ITO, Rewari V. Sh. Narayan Singh, Rewari

ITA 1802/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7307 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SINCE FACTS
• Keywords: Capital asset; Fair market value
• Section: 11

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI R. S. SYAL , ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 1802 /DEL/ 2013 (ASSESSMENT YEAR: 2009 - 10 ) ITO, WARD - 2, AAYAKAR BHAWAN, MODEL TOWN, REWARI VS. NARAYAN SINGH, VILL - KAPRIWAS, P.O. - HERO HONDA, DHARUHERA, REWARI PAN:ASTPS8638P (APPELLANT) (RESPONDENT) ITA NO. 1801 /DEL/ 2013 ASSESSMENT YEAR: 2009 - 10 ) ITO, WARD - 2, AAYAKAR BHAWAN, MODEL TOWN, REWARI VS. KIRAN KUMAR, S/O. SH. RAMOTAR, VILL - KAPRIWAS, DHARUHERA, DISTT - REWARI, HARYANA, PAN:BDIPK0522M (APPELLANT) (RESPONDENT) ITA NO. 1869 /DEL/ 2013 (ASSESSMENT YEAR: 2009 - 10 ) ITO, WARD - 2, AAYAKAR BHAWAN, MODEL TOWN, REWARI VS. ASHRIFI D/O. SHRI BHAWANI SINGH VILL - KAPRIWAS, DARUHERA REWARI PAN:ANIPA0897N (APPELLANT) (RESPONDENT) O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THESE THREE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A), ROHTAK DATED 21.0 1.2013 FOR ASSESSMENT YEAR 2009 - 10. 2. SINCE THE ISSUES RAISED IN ALL THE AFORESAID APPEALS ARE SIMILAR WE TAKE UP THE CASE OF NARAYAN SINGH; AND SINCE THE FACTS AND CIRCUMSTANCES OF THE OTHER CASE S BEING APPELLANT BY : DR. B.R. R. KUMAR, SR. DR RESPONDENT BY : RAKESH GUPTA, CA PAGE NO. 2 SAME, THE RESULT OF THE ISSUES ADJUDICATED IN THIS APPEAL WOULD FOLLOW ON THE SOLE ISSUE IN OTHER APPEALS. 3. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: - 1. ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN LAW BY ANNULLING THE ASSESSMENT WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE AO THAT LAND SOLD WAS IN INDIVIDUAL CAPACITY AND ASSESSEE RECEIVED THE CONSIDERATION IN INDIVIDUAL CAPACI TY AND NOT IN HUF STATUS. MOREOVER IN THE LAND RECORDS ALSO THE LAND WAS ON INDIVIDUAL NAME AND NOT ON HUF NAME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN LAW BY NOT ADJUDICATING THE CASE ON MERITS BUT ANNULLED THE A SSESSMENT ON THE BASIS OF STATUS OF THE ASSESSEE WHICH WAS DULY CONSIDERED BY THE AO DURING THE ASSESSMENT PROCEEDING AND WAS DECIDED ACCORDINGLY. 4. SOLE GROUND - APROPOS DETERMINATION WHETHER THE LAND SOLD IN DISPUTE I S BY HUF OR THE ASSESSEES IN HIS IN DIVIDUAL CAPACITY. 5. BRIEF FACTS OF THE CASE ARE AS UNDER: - THE ASSESSEE IS AN EMPLOYEE OF THE GOVT., FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS 1,82,718/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTE D C ASH DEPOSITS IN HIS BANK A/ C FOR WHICH THE ASSESSEE SUBMITTED THAT THE CASH DEPOSITS WERE MADE OUT OF THE SALE PROCEEDS OF AGRICULTURE LAND. ON EXAMINATION OF THE SALE DEED AND OTHER DOCUMENTS, THE AO NOTED THAT AGRICULTURE LAND MEASURING 93 KANALS 13 MARLAS WAS SOLD BY THE ASSESS EE AND OTHERS ON 12.06.2008 FOR A TOTAL CONSIDERATION OF RS 12,17,45,000/ - TO M/S MILESTONE MEGA CITY PVT. LTD. IN WHICH THE ASSESSEE'S SHARE OF THE PROPERTY WA S MEASURED TO BE AT 15 KANALS 02 MARLAS FOR RS ,96,57,084/ - . THE SAID LAND IS SITUATED AT VIL LAGE KAPRIWAS, PO DHARUHERA, REWARI AND THE ASSESSEE PRODUCED A CERTIFICATE ACCORDING TO WHICH THE LAND IS SITUATED AT ABOUT 7 - 8 KM FROM MUN I CIPAL COMMITTEE, DHARUHERA. THE AO EXAMINED THE CERTIFICATE AND DEPUTED AN INSPECTOR FOR ENQUIRY. THE INSPECTOR VID E REPORT DATED 24.11.2011 STATED THAT THE LAND IS ONLY ABOUT 4 KMS FROM THE MUNICIPAL LIMITS OF DHARUHERA TOWN. THEREAFTER, THE AO ISSUED SUMMONS TO HALKA PATWARI OF KAPRIWAS VILLAGE TO FURNISH THE LAND RECORDS ETC. TO EXAMINE THE DISTANCE OF THE LAND UNDE R CONSIDERATION. THE HALKA PATWARI SUBMITTED A DETAILED REPORT AS PER WHICH THE LAND IS ONLY 4 KM FROM THE MUNICIPAL LIMITS OF DHARUHERA. AFTER RECEIPT OF THIS REVISED REPORT OF HALKA PATWARI, THE AO ISSUED SUMMONS TO NAIB TEHSILDAR, DHARUHERA TO AUTHENTIC ATE THE DISTANCE OF THE LAND AS THREE DIFFERENT REPORTS WERE RECEIVED IN THE CASE IN RESPONSE TO WHICH NAIB TEHSILDAR, DHARUHERA SUBMITTED A REPORT WHEREIN IT WAS STATED THAT SHE HERSELF VISITED THE LAND UNDER PAGE NO. 3 CONSIDERATION AND FOUND THE DISTANCE OF LAND T O BE ONLY 4 KMS FROM THE MUNICIPAL LIMITS OF DHARUHERA. SHE ALSO SUBMITTED THE EXPLANATION OF THE HALKA PATWARI, KAPRIWAS VILLAGE AS TO UNDER WHAT CIRCUMSTANCES HE HAD ISSUED A WRONG CERTIFICATE TO THE ASSESSEE. THE REVISED DISTANCE CERTIFICATE ISSUED BY H ALKA PATWARI, KAPRIWAS VILLAGE ALONG WITH THE REPORT OF NAIB TEHSILDAR, DHARUHERA WAS GIVEN TO THE ASSESSEE FOR HIS COMMENTS BUT NO OBJECTIONS WERE FILED BY THE ASSESSEE. THE AO NOTED THAT CBDT VIDE NOTIFICATION IN F. NO. 164/3/87 - ITA.I DATED 06.01.1994 HAD NOTIFIED THE AREA OF DHARUHERA AS 'AREAS UP TO A DISTANCE OF 5 KM S FROM THE MUNICIPAL LIMITS IN ALL DIRECTIONS'. SINCE THE LAND IN QUESTION LIES WITHIN THE LIMITS NOTIFIED BY CBDT, THE AO HELD THAT IT IS COVERED UNDER THE DEFINITION OF CAPITAL ASSET U/ S 2 (14) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT) AND THEREFORE LIABLE FOR CAPITAL GAINS U/S 45 OF THE ACT. THE ASSESSEE SUBMITTED THAT THE LAND SOLD BY HIM BELONGS TO HUF. THE A0 ASKED THE ASSESSEE TO FURNISH DOCUMENTARY EVIDENCE THAT THE LAND BELONGS TO HUF FOR WHICH THE ASSESSEE REPLIED AS UNDER : - THE AGRICULTURAL LAND SOLD WAS AN ANCESTRAL LAND AND THE INC OME OUT OF THE SALES PROCEEDS OF SAID LAND BELONG THE HUF. THE AGRICULTURAL LAND WAS TRANSFERRED IN THE NAME OF SH. NARAIN SINGH FROM MY FATHER SH. GAJRAJ SINGH EVIDENT WITH THE INTAKAL REGISTER SHOWING MY FATHER'S NAME SH. GAJRAJ SINGH AND THE PRESENT OWN ER NARAIN SINGH. THIS PROVES THE CONTENTION OF THAT THE SAID LAND WAS NOT PURCHASED BY MYSELF BUT BELONGS TO THE HUF. THE COPY OF INTAKAL REGISTER IS APPENDED FOR YOUR READY REFERENCE AS ANNEXURE - 1. 6. THE AO NOTED FROM THE COPY OF INTAKAL AND THE EXPLANATION OFFERED BY THE ASSESSEE THAT THE LAND IN QUESTION WAS TRANSFERRED FROM HIS FATHER TO HIM BUT NOTHING HAS BEEN MENTIONED IN THE INTAKAL REPORT AS TO WHETHER THE LAND WAS SELF ACQUIRED OR INHERITED BY THE FATHER OF THE ASSESSEE. THE AO ASKED THE ASSESSEE TO PROVIDE FURTHER EVIDENCE IN THIS REGARD AND IN THE ABSENCE OF FILING OF FURTHER EVIDENCE, THE AO DENIED THE CLAIM OF THE ASSESSEE THAT THE LAND UNDER CONSIDERATION BELONGS TO HUF. THE AO FURTHER NOT ED T HAT THE SALE PROCEEDS OF THE AGRICULTURE LAND HAVE BEEN DEPOSITED IN THE INDIVIDUAL BANK A/C OF THE ASSESSEE. 7. SINCE THE LAND IN QUESTION WAS INHERITED FROM THE FATHER OF THE ASSESSEE ON 04.04.1983, TO DETERMINE THE FAIR MARKET VALUE (FMV) AS 01.04. 1981, SUMMONS WERE ISSUED TO THE CONCERNED OFFICIALS IN THE OFFICE OF DY. COMMISSIONER CUM REGISTRAR, REWARI TO PRODUCE THE LIST OF SALE DEED OF PAGE NO. 4 AGRICULTURAL LAND FOR THE FY 1980 - 81 & 1981 - 82 TO SORT OUT THE REGISTERED DOCUMENTS IN AND AROUND KAPRIWAS/DHAR UHERA. FROM THE INFORMATION AND DOCUMENTS PRODUCED IN RESPONSE TO SUMMONS, THE AO NOTED REGISTRY OF AGRICULTURE LAND IN DHARUHERA VILLAGE DATED 19.06.1980 AS PER WHICH AGRICULTURE LAND MEASURING 22 KANALS 03 MARLAS WAS SOLD FOR A TOTAL CONSIDERATION OF RS 42,916/ - WHICH GIVES A RATE OF RS 97 PER MARLA OR RS15, 520/ - PER ACRE. ADOPTING THIS RATE, THE AO WORKED OUT THE FMV AS ON 01.04.1981 OF THE LAND OF THE ASSESSEE 115 KANALS 02 MARLAS OR 302 MARLAS) AS RS 29,294/ - AND AFTER INDEXATION WORKED OUT THE LONG TERM CAPITAL GAINS (LTCG) AT RS 1,94,86,593/ - AND MADE THE ADDITION ACCORDINGLY. 8. THE AO NOTED THAT INTEREST INCOME EARNED BY THE ASSESSEE ON THE SALE CONSIDERATION WHICH HAS BEEN DEPOSITED IN THE BANK A/ C HAS NOT BEEN OFFERED FOR TAX. THE AO STATED T HAT THE INTEREST INCOME OFFERED FOR TAX IS IN HUF CAPACITY. HAVING HELD THAT THE AGRICULTURAL LAND UNDER CONSIDERATION BELONGS TO HUF, THE AO ADDED THE INTEREST INCOME OF RS 4,13,658/ - I N THE HANDS OF THE ASSESSEE. 9 . AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO WAS PLEASED TO ALLOW THE APPEAL AND HELD AS UNDER: - 5. I HAVE CAREFULLY CONSIDERED THE ISSUE, THE SUBMISSIONS MADE BY THE AR AND THE REMAND REPORT OF THE AO AND THE CASE RECORDS. THE INTAKAL REGISTER PRODUCED BY THE ASSESSEE DURING ASSESSMENT AND APPEAL PROCEEDINGS DENOTES THE PASSING OF AGRICULTURE LAND FROM THE FOREFATHERS OF THE APPELLANT. NAIB TEHSILDAR IN THE REPORT DURING THE REMAND PROCEEDINGS STATED THAT IT IS ANCESTRAL LAND. THE AO IN THE REMA ND REPORT BASED ON THE EVIDENCE PRODUCED BY THE ASSESSEE BY WAY OF INTAKAL REGISTER ETC. AND THE REPORT OF NAIB TEHSILDAR, STATED THAT THE LAND IN QUESTION WAS INHERITED BY THE ASSESSEE FROM HIS FATHER. MERE DEPOSIT OF THE SALE CONSIDERATION IN THE INDIVID UAL BANK A/C OF THE ASSESSEE DOES NOT ALTER THE STATUS OF THE AGRICULTURE LAND AS TO WHOM IT BELONGS. THE REMAND REPORT OF THE AO, THE REPORT OF THE NAIB TEHSILDAR AND THE INTAKAL REGISTER INDICATE THAT THE AGRICULTURE LAND BELONGS TO THE HUF. SINCE THE LA ND WAS INHERITED BY THE ASSESSEE FROM HIS FOREFATHERS, IT BELONGS TO THE HUF AND THEREFORE THE CAPITAL GAINS IS LIABLE TO BE BROUGHT TO TAX IN THE HANDS OF INDIVIDUAL HUF ONLY. SINCE THE CAPITAL GAINS HAS BEEN BROUGHT TO TAX IN THE HANDS OF INDIVIDUAL, THE ASSESSMENT MADE BY THE AO IS SET ASIDE/CANCELLED AND THE ASSESSEE SUCCEEDS IN THE ALTERNATE GROUND OF APPEAL. THE GROUNDS OF APPEAL ON MERITS ARE THEREFORE NOT ADJUDICATED UPON. 10 . WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULLY PERUSED THE RECORDS OF THE CASE. WE FIND THAT THE LD CIT(A) HAS CLEARLY MADE A FINDING THAT THE LAND IN QUESTION PAGE NO. 5 BELONG TO THE HUF AND THEREFORE TAX ON CAPITAL GAIN CAN BE LEVIED ONLY ON HUF AND NOT THE INDIVIDUAL ASSESSEE. IT HAS BEEN BROUGHT TO OUR NOTICE BY THE LD AR THAT TH E CAPITAL GAIN IN RESPECT TO THE LAND IN QUESTION HAS BEEN BROUGHT TO TAX IN THE HANDS OF HUF. IN THE LIGHT OF THE AFORESAID SUBMISSION OF THE LD AR, IT WOULD BE FAIR AND REASONABLE TO DIRECT THE AO TO VERIFY THE SAID CLAIM OF THE LD AR. AND IN CASE IT IS FOUND THAT THE HUF HAS BEEN TAXED FOR THE CAPITAL GAIN ON THE LAND IN QUESTION, THEN THE AO SHALL DELETE THE SAME LEVIED ON THE INDIVIDUAL ASSESSEE. THEREFORE WE SET - ASIDE THE ORDER OF THE LD CIT(A) AND REM IT THE MATTER BACK TO THE FILE OF THE AO AND DIRECT HIM TO VERIFY WHETHER THE HUF HAS BEEN TAXED ON THE CAPITAL GAIN ON THE LAND IN QUESTION , AND IF SO , THE ADDITION MADE ON THE INDIVIDUAL ASSESSEES NEED TO BE DELETED. NEEDLESS TO SAY, SUFFICIENT OPPORTUNITY MAY BE GRANTED TO ALL THE THREE ASSESSEE S. 11 . IN THE RESULT ALL THE APPEAL S OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 6 . 09 .2014. - S D / - - S D / - ( R. S. SYAL ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 6 / 09 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI