Ramesh Kumar Daga, CHENNAI V. ITO, CHENNAI

ITA 1630/CHNY/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5036 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 02-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR IRSADDL
• Keywords: Capital asset
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 1630/CHNY/2016 ! ' / ASSESSMENT YEAR : 2011-2012. SHRI. RAMESH KUMAR DAGA, APARTMENT NO.7M, NITHYASHREE, 51, CHAMIERS ROAD, CHENNAI 600 028. [PAN AADPD 8092Q] VS. THE INCOME TAX OFFICER, BUSINESS WARD II(3) CHENNAI. ./I.T.A. NO. 1102/CHNY/2016 ! ' / ASSESSMENT YEAR : 2011-2012. SMT. RADHA DAGA PLOT NO.7M, NITHYASHREE 57, CHAMIERS ROAD, ALWARPET, CHENNAI 600 018. [PAN ADGPR 9527G] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3) CHENNAI. ( / APPELLANT) ( /RESPONDENT) # $ % / APPELLANT BY : SHRI. G. BASKAR, ADVOCATE &' # $ % /RESPONDENT BY : SHRI. R. CLEMENT RAMESH KUMAR, IRS,ADDL. CIT. ( ) $ * /DATE OF HEARING : 07-08-2019 +,'! $ * /DATE OF PRONOUNCEMENT : 20-08-2019 ITA NOS.1630 &1102/2016 :- 2 -: / O R D E R PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THESE ARE APPEALS FILED BY THE ASSESSEES DIRECTED A GAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2 AND 1 CHENNAI (CIT(A) FOR SHORT) DATED 31.03.2016 AND 1 0.02.2016 RESPECTIVELY FOR THE ASSESSMENT YEARS 2011-12. 2. SINCE, THE IDENTICAL FACTS AND ISSUES ARE INVOLVED IN THESE APPEALS, WE PROCEED TO DISPOSE THE SAME VIDE THIS C OMMON ORDER. 3. FOR THE SAKE OF CONVENIENCE AND CLARITY THE FACTS RELEVANT TO THE APPEAL IN ITA NO.1630/CHNY/2016 IN RESPECT O F SHRI. RAMESH KUMAR DAGA FOR ASSESSMENT YEAR 2011-12 ARE STATED H EREIN. 4. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : A) THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, CHENNAI-600 034, DATED 31.03.2016 IS ERRONEOUS, ILLEGAL, CONTRARY TO LAW AND LIABLE TO B E CANCELLED. B) THE ASSESSING AUTHORITY ERRED IN ASSESSING RS.57,92,000I- AS LONG TERM CAPITAL GAINS ON SALE O F AGRICULTURAL LAND AT UTHANDI IN THE IMPUGNED ORDER. C) THE ASSESSING AUTHORITY HAS FAILED TO CONSIDER T HE EXPLANATIONS AND EVIDENCES FURNISHED BY THE APPELLA NT SHOWING THAT THE LAND SOLD IS AGRICULTURAL LAND AND IS NOT A CAPITAL ASSET AS PER SEC 2(14). D) THE ASSESSING AUTHORITY SHOULD HAVE TAKEN COGNIZ ANCE OF THE FACT THAT THE LAND WAS PURCHASED AS AN AGRIC ULTURAL LAND AND THE APPELLANT HAS NOT CONVERTED THE SAME I NTO A ITA NOS.1630 &1102/2016 :- 3 -: NON-AGRICULTURAL LAND TILL THE DATE OF SALE. THEREF ORE, IT CONTINUES TO BE AN AGRICULTURAL LAND. E) THE APPELLANT SUBMITS THAT LAND WAS USED FOR AGRICULTURAL PURPOSES AND HAS REPEATEDLY OFFERED EXPLANATIONS AND SUPPORTING TO SHOW THE LAND AT UTH ANDI VILLAGE WAS USED FOR AGRICULTURAL PURPOSES AND SHRI MOHANA KUMAR WAS ENGAGED IN THIS REGARD. THE ASSESSING AUTHORITY HAS FAILED TO CONSIDER THE SAME AS WELL A S THE EXISTENCE OF PUMPS FOR IRRIGATION AND HAS PROCEEDED TO ERRONEOUSLY TREAT THE LAND AS A CAPITAL ASSET. THIS IS PERVERSE TO THE FACTS OF THE CASE. F) THE ASSESSING AUTHORITY HAS FAILED TO CONSIDER T HE VARIOUS JUDICIAL DECISIONS SUBMITTED BY THE APPELLA NT SUPPORTING THE FACT THAT THE LAND SOLD WAS AGRICULT URAL IN NATURE AND NOT A CAPITAL ASSET. G) THE ASSESSING AUTHORITY HAS ERRED IN ASSESSING R S.24,41 ,400/- AS INCOME FROM OTHER SOURCES REPRESENTING TH E GROSS RECEIPTS AS PER THE LAND DEVELOPMENT AGREEMEN T. H) THE ASSESSING OFFICER HAVING ACCEPTED THAT THE APPELLANT HAD TRANSFERRED THE LAND ALONG WITH COMPO UND WALLS, BORE WELL WITH SUBMERSIBLE PUMPS, GATES AND DEVELOPED LAND OUGHT TO HAVE ALLOWED THE EXPENDITUR E INCURRED FOR THE SAME AND OUGHT NOT TO HAVE ASSESSE D THE ENTIRE GROSS RECEIPTS AS INCOME. I) ANY OTHER GROUND THAT MAY BE RAISED AT THE TIME OF PERSONAL HEARING. 5. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL DERIVING INCOME UND ER THE HEAD BUSINESS AND OTHER SOURCES. THE RETURN OF INCOME FOR THE AY 2011-12 WAS FILED ON 29.08.2012 DISCLOSING TOTAL INCOME OF RS.11,59,612/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT W AS COMPLETED BY THE INCOME TAX OFFICER, BUSINESS WARD II(3), CHE NNAI (IN HEREAFTER ITA NOS.1630 &1102/2016 :- 4 -: REFERRED AS ASSESSING OFFICER) VIDE ORDER DATED 28. 03.2014 PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AT TOTAL INCOME OF H93,93,010/-. WHILE DOING SO, THE AO BR OUGHT TO TAX CAPITAL GAINS ARISING OUT OF SALE OF LAND MEASURIN G 14,523.42 SQ.FT SITUATED AT SAMUDRA DWAR ROAD, IN UTHANDI VILLAGE O N 25.10.2010 FOR CONSIDERATION OF H1,45,24,000/-. THE LAND WAS SOLD BY REGISTERED DOCUMENT NO.6331/2010 WITH SUB REGISTRAR OFFICE, NE ELANKARAI. OUT OF THE ABOVE CONSIDERATION, 50% OF THE SALE CONSIDE RATION BELONGS TO HIS WIFE AND BALANCE WAS ASSESSED IN THE HANDS OF THE ASSESSEE. ASSESSEE HAD NOT ADMITTED ANY CAPITAL GAINS CLAIMIN G IT TO BE AGRICULTURAL LAND. HOWEVER, THE ASSESSING OFFICER AFTER RECORDING THE STATEMENT FROM THE TENANT ONE MR. MOHAN KUMAR WHO HAS BEEN USING THIS LAND FOR NURSERY PACKETS AND ALSO NOT ING THAT TAMIL NADU GOVERNMENT HAD PUBLISHED THE CLASSIFICATION IN THEI R OFFICIAL WEBSITE, THE LAND AT SAMUTHRA DWAR ROAD AS RESIDENTIAL AREA- SPECIAL TYPE OF LAND CLASS I AND THE ASSESSING OFFICER FURTHER I NFERRED THAT NO AGRICULTURAL ACTIVITIES WAS CARRIED ON BY THE ASS ESSEE OR BY THE SAID TENANT AND ACCORDINGLY TREATED THE LAND AS NON A GRICULTURAL AND BROUGHT TO TAX CAPITAL GAINS OF H57,92,000/-. THE ASSESSING OFFICER ALSO BROUGHT TO TAX H24,41,400/- UNDER THE HEAD IN COME FROM OTHER SOURCES BEING AMOUNT OF CONSIDERATION RECEIVED BY THE ASSESSEE IN TERMS OF DEVELOPMENT AGREEMENT DATED 25.11.2010 EN TERED WITH ONE ITA NOS.1630 &1102/2016 :- 5 -: MRS. SHARMILA SUKUMARAN ALONGWITH HIS WIFE. THIS DEVELOPMENT AGREEMENT IS AN UNREGISTERED AGREEMENT. THE ASSES SING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE THAT AMOUN T WAS RECEIVED AS PART OF THE SALE CONSIDERATION AND BY HOLDING THA T THIS IS NOT PART OF SALE CONSIDERATION AND ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE LAND SOLD WAS NOT DEVELOPED BY THE ASSES SEE AND NO EXPENDITURE WAS INCURRED. ACCORDINGLY, HE BROUGHT A SUM OF H24,41,400/- TO TAX UNDER THE HEAD INCOME FROM OTH ER SOURCES. 6. BEING AGGRIEVED BY THE ABOVE ADDITIONS, AN APPEAL W AS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDE R CONFIRMED THE ADDITIONS. 7. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. LD. COUNSEL SUBMITTED BEFORE US THA T ASSESSEE IS AN AGED PERSON SUFFERING FROM CANCER AND HE SOLD THE S AID LAND TO MEET HIS MEDICAL EXPENDITURE AND THE LAND REMAINS TO BE AGRICULTURAL LAND AND IT IS NOT SITUATED WITHIN 8 KMS OF MUNICIPAL CORPORATION OF CHENNAI. THEREFORE THE CHARACTER OF LAND REMAINS TO BE AGRICULTURAL LAND AND LOWER AUTHORITIES SHOULD NOT HAVE TREATED THE LAND AS NON AGRICULTURAL LAND. 8. ON THE OTHER HAND, THE LD. SR. DEPARTMENTAL REPRESE NTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES ITA NOS.1630 &1102/2016 :- 6 -: 9. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE GROUNDS OF APPEAL A) AND I) GENERAL IN NATURE THEREFORE, DOES NOT REQUIRE ANY ADJUDICATION. 10. GROUNDS OF APPEAL (B) TO (F) CHALLENGES THE ACTI ON OF LOWER AUTHORITIES IN ASSESSING LONG TERM CAPITAL GAINS A RISING OUT OF SALE OF AGRICULTURAL LAND SITUATED AT SAMUDRA DWAR ROAD IN UTHANDI VILLAGE. ADMITTEDLY, THE LAND WAS NOT SITUATED WITHIN 8 KMS OF MUNICIPAL CORPORATION. FURTHER, ASSESSEE HAD NOT CONVERTED THE LAND FOR NON AGRICULTURAL PURPOSE. EVEN ASSUMING THAT THE INFO RMATION GATHERED BY THE ASSESSING OFFICER THAT LAND WAS NOT USED FO R CULTIVATION IS CORRECT, THE FACT REMAINS THAT LAND REMAIN AGRICULT URAL LAND AND MERE FACT THAT LAND WAS NOT CAPABLE OF USED FOR AGRICU LTURAL PURPOSE WILL NOT RENDER THE LAND NON AGRICULTURAL. ADMITTEDLY, A SSESSEE HAD NOT DERIVED ANY INCOME FROM THE LAND FOR PUTTING FOR NON AGRICULTURAL PURPOSE AND ALSO THE SUBMISSION OF THE ASSESSEE THA T LAND WAS NOT CONVERTED FOR NON AGRICULTURAL PURPOSE REMAIN UNCO NTROVERTED. THEREFORE THE DECISION OF HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS. P. ASHOK KUMAR IN T.C. NO.268 OF 2011, DAT ED 02.01.2019 , IS SQUARELY APPLICABLE, WHEREIN IT WAS HELD AS HELD :- 5. THE ASSESSING OFFICER CONDUCTED INSPECTION OF THE PROPERTY IN THE PRESENCE OF REVENUE OFFICIALS AND SUBMITTED A R EMAND REPORT, IN WHICH, IT HAS BEEN CATEGORICALLY STATED THAT THE LAND IS SITUATED AT A DISTANCE OF MORE THAN 8 KMS AWAY FROM THE OUTE R LIMITS OF ST.THOMAS MOUNT CANTONMENT BOARD. THUS, THE REMAND REPORT WAS TAKEN INTO CONSIDERATION BY THE CIT (A) AS ONE OF THE FACTORS ITA NOS.1630 &1102/2016 :- 7 -: FOR ALLOWING THE APPEAL FILED BY THE ASSESSEE. APAR T FROM THAT, CIT (A) ALSO REFERRED TO THE CERTIFICATE ISSUED BY THE TAHSILDAR AND ONE OF THE IMPORTANT ENTRY IN THE SAID CERTIFICATE IS B Y STATING THAT THE LANDS ARE CLASSIFIED AS AGRICULTURAL LANDS. THOUGH THE CERTIFICATE MAY STATE THAT THERE IS NO CULTIVATION CARRIED ON T HE LANDS AS PER THE LAND RECORDS, THERE IS NOTHING ON RECORD TO SHO W THAT THE LAND IN QUESTION WAS PUT TO USE FOR ANY NON~AGRICUL TURAL PURPOSES. APART FROM THAT THE ASSESSEE HAS ALSO PA ID TAXES WHICH HAS BEEN RECORDED BY THE CIT(A). IN VIEW OF THE ABOVE JUDGMENT, THE LAND IN QUESTI ON CANNOT BE TREATED AS NON AGRICULTURAL LAND AND THEREFORE WE REVERSE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW GROUNDS OF APPEAL ( B) TO (F) FILED BY THE ASSESSEE. 11. THE GROUNDS OF APPEAL (G) & (H) CHALLENGES THE ACT ION OF THE LOWER AUTHORITIES TO BRING INTO TAX A SUM OF H24,4 1,400/- RECEIVED FROM THE BUYERS OF THE LAND IN TERMS OF DEVELOPMENT AGREEMENT. IT IS AN ADMITTED FACT THAT THE DEVELOPMENT AGREEMENT WAS ENTERED IN RESPECT OF SAME LAND WHICH WAS SOLD AS DISCUSSED BY US IN PRECEDING PARA. IN THE GIVEN CIRCUMSTANCES, IT WILL BE TREA TED AS PART OF SALE CONSIDERATION OF THE LAND SINCE WE HELD THAT CONSI DERATION RECEIVED ON SALE OF LAND CANNOT BE BROUGHT TO TAX AS NON AGRIC ULTURAL. THE ASSESSING OFFICER IS NOT JUSTIFIED IN BRING TO TA X THE SUM OF H24,41,400/- UNDER THE HEAD OTHER SOURCES. ACCORDI NGLY, WE ALLOW THE GROUNDS OF APPEAL (G) AND (H) RAISED BY THE ASSESS EE. ITA NOS.1630 &1102/2016 :- 8 -: 12. THE APPEAL OF THE ASSESSEE IN ITA NO.1630/CHNY/2016 FOR ASSESSMENT YEAR 2011-2012 IN RESPECT OF SHRI. RAME SH KUMAR DAGA IS ALLOWED. ITA NO.1102/CHNY/ 2016 FOR ASSESSMENT YEAR 2011-1 2 IN RESPECT OF SMT. RADHA DAGA. 13. SINCE, THE FACTS IN THE PRESENT APPEAL ARE IDENTIC AL TO THE FACTS IN ITA NO.1630/CHNY/2016, FOR THE REASONS MENTIONED THEREIN, WE ALLOW THE APPEAL FILED BY THE ASSESSEE THE SAME LINES INDICATED IN APPEAL ITA NO.1630/CHNY/2016 SUPRA. HENCE, THE ABOV E CAPTIONED APPEAL FILED BY THE ASSESSEE IS ALLOWED. 14. IN THE RESULT, THE APPEALS OF THE ASSESSEES IN IT A NO.1630 &1102/CHNY/2016 FOR ASSESSMENT YEAR 2011-2012 STAN D ALLOWED. ORDER PRONOUNCED ON 20TH DAY OF AUGUST, 2019, AT C HENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER -) / CHENNAI . / DATED:20 TH AUGUST, 2019. KV /0 $0& *12032'* / COPY TO: 0 1 . # / APPELLANT 3. 0 ( 4*056 / CIT(A) 5. 278 0& * 9 / DR 2. &' # / RESPONDENT 4. 0 ( 4* / CIT 6. 8:0;) / GF