DCIT, Patiala V. Smt. Kaushalya Devi, Patiala

ITA 1300/CHANDI/2010

• Counselvise Citation: 130021514 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 15-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: K P BAJAJ
• Keywords: Capital asset; Cost of acquisition
• Section: 54B; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BEN CH A BEFORE SHRI H.L.KARWA, VP AND SHRI MEHAR SINGH, AM ITA NO. 1300/CHD/2010 ASSESSMENT YEAR 2006-07 D.C.I.T. CENTRAL CIRCLE, V SMT. KAUSHALAYA DEVI PATIALA C/O M/S JAGDISH JEWELLERS (P) LTD. ADALAT BAZAR, PATIALA AANPD 7968 D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. SAINI RESPONDENT BY: SHRI K.P. BAJAJ DATE OF HEARING: 5.3.2012 DATE OF PRONOUNCEMENT: 07 .03.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE, FOR ASSES SMENT YEAR 2006-07, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A )-I, LUDHIANA DATED 27..8.2010 U/S 250(6) OF THE INCOME-TAX ACT ( IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACT S OF THE CASE IN DELETING AN ADDITION FOR RS. 18,03,522/- MA DE BY THE AO ON ACCOUNT OF SHORT TERM CAPITAL GENERAL IN NAT URE AND DOES NOT REQUIRE ANY ADJUDICATION. ON SALE OF LAND ON WHICH THE ASSESSEE HAD ALREADY CLAIMED EXEMPTION U/S 54B AND SUBSEQUENTLY THE ASSESSEE HAD ALSO SOLD THE NEW ASS ET WITHIN THIRTY SIX MONTHS OF ITS PURCHASE. 2. THE APPELLANT CRAVES TO ADD OR AMEND THE GROUND OF APPEAL ON OR BEFORE THE APPEAL IS HEARD AND DISPOSE D OFF. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND RELEVANT RECORD. IN THIS CASE, THE ASSESSE E SOLD HIS AGRICULTURAL LAND AT SANOUR ON 16.2.2006 FOR RS. 18 ,03,522/-. DURING 2 THE FINANCIAL YEAR 2003-04 RELEVANT TO AY 2004-05 T HE ASSESSEE SOLD 7 BIGHAS AND 5 BISWAS AGRICULTURAL LAND FOR RS. 28. 00 LAKHS ON 9..5.2003 AND CLAIMED BENEFIT U/S 54B OF THE INCOME -TAX ACT, 1961, FOR PURCHASE OF LAND AT SANOUR FOR RS. 18,55,700/-. THE ASSESSEE PURCHASED NEW AGRICULTURAL LAND AT SANOUR. SUBSEQU ENTLY THE ASSESSEE SOLD THE NEW ASSET PURCHASED AT SANOUR BEF ORE THE COMPLETION OF 36 MONTHS. THE AO INVOKED THE PROVIS IONS OF SECTION 54B OF THE ACT AND TREATED THE ENTIRE CONSIDERATION OF RS. 18,03,522/- AS SHORT TERM CAPITAL GAINS FOR AY 2006 -07. THIS ACTION OF THE AO WAS DEFENDED BY THE LD 'DR', FOR THE REVE NUE BY QUOTING PROVISIONS OF SECTION 54B OF THE ACT EXTENSIVELY. HOWEVER, THE LD 'AR' FOR THE ASSESSEE SUBMITTED THAT THE NEW ASSET PURCHASED AT SANOUR DOES NOT FALL U/S 2(14)(III) OF THE ACT. TH E NEW ASST FALLS BEYOND THE M.C. LIMIT OF THAT TOWN AND THE ASSESSEE REFERRED TO PAGE NO. 5 OF HIS PAPER BOOK INDICATING THAT THE MA IN SPECIFIC PARTICULARS OF THE NEW ASST I.E. AGRICULTURAL LAND FALLS OUTSIDE THE NEW M.C. LIMIT OF SANOUR AS INTIMATED IN COL. 12 OF COP Y OF JAMABANDI SIGNED BY THE PATWARI ON 23.12.2009. THE REVENUE HAS FAILED TO ESTABLISH THE FACTUM THAT THE NEW ASSET IS CAPITAL ASSET WITHIN THE DEFINITION PRESCRIBED U/S 2(14)(III) OF THE ACT. C ONSEQUENTLY, THE PROVISIONS OF SECTION 54B CANNOT BE APPLIED TO THE PRESENT CASE. THE PROVISIONS OF SECTION 54B AND ITS VARIANTS UPTO 54F ARE NOT INTENDED AS CHARGING SECTION FOR CAPITAL GAINS. TH EREFORE, THE FINDINGS OF THE AO ARE NOT IN CONSONANCE WITH THE E XPRESSED PROVISIONS OF THE ACT AND, HENCE, CANNOT BE SUSTAIN ED. IN VIEW OF THIS, THE FINDINGS OF THE LD. CIT(A) ARE UPHELD. R ELEVANT PORTION OF THE FINDINGS OF THE LD. CIT(A) ARE REPRODUCED HEREU NDER: 16.4 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD 'AR'. DURING THE YEAR THE ASSESSEE HAS SOLD LAND AT SANOU R ON 16.2.2006 FOR RS. 18,03,522/- AND COMPUTED THE CAPI TAL LOSS OF RS. 1,88,450/- AS NOTED IN THE ASSESSMENT ORDER. D URING THE FINANCIAL YEAR 2003-04 RELEVANT TO THE AY 2004-05 T HE AE SOLD 3 7 BIGHA 5 BISWAS AGRICULTURAL LAND FOR RS. 28.00 LA KHS AND CLAIMED DEDUCTION U/S 54B OF THE ACT AS THE ASSESSE E PURCHASED NEW AGRICULTURAL LAND AT SANOUR. HOWEVER , THE ASSESSEE HAS SOLD THE SAME SANOUR LAND BEFORE COMPL ETION OF 36 MONTHS. ACCORDINGLY AO ASKED THE ASSESSEE TO EX PLAIN AS TO WHY THE CLAIM U/S 54B MAY NOT BE DISALLOWED AND WHY COST OF ACQUISITION OF LAND SOLD DURING THE YEAR MAY NO T BE TAKEN AS NIL AND CONSEQUENTLY WHY NOT TOTAL SALE CONSIDE RATION OF RS. 18,03,522/- MAY NOT BE TREATED AS SHORT TERM CA PITAL GAIN. SINCE NO REPLY WAS FILED AO TREATED THE ENTIRE SALE CONSIDERATION OF RS. 18,03,522/- AS SHORT TERM CAPI TAL GAINS FOR AY 2006-07 BY TAKING THE COST OF LAND AS NIL BY INV OKING THE PROVISIONS OF SECTION 54B. IN THE REMAND REPORT AO AFTER REPEATING THE FACTS ALREADY DISCUSSED HAS STATED TH AT THERE IS NO RELEVANCE OF THE FACT THAT THE LAND SOLD IS SITU ATED WITHIN THE REVENUE STATE OF VILLAGE SANOUR OR NOT. THE AS SESSEE HAS ALREADY CLAIMED THE COST OF LAND U/S 54B. HOWEVER, I AM NOT INCLINED TO AGREE WITH THE AFORESAID CONTENTIONS OF THE AO. IN THIS REGARD AR HAS DRAWN MY ATTENTION TO THE PROVIS IONS OF SECTION 54B AND THE DEFINITION OF CAPITAL ASSET AS GIVEN IN SECTION 2(14)(III) OF THE ACT. 16.5 FROM THE AFORESAID DISCUSSION AND PROVISIONS O F SECTION 54B AND 2(14)(III) OF THE ACT IT FOLLOWS THAT LAND SOLD AT SANOUR WAS NOT A CAPITAL ASSET, AS DEFINED IN SECTION 2(14 )(III) OF THE ACT AND THEREFORE CANNOT BE SUBJECTED TO TAX UNDER THE HEAD CAPITAL GAIN. AR IN HIS SUBMISSIONS HAS STATED THAT AS PER NOTIFICATION DATED 9.11.1993 NO PART OF THE AREA UN DER SANOUR MUNICIPALITY HAS BEEN NOTIFIED AND THERE WAS NO FUR THER NOTIFICATION AFTER THE AFORESAID NOTIFICATION DATED 9.11.93. FOREMOST CONDITIONS FOR LEVY OF CAPITAL GAIN TAX IS THAT AN ASSET SHOULD BE A CAPITAL ASSET AS PER PROVISIONS OF INCO ME TAX ACT WHICH IS NOT THE CASE WITH THIS LAND OR AT LEAST AO HAS NOT CONTROVERTED THE ARS ABOVE SUBMISSION IN THIS REGA RD WITH PROPER LEGAL PROVISIONS OF THE ACT AND EVIDENCE. 16.6 IN VIEW OF THE ABOVE AND ALSO IN VIEW OF THE D ECISION OF HON'BLE ITAT IN THE CASE OF ITO V. KHAZAN SINGH, SA NGRUR IN ITA NO. 53/CHD/2005, I AM OF THE OPINION THAT THE A FORESAID LAND CANNOT BE TERMED AS A CAPITAL ASSET6 AND THERE FORE CANNOT BE SUBJECTED TO CAPITAL GAIN TAX EVEN THROUG H AS PER PROVISIONS OF SECTION 54B ITS COST IS TAKEN AT NIL. ACCORDINGLY ADDITION OF RS. 18,03,522/- IS DELETED. 4. GROUND NOS. 2 AND 3 ARE GENERAL IN NATURE AND DO NOT NEED ANY SPECIFIC ADJUDICATION. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED ON 07 .03.2012 SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER CHANDIGARH, THE 07 .03.2012 SURESH COPY TO:THE APPELLANT/THE RESPONDENT/THE CIT/THE CI T(A)/THE DR 4