PRIYA S. WALAVALKAR, THANE V. DCIT CIR 3, THANE

ITA 1549/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100761 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 16-03-2015
• Court: TRIBUNAL
• Department Lawyers: S K JANGRE
• Assessee Lawyers: C N VAZE
• Keywords: Capital asset; Rule of consistency
• Section: 143(3); 2(14); 10

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO. 1549/M/2015 (AY:2011 - 2012 ) MRS. PRIYA S. WALAVALKAR, 501 / 502, CHIRAG ARCADE, RAGHOBA SHANKAR ROAD, CHENDANI KOLIWADA, THANE (W) 400 601. / VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 3, B - WING, 6 TH FLOOR, ASHAR IT PARK, ROAD NO.16Z, WAGLE ESTATE, THANE - 400 604. ./ PAN : AABPW4344R ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI C.N. VAZE, AR / RESPONDENT BY : SHRI S.K. JANGRE, DR / DATE OF HEARING : 23.07.2015 / DATE OF PRONOUNCEMENT : 19 .08.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 16.3.2015 IS AGAINST THE ORDER OF THE CIT (A) - 2, THANE DATED 21.1.2014 FOR THE ASSESSMENT YEAR 2011 - 2012. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN NOT GIVING A FINDING ON TAXATION OF SALE OF AGRICULTURAL LAND UNDER THE HEAD INCOME FROM OTHER SOURCES. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN ALSO TAXING THE SALE OF AGRICULTURAL LAND UNDER THE HEAD CAPITAL GAINS. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN NOT ALLOWING THE EXEMPTION IN RESPECT OF GAINS FROM SALE OF AGRICULTURAL LAND DESPITE SPECIFIC EXCLUSION IN THE DEFINITION OF CAPITAL ASSET CONTAINED IN SECTION 2(14) OF THE INCOME TAX ACT, 1961. 4. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN HOLDING THAT THE APPELLANT HAS SOLD LI TIGATION RIGHTS AND NOT THE AGRICULTURAL LAND. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN HOLDING THAT TENANCY RIGHTS WAS ALREADY CONVEYED BY THE TENANT TO M/S. MANAS INFRATECH PVT LTD. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN HOLDING THAT THE APPELLAT HAS ONLY PERSONAL RIGHT BUT NOT THE PROPERTY RIGHT OVER THE LAND. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN NOT APPRECIA TING THE SUBMISSIONS OF THE APPELLANT IN ITS TRUE SPIRIT. 2 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE, WHICH IS AN INDIVIDUAL, FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 19,50,982/ - . IN THE RETURN OF INCOME, ASSE SSEE OFFERED THE SAID INCOME EARNED IN THE FORM OF INTEREST ON FDS AND BANK INTEREST. DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT THE ASSESSEE CLAIMED THE SALE CONSIDERATION OF LAND AS EXEMPT U/S 10 OF THE ACT, SINCE, THE SAID LAND BEING AGRICULTURA L LAND. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT THE AND THE ASSESSED INCOME WAS DETERMINED AT RS. 1,68,53,572/ - , WHICH INCLUDES THE ADDITION OF RS. 1,48,98,000/ - ON ACCOUNT OF INCOME FROM OTHER SOURCES. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) DISMISSED THE APPEAL . AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FU RTHER APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 4 . DURING THE PROCEEDINGS BEFORE US, A T THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE REFERRED GROUNDS AND SUBMITTED THAT THE TRANSACTIONS RELATING TO THE TRANSFER OF AGRICULTURAL LANDS AND THE NATURE OF THE AGRICULTURAL LAND IS NOT DISPUTED. ASSESSEE IS A CO - OWNER OF THE PROPERTY ALONG WITH HER BROTHER SHRI DATTRAY V. RALKAR . IT IS INFORMED THAT THE ASSESSMENT IN THE CASE OF BROTHER WAS FINALIZED AFTER EXAMINING THE TRANSACTIONS OF THE SAID AGRICULTURAL LAND AND THE CLAIM OF EXEMPTION WAS ALLOWED BY HIS AO WITHOUT MAKING ANY ADDITIONS. C ONSIDERING THE COMMON PROPERTY A N D TH E TRANSACTIONS, NO ADDITION SHOULD HAVE BEEN MADE IN THE ASSESSEES CASE TOO . FURTHER, IT IS ALSO SUBMITTED THAT CONSIDERING THE DISCRIMINATORY TREATMENT OF THE AO AND FAILURE TO FOLLOW THE PRINCIPLE OF CONSISTENCY, AO SHOULD NOT HAVE MADE ANY ADDITION IN THIS CASE. TO SUPPORT THE ABOVE, ASSESSEE FIELD THE COPY OF THE ASSESSMENT IN THE CASE OF HER BROTHER (CO - OWNER OF THE LAND NAMED SHRI DATTRAY V RALKAR) AND THE SAME IS PLAC ED AT PAGE 22 OF THE PAPER BOOK. PARA 3 OF THE ASSESSMENT ORDER IN THE CASE OF S HRI DATTRAY V. RALKAR