Late Pobbati Ramachandra Setty, V. ITO,

ITA 182/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0349 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 31-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEGAL HEIR SRI P R SRINATH
• Assessee Lawyers: V SRINIVASAN SHRI V SREENI
• Keywords: Capital asset; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI A.K.GARODIA, AM (SMC) ITA NO.182(B)/2014 (ASSESSMENT YEARS : 2005-06) LATE POBBATI RAMACHANDRAIAH SETTY, REP. BY LEGAL HEIR SRI P.R. SRINATH AND OTHERS, SRINATH BUILDING, SULTANPET, BANGALORE -560 053 PAN NO.ASZPS5387B APPELLANT VS THE INCOME TAX OFFICER, WARD-3(2), BANGALORE RESPONDENT ASSESSEE BY : SHRI V. SRINIVASAN, ADVOCATE REVENUE BY : SHRI V. SREENIVASAN, JCIT DATE OF HEARING : 07-06-2016 DATE OF PRONOUNCEMENT : . 06.2016 O R D E R PER SHRI A.K.GARODIA, AM: THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A),-II, BANGALORE DATED 02-12-2013 FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1 . THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS TH EY ARE AGAINST THE APPELLANT, ARE OPPOSED TO LAW , EQUITY, WEIGHT OF EVIDENCE , PROBABILITIES , FACTS AND CIRCUMSTANCES OF THE CASE . 2. THE LEARNED CIT[A] IS NOT JUSTIFIED IN PASSING T HE APPELLATE ORDER IN THE NAME OF THE DECEASED APPELLANT AND CONSEQUENTLY, TH E IMPUGNED ORDER PASSED DESERVES TO BE CANCELLED. 3. WITHOUT PREJUDICE TO THE ABOVE , THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING IN COMPUTING THE TAXABLE LONG TERM CAPITA L GAINS OF RS. 20 , 51,0121- ON THE SALE OF AGRICULTURAL LANDS UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. ITA NO.182(B)/2014 2 3.1. THE LEARNED CIT[A] FAILED TO APPRECIAT E THAT THE AGRICULTURAL LANDS SOLD BY THE APPELLANT WERE NOT CAPITAL ASSETS AS THEY WERE SITUATED BEYOND 8 KMS FROM THE MUNICIPAL LIMITS OF BANGALORE AND HENCE THE COMPUTA TION OF LONG TERM CAPITAL GAINS WAS OPPOSED TO LAW AND LIABLE TO BE VACATED. 3.2. THE LEARNED CIT[A] FURTHER FAILED TO AP PRECIATE THAT THE CONVERSION OF THE AGRICULTURAL LANDS WAS ONLY TO FACILITATE THE SALE OF THE PROPERTY AND THEREFORE THERE WAS NO JUSTIFICATION TO HOLD THAT THE APPELLANT HAD SOLD NON- AGR I CU L TURA L L ANDS AND THUS , THE CONC L US I O N REACHED BY THE L EARNED A.O. IS UNJ USTIF I ED A N D LI AB LE TO B E V ACATE D . 3.3. WI T H OU T P RE J UD I CE TO TH E ABOVE , T H E L ONG- T ERM CAPITA L GAIN COMPUTED BY TH E L EARNED A.O. I S HI G HLY EXCESS IV E AND I S L I A BL E T O BE REDUCED SUBSTANTIA LL Y. 4 . W ITHOUT PRE J UD I CE TO TH E RI G HT T O SEE K WAIVER WITH THE HON'BLE CCIT IDG, THE APPE L LANT D E NI ES H I MSE L F LI ABLE TO BE CHARGED TO INTEREST ULS 234-A AND 234-B OF THE ACT , WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF T HE APPE L LANT'S CASE AND THE LEVY DESERVES TO BE CANCELLED. 5. FOR THE ABOVE AND OTHER GROUNDS THAT MAY B E URGED AT THE TIME OF HEAR I NG OF THE APPEAL , YOUR APPELLANT HUMB L Y PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE R EFUND OF THE INST I TUTION FEES AS PART OF THE COSTS . 3. IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESS EE THAT ONLY ONE ISSUE IS INVOLVED IN THIS APPEAL WHETHER THE INCOME ARISING ON THE SALE OF PROPERTY IN QUESTION IS TAXABLE AS LTCG OR NOT. HE SUBMITTED T HAT ALTHOUGH THE PROPERTY IN DISPUTE WAS CONVERTED FROM AGRICULTURAL LAND TO NON -AGRICULTURAL LAND BUT EVEN AFTER THAT, ACTUAL AGRICULTURAL OPERATIONS WERE CAR RIED ON TILL THE DATE OF SALE AND HE SUBMITTED THAT UNDER THESE FACTS, PROPERTY IN DISP UTE HAS TO BE ACCEPTED AS AGRICULTURAL LAND AND AS A CONSEQUENCE, IT IS NOT A CAPITAL ASSET AND THEREFORE, THE PROFIT ON SALE OF THIS PROPERTY IS NOT LIABLE TO BE TAX AS CAPITAL GAIN TAX. IN SUPPORT OF HIS CONTENTION, HE