ITO, CHENNAI V. M.Duraipandian, CHENNAI

ITA 167/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8868 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-06-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 29-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAHADEVANJCIT
• Assessee Lawyers: ANAND BABUNATH
• Keywords: Capital asset
• Section: 143(3); 2(14); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , # BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.167/MDS/2016 ( / ASSESSMENT YEAR: 2012-13) THE INCOME TAX OFFICER, NON-CORPORATE WARD-7(2), 606, WANAPARTHY BLOCK, CHENNAI - 34. VS MR. M.DURAIPANDIAN, 71, Z BLOCK, 11 TH STREET 5 TH AVENUE, ANNA NAGAR, CHENNAI - 600 040. PAN:AAIPS2091P ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SAHADEVAN,JCIT /RESPONDENT BY : MR. ANAND BABUNATH, C.A /DATE OF HEARING : 6 TH JUNE, 2016 /DATE OF PRONOUNCEMENT : 9 TH AUGUST, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 7, CHENNAI DATED 23.11.2015 IN ITA NO.85/CIT(A)-7/2 014-15 PASSED UNDER SECTION 143(3) R.W.S. 250(6) OF THE A CT. 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEAL, HOWEVER THE CRUX OF THE ISSUE IS AS FOLLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THE APPELLANT IS NOT LIABLE TO CAPITAL GAIN TAX FOR THE SALE OF H IS LAND 2 ITA NO.167/MDS/2016 3. BRIEF FACTS OF THE ASSESSEE ARE THAT THE ASSESSE E IS AN INDIVIDUAL EARNING INCOME FROM COMMISSION FILED HIS RETURN OF INCOME ON 24.12.2012 FOR THE ASSESSMENT YEAR 2012-1 3 DECLARING TOTAL INCOME OF `6,34,080/-. IT WAS SUBS EQUENTLY REVEALED THAT THE ASSESSEE SOLD HIS SHARE IN IMMOVA BLE PROPERTY FOR `83,47,718/- . THEREFORE THE ASSESSMEN T WAS REOPENED UNDER SECTION 147 OF THE ACT AND ORDER UND ER SECTION 143(3) R.W.S.147 OF THE ACT WAS PASSED ON 13.02.2015 WHEREIN THE LEARNED ASSESSING OFFICER AR RIVED AT THE CAPITAL GAIN OF THE ASSESSEE TOWARDS THE SALE O F HIS SHARE IN LAND AT `82,05,916/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD EXPLAINED THAT THE LAND SOLD BY HIM WA S AGRICULTURAL LAND WHEREIN MANGO TREES AND COCONUT T REES WERE CULTIVATED. HE HAD FURTHER CLAIMED THAT THE LA ND WAS OUTSIDE THE LIMIT OF 8 KMS FROM MUNICIPAL LIMIT. HE NCE, IT WAS SUBMITTED THAT THE LAND SOLD BY HIM IS AGRICULTURAL LAND WHICH IS EXEMPT FROM CAPITAL GAIN TAX. HOWEVER, THE LEARN ED ASSESSING OFFICER ARRIVED AT THE CONCLUSION THAT TH E LAND SOLD 3 ITA NO.167/MDS/2016 BY THE ASSESSEE IS NOT AGRICULTURAL LAND AND THEREF ORE LIABLE TO LONG TERM CAPITAL GAIN TAX BECAUSE OF THE FOLLOWING REASONS:- I) THE LAND WAS PURCHASED AS PLOT AND SOLD AS A PLO T. II) URBAN LAND TAX WAS COLLECTED FROM THE ASSESSEE. III) THE GAZETTE NOTIFICATION ALSO CONFIRMED THE FA CT THAT THE LAND IN QUESTION COMES WITHIN THE CHENNAI CORPORATI ON BEFORE THE SALE OF THE LAND ON 12.12.2011. IV) THE LAND WAS CLASSIFIED AS RESIDENTIAL AREA CL ASS II BEARING SURVEY NO.107/4A 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) HELD THAT THE LAND SOLD BY THE ASSESSEE I S AGRICULTURAL LAND AND THEREFORE NOT LIABLE TO CAPIT AL GAIN TAX BY OBSERVING AS UNDER:- 6.3 FOR THE SAKE OF CLARITY LET US RECALL THE FACT S UNDISPUTED IN THE CASE. I) THE APPELLANT PURCHASED THE IMPUGNED LAND ON 21. 01.2002 VIDE SALE DEED DOCUMENT NO.850/2002. II) AT THE TIME OF PURCHASE, THE LAND WAS BEYOND 8 KMS OF THE MUNICIPALITY. III) THE GOVT. EXTENDED THE BOUNDARIES OF CHENNAI C ITY UPTO MAHABALIPURAM POINT VIDE G.O. NO.256 DATED 26.12.09 . THIS GO WAS TO COME INTO EFFECT FROM THE DATE OF NEXT ELECT ION TO LOCAL BODIES SITUATED ACROSS THE NEIGHBORING DISTRICT. 4 ITA NO.167/MDS/2016 IV) THE NEXT ELECTION TO LOCAL BODIES TOOK PLACE ON 16.10.11 AND THE NEWLY ELECTED BODY TOOK OVER CHARGE ON 25.10.11 . ACCORDINGLY, NOTIFICATION VIDE GO NO.256 DATED 26.1 2.2004 CAME INTO OPERATION W.E.F 25.10.11. V) AS A RESULT OF THE NOTIFICATION THE IMPUGNED LAN D WAS ANNEXED WITH CHENNAI CORPORATION IE.. WITHIN 8 KMS RADIUS O F THE CORPORATION BOUNDARY. VI) THE DATA AVAILABLE IN TNREGINET CLASSIFIED THE LAND AS RESIDENTIAL AREA CLASS II. VII) THE CERTIFICATE FROM VAO AND CHITTA ABOUT CULT IVATION OF MANGO AND COCONUT ON THE IMPUGNED LAND. VIII) THE APPELLANT HAS BEEN CONSISTENT IN DECLARIN G AGRICULTURAL INCOME IN THE RETURN OF INCOME YEAR AFTER YEAR AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT. CERTIFIED COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME DISCLOSING AGRI CULTURAL INCOME FROM ASSESSMENT YEAR 2005-06 ONWARDS HAS BEE N FILED. IX) THE IMPUGNED LAND WAS SOLD BY THE APPELLANT ON 12.12.2011 I.E. MORE THAN A MONTH AFTER THE OPERATIONALIZATION OF THE GO NO.256. X) THE APPELLANT IN HIS RETURN OF INCOME HAS CLAIME D EXEMPTION FROM CAPITAL GAINS ON THE GROUNDS THAT THE IMPUGNED LAND WAS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2 (14) OF THE ACT. 6.4.IN THE LIGHT OF THE FACTS AND JUDICIAL PRONOUNC EMENTS AS DISCUSSED SUPRA, THE CASE OF THE APPELLANT IS EXAMI NED. THE HONBLE JAIPUR BENCH HAS CLEARLY HELD THAT FOR THE PURPOSE OF DETERMINATION OF LOCATION OF LAND, THE POSITION TO BE CONSIDERED IN THE ONE EXISTING ON THE DATE ON WHICH CBDT NOTIFICA TION DATED 06.01.1994 WAS PUBLISHED IN THE OFFICIAL GAZETTE AN D NOT THE POSITION THAT EXISTED ON THE DATE OF SALE. IN THIS CONNECTION THE RELEVANT CLAUSE IN EXPLANATION 2 OF THE CBDT NOTIFI CATION DATED 06.01.1994 EXPLANATION 2 OF THE NOTIFICATION IS AS UNDER:- (2) THE REFERENCE TO THE MUNICIPAL LIMITS ON THE LI MIT OF CANTONMENT BOARD IN THE SCHEDULE TO THIS NOTIFICATI ON IS TO THE LIMITS AS EXISTING ON THE DATE ON WHICH THE NOT IFICATION IS PUBLISHED IN THE OFFICIAL GAZETTE. 6.5 IN VIEW OF THE AFORESAID EXPLANATION WHICH CLEA RLY HOLDS THAT THE MATERIAL DATE IN THE DATE OF PUBLICATION O F NOTIFICATION IN THE OFFICIAL GAZETTE AND ALSO FOLLOWING THE JUDGEME NT OF HONBL ITAT JAIPUR BENCH AS DISCUSSED ABOVE, I HOLD THAT I MPUGNED 5 ITA NO.167/MDS/2016 PROPERTY WAS OUTSIDE THE PURVIEW OF THE STIPULATION S UNDER SECTION 2(14) OF THE ACT. 6.6 HOWEVER, AT THE SAME TIME IT IS EXTREMELY RELEV ANT TO SEE THE ACTUAL USAGE OF LAND TO DETERMINE ITS NATURE. H ONBLE SUPREME COURT IN THE CASE OF SMT. SARIFABIBI MOHAME D IBRAHIM VS. CIT REPORTED IN 204 ITR 631 HAS HELD THAT WHETHER A LAND IS AN AGRICULTURAL LAND OR NOT IS E SSENTIALLY A QUESTION OF FACT. SEVERAL TEST HAVE BEEN INVOLVED IN THE DECISION OF THE SUPREME COURT BUT ALL OF THEM ARE MORE IN THE NATURE OF GUIDELINES. THE QUESTION HAS TO BE AN SWERED IN EACH CASE HAVING REGARD TO FACTS AND CIRCUMSTANC ES OF THAT CASE. THE COURT HAS TO ANSWER THE QUESTION ON A CONSIDERATION OF ALL OF THEM A PROCESS OF EVALUATIO N. THE INFERENCE HAS TO BE DRAWN ON A CUMULATIVE CONSIDERA TION OF ALL THE RELEVANT FACTS. 6.7 THE APPELLANT HAS PRODUCED FOLLOWING EVIDENCES JUSTIFYING THE AGRICULTURAL ACTIVITY ON THE IMPUGNED LAND : 1. CHITTA AND CERTIFICATE FROM VAO CERTIFYING THAT THE NATURE OF CULTIVATION FROM IMPUGNED LAND WAS COCONU T AND MANGOES. 2. DISCLOSURE OF AGRICULTURAL INCOME CONSISTENTLY IN THE RETURN OF INCOME. 6.8 THE ASSESSING OFFICER ON THE CONTRARY HAS STATE D THAT CERTIFICATE OF THE VAO HAS NO RELEVANT AS THE SCHED ULE IN THE DEED OF CONVEYANCE MAKES NO MENTION OF TREES. THE A SSESSING OFFICER HAS FURTHER MENTIONED THAT ON INSPECTION TH E INSPECTOR DID NOT FIND ANY EVIDENCE OF PLOUGHING SEEDING AND OTHE R RELATED ACTIVITIES. 6.9. THE ARGUMENTS OF THE ASSESSING OFFICER IS NOT ACCEPTABLE ON THE GROUND THAT AGRICULTURE HAS A VERY WIDE CONN OTATION NOT RESTRICTED TO JUST PLOUGHING AND SEEDING. THE CERTI FICATE FROM VAO CLEARLY MENTIONS THE IMPUGNED LAND SURVEY NO.10 7/4A AND THE NATURE OF CULTIVATION IN COLUMN NO.9 AS MANGOES AND COCONUT. IT THEREFORE BECOMES CLEAR THAT THE USAGE OF LAND I S AGRICULTURAL. THE ASSESSING OFFICER HAS DISREGARDED THE EVIDENCE AND COME TO A FINDING WHICH IS NOT CORRECT. BASED ON THE FAC TS AND CIRCUMSTANCES MENTIONED ABOVE, I HOLD THAT USAGE OF IMPUGNED LAND WAS AGRICULTURAL. 6.10 TO SUM UP THE FINDINGS IN THE APPEAL ARE AS UN DER:- A) THE LOCATION OF THE LAND HAS TO BE MADE WITH REF ERENCE TO THE POSITION AS ON THE DATE OF PUBLICATION OF CB DT 6 ITA NO.167/MDS/2016 NOTIFICATION IN THE OFFICIAL GAZETTE. APPLYING THE SAME, THE IMPUGNED LAND IS AN ASSET FALLING OUTSIDE THE PURVI EW OF SECTION 2(14) OF THE ACT. B) THE USAGE OF THE LAND IN THE HANDS OF THE APPEL LANT IS AGRICULTURAL. IN VIEW OF THESE FINDINGS, IT IS HELD THAT THE APPE LLANT IS NOT LIABLE TO CAPITAL GAINS ON THE TRANSACTION. AS SUCH, THE A DDITION MADE ON ACCOUNT OF CAPITAL GAINS BY THE ASSESSING OFFICE R IS HEREBY DELETED. 6. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSES SING OFFICER REITERATING HIS FINDINGS AND REQUESTED HIS ORDER TO BE SUSTAINED. 7. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE RELIED IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), I T APPEARS THAT THE LANDS FALL WITHIN THE 8 KMS OF T HE CHENNAI CORPORATION BECAUSE THE LAND WAS SOLD ON 12.12.2011 AND THE GAZETTE NOTIFICATION NO.256 DATED 26.12.2004 CA ME INTO 7 ITA NO.167/MDS/2016 OPERATION W.E.F. 25.10.2011. HOWEVER, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS MENTIONED IN HIS ORDER THAT THE LOCATION OF THE LAND HAS TO BE VIEW ED WITH REFERENCE TO THE POSITION AS ON THE DATE OF PUBLICA TION OF CBDT NOTIFICATION IN THE OFFICIAL GAZETTE AND ACCO RDINGLY HELD THE LAND AS AN ASSET FALLING OUTSIDE THE PURVIEW OF SECTION 2(14) OF THE ACT, RELYING IN THE DECISION OF THE J AIPUR BENCH OF THE TRIBUNAL IN THE CASE OF SUBHA TRIPATHI VS. DCI T REPORTED IN 58 SOT 139 WHEREIN IT WAS HELD THAT AS PER EXPLA NATION 2 OF CBDT NOTIFICATION DATED 06.01.1994, THE MUNICIP AL LIMIT IS TO BE THE LIMITS AS EXISTING ON THE DATE ON WHICH T HE NOTIFICATION IS PUBLISHED IN THE GAZETTE. HOWEVER, IN THE PRESENT CASE BEFORE US NO RELEVANT MATERIALS ARE BR OUGHT BEFORE US TO ESTABLISH AS TO WHEN THE GAZETTE NOTIF ICATION WAS PUBLISHED IN THE OFFICIAL GAZETTE. THEREFORE, WE AR E OF THE CONSIDERED VIEW THAT THE ENTIRE ISSUE HAS TO BE RE- EXAMINED. FURTHER, SINCE THE LEARNED ASSESSING OFFICER DID NO T HAVE AN OPPORTUNITY TO EXAMINE THE RELEVANT CASE LAWS RELIE D UPON BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), W E HEREBY REMIT BACK THE MATTER TO THE FILE OF THE LEA RNED ASSESSING OFFICER FOR DE NOVO CONSIDERATION. 8 ITA NO.167/MDS/2016 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 9 TH AUGUST, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) ! # /JUDICIAL MEMBER # / ACCOUNTANT MEMBER ! /CHENNAI, % /DATED 9 TH AUGUST, 2016 SOMU '( )( /COPY TO: 1. APPELLANT 2. RESPONDENT 3. * ( ) /CIT(A) 4. * /CIT 5. ( - /DR 6. /GF .