VINEETA KUMAR, Jaipur V. ITO, Jaipur

ITA 186/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5110 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 25-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA JCIT DHK
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value
• Section: 143(3); 50C; 2(14)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 186/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. SMT. VINEETA KUMAR, C-14, DEEPAK MARG, MD ROAD, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 7(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AEEPK 5409 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (C.A) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12.07.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27/07/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS)- 3, JAIPUR DATED 10.02.2015 PERTAINING TO ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED ON FACTS AND IN LAW IN HOLDING THAT THE AGRICULTURAL LAND SOLD BY A SSESSEE AT VILLAGE NARSINGHPUR, TEHSIL SANGANER, JAIPUR IS A CAPITAL A SSET U/S 2(14) OF THE INCOME TAX ACT, 1961 AND THEREBY UPHOLDING THE ASSE SSMENT OF LONG TERM CAPITAL GAIN OF RS. 59,80,000/- DETERMINED BY AO ON SALE OF THIS LAND. 1.1.THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED ON FACTS AND IN LAW IN NOT DECIDING THE GROUND OF ASSESSEE RELATING TO ALLOWING BENEFIT OF INDEXATION OF COMPUTING LONG TERM CAPITAL GAIN ON S ALE OF THE SAID AGRICULTURAL LAND. 1.2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED ON FACTS AND IN LAW IN ADOPTING THE DEEMED SALES CONSIDERATION ON S ALE OF SAID AGRICULTURAL LAND U/S 50C AT RS. 80,74,000/- AS AGAINST ACTUAL S ALES CONSIDERATION OF RS. 2 ITA NO. 186/JP/2015 SMT. VINEETA KUMAR VS. ITO 66,00,000/- FOR COMPUTING THE CAPITAL GAIN WITHOUT REFERRING IT TO THE VALUATION OFFICER AS REQUIRED U/S 50C(2) OF THE INCOME TAX AC T, 1961. 2. THE APPELLANT CRAVES TO ALTER, AMEND AND MODIFY ANY GROUND OF APPEAL. 3. NECESSARY COST BE AWARDED TO THE ASSESSEE. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS PICKED UP FOR SCRUTINY AND ASSESSMENT UNDER SECTION 143(3) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 20.03.2013. WHILE FRAMING THE ASSESSMENT, THE AO OBSERVED THAT THE ASSESSEE HAS C LAIMED SALE OF AGRICULTURAL LAND FOR A TOTAL CONSIDERATION OF RS. 1,22,00,000/- ON 1 6.02.2010 AND COMPUTED LONG TERM CAPITAL GAIN OF RS. 79,53,588/-. THE AO ALSO O BSERVED THAT AS PER AIR INFORMATION, THE ASSESSEE HAS ALSO SOLD A PIECE OF LAND ON 23.9.2009 FOR A TOTAL CONSIDERATION OF RS. 80,74,000/-. THE AO ISSUED A S HOW CAUSE NOTICE IN RESPECT OF SALE OF THE LAND. THE ASSESSEE RESPONDED THAT THE L AND WAS PURCHASED BY ASSESSEE FOR RS. 19,80,000/- IN THE YEAR 2006 AND CLAIMED IT AS AGRICULTURAL LAND. IT WAS CONTENDED THAT AGRICULTURAL LAND IS SITUATED 8 KM A WAY FROM MUNICIPAL LIMITS AND OUTSIDE THE SCOPE OF CAPITAL ASSET AND THUS NOT TAX ABLE. THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND TREATED THE SALE OF LAND AS TRANSFER OF CAPITAL ASSET AND ACCORDINGLY CALCULATED CAPITAL GA IN ARISING THERE FROM TAKING THE SALE CONSIDERATION AS ASSESSED BY THE SUB REGISTRAR AT RS. 80,74,000/- AND COMPUTED THE CAPITAL GAIN AT RS. 59,80,000/-. TH E ASSESSEE AGGRIEVED BY THIS ORDER, FILED APPEAL BEFORE LD. CIT (A) WHO AFTER CO NSIDERING THE SUBMISSIONS DISMISSED THE APPEAL. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUN AL. 3 ITA NO. 186/JP/2015 SMT. VINEETA KUMAR VS. ITO 4. GROUND NO. 1 IS AGAINST TREATING THE TRANSFER OF LAND IN QUESTION AS TRANSFER OF CAPITAL ASSET. 4.1. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE ASSESSEE HAS TRANSFERRED AGRICULTURAL LAND. THE AO TREATED THE SAME AS TRANS FER OF CAPITAL ASSET AND COMPUTED LONG TERM CAPITAL GAIN OF RS. 59,80,000/- TAKING TH E VALUE AS ADOPTED BY THE STAMP VALUATION AUTHORITY. THE LD. COUNSEL FOR THE ASSESS EE VEHEMENTLY ARGUED THAT THIS ACT OF THE AUTHORITIES IS NOT JUSTIFIED IN VIEW OF THE FACT THAT ADMITTEDLY LAND IS AN AGRICULTURAL LAND SITUATED AT VILLAGE PATWAR, HALKA MUHANA, SANGANER. THE LD. COUNSEL SUBMITTED THAT AS PER THE GAZETTE NOTIFICAT ION DATED 06.01.1994, THE LAND IS SITUATED BEYOND THE PRESCRIBED LIMIT OF 8 KM OF MUN ICIPAL LIMIT. HE FURTHER ARGUED THAT THE LAND IN QUESTION IS NOT IN MUNICIPAL LIMIT , BUT COVERED UNDER THE LIMIT OF JAIPUR NAGAR PARISHAD. HE PLACED RELIANCE ON THE JU DGMENT OF THIS TRIBUNAL IN THE CASE OF DR. SUBHA TRIPATHI IN ITA NO. 1129/JP/2011 AND URGED THAT THE IMPUGNED ORDER BE QUASHED AND DEMAND SO RAISED BE DELETED. ANOTHER ARGUMENT THE LD. COUNSEL HAS TAKEN THAT THE POPULATION OF THE AREA I S LESS THAN 10,000, THEREFORE, IT CANNOT BE TREATED WITHIN MUNICIPAL LIMITS. HOWEVER , SUBSEQUENTLY HE FAIRLY CONCEDED THE FACT THAT THE POPULATION IS TAKEN OF THE MUNICI PALITY OF WHICH THE AREA IN WHICH LAND IS SITUATED IS FORMING PART OF THE MUNICIPALIT Y. THE LD. COUNSEL REITERATED THE SUBMISSIONS AS WERE MADE BEFORE LD. CIT (A). AS PER NOTIFICATION DATED 06.01.1994, AREA UPTO A DISTANCE OF 8 KM FROM MUNICIPAL LIMIT I N ALL DIRECTIONS. MUNICIPALITY AS DEFINED IN THE NOTIFICATION MEANS ANY AREA, WHICH I S COMPRISED WITHIN THE JURISDICTION OF MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, M UNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE OR BY ANY OTHER NAME) 4 ITA NO. 186/JP/2015 SMT. VINEETA KUMAR VS. ITO WHICH HAS POPULATION OF NOT LESS THAN TEN THOUSAND ACCORDING TO THE PRECEDING CENSUS. 4.2. ON THE CONTRARY, THE LD. D/R OPPOSED THE SUBMI SSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND SUPPORTED THE ORDERS OF THE AUTHOR ITIES BELOW. THE LD. D/R SUBMITTED THAT THE SUBMISSIONS OF THE LD. COUNSEL F OR THE ASSESSEE ARE NOT SUPPORTED WITH EVIDENCE. ON THE CONTRARY, AUTHORITIES BELOW H AVE GIVEN A FINDING OF FACT THAT THE LAND IN QUESTION IS SITUATED WITHIN THE MUNICIP AL LIMIT OF JAIPUR NAGAR PARISHAD. THE JAIPUR NAGAR PARISHAD IS A MUNICIPALITY IN ITSE LF WITHIN THE MEANING OF NOTIFICATION DATED 06.01.1994. 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FAC T THAT THE ASSESSEE TRANSFERRED LAND AND DID NOT OFFER CAPITAL GAIN ARISING OUT OF SUCH TRANSFER ON THE GROUND THAT THE LAND SO TRANSFERRED IS AN AGRICULTURAL LAND IS NOT CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III) OF THE ACT. AS PER THIS PROVISI ON, IT IS PRECLUDED FROM THE CATEGORY OF CAPITAL ASSET IF THE SAME IS NOT (A) IN AN AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COM MITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND ; OR (B) IN ANY AREA WITHIN THE DISTA NCE, MEASURED AERIALLY, NOT BEING MORE THAN TWO KILOMETERS, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM (A), AND WHICH A POPULATI ON OF MORE THAN TEN THOUSAND BUT NOT EXCEEDING ONE LAKH ; OR NOT BEING MORE THAN SIX KILOMETERS FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM (A) AND WHICH HAS A POPULATION OF MORE THAN ONE LAKH BUT NOT EXCEEDING TEN LAKH ; OR NOT BEING MORE 5 ITA NO. 186/JP/2015 SMT. VINEETA KUMAR VS. ITO THAN EIGHT KILOMETERS, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM (A) AND WHICH HAS A POPULATION OF MORE THAN TEN LAKH. IN THE PRESENT CASE, THE ASSESSEES CONTENTION IS THAT THE AGRICULTURAL LAND SO TRANSFERRED CANNOT BE TERMED AS CAPITAL ASSTAS THE SAME IS BE YOND 8 KM FROM THE MUNICIPAL LIMITS. WE FIND THAT THE LD. D/R HAS DREW OUR ATTE NTION TO REMAND REPORT AT PAGE 20 OF THE ASSESSEES PAPER BOOK WHEREIN THE NOTIFICATI ON DATED 23.04.1992 IS MENTIONED. CONTENTION OF THE ASSESSEE IS THAT ACCOR DING TO THIS NOTIFICATION, VILLAGE NARSINGHPURA FALLS IN THE PANCHAYAT SAMITI, SANGANE R. THIS NOTIFICATION DOES NOT DEAL WITH THE MUNICIPAL LIMIT OF SANGANER, JAIPUR. WE ARE UNABLE TO ACCEPT THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THIS VILLAGE FALLS IN THE PANCHYAT SAMITI, WHEN THE NOTIFICATION, WHICH IN OUR CONSIDE RED VIEW ESSENTIALLY FALL WITHIN THE MEANING OF MUNICIPALITY. HENCE THE GROUND RAISED IS DEVOID OF ANY MERIT, THE SAME IS REJECTED. 5. GROUND NO. 1.1 AND 1.2 ARE INTER CONNECTED, RELA TES TO ADOPTION OF VALUE FOR THE PURPOSE OF COMPUTATION. HOWEVER, BOTH THESE GRO UNDS WERE NOT TAKEN BEFORE THE FIRST APPELLATE AUTHORITY. IT IS SUBMITTED BY T HE LD. COUNSEL FOR THE ASSESSEE THAT BOTH THESE GROUNDS ARE LEGAL GROUNDS AND IN VIEW OF ITAT RULES, THESE GROUNDS CAN BE TAKEN EVER AT ANY STAGE. 5.1. THE LD. D/R OPPOSED THE SUBMISSIONS. 5.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIE S. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE AO HAS TREATED TRANSFER OF AGRICULTURAL LAND AS CAPITAL ASSET AND COMPUTED CAPITAL GAIN. THE AO ADOPTED THE VALUATION AS ADOPTED BY THE STAMP VALUATION AUTHORITY. THE CONTENTION OF THE AS SESSEE IS THAT WHEN THE AO 6 ITA NO. 186/JP/2015 SMT. VINEETA KUMAR VS. ITO PROCEEDED TO ADOPT VALUATION AS ADOPTED BY THE STAM P VALUATION AUTHORITY UNDER SECTION 50C, IN THAT EVENT IN VIEW OF SUB-SECTION ( 2) OF SECTION 50C, THE AO OUGHT TO HAVE REFERRED THE VALUATION TO THE DEPARTMENTAL VAL UATION OFFICER. IN THE INSTANT CASE NO REPORT FROM THE DVO IS CALLED FOR. ON THE C ONTRARY, THE LD. D/R SUBMITTED THAT THE ASSESSEE OUGHT TO HAVE OBJECTED TO THE VAL UATION BEFORE THE AO, IN THAT EVENT ONLY THE AO WOULD REFER THE ISSUE OF VALUATIO N TO THE DVO. BEFORE THE AO, THE STAND OF THE ASSESSEE WAS THAT THE LAND IN QUESTION WAS NOT A CAPITAL ASSET AND CANNOT BE SUBJECTED TO CAPITAL GAIN TAX. WE FIND TH AT BEFORE THE LD. CIT (A) THE ASSESSEE HAS SUBMITTED THAT THE AO HAS WORKED OUT T HE CAPITAL GAIN BY REDUCING THE COST OF ACQUISITION OF AGRICULTURAL LAND AT RS. 20, 94,000/- FROM THE VALUE ASSESSED BY STAMP VALUATION AUTHORITY AT RS. 80,74,000/- AS AGA INST AGRICULTURAL CONSIDERATION OF RS. 66,00,000/-. FIRSTLY, THE AO HAS NOT ALLOWED TH E INDEX COST OF ACQUISITION WORKED OUT AT RS. 25,49,919/-. SECONDLY, THE AO HAS ADOPTE D THE VALUATION WITHOUT REFERRING THE MATTER TO THE DVO UNDER SECTION 50C(2) WHEN THE ASSESSEE HAS DISPUTED THE VERY LEVY OF CAPITAL GAIN FROM THE SALE OF THIS LAN D. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RIVAL CONTENTIONS. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS NOT OBJECTED BEFORE THE AO FO R ADOPTING THE VALUE AS ADOPTED BY THE STAMP VALUATION AUTHORITY. AS PER THE PROVIS IONS OF SECTION 50C(2), IT IS ONLY WHEN THE ASSESSEE CLAIMS BEFORE THE AO THAT THE VAL UE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXC EEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THAT DATE OF TRANSFER; THE VALU E SO ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE AN Y OTHER AUTHORITY, COURT OR THE HIGH COURT, THE AO MAY REFER THE VALUATION OF THE C APITAL ASSET TO A VALUATION OFFICER. 7 ITA NO. 186/JP/2015 SMT. VINEETA KUMAR VS. ITO ON A POINTED QUERY, THE LD. COUNSEL FOR THE ASSESSE E COULD NOT POINT OUT FROM THE MATERIAL AVAILABLE ON RECORD THAT SUCH CLAIM WAS MA DE BY THE ASSESSEE BEFORE THE AO. IN THE ABSENCE OF SUCH CLAIM, WE ARE UNABLE TO INTERFERE INTO THE ACTION OF THE AO FOR ADOPTING SALE CONSIDERATION AS ADOPTED BY TH E STAMP VALUATION AUTHORITY AT RS. 80,74,000/-. HOWEVER, THE AO IS REQUIRED TO CO MPUTE CAPITAL GAIN AS PER SECTION 48 OF THE ACT. IN THE PRESENT CASE THE ASSESSEE IS NOT GIVEN BENEFIT OF INDEXATION AS PROVIDED UNDER SECTION 48 OF THE ACT. ACCORDINGLY, WE RESTORE THE ISSUE OF COMPUTATION OF CAPITAL GAIN TO THE FILE OF THE AO A ND DIRECT HIM TO ALLOW BENEFIT OF INDEXATION IN COMPUTING THE LONG TERM CAPITAL GAIN. THUS GROUND NO. 1.1 OF THE ASSESSEE IS ALLOWED IN THE TERMS STATED HEREIN ABOV E, AND GROUND NO. 1.2 OF THE ASSESSEE IS REJECTED. 6. GROUND NO. 2 AND 3 ARE GENERAL IN NATURE AND NEE DS NO SEPARATE ADJUDICATION. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27/07/20 16. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 27/07/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SMT. VINEETA KUMAR, JAIPUR. 2. THE RESPONDENT- THE INCOME TAX OFFICER, WARD 7(1 ), JAIPUR. 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 186/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 8 ITA NO. 186/JP/2015 SMT. VINEETA KUMAR VS. ITO