M/s Elcon Estate Pvt. Ltd., Howrah V. ITO, WD-13(1), KOLKATA, Kolkata

ITA 1522/KOL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6319 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 28-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA
• Keywords: Capital asset
• Section: 2(14); 10

Judgement Text

ITA NO.1522/KOL/2015 M/S ELCON ESTATE PVT. LTD. A. Y.2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & SMT. MADHUMITA ROY, JM ] ITA NO.1522/KOL/2015 ASSESSMENT YEAR : 2011-12 M/S ELCON ESTATE (P) LTD. -VERSUS- I.T.O., WARD-13 (1) KOLKATA KOLKATA (PAN: AABCE 54730 O) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.M.SURANA, ADVOCATE FOR THE RESPONDENT: SALLONG YADEN, ADDL.CIT DATE OF HEARING : 30.05.2018. DATE OF PRONOUNCEMENT : 01.06.2018. ORDER PER MADHUMITA ROY JM: THE INSTANT APPEAL HAS BEEN FILED BY THE ASSESSEE B EFORE US AGAINST THE ORDER DATED 16.11.2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX-5, KOLKATA U/S 250 OF THE INCOME TAX ACT, 1961 (ACT) ARISING OUT OF TH E ORDER DATED 28.02.2014 PASSED BY THE INCOME TAX OFFICER, WARD-2(2), KOLKATA FOR A.Y. 2011-12. 2. THE MAIN ISSUE INVOLVED IN THIS MATTER RELATES T O THE DISALLOWANCE OF THE AGRICULTURAL GAIN/PROFIT TO THE TUNE OF RS.95,77,85 1/- AS CLAIMED TO BE EXEMPT U/S 10(1) OF THE ACT ARISING OUT OF TRANSFER OF AGRICULTURAL LAND. THE ASSESSEE SOLD OUT SEVERAL PIECES OF AGRICULTURAL LAND AND INCOME EARNED OUT O F TAXATION CLAIMED TO BE EXEMPT U/S 10(1) OF THE ACT AS AGRICULTURAL INCOME. THE ASSESS EES CASE IS THAT THE LAND BEING AGRICULTURAL IN NATURE NOT FALLING WITHIN 8 KMS IN MUNICIPALITY OR CANTONMENT THE CAPITAL GAINS DID NOT ARISE AS ASSET BEING LAND WAS CLAIMED AS AGRICULTURAL LAND WITHIN THE MEANING OF SECTION 2(14)(III) OF THE ACT. HOWE VER, THE ASSESSEE DECLARED THE SAID INCOME IN THE PROFIT AND LOSS ACCOUNT UNDER THE COM PANIES ACT 1956. THE OFFER OF INCOME HAS ARISEN OUT OF SALE OF STOCK. THE PROFIT AND LOSS ACCOUNT IS CLAIMED TO BE BASED ON THE IMPRESSION THAT THE AGRICULTURAL INCOM E FROM SALE OF AGRICULTURAL LAND WAS TO BE INCLUDED IN THE PROFIT AND LOSS ACCOUNT UNDER COMPANIES ACT. IT IS THE SPECIFIC ITA NO.1522/KOL/2015 M/S ELCON ESTATE PVT. LTD. A. Y.2011-12 2 CASE OF THE ASSESSEE THAT INCLUSION OF INCOME IN TH E PROFIT AND LOSS ACCOUNT HAS ARISEN OUT OF STOCK BECAUSE OF MISTAKE ON THE PART OF THE PROFESSIONAL. THIS PLEA WAS TAKEN BEFORE THE AO BUT THE AO DID NOT CONSIDER IT AS THE CORRECT PROPOSITION OF LAW AND ADDED THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE . 3. IN APPEAL THE LD. CIT(A) CONFIRMED THE SAME AND HENCE THE INSTANT APPEAL BEFORE US FILED BY THE ASSESSEE. 4. THE LD. AR AT THE TIME OF HEARING OF THE MATTER ARGUED BEFORE US THAT THE LAND IN QUESTION WAS LOCATED BEYOND THE LIMITS OF ANY MUNIC IPALITY OR CANTONMENT BOARD AS MENTIONED IN SECTION 2(14)(A)(B). THE INCOME DERIV ED FROM SUCH PURCHASE AND SALE OF LAND AND INTEREST INCOME HAS BEEN CLAIMED TO BE AGR ICULTURAL INCOME AND EXEMPTION U/S 10(1) OF THE ACT HAS BEEN PRAYED FOR. THE LD. A R FURTHER SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FILED A XEROX C OPY OF THE PURCHASE / SALE DEEDS OF LANDS INCLUDING A CERTIFICATE FROM GRAM PANCHAYAT D ATED 04.04.2011 STATING THAT THE LANDS WERE SITUATED ON THE BARREN AREA, WAS AN AGR ICULTURAL LAND AND DOES NOT FALL WITHIN 8 KM OF MUNICIPALITY OR CANTONMENT BOARD. FU RTHER THAT THE ASSESSE EXPLAINED IN THE WRITTEN SUBMISSION THAT SECTION 2(14) OF THE AC T DEFINES CAPITAL ASSETS AND AGRICULTURAL LAND IS EXCLUDED FROM CAPITAL ASSETS. HE FURTHER ADDED THAT THE SAME HAS BEEN INCLUDED IN THE PROFIT AND LOSS ACCOUNT AS AN INCOME INADVERTENTLY BY A MISTAKE ON THE PART OF THE PROFESSIONAL AND PRAYED FOR EXE MPTION IN TERMS OF THE STATUTE. IN SUPPORT OF HIS CONTENTION THE LD. AR RELIED UPON TH E JUDGMENT OF THE HONHBLE BOMBAY HIGH COURT IN THE MATTER OF MANUBHAI A.SHETH V. N.D.NIRGUDKAR SECOND ITO 128 ITR 128 ITR 87 FOR THE PROPOSITION THAT INC OME FROM SALE OF AGRICULTURAL LAND IS ALSO AGRICULTURAL INCOME. 5. ON THE CONTRARY THE LD. DR SUPPORTS THE ORDER OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORDS. IT IS NOT IN DISPU TE THAT THE LAND IN QUESTION IS AGRICULTURAL LAND ONLY. THE IT ACT DEFINES AGRICULT URAL LAND AS FOLLOWS : ITA NO.1522/KOL/2015 M/S ELCON ESTATE PVT. LTD. A. Y.2011-12 3 AGRICULTURAL LAND IN INDIA, NOT BEING LAND SITUAT E (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICT ION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORA TION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND OR (B) IN ANY AREA WITHIN THE DISTANCE, MEASURED AERIALLY I) NOT BEING MORE THAN TWO KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITE M (A) AND WHICH HAS A POPULATION OF MORE THAN TEN THOUSAND BUT NOT EXCEED ING ONE LAKH; OR II) NOT BEING MORE THAN SIX KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO ITEM ( A) AND WHICH HAS A POPULATION OF MORE THAN ONE LAKH BUT NOT EXCEEDING TEN LAKH; OR III) NOT BEING MORE THAN EIGHT KILOMETRES, FROM THE LOCA L LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITE M (A) AND WHICH HAS A POPULATION OF MORE THAN TEN LAKH. 7. THE DETAILS OF LAND IN QUESTION AVAILABLE ON REC ORDS SATISFY THE CONDITIONS STIPULATED IN THE STATUTE WHICH IS ALSO EVIDENT FRO M THE CERTIFICATE OF THE PANCHAYAT PRADHAN. SINCE THIS IS AN AGRICULTURAL LAND, NOT CO MING UNDER THE PURVIEW OF DEFINITION OF CAPITAL ASSET OF SECTION 2(14) OF THE ACT, THE I NCOME ARISING FROM THE TRANSFER OF AGRICULTURAL LAND SHALL BE TREATED AS REVENUE DERIV ED FROM SUCH AGRICULTURAL LAND AND WOULD BE AGRICULTURAL INCOME WITHIN THE MEANING OF SECTION 2(1A)(A) OF THE ACT AND WOULD THEREFORE BE EXEMPT U/S 10 OF THE ACT. 7.1. THE JUDGMENT CITED BY THE LD. AR PASSED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MANUBHAI A.SHETH V. NIRGUDKAR (2ND I TO [1981] 128 ITR 87) (SUPRA) HELD AS FOLLOWS :- THE CAPITAL GAINS ARISING FROM THE SALE OF LAND S ITUATED IN INDIA, WHICH LAND IS USED FOR AGRICULTURAL PURPOSES, WOULD BE REVENUE DE RIVED FROM SUCH LAND AND, THEREFORE, AGRICULTURAL INCOME WITHIN THE MEANING O F SECTION 2(1) OF THE INCOME- TAX ACT, 1961. THE ANDHRA PRADESH HIGH COURT IN THE CASE OF S. MUTYAM REDDY V. ITA NO.1522/KOL/2015 M/S ELCON ESTATE PVT. LTD. A. Y.2011-12 4 ITO [1988] 169 ITR 174 HAS ALSO HELD THAT THE CAPIT AL GAINS ARISING FROM SALE OF LAND USED FOR AGRICULTURAL PURPOSES CONSTITUTED REV ENUE DERIVED FROM AGRICULTURAL LAND AND THEREFORE AGRICULTURAL INCOME UNDER SECTIO N 2(1A) OF THE ACT AND THEREFORE NOT CHARGEABLE TO CENTRAL INCOME-TAX. NO CONTRARY JUDGMENT IS BROUGHT TO OUR NOTICE BY TH E LD. DR. 8. WE FIND THE RATIO OF THE SAID JUDGMENT IS SQUARE LY APPLICABLE TO THE INSTANT CASE AND WE THEREFORE HELD THAT THE INCOME DERIVED FROM THE PURCHASE AND SALE OF AGRICULTURAL LAND BY THE ASSESSEE IS AN AGRICULTURA L INCOME AND NOT LIABLE TO BE CHARGED UNDER THE INCOME TAX ACT. IT IS WELL SETTLED THAT E NTRIES IN THE BOOKS OF ACCOUNT DO NOT DETERMINE THE TAXABILITY OR OTHERWISE OF A RECEIPT. IF A RECEIPT IS TAXABLE UNDER THE INCOME TAX ACT, 1961, THEN ONLY IT SHOULD BE COMPUT ED AS INCOME. .WE, THEREFORE, SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT THE APPEAL BY THE ASSESSEE IS ALLO WED. O RDER PRONOUNCED IN THE COURT ON 01.06.2018. SD/- SD/- [J.SUDHAKAR REDDY] [ MADHUMITA ROY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 01.06.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.M/S ELCON ESTATE PVT. LTD., 1, MADHUSUDAN PAL CHO WDHURY LANE, P.S.BANTERA, HOWRAH-711101. 2 I.T.O., WARD-13 (1), KOLKATA. 3. C.I.T.(A)- 5, KOLKATA 4. C.I.T-5, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES ITA NO.1522/KOL/2015 M/S ELCON ESTATE PVT. LTD. A. Y.2011-12 5