EVIDENCES THE FACT THAT THE LAND IN QUESTION AS WELL AS THE ISSUE WAS THE SAME, AND IT CONFIRMS THE FACT THAT THE ASSESSE AND HER BROTHER ARE THE CO - OWNERS OF THE LAND. 5 . AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS O F THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US, WE ARE OF THE OPINION 3 THAT THE BRIEF FACTS ANALYZED IN PARA 4 OF THE ASSESSMENT ORDER ARE RELEVANT IN THIS REGARD WHICH READ AS UNDER: 4. (I) THE ASSESSEE INHERITED THE LAND FROM THE ANCESTORS. (II) THE KOTHARI FAMILY HAS TENANCY RIGHT ON THE LAND AND DOING ALL AGRICULTURAL ACTIVITIES ON THE LAND IN LIEU OF THAT USED TO PAY RENT TO THE LANDLORD IE ASSESSEES FAMILY. THE TENANCY RIGHT WAS PERMANENT AND WAS WITH KOTHARI FAMILY FROM GENERATION. (III) THE TENANCY RIGHT OF THE LAND IS ALREADY SOLD BY THE TENANT IN THE FY 2008 - 2009 ONLY TO M/S. MANAS INFRATECH PVT LTD FOR RS. 12,84,00,000/ - . (IV) THE ASSESSEE HAS SOLD ITS OWNERSHIP RIGHT IN THE LAND TO M/S. MANAS INFRACTECH PVT LTD AS T ENANCY RIGHT WAS ALREADY SOLD BY PERMANENT TENANT OF THE LAND TO M/S. MANAS INFRATECH PVT LTD. (V) AS THE TENANCY RIGHT WAS ALREADY SOLD BY TENANT, THE ASSESSEE IS FORCED TO SALE HER OWNERSHIP TO M/S. MANAS INTRATECH PVT LTD AS SHE CANNOT DO ANY ACTIVITY O N THE LAND. (VI) AS THE ASSESSEE HAD NOT UTILIZED THE LAND FOR AGRICULTURAL PURPOSE NOR HAVING RIGHT TO USE THE LAND AND THE FACT IS THE TENANCY RIGHT HAS ALREADY BEEN SOLD WAY BACK IN FY 2008 - 2009 ONLY THE OWNERSHIP RIGHT WAS LEFT WITH THE ASSESSEE, CANNO T BE CONSIDERED AS AGRICULTURAL LAND. 6 . ON PERUSAL OF THE ABOVE, WE FIND THE FACTS ARE VERY CLEAR THAT THE ASSESSEE IS LEFT WITH THE OWNERSHIP RIGHT OF THE INHERITED AGRICULTURAL LAND, ON WHICH THE PERMANENT TENANCY RIGHT WAS GIVEN TO KOTHARI FAMILY. THIS FACT WAS AGREED BY THE AO AND THE AGRIC ULTURAL NATURE OF THE LAND IS UN DISPUTED. FURTHER, SIMILAR CLAIM MADE BY THE ASSESSEES BROTHER AND COPARCENER OF THE SAID AGRICULTURAL LAND (MR. DATTRAY V. RALKAR) WAS ALLOWED BY THE REVENUE AUTHORITIES, WHICH IS EV IDENT FROM THE ASSESSMENT ORDER OF SHRI DATTRAY V. RALKAR AND THE COPY OF SAME IS PLACED ON RECORD. THEREFORE, IN OUR OPINION, ADDITION MADE BY THE AO ON THIS ACCOUNT IS LEGALLY UNSUSTAINABLE. IN THIS JUNCTURE, WE FIND IT RELEVANT TO EXTRACT THE REL EVANT PARA 3 OF THE ASSESSMENT ORDER PERTAINING TO THE ASSESSEES BROTHER AND CO - OWNER OF THE SAID AGRICULTURAL LAND, WHEREIN THE REVENUE HAS ALLOWED THE SIMILAR TRANSACTIONS. 3. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD AN AGRICULTURAL L AND AT S.NO.2, HISSA NO.2A, ADMEASURING 15H 40R AT VENGURLA, TAL: VENGURLA, DIST: SINDHUDURG TO MANAS INFRATECH PRIVATE LIMITED FOR A TOTAL CONSIDERATION OF RS. 2,97,96,000/ - ON 25.08.2010. THE SAID LAND WAS ANCESTRAL ONE AND BELONGING TO HIS HUF. SINCE, THE LAND BEING AGRICULTURAL ONE, THE CAPITAL GAINS ATTRACTED FROM THE SAID TRANSACTION IS EXEMPT U/S 10 OF THE IT ACT, 1961. THERE ARE TWO MEMBERS OF THE HUF, NAMELY SHRI D.S. RALKAR AND HIS SISTER MRS. PRIYA WALAWALKAR. THE RESPECTIVE SHARE HAS BEEN RE CEIVED BY THE COPARCENERS OF THE HUF. THOSE SALES PROCEEDS ARE DEPOSITED BY THE ASSESSEE IN THE FDR WITH BANK OF INDIA AND INTEREST INCOME ACCRUED / RECEIVED FROM THE SAID DEPOSIT IS OFFERED FOR TAXATION. 5. ON PERUSAL OF THE ABOVE, WE FIND MERIT IN THE ARGUMENT OF THE LD COUNSEL THAT SINCE, THE ASSESSMENT IN THE CASE OF ASSESSEES BROTHER WAS FINALIZED AFTER EXAMINING THE TRANSACTIONS OF THE SAID AGRICULTURAL LAND, AND THEREFORE, CONSIDERING THE SIMILARITY 4 OF THE TRANSACTIONS, THE CLAIM OF THE ASSESS EE SHOULD BE ALLOWED WITHOUT MAKING ANY ADDITIONS. IN OUR OPINION, CONSIDERING THE COMMON PROPERTY ON THE TRANSACTIONS, NO ADDITION SHOULD HAVE BEEN MADE IN THE ASSESSEES CASE. ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE AO AND THE ORDER OF THE CIT (A) IS REQUIRED TO BE REVERSED. THUS, THE GROUNDS RAI SED BY THE ASSESSEE ARE ALLOWED ON TECHNICAL GROUNDS. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 19 TH AUGUST, 2015. SD/ - SD/ - (AMI T SHUKLA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 19 .8. 2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI