ITO, Bangalore V. Shri. Raghuram Reddy, Bangalore

ITA 1521/BANG/2012

• Counselvise Citation: 152121114 RSA 2012
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 14-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 21-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Assessee Lawyers: A SHANKAR
• Keywords: Capital asset
• Section: 143(3); 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C : BANGALORE BEFORE SMT. P. MADHAVI DEVI , JUDICIAL MEMBER A ND SHRI ABRAHAM P GEORGE , ACCOUNTANT MEMBER ITA NO. 1521 / BANG/20 1 2 (ASSESSMENT YEAR: 20 05 - 06 ) INCOME - TAX OFFICER, WARD 7(3), BANGALORE. APPELLANT VS. SHRI RAGHURAM REDDY, 235, 1 ST FLOOR, IV CROSS, IV MAIN, KORAMANGALA I BLOCK, BANGALORE. RESPONDENT PAN:AARPR1025K APPELLANT BY: SHRI T.S.N.MURTHY, CIT(DR). RESPONDENT BY: S/SHRI A.SHANKAR & NARENDRA SH ARMA, ADVOCATES. DATE OF HEARING : 14 - 08 - 2014 DATE OF PRONOUNCEMENT: 28 - 08 - 2014 O R D E R PER SMT. P.MADHAVI DEVI, JM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) LTU, BANGALORE, DATED 11 - 6 - 2012 FOR THE ASSESSMENT YEAR 2005 - 06. 2. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER (AO) TO GRANT ITA NO . 1521/BANG/2012 SHRI RAGHURAM REDDY PAGE 2 OF 7 EXEMPTION FROM CAPITAL GAINS TAX LIABILITY CLAIMED BY THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE AGRICULTURAL L AND SOLD IS SITUATED IN HARLUR VILLAGE, WHICH WAS ONLY 3 KMS AWAY FROM CITY CORPORATION LIMITS AND THEREFORE, HAD TO BE TREATED AS CAPITAL ASSET WITHIN THE MEANING OF SEC.2(14) OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT']. 3. BRIEF F ACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 29 - 1 - 2005 DECLARING A TOTAL INCOME OF RS.6,82,420/ - . THE ASSESSEE WAS DERIVING INCOME FROM HOUSE PROPERTY AND INTEREST INCOME. DURING THE ASSESSMENT PRO CEEDINGS U/S 143(3) OF THE ACT, THE AO NOTED THAT THE ASSESSEE HAD SOLD AGRICULTURAL LAND FOR A SUM OF RS.1,03,00,000/ - . THE ASSESSEE WAS, THEREFORE, REQUIRED TO PRODUCE THE NECESSARY DETAILS. AFTER CONSIDERING THE DETAILS FURNISHED BY THE ASSESSEE, THE A O OBSERVED THAT DURING THE FINANCIAL YEAR 2004 - 05, THE ASSESSEE HAS SOLD AGRICULTURAL LAND ON 20 - 7 - 2004 FOR A SUM OF RS.1,03,00,000/ - AND THAT THE LAND MEASURED 2 ACRES AND 29 GUNTAS IN SURVEY NO.102/1 AND 102/3 OF HARLUR VILLAGE, VARTHUR HOBLI, BANGALORE . SINCE THE ASSESSEE HAD CLAIMED THE ENTIRE SALE PROCEEDS FROM THE SALE OF AGRICULTURAL LAND AS EXEMPT FROM CAPITAL GAINS, THE AO REQUESTED THE ASSESSEE TO FURNISH PROOF IN SUPPORT OF HIS CLAIM. THE ASSESSEE, VIDE LETTER DATED 19 - 12 - 2007 FURNISHED A COPY OF THE PURCHASE DEED RELATING TO THE PROPERTY, VOTERS LIST OF HARLUR VILLAGE, COPY OF ITA NO . 1521/BANG/2012 SHRI RAGHURAM REDDY PAGE 3 OF 7 RECORD OF RIGHTS/ PAHANI , MUTATION REGISTER, COPIES OF TAX PAID RECEIPT FOR THE AGRICULTURAL LAND ETC. THE AO, THEREAFTER, REQUESTED THE TAHSILDAR, BANGALORE EAST TALUK, K.R.PURAM, BANGALORE TO FURNISH DETAILS OF THE POPULATION OF THE VILLAGE AS WELL AS THE DISTANCE FROM THE BANGALORE CITY CORPORATION LIMIT. IN RESPONSE TO THE SAME, THE TAHSILDAR BANGALORE EAST TALUK, K.R.PURAM, VIDE HIS LETTER DATED 13 - 12 - 2007 STATED TH AT THE POPULATION OF HARLUR VILLAGE AS PER 2001 CENSUS WAS 1186 AND THAT THE VILLAGE IS 3 KMS AWAY FROM THE BANGALORE CITY CORPORATION LIMIT IN THE YEAR 2007 - 08 AND THAT THE HARLUR VILLAGE COMES UNDER THE BRUHAT BANGALORE MAHANAGARA PALIKE (BBMP) . TAKING NOTE OF THE SAME, THE AO HELD THAT THE AGRICULTURAL LAND OF THE ASSESSEE IN THE VILLAGE OF HARLUR IS ONLY 3 KMS. AWAY FROM THE CITY CORPORATION LIMITS AND THEREFORE IT IS A CAPITAL ASSET U/S 2(14)(III)(B) OF THE ACT AND THE GAINS FROM THE SALE OF THIS LAND IS EXIGIBLE TO CAPITAL GAINS TAX. ACCORDINGLY, HE BROUGHT IT TO TAX. 4. AGGRIEVED , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) REITERATING THE SUBMISSIONS MADE BEFORE THE AO AND ALSO STATING THAT IT WAS ONLY IN 2007 - 08 THAT THE VILLAGE CAME UNDER THE BBMP WHEREAS THE TRANSACTION HAD TAKEN PLACE DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2005 - 06. THE ASSESSEE FURTHER CONTENDED THAT THE ASSESSEE HAD REQUESTED THE TAHSILDAR WHO ISSUED ENDORSEMENT WITH REGARD TO THE POSITION IN ASSESSMENT YEAR 2005 - 06 FOR WHICH THE NECESSARY APPLICATION ITA NO . 1521/BANG/2012 SHRI RAGHURAM REDDY PAGE 4 OF 7 WAS MADE BEFORE THE TAHSILDAR AND THAT THE ENDORSEMENT WAS RECEIVED ONLY ON 21 - 2 - 2008 I.E. AFTER COMPLETION OF THE ASSESSMENT BY THE AO ON 28 - 12 - 2007 FROM THE OFFICE OF THE TAHSILDAR, BANGALORE EAST TALUK, K .R.PURAM THAT HARLUR VILLAGE WAS WITHIN THE BELLANDUR GRAM PANCHAYAT IN THE YEAR 2004 - 05. THE CIT(A), THEREAFTER, CONSIDERED THE ASSESSEE S CONTENTION AND ALSO THAT THE TAHSILDAR, BANGALORE EAST TALUK HAS DIRECTED THE ASSESSEE TO APPROACH THE STATE PUBLIC WORKS DEPARTMENT TO SEEK INFORMATION RELATING TO THE DISTANCE OF THE SAID VILLAGE FROM THE THEN MUNICIPAL LIMITS OF THE BBMP AND THAT THE ASSESSEE HAD OBTAINED A LETTER DATED 29 - 2 - 2008 FROM THE OFFICE OF THE EXECUTIVE ENGINEER, DEPARTMENT OF PUBLIC WORKS, PORTS AND INLAND WATER TRANSPORT WHEREIN IT IS STATED THAT THE DISTANCE BETWEEN THE BOUNDARY OF BBMP AND THE LAND SITUATED AT SURVEY NOS.102/1 AND 102/3 IN THE YEAR 2004 - 05 WAS 9.6 KMS. THE CIT(A) ALSO CONSIDERED THE ASSESSEE S CONTENTION THAT HARLUR VIL LAGE WAS NOT A MUNICIPALITY WHICH WAS NOTIFIED IN THE OFFICIAL GAZETTEE BY THE CENTRAL GOVERNMENT AS A RESULT OF WHICH THE PROVISIONS OF SEC.2(14)(III)(B) ARE NOT ATTRACTED. THE CIT(A) HAD CALLED FOR A REMAND REPORT FROM THE AO AS REGARDS THE CERTIFICATE ISSUED BY THE DEPARTMENT OF PUBLIC WORKS DATED 29 - 2 - 2008 AND THE AO SUBMITTED THE REMAND REPORT DATED 8 - 4 - 2008 REITERAT ING HIS FINDING IN THE ASSESSMENT ORDER. THE CIT(A) , THEREAFTER, ON THE BASIS OF THE CERTIFICATE PRODUCED BY THE ASSESSEE FROM THE STATE PWD HELD THAT THE LAND SOLD BY THE ASSESSEE WAS ITA NO . 1521/BANG/2012 SHRI RAGHURAM REDDY PAGE 5 OF 7 AGRICULTURAL LAND AND WAS NOT A CAPITAL ASSET U/S 2(14) OF THE ACT. HE, ACCORDINGLY, ALLOWED THE ASSESSEE S APPEAL. AGGRIEVED BY THE RELIEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. T HE LEARNED DEPARTMENTAL REPRESENTATIVE, SUPPORTED THE ORDER OF THE AO WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). HOWEVER, DURING THE COURSE OF HEARING ON 3 - 12 - 2013 THE BENCH WAS OF THE OPINION THAT THE DISTANCE FROM THE BBMP TO VILLAGE AND THE DISTANCE FROM THE BOUNDARY OF THE VILLAGE TO THE LAND WAS ALSO NECESSARY TO EXAMINE WHETHER THE AGRICULTURAL LAND WAS CAPITAL ASSET U/S 2(14) OF THE ACT. DURING THE COURSE OF HEARING ON11 - 8 - 2014, THE LEARNED COUNSEL FOR THE ASSESSE E HAS FILED BEFORE US THE CERTIFICATE OF THE STATE PWD DATED 16 - 1 - 2014 WHEREIN IT IS STATED THAT THE PROPERTIES IN SURVEY NOS.102/1 AND 102/3 SITUATED AT HARLUR VILLAGE ARE AT A DISTANCE OF 0.60 KMS. F ROM SRIRAM TEMPLE FROM THE BOUNDARY OF THE HARLUR VILLA GE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PER THIS CERTIFICATE ALSO, IF THE DISTANCE IS 0. 6 0 KMS. IS REDUCED FROM 9.6 KM THEN THE DISTANCE BETWEEN THE BOUNDARY OF BANGALORE CITY AND THE LANDS AT SURVEY NO.102/1 AND 102/3 IS MORE THAN 8 KM S AND THEREFORE THE ASSET WOULD NOT BE A CAPITAL ASSET U/S 2(14)(III)(B) OF THE ACT. THUS, ACCORDING TO HIM, THE ISSUE NEEDS TO BE DECIDED IN FAVOUR OF THE ASSESSEE AND THE ORDER OF THE CIT(A) IS TO BE CONFIRMED. ITA NO . 1521/BANG/2012 SHRI RAGHURAM REDDY PAGE 6 OF 7 6. HAVING HEARD BOTH THE PARTIES AND HAVIN G CONSIDERED THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS APPROACHED THE TAHSILDAR I.E. THE CONCERNED REVENUE OFFICER TO CERTIFY THE DISTANCE BETWEEN THE BANGALORE CITY LIMITS OR BANGALORE MUNICIPALITY AND THE LANDS IN QUESTION AND IT WAS STATED BY THE TAHSILDAR THAT HARLUR VILLAGE HAD BECOME WITHIN THE LIMITS OF BBMP FROM THE ASSESSMENT YEAR 2007 - 08. AS REGARDS THE POSITION IN THE RELEVANT PREVIOUS YEAR 2004 - 05, THE TAHSILDAR DIRECTED THE ASSESSEE TO APPROACH THE STATE PWD. THE ASSESSEE HAD APPROACHED THE STATE PWD WH ICH HAS CERTIFIED THAT DURING THE RELEVANT PREVIOUS YEAR, THE VILLAGE WAS UNDER BELLANDUR GRAM PANCHAYAT AND THE DISTANCE BETWEEN THE BANGALORE CITY LIMITS AND THE AGRICULTURAL LAND SITUATED AT SURVEY NOS.102/1 AND 102/3 WAS 9.6 KMS. THE CIT(A) HAD, IN FACT, CALLED FOR A REMAND REPORT AND THE AO HAS NOT BEEN ABLE TO REBUT THE CERTIFICATE GIVEN BY THE STATE PWD. EVEN FROM THE CERTIFICATE FILED BEFORE US THAT IS DATED 16 - 1 - 2014, IT IS EVIDENT THAT THE LAND IS SITUATED ONLY 0. 6 KMS. AWAY FROM THE BOUNDARY OF HARLUR VILLAGE AND IF IT IS EXCLUDED FROM THE DISTANCE FROM THE BBMP AND THE LANDS, IT WOULD STILL BE MORE THAN 8 KMS. IN VIEW OF THE SAME, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). HOWEVER, SIN CE THE CERTIFICATE DATED 16 - 1 - 2014 IS SUBSEQUENT TO THE ORDER OF THE CIT(A) AND IT IS OBTAINED AND FILED BEFORE US DURING THE COURSE OF PROCEEDINGS BEFORE US, WE DEEM IT FIT AND PROPER TO REMAND THIS ISSUE TO THE FILE OF THE AO ONLY FOR THE ITA NO . 1521/BANG/2012 SHRI RAGHURAM REDDY PAGE 7 OF 7 PURPOSE OF V ERIFICATION OF THE CERTIFICATE DATED 16 - 1 - 2014 AND IF IT IS FOUND TO BE A GENUINE CERTIFICATE ISSUED BY THE GOVERNMENT AUTHORITIES, THEN THE ORDER OF THE CIT(A) WOULD STAND. 7. IN THE RESULT, THE REVENUE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . PRON OUNCED IN THE OPEN COURT ON 28 TH OF AUGUST , 201 4. SD/ - SD/ - ( ABRAHAM P GEORGE ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE