Syed Shahabuddin, Medak, Hyderabad V. ITO, Ward-1, Sangareddy, Sanga Reddy

ITA 1377/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2390 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 14-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N RAVI BABU
• Assessee Lawyers: MD AFZAL
• Keywords: Capital asset
• Section: 54F; 234B; 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1377/HYD/2016 ASSESSMENT YEAR: 2007-08 SYED SHAHABUDDIN, RAMACHANDRAPURAM [PAN: CJMPS3609C] VS INCOME TAX OFFICER, WARD-1, SANGAREDDY (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI MD. AFZAL, AR FOR REVENUE : SHRI N. RAVI BABU, DR DATE OF HEARING : 09-11-2017 DATE OF PRONOUNCEMENT : 22-11-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-2, HYDERABAD, DATED 31-05-2016, FOR THE AY. 2007-08. 2. THE GROUNDS RAISED BY ASSESSEE ARE AS UNDER: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2 HYDERABAD, IS AGAINST THE LAW, WEIGHT OF EVIDENCE A ND PROBABILITIES OF CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE AGRICULTURAL LAND SOLD FOR A CONSIDERATION OF RS.22,40,000/- IS NOT A CAPITAL ASSET, THEREFORE, SECTION 45 IS NOT APPLI CABLE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE LAND IS SITUATED AT TELLAPUR V ILLAGE OF I.T.A. NO. 1377/HYD/2016 :- 2 - : RAMCHANDRAPURAM MANDAL, MEDAK DISTRICT, THEREFORE, NOT WITHIN THE MUNICIPAL LIMITS OF RAMCHANDRAPURAM, THEREFORE, NOT AN ASSET FOR THE PURPOSE OF SECTION 45 OF THE IT ACT. 4. THE LEARNED COMMISSIONER ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER WHEREIN, CLAIM U/S. 54F OF THE IT ACT WAS NOT ALLOWED. 5. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR M ODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF H EARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. 3. THE ISSUE IN THIS APPEAL IS ABOUT COMPUTATION OF CAP ITAL GAIN IN THE ASSESSMENT COMPLETED U/S. 144 OF THE INCOME TAX ACT [ACT] EX-PARTE AND CONFIRMATION BY LD.CIT(A) EX-PARTE AS WELL. 4. BRIEFLY STATED, ASSESSING OFFICER (AO) RECEIVED IN FORMATION THAT ASSESSEE SOLD LAND TO AN EXTENT OF RS. 22,40,000/- AND INITIATED PROCEEDINGS U/S. 147. THE ORDER OF AO ON TH IS ISSUE IS AS UNDER: 2. UNEXPLAINED INCOME: DURING THE FINANCIAL YEAR THE ASSESSEE SRI SYED SHA HABUDDIN HAS SOLD ACRES 1.24 GUNTAS OF LAND LOCATED IN SY.NO. 444/AA, TELLAPUR VILLAGE, RAMACHANDRAPURAM MANDAL, MEDAK DIST, FOR A CONSIDER ATION OF RS. 22,40,000/-. THIS LAND MAY BE TREATED AS URBAN LAN D AS IT IS LOCATED WITH THE PRESCRIBED RADIUS OF MUNICIPALITY AREA. SINCE NO PROPER EXPLANATION HAS BEEN OFFERED BY YOU WITH REGARD TO THE SAME, TH E TRANSACTION ATTRACTS CAPITAL GAINS AS PER PROVISIONS OF SECTION 54 OF TH E I.T. ACT. 3. IN RESPONSE TO THE SHOW CAUSE LETTER THE ASSESSE E HAS FILED INFORMATION REGARDING PURCHASE OF PROPERTY AND BANK STATEMENT A ND A LETTER DATED 26- 03-2013 WHEREIN IT IS STATED THAT I AM RETIRED EMPLOYEE FROM BHEL. I HAD AN AGRICUL TURAL DRY LAND SY. NO. 444/A ADMEASURING AREA ACRES 1.24 GUNTAS, SITUA TED AT TELLAPUR VILLAGE, R C PURAM MANDAL, MEDAK DIST. THIS AGRICULTURAL DR Y LAND WHICH IS ALSO MENTIONED IN THE REGISTRATION DOCUMENT IS SOLD TO A LINES GROUP INFRA PVT LTD I.T.A. NO. 1377/HYD/2016 :- 3 - : THE ABOVE AGRICULTURAL LAND DOES NOT COME UNDER THE CAPITAL ASSET AS PER PROVISIONS OF SECTION 54 OF THE I.T. ACT . 4. QUANTUM OF DEDUCTION UNDER SECTION 54. CAPITAL GAINS SHALL BE EXEMPTED TO THE EXTENT, IT I S INVESTED IN THE PURCHASE AND/OR CONSTRUCTION OF ANOTHER PROPERTY. 1. IF THE ENTIRE AMOUNT IS EQUAL TO OR LESS THAN THE C OST OF THE NEW PROPERTY, THE ENTIRE CAPITAL GAIN SHALL BE EXEMPT. 2. IF THE AMOUNT OF CAPITAL GAIN IS GREATER THAN THE C OST OF THE HOUSE, THEN THE COST OF THE NEW PROPERTY, THEN THE COST OF THE NEW PROPERTY SHALL BE ALLOWED AS AN EXEMPTION. ON GOING THROUGH THE REPLY, SALE DEEDS, BANK STATEM ENT FURNISHED BY THE ASSESSEE IT IS NOTICED THAT THE PROPERTY PURCHASED BY HIM WAS PRIOR TO THE LAND SOLD BY HIM AND THE ASSESSEE IS NOT ENTITLED F OR EXEMPTION U/S. 54 OF THE I.T. ACT. THE CONTENTION OF THE ASSESSEE CAN N OT BE CONSIDERED AND AFTER GOING THROUGH THE MATERIAL AVAILABLE ON THE R ECORD THE ASSESSMENT IS COMPLETED AS UNDER: RS. RS. INCOME RETURNED 22,40,000 LESS: COST INDEXATION 19,930 LONG TERM CAPITAL GAINS 22,20,070 TAX ON LONG TERM CAPITAL GAINS @ 20% 4,44,014 ADD: SURCHARGE @ 10% 44,401 ADD: EDUCATION CESS @2% 9,768 TOTAL TAX PAYABLE 4,98,183 ADD: INTEREST U/S. 234B 3,58,691 U/S. 234C 3,586 NET TAX PAYABLE 8,60,460 5. EVEN THOUGH ASSESSEE IS A RETIRED BHEL EMPLOYEE AN D IS RESIDING AT RAMACHANDRAPURAM, ASSESSMENT WAS COMPLETE D ON TELLAPUR ADDRESS AND BY MISTAKE, THE SAME ADDRESS WAS GIVEN IN FORM 35 BEFORE THE LD.CIT(A). THE NOTICES ISSUES TO THAT ADDRESS I.T.A. NO. 1377/HYD/2016 :- 4 - : WERE NOT SERVED ON ASSESSEE AND THE APPEAL WAS DISMI SSED BY LD.CIT(A), AS NO SUBMISSIONS WERE MADE. 6. REFERRING TO THE ORDER OF AO, IT WAS THE SUBMISSIO N THAT THE LAND IS AGRICULTURAL LAND AND IS AWAY FROM RAMACHAN DRAPURAM MUNICIPALITY BY MORE THAN 8 KMS. MOREOVER, RAMACHAN DRAPURAM MUNICIPALITY IS NOT NOTIFIED AT THAT TIME. IN ADDITION, TH E LD. COUNSEL REFERRED TO ORDER OF AO TO SUBMIT THAT AO HAS NOT SPECIFIED HOW THE AGRICULTURAL LAND BECAME URBAN LAND. FURTH ER, ASSESSEE ALSO INVESTED IN FLAT FROM THE ADVANCE RECEIVED AND TH E SAME WAS REJECTED AS ON THE REASON THAT THE SAME WAS INVESTED PR IOR TO THE DATE OF TRANSFER. HE REFERRED TO THE PROVISIONS OF LAW THAT ASSESSEE IS ENTITLED TO CLAIM IF A HOUSE IS PURCHASED ONE YEAR BEFORE THE DATE OF TRANSFER AND THIS WAS PURCHASED WITHIN THAT TIME . THE PRAYER IS TO SET ASIDE THE ORDER OF AO FOR EXAMINATION OF CONTENTIONS AFRESH. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS, I AM SATISF IED THAT THE ISSUE REQUIRES RE-EXAMINATION BY AO. AS CAN BE SEEN FROM THE ORDER, AO HAS NOT GIVEN ANY FINDING HOW THE AGRICULTUR AL LAND BECAME URBAN LAND. HIS OPINION THIS LAND MAY BE TREATED AS URBAN LAND AS IT IS LOCATED WITHIN THE PRESCRIBED R ADIUS OF MUNICIPAL AREA HAS NO BASIS AS HE HAS NOT SPECIFIED THE MUNICIPAL ITY AND DISTANCES. MOREOVER, THE REASONING OF NOT CONSIDERING ALTERNATE CONTENTION OF DEDUCTION U/S. 54 IS ALSO NOT CORRECT. IN VIEW THAT, I SET ASIDE THE ORDER OF AO AND CIT(A) AND RESTORE THE IS SUE TO THE FILE OF AO TO GIVE CLEAR FINDING ON THE ISSUES AND IF THE LAND IS NOT URBAN LAND NOT TO TAX THE CAPITAL GAIN. IF IT IS UR BAN LAND, THEN TO CONSIDER THE CLAIM U/S. 54/54F ON THE FACTS AND LAW. NEEDLESS TO I.T.A. NO. 1377/HYD/2016 :- 5 - : STATE THAT THE ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY, BY SERVING NOTICES TO HIS RESIDENTIAL ADDRESS, NOT THE PLACE WHERE HE SOLD LAND. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND NOVEMBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 22 ND NOVEMBER, 2017 TNMM COPY TO : 1. SYED SHAHABUDDIN, C/O. MOHD. AFZAL, ADVOCATE, 11-5-465, SHERSONS RESIDENCY, FLAT NO. 402, CRIMIN AL COURT ROAD, RED HILLS, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-1, SANGAREDDY. 3. CIT (APPEALS)-2, HYDERABAD. 4. PR.CIT-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.