ITO, CHENNAI V. M.A.Jananilakshmi, CHENNAI

ITA 1317/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90705 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: N DEVANATHAN
• Keywords: Capital asset
• Section: 54B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' $ , % ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A.NO . 1317/MDS/2013 & C.O.NO.113/MDS/2013 (IN ITA NO.1317/MDS/2013) (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER, BUSINESS .WARD-I(2), CHENNAI-34. VS SMT. M.A.JANANILAKSHMI 10/5, FIRST LINK STREET, CIT COLONY, MYLAPORE, CHENNAI-600 004. PAN: AEDPJ1012L ( /APPELLANT) ( /RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : MR. A.V.SREEKANTH, JCIT /RESPONDENT BY : MR. N.DEVANATHAN, ADVOCATE /DATE OF HEARING : 2 ND JUNE, 2015 /DATE OF PRONOUNCEMENT : 24 TH JULY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THE APPEAL AND THE CROSS OBJECTION ARE FILED BY TH E REVENUE AND ASSESSEE RESPECTIVELY AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, CHENNAI DA TED 10.01.2013 FOR THE ASSESSMENT YEAR 2007-08. 2. THERE ARE TWO ISSUES IN THE APPEAL OF THE REVENU E. ONE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN ALLOWING EXEMPTION UNDER SECTION 54B OF THE ACT AND THE OTHER IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING BROKERAGE COMMISSION OF ` 1,00,000/-. 2 ITA NO.1317/MDS/2013 & C.O. NO.113/MDS/2013 3. COUNSEL FOR THE ASSESSEE AT THE OUTSET INVITED OUR ATTENTION TO PARA 5 AND 7 OF THE ORDER OF COMMISSIO NER OF INCOME TAX (APPEALS) WHEREIN HE ALLOWED THE CLAIMS OF THE ASSESSEE BASED ON THE REMAND REPORT GIVEN BY THE ASSESSING OFFICER THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54B AND BROKERAGE COMMISSION PAID OF ` 1,00,000/- FOR PURCHASE OF LAND, WHICH IS ELIGIBLE FOR DEDUCTION, IS PROVED AND ELIGIBLE FOR DEDUCTION. CO UNSEL FOR THE ASSESSEE SUBMITS THAT APPEAL OF THE REVENUE CHA LLENGING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) IN ALLOWING THE CLAIM UNDER SECTION 54B AND BROKERAGE COMMISSION IS NOT MAINTAINABLE AT ALL, SINCE THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CL AIMS OF THE ASSESSEE BASED ON THE REMAND REPORT FURNISHED B Y THE ASSESSING OFFICER WHO ACCEPTED IN THE REMAND PROCEE DINGS THAT CLAIMS OF THE ASSESSEE ARE IN ORDER. 4. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDERS OF LOWER AUTHORITIES. 5. ON GOING THROUGH THE ORDER OF COMMISSIONER OF IN COME TAX (APPEALS), WE FIND THAT CLAIMS OF THE ASSESSEE UNDER 3 ITA NO.1317/MDS/2013 & C.O. NO.113/MDS/2013 SECTION 54B AND BROKERAGE COMMISSION PAYMENT IN RES PECT OF PURCHASE OF LAND HAVE BEEN ALLOWED BASED ON THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER WHO HAS A CCEPTED THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTI ON 54B OF THE ACT AND THE BROKERAGE COMMISSION PAID IS GENUIN E AND IT IS PROVED, THUS THE SAME IS ELIGIBLE FOR DEDUCTION. COMMISSIONER OF INCOME TAX (APPEALS) WHILE ALLOWING THE CLAIMS OF THE ASSESSEE OBSERVED AS UNDER:- 3 . AFTER GOING THROUGH ALL THE RELEVANT DOCUMENTS, ARGUMENTS, REPORTS, THE APPEAL IS ADJUDICATED. FROM THE ABOVE TWO OF THE THORNY ISSUES CONTESTED IN THIS AP PEAL HAVE BEEN RESOLVED BY ENQUIRIES CAUSED BY THE AO DURING THE REMAND PROCEEDINGS. FIRSTLY THE ADDITIO NAL GROUND NO.3 FILED ON 23.11.2012 WHERE IT IS AGITATE D THAT THE CENTRAL