ITO, CHENNAI V. Lalitha, CHENNAI

ITA 14/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90667 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-05-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 05-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: K SRIDHAR
• Keywords: Capital asset
• Section: 143(3); 54B; 2(14); 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 14/MDS/2015 & C.O.NO.15/MDS/2015 (IN ITA NO.14/MDS/2015) (ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER, NON-CORPORATE WARD-15(3), WANAPARTHY BLOCK, 2 ND FLOOR, CHENNAI-34. VS SMT. LALITHA 9, INDIRA GANDHI STREET, KARAPAKKAM, CHENNAI-600 096. PAN: AFSPL7659D ( /APPELLANT) ( /RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : MR. P.RADHAKRISHNAN, JCIT /RESPONDENT BY : MR. K.SRIDHAR, C.A. /DATE OF HEARING : 20 TH MAY, 2015 /DATE OF PRONOUNCEMENT : 17 TH JULY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS-V), CHENNAI DATED 23.09.2014 FOR THE ASSESSMENT YEAR 2010-11. THE CRO SS OBJECTION IS FILED BY THE ASSESSEE. THE ONLY ISSU E IN THE APPEAL OF THE REVENUE IS THAT COMMISSIONER OF INCOM E TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE ADDITION MADE ON ACCOUNT OF CAPITAL GAINS ON SALE O F AGRICULTURAL LAND. IN OTHER WORDS, THE ISSUE IS WHE THER THE LAND 2 ITA NO.14/MDS/2015 & C.O. NO.15/MDS/2015 SOLD BY THE ASSESSEE IS AGRICULTURAL LAND OR NON-AG RICULTURAL LAND FOR THE PURPOSE OF CAPITAL GAINS. 2. THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSE SSMENT YEAR 2010-11 ON 8.4.2011 ADMITTING INCOME OF ` 1,79,500/- ASSESSMENT WAS COMPLETED ON 28.3.2013 UNDER SECTION 143(3) OF THE ACT DETERMINING LONG TERM CAPITAL GAI NS AT ` 85,94,381/-. WHILE COMPLETING THE ASSESSMENT ASSESS ING OFFICER DENIED EXEMPTION CLAIMED UNDER SECTION 54 A ND 54B OF THE ACT HOLDING THAT PROPERTY SOLD WAS ONLY A VA CANT LAND AND WILL BE USED FOR HOUSING PLOTS. ON APPEAL, COMM ISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CLAIMS OF THE A SSESSEE AGAINST WHICH REVENUE IS IN APPEAL BEFORE US. 3. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER O F THE ASSESSING OFFICER AND SUBMITS THAT THE LAND SOLD IS NOT AN AGRICULTURAL LAND AND THEREFORE THE ASSESSING OFFIC ER IS RIGHT IN DISALLOWING THE CLAIMS OF THE ASSESSEE UNDER SECTIO N 54 AND 54B AND ASSESSING THE SALE PROCEEDS AS LONG TERM CA PITAL GAINS. 3 ITA NO.14/MDS/2015 & C.O. NO.15/MDS/2015 4. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING TH E CLAIMS OF THE ASSESSEE. HE FURTHER SUBMITS THAT LAND SITUA TED IS IN A REMOTE AREA AND THE SURROUNDING LANDS ARE ALL AGRIC ULTURAL LANDS. THE LAND SITUATED IN CHEYYUR WHICH IS IN KA NCHIPURAM DISTRICT AND THE POPULATION OF CHEYYUR IS LESS THAN 10,000 AS CERTIFIED BY THE MANDALA THUNAI VATTACHIYAR, ELATH UR, AND THE LAND IS SITUATED ABOVE 8 KMS FROM MUNICIPAL LIMITS . HE ALSO SUBMITS THAT MANDALA THUNAI VATTACHIYAR ISSUED CER TIFICATE STATING THAT ASSESSEE HAS CULTIVATED GROWING GROUND NUT AND COCONUT AND SOME PART OF THE LAND WAS VACANT. THER EFORE, HE SUBMITS THAT LAND SOLD BY THE ASSESSEE IS AGRICULTU RAL LAND AND THUS COMMISSIONER OF INCOME TAX (APPEALS) HAS R IGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ISSUE IN APPEAL HAS BEEN ELABORATELY CONSIDERED BY THE COMMISSIONER OF INCOME TAX (APPEALS) WITH REFERENCE TO THE DOCUMENTS FURNISHED AND THE SUBMISSIONS MADE BEFORE HIM AND THE CONTENTIONS OF THE ASSESSING OFFICER AND AL LOWED THE CLAIMS OF THE ASSESSEE HOLDING AS UNDER:- 4 ITA NO.14/MDS/2015 & C.O. NO.15/MDS/2015 6.1 I HAVE VERIFIED THE SUBMISSIONS MADE BY THE AR OF THE APPELLANT. AS PER THE DOCUMENT SUBMITTED, REVENUE R ECORDS, PATTA, VAO CERTIFICATE, THE LAND HAS BEEN CLASSIFIED AS AGRICULTURAL LAND. THE AR OF THE APPELLANT IN SUPPORT OF HER CLAIM ARGUED THAT IF THE LAND USAGE IS OTHER THAN AGRICULTURE, THE RECORDS WOULD HAVE SHOWN IT CLEARL Y INDICATING THE ACTIVITIES WHICH IS OTHER THAN AGRICULTURE. THE LAND HAS BEEN CLASSIFIED IN REVENUE RECORDS AS AGRICULTURAL AND THE PATTA SHOWS AS AGRICULTURAL LAND WHICH CLEARLY INDI CATES THAT THE LAND SOLD IS ONLY AN AGRICULTURAL LAND AND IT I S EXEMPT FROM CAPITAL GAINS TAX. ANY SALE OF AGRICULTURAL LAND EX EMPTED U/S 2(14) OF THE IT ACT. THE APPELLANT HAS BEEN CARRYIN G ON AGRICULTURAL OPERATIONS ON THE SAID LAND AND NO COM MERCIAL ACTIVITIES HAVE BEEN CARRIED ON THE ABOVE SAID LAND . THE AR OF THE APPELLANT HAS ALSO FURNISHED A 'GOOGLE MAP' WHI CH SHOWED THE DISTANCE BETWEEN THE NEAREST DISTRICT HEADQUART ERS I.E. CHENNAI MUNICIPAL CORPORATION (CMDA) TO THE LOCATIO N OF THE PROPERTY SOLD AS 30.3 KMS AND FROM THE VO CERTIFICA TE ISSUED ON 08.05.2013 MENTIONED CLEARLY THAT THE CHEYYUR VI LLAGE TOTAL POPULATION IS WITHIN 10000 AND THAT THE LANDS ARE L OCATED BEYOND 8 KMS AND HENCE THE LANDS ARE TO BE CONSIDER ED AS AGRICULTURAL LANDS. 6.2 THE ASSESSING OFFICER PLACED HIS RELIANCE FOR TREATING THE LANDS AS NON- AGRICULTURAL ON THE RATIO HELD IN THE CASE OF FAZALBHOY INVESTMENTS CO. P. LTD., VS. CIT, MUMBAI (HC) WHEREIN IT WAS HELD THAT IN THE ABSENCE OF ANY PROO F OF AGRICULTURE ACTIVITIES CARRIED OUT THE LANDS ARE TR EATED AS NON- AGRICULTURAL. IN THE CASE OF THE APPELLANT, THE AGR ICULTURAL ACTIVITIES HAVE BEEN CARRIED OUT TILL THE DATE OF S ALE OF PROPERTY ALONG WITH MUNICIPAL RECORDS IN SUPPORT OF THE APPE LLANT CLAIMS. SIMILARLY, IN THE CASE OF SARIFABIBI MOHAME D IBRAHIM AND OTHERS VS. CIT IN 204 ITE 631, THE HON'BLE SUPR EME COURT HAS HELD THAT THE AGRICULTURAL LAND WAS SOLD TO A COOPERATIVE SOCIETY, AND BEFORE THE DATE OF SALE, A PPLICATION WAS MADE TO CONCERNED AUTHORITIES TO CONVERT THE SA ID LAND INTO HOUSING PLOTS, AND WITHIN 3 DAYS OF REGISTRATI ON THE SOCIETY COMMENCED ITS HOUSING ACTIVITIES. WHERE AS IN THE PRESENT CASE, THE APPELLANT HAS NOT CONVERTED THE N ATURE OF LAND, TILL THE DATE OF SALE AND IT CONTINUED TO BE REMAINED AS AGRICULTURAL LAND IN REVENUE RECORDS. HENCE THE RAT IO HELD IN THE APEX CASE COURT CANNOT BE APPLICABLE TO THE PRE SENT CASE. EVEN IN THE CASE OF , MIS PALLAVA RESORTS P LTD IN ITA NO. 7941MDS111, DATED 11/1012012, THE MAIN ACTIVITY OF PALLAVA RESORTS IS SETTING UP OF RESORTS AND THEIR HOLDING COMPANY QUESTNET INDIA PVT. LTD., IS ENGAGED IN DEVELOPMENT OF RESORTS. 5 ITA NO.14/MDS/2015 & C.O. NO.15/MDS/2015 THEREFORE THE COURT HELD THAT THE LAND CANNOT BE CL ASSIFIED AS AGRICULTURAL LAND. NOW IN PRESENT CASE, THE APPELLA NT IS NOT ENGAGED IN ANY COMMERCIAL ACTIVITY AND THE LAND IS SITUATED OUTSIDE THE LIMITS OF MUNICIPAL CORPORATION AND AGR ICULTURAL OPERATION WERE CARRIED OUT AND HENCE THE CONTENTION S OF THE ASSESSING OFFICER IN THE ABOVE CASE IS ALSO NOT APP LICABLE TO THE FACTS OF THE APPELLANT'S CASE UNDER CONSIDERATI ON. 6.3 THE AR OF THE APPELLANT IN HIS SUBMISSION PLAC ED HIS RELIANCE RATIO HELD IN THE CASE OF DR. MOTIBHAI D. PATEL VS. EN 1982 (127 ITR 671) WHEREIN THE GUJARAT HIGH COURT H AS HELD THAT THE AGRICULTURAL OPERATIONS HAVE BEEN CARRIED ON IN THE LAND IN QUESTION AT THE TIME WHEN THE LAND IS SOLD AND FURTHER IF THE ENTRIES IN THE REVENUE RECORDS SHOWS THAT LAND IN QUESTION IS AGRICULTURAL LAND, THEN, A PRESUMPTION ARISES TH AT THE LAND IS AGRICULTURAL IN CHARACTER. SINCE THE APPELLANT HAS PRODUCED CLEAR PROOF THAT IN THE REVENUE RECORDS, THE LAND I S CLASSIFIED AS AGRICULTURAL LAND BOTH AT THE TIME OF PURCHASE AND SALE AND THE PATTA ISSUED ALSO SHOWS THE LAND AS AN AGRICULTURAL LAND. EVEN IN THE CASE OF COMMISSIONER OF WEALTH TAX VS. H. V. MUNGALE, 1984(145) ITR, 208 WHEREIN THE HON'BLE SUPREME COUR T HELD THAT WHAT IS TO BE DETERMINED IS THE CHARACTER OF T HE LAND ACCORDING TO THE PURPOSE FOR WHICH IT WAS MEANT OR SET APART AND CAN BE USED. IN THE CASE OF THE APPELLANT THE S UBJECT LAND SOLD WAS AGRICULTURAL LAND WHICH WAS NOT ONLY AS CL ASSIFIED IN THE REVENUE RECORDS BUT ALSO IT WAS SUBJECTED TO TH E PAYMENT OF LAND REVENUE TAX AND WAS USED FOR AGRICULTURAL P URPOSES ONLY AT THE RELEVANT TIME OF SALE. HENCE THE SAME C ANNOT BE TREATED AS A CAPITAL ASSET. 6.4 KEEPING IN VIEW OF THE VARIOUS CITATIONS AND SUPPORTING DOCUMENTS FILED BY THE AR OF THE APPELLA NT AND ALSO RELYING ON LEGAL POSITION ENUNCIATED BY VARIOU S CASE LAWS MENTIONED SUPRA, THE SALE CONSIDERATION RECEIVED ON SALE OF AGRICULTURAL LAND IS EXEMPT U/S 2(14) OF THE IT ACT AND ACCORDINGLY THE ASSESSING OFFICER IS DIRECTED TO DE LETE THE ADDITION MADE ON ACCOUNT OF CAPITAL GAINS WORKED OU T BY THE HIM ON ACCOUNT OF SALE OF AGRICULTURAL LAND. THE AP PELLANT SUCCEEDS ON THIS GROUND OF APPEAL. 6. ON GOING THROUGH THE ABOVE ORDER OF THE COMMISSI ONER OF INCOME TAX (APPEALS), WE DO NOT FIND ANY VALID R EASON TO 6 ITA NO.14/MDS/2015 & C.O. NO.15/MDS/2015 INTERFERE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT LAND SOLD BY THE ASSESSEE IS AGRICULTURAL LAND ONLY. FOR THE ELABORATE REASONS G IVEN BY THE COMMISSIONER OF INCOME TAX (APPEALS), WE HOLD THAT THE LAND SOLD BY THE ASSESSEE IS AGRICULTURAL LAND AND THUS SUSTAINED THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS) AND REJECT THE GROUNDS RAISED BY THE REVE NUE. 7. THE CROSS OBJECTION IS FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS). SINCE WE HAVE UPHELD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE APPEAL OF THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE BECOMES INFRU CTUOUS AND THE SAME IS DISMISSED ACCORDINGLY. 8. IN THE RESULT THE APPEAL OF THE REVENUE AND CROS S OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JULY, 2015. SD/- SD/- ( ) ( # % ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) ' / ACCOUNTANT MEMBER %( ' / JUDICIAL MEMBER 7 ITA NO.14/MDS/2015 & C.O. NO.15/MDS/2015 % /CHENNAI, * /DATED 17 TH JULY, 2015 SOMU (,- .- /COPY TO: 1. ASSESSEE 2 ASSESSING OFFICER 3. / () /CIT(A) 4. / /CIT 5. - ((3 /DR 6. 6 /GF .