PLACE RELIANCE ON THE TRIBUNA LS ORDER RENDERED IN THE CASE OF SHRI M.R.SEETHARAM VS ACIT IN ITA NO.1654/BANG/2013 DATED 113-06-2014. HE ITA NO.182(B)/2014 3 SUBMITTED A COPY OF THIS TRIBUNALS ORDER AND DRAWN MY ATTENTION TO PARA-5 ON PAGE-4 OF THE TRIBUNALS ORDER AND POINTED OUT THAT IN THAT CASE ALSO, THE LAND WAS ALREADY CONVERTED AS NON-AGRICULTURAL LAND BEFORE T HE DATE OF SALE AND WAS SOLD AS CONVERTED LAND AND THE LAND WAS PURCHASED BY COMPAN Y AND AS PER THE KARNATAKA LAND REFORMS ACT, NO COMPANY WAS PERMITTED TO PURCH ASE AGRICULTURAL LAND WHICH CONFIRMS THAT THE LAND WAS IN FACT NON-AGRICULTURAL LAND. THEREAFTER, HE HAS DRAWN MY ATTENTION TO PAGE 32 OF THE TRIBUNALS ORD ER AND IN PARTICULAR MY ATTENTION WAS DRAWN TO PARA-7.3 AND IT WAS SUBMITTE D THAT IT WAS HELD BY THE TRIBUNAL IN THIS CASE THAT THE ASSESSEE HAD CONTINU ED THE AGRICULTURAL OPERATIONS UNABATED IN THE SUBJECT PROPERTY ON THE DATE OF SAL E EVEN THOUGH THE SAID LAND WAS CONVERTED FOR NON-AGRICULTURAL PURPOSES BY A CONVER SION ORDER OF THE STATE GOVERNMENT WITH A RIDER THAT THE LAND SHOULD BE USE D FOR THE PURPOSE FOR WHICH THE CONVERSION WAS GRANTED WITHIN TWO YEARS FROM TH E DATE OF ISSUE OF THE SAID ORDER BUT ON THE DATE OF SALE, THE SUBJECT LAND WAS UNDER ACTIVE CULTIVATION FOR AGRICULTURAL PURPOSES ONLY. FINALLY, HE HAS DRAWN MY ATTENTION TO PARA 7.3.10 OF THE TRIBUNAL ORDER WHEREIN IT WAS HELD BY THE TRIBU NAL THAT THIS LAND SHOULD HAVE BEEN TREATED AS AGRICULTURAL LAND AND THUS, EXEMPT FROM CAPITAL GAINS IN VIEW OF SEC.2(14) OF THE IT ACT, 1961. 4. AS AGAINST THIS, LD. DR OF THE REVENUE SUPPORTED THE ORDER OF THE LOWER AUTHORITIES BELOW. HE ALSO SUBMITTED THAT THIS ASPE CT HAS TO BE EXAMINED AS TO WHETHER ACTUAL AGRICULTURAL OPERATIONS WERE ACTUALL Y CARRIED OUT OR NOT TILL THE DATE OF SALE OF THE LAND IN QUESTION AS IS BEING CLAIMED . HE ALSO SUBMITTED THAT THIS ASPECT ALSO NEEDS EXAMINATION WHETHER THE LAND IN Q UESTION IS SITUATED WITHIN 8 KMS OF THE MUNICIPAL AREA OR NOT. ITA NO.182(B)/2014 4 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIND THAT ALTHOUGH THIS TRIBUNAL ORDER IS RELEVANT IN THE PRESENT CASE BUT WHETHER T HE ASSESSEE WOULD GET ANY BENEFIT FROM THIS TRIBUNALS ORDER OR NOT DEPENDS U PON THE FACTS AS TO WHETHER HE ASSESSEE HAS CARRIED OUT AGRICULTURAL OPERATIONS OR NOT TILL THE DATE OF SALE OF LAND IN QUESTION AND MERE THIS FACT ALONE THAT AGRICULTU RAL INCOME HAS BEEN DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AND THE SAME WAS ACCEPTED BY THE DEPARTMENT, IT CAN BE CONCLUDED THAT ACTUAL AGRICUL TURAL OPERATIONS WERE CARRIED OUT. HENCE, I FEEL THAT THIS MATTER SHOULD GO BACK TO THE FILE OF THE AO FOR FRESH DECISION. ACCORDINGLY, I SET ASIDE THE ORDER OF TH E LD. CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR A FRESH DECISION WIT H A DIRECTION THAT THE ASSESSEE SHOULD BRING EVIDENCE ON RECORD TO ESTABLISH ITS CL AIM THAT ACTUAL AGRICULTURAL OPERATIONS WERE CARRIED OUT BY THE ASSESSEE ON THIS LAND TILL THE DATE OF SALE OF THIS LAND. THE AO SHOULD ALSO EXAMINE AS TO WHETHER THE LAND IS SITUATED WITHIN 8 KMS OF THE MUNICIPAL LIMIT OR NOT AND THEREAFTER, HE SH OULD PASS NECESSARY ORDERS AS PER LAW AFTER CONSIDERING THIS TRIBUNALS ORDER REN DERED IN THE CASE OF SHRI M.R.SEETHARAM VS ACIT (SUPRA). NEEDLESS TO SAY TH AT THE AO SHOULD PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MEN TIONED IN CAPTION PAGE. (A.K.GARODIA) ACCOUNTANT MEMB ER D A T E D : .06.2016 PLACE: BANGALORE AM* ITA NO.182(B)/2014 5 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE 1. DATE OF DICTATION .. 2. DATE ON WHICH T HE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5 . DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER ITA NO.182(B)/2014 6