GOVERNMENT HAS NO LEGISLATIVE COMPETENC E TO LEGISLATE ON AGRICULTURAL INCOME WHICH IS A STAT E SUBJECT AND ALSO THAT CONCERNED AMENDMENTS TO IT AC T HAS NO FORCE OF LAW SINCE MANDATORY CONSENT OF THE HON'BLE PRESIDENT IN TERMS OF ARTICLE 274 OF THE CONSTITUTION WAS NOT OBTAINED. IT IS TO BE NOTED HE RE THAT THE SAID LEGISLATIVE AMENDMENT U/S 2( 14) IS NOT AB OUT AGRICULTURAL INCOME BUT ONLY AGRICULTURAL LANDS. HE NCE, THERE IS NO INFRINGEMENT OF STATE SUBJECT BY THE UN ION. HENCE, THIS GROUND IS DISMISSED. REST OF THE ADDITI ONAL GROUNDS ARE CONTINUATION OF THE GROUNDS ORIGINALLY FILED. HENCE, ALL THE GROUNDS ARE ADJUDICATED COMMONLY. EV EN THOUGH THE SALE PROCEEDS FROM THE SAID AGRICULTURAL LANDS WERE ORIGINALLY CLAIMED AS EXEMPT R.W.S. 2(14), THE APPELLANT HAS MODIFIED HER CLAIM TO RELIEF U/S 54B. WITH REFERENCE TO THE CLAIM OF THE APPELLANT U/S 54B AS ADDITIONAL GROUND THE AO HAS ACCEPTED THE CLAIM THA T AGRICULTURE HAS BEEN CARRIED OUT IN THE SAID LANDS TO GROW EUCALYPTUS TREES BASED ON THE ENQUIRY WITH THE VAO. THE ADDITIONAL GROUNDS REPRODUCED IN PARA 2 ABOVE WERE FORWARDED TO THE AO FOR HIS REMARKS AND HER REMARKS ARE EXTRACTED HERE. THE REMAND REPORT CALLED FOR IN THE CASE OF SMT. SM T.JANANI LAKSHMI IS SUBMITTED BELOW: 4 ITA NO.1317/MDS/2013 & C.O. NO.113/MDS/2013 ON VERIFICATION OF THE DOCUMENTS AVAILABLE ON RECOR D, THE FOLLOWING ARE SUBMITTED FOR YOUR KIND CONSIDERATION . PARA NO.1 OF ADDITIONAL GROUNDS: NOT APPLICABLE PARA NO.2: DURING ASSESSMENT PROCEEDINGS THE ITO HA S VERIFIED FROM THE VAO THAT EUCALYPTUS TREES HAVE AC TUALLY BEEN GROWN IN THE SAID LAND. THE CHITTA AND ADANGAL HAVE ALSO BEEN PLACED ON FILE AS PROOF OF THE SAME. HOWEVER THE CLAIM THAT, SALE PROCEEDS OF AGRICULTURAL LAND IS EXEMPT, WAS REJECTED SINCE THE VAO HAS CERTIFIED THAT THE TRANSFERRED LAND IS WELL WITHIN 3 KMS FROM THE MARAIMALAI L\IAGAR MUNICIPAL LIMITS. THE ASSESSEE HAS, IN ADDI TION TO HIS PREVIOUS EVIDENCES, A LETTER FROM THE WATCHMAN AND A PHOTOGRAPH OF THE LAND WITH THE EUCALYPTUS TREES. PARA NO.3: NOT APPLICABLE. PARA NO.4 : THE ASSESSE' PAID BROKERAGE OF RS. 1 LA KH IN PURCHASE OF AGRICULTURAL LAND AT MANNAMAI VILLAGE VERIFICATION OF THE SAME WAS DONE AND FOUND TO BE I N ORDER. PARA NO.5: FROM THE PAPERS ON RECORD AND FROM THE STATEMENT OF THE WATCHMAN IT HAS BEEN ASCERTAINED T HAT EUCALYPTUS TREES HAS ACTUALLY BEEN GROWN ON THE LAN D. THERE HAS BEEN A PERMANENT EMPLOYEE, A WELL AND !MOTOR FO R MAINTENANCE OF THE SAME. PARA NO.6: THE ASSESSEE HAS CLAIMED SALE OF EUCALYP TUS LEAVES TO THE VILLAGERS. BUT NO PROOF OF THE SAME H AS BEEN PRODUCED. 4. AS CLAIMED BY THE APPELLANT'S AR, EUCALYPTUS TRE ES NOT ONE THAT CAN GROW SPONTANEOUSLY. IT NEEDS CONSTANT NURTURING AND TILLAGE AND GROW AT LEAST FOR THE FIR ST TWO YEARS AFTER PLANTATION. EVEN THE PLANTATION HAS TO BE SYSTEMATIC WITH PITS MADE READY AND PLANT THE SAPLI NGS IN ROWS FACILITATING INTER CULTIVATIONAL PRACTICES. TH E CLAIM OF THE APPELLANT THAT THE EUCALYPTUS TREES, AFTER ARE CUTTING, USED IN THE PAPER PULP INDUSTRIES IS ALSO A FACT. T HE REMAND REPORT DATED 19.12.2012 ALSO CONFIRMS THIS AGREEMENT OF THE APPELLANT. HENCE FOR THESE REASONS , IT IS HELD THAT THE LAND IS PUT TO AGRICULTURAL USE FOR C ULTIVATION OF EUCALYPTUS TREES AND HENCE, THE LANDS ARE HELD TO B E AGRICULTURAL LANDS. 5. IN HIS REMAND REPORT VIDE LETTER DATED 06.05.201 0 FURNISHED BY THE ITO, BUSINESS WARD-I(2), THE ISSUE OF USER OF THE LAND PURCHASED LN MANAMAI VILLAGE HAS B EEN DISCUSSED IN DETAIL. IN PARA 5 AND 6 OF THE REMAND REPORT, IT IS ACCEPTED BY THE AO THAT ON PERUSAL OF ALL THE DETAILS AND DOCUMENTS SUBMITTED BEFORE HIM THAT THE ASSESSE E ~AD INVESTED THE PROCEEDS RECEIVED FROM THE SALE OF 5 ITA NO.1317/MDS/2013 & C.O. NO.113/MDS/2013 PROPERTY AT MELROSAPURAM VILLAGE, SENGUNDRAM VILLAG E, CHINGLEPUT TALUK IN A NEW AGRICULTURAL LAND BY WAY OF TWO REGISTERED DOCUMENTS AT MANAMAI VILLAGE, THIRUKAZHUKUNDRAM TALUK, KANCHEEPURAM DISTRICT. IT HAS ALSO BEEN NOTICED BY HIM THAT THE SAID LANDS PURCHA SED BY TWO SALE DEEDS ON 29.11.2007 HAVE BEEN QUALIFIED AS 'PUNJA' (CULTIVABLE -LANDFFI1 SURVEY NO.291/1CB, MA NAMAI VILLAGE AND THAT THE SAID PROPERTY WAS FOUND FITTED WITH 5 HP MOTOR, PUMP-SET AND MANGO & COCONUT TREES WERE ALREADY EXISTING IN THE LAND. HENCE, THE AO HAS GIV EN A FINDING THAT THE ASSESSEE WOULD BE ELIGIBLE FOR DED UCTION U/S 54B OF THE ACT. THE AMOUNT INVESTED IN SUCH LAN DS U/S 54B COMES TO RS.68,65,172/-. 6. THUS, BY A COMBINED READING OF THE REMAND REPORT S WHEREIN THE FINDINGS WERE GIVEN THAT AGRICULTURE IS CARRIED OUT IN THE LANDS TREATED AS CAPITAL ASSETS AND ALSO IN THE LANDS PURCHASED AT MANAMAI VILLAGE, THE ASSESSEE IS HELD TO BE ELIGIBLE FOR DEDUCTION U/S.54B OF THE ACT. ACCORDINGLY, ASSESSING OFFICER SHALL RECOMPUTE THE CAPITAL GAINS LIABLE FOR TAXATION. 7. REGARDING THE ASSESSEE'S CLAIM OF ` L LAC PAID AS BROKERAGE THE DETAILS FURNISHED FROM MR. ARUNAGIRIN ATHAN, ADVOCATE, CHENNAI, THE SAME WAS EXAMINED DURING REMAND REPORT. THE SAID' PAYMENT IS FOUND TO BE IN ORDER INFERRING THAT RS.L LAC CLAIMED AS BROKERAGE IS ELI GIBLE FOR DEDUCTION. THE AO IS ALSO DIRECTED TO ALLOW THIS DE DUCTION FROM THE SALE CONSIDERATION. 6. AS COULD BE SEEN FROM THE ABOVE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) THE CLAIMS OF THE ASSESSEE HAVE BEEN ALLOWED BASED ON THE REMAND REPO RT SUBMITTED BY THE ASSESSING OFFICER, WHO CAUSED THOR OUGH ENQUIRIES IN REMAND PROCEEDINGS AND ACCEPTED THAT C LAIMS OF THE ASSESSEE ARE CORRECT. WE ARE UNABLE TO UNDERSTA ND WHY THE REVENUE HAS PREFERRED THE APPEAL BEFORE THE TRI BUNAL, WHEN THE ASSESSING OFFICER HIMSELF HAS AGREED THAT CLAIMS OF 6 ITA NO.1317/MDS/2013 & C.O. NO.113/MDS/2013 THE ASSESSEE ARE IN ORDER. THE REVENUE SHOULD NOT FILE AN APPEAL IN A ROUTINE MANNER. IN ANY EVENT, SINCE THE CLAIMS OF THE ASSESSEE HAVE BEEN ACCEPTED BY THE ASSESSING OF FICER IN THE REMAND PROCEEDINGS, WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS TH E APPEAL OF THE REVENUE. 7. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ON LY IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND AS WE HAVE SUSTAINED THE IMPUGNED ORD ER, THE CROSS OBJECTION FILED BY THE ASSESSEE BECOMES INFR UCTUOUS AND DISMISSED ACCORDINGLY,. 8. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS O BJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JULY, 2015. SD/- SD/- ( ) ( ' $ ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) & / ACCOUNTANT MEMBER $' & / JUDICIAL MEMBER $ /CHENNAI, ) /DATED 24 TH JULY, 2015 SOMU 7 ITA NO.1317/MDS/2013 & C.O. NO.113/MDS/2013 ',- .- /COPY TO: 1. ASSESSEE 2 ASSESSING OFFICER 3. / () /CIT(A) 4. / /CIT 5. - ''3 /DR 6. 6 /GF .