. MR. K. RAMULU, HYDERABAD. C/O. MR. P. BALAKRISHNA, ADVOCATE, OFFICE NO.216/A, 2 ND FLOOR, LEFT WING NBK ESTATE, GOLCONDA X ROAD, HYDERABAD 500 020. 2. ACIT, CIRCLE 8(1), I.T. TOWERS, HY DERABAD. 3. CIT(A) - III , HYDERABAD 4 . CIT - II , HYDERABAD 5 . D.R. ITAT A BENCH, HYDERABAD. 6 . GUARD FILE