A.Lalichan, CHENNAI V. ITO, CHENNAI

ITA 1878/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5737 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHD MUSTAFA
• Assessee Lawyers: D PALANIVEL
• Keywords: Capital asset

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . , ' , % & BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO.1878/MDS/2016 %' ' /ASSESSMENT YEAR: 2007-08 SHRI A. LALICHAN, 4/234D, M.G.R. SALAI, PALAVAKKAM, CHENNAI-600 041. VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD-15(3), #121, M.G.ROAD, CHENNAI-600 034. [PAN: AABPL 7067 R ] ( ( /APPELLANT) ( )*( /RESPONDENT) ASSESSEE BY : MR.PHILIP GEORGE, ADV. & MR.D.PALANIVEL, ADV. DEPARTMENT BY : MR.S.MOHD. MUSTAFA, JCIT , /DATE OF HEARING : 30.11.2017 , /DATE OF PRONOUNCEMENT : 05.12.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.1878/MDS/2016 IS AN APPEAL FILED BY THE ASS ESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-15, CHENNAI, IN ITA NO.155/CIT(A)-15/14-15 DATED 18.03.2016 FOR THE AY 2007-08. 2. SHRI S.MOHD. MUSTAFA, JCIT, REPRESENTED ON BEHAL F OF THE REVENUE AND SHRI PHILIP GEORGE, ADV. & SHRI D.PALANIVEL, AD V., REPRESENTED ON BEHALF OF THE ASSESSEE. ITA NO.1878/MDS/2016 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.AR THAT THERE WAS A SURVEY OPERATION ON THE ASSESSEE ON 05.06.2012. IN THE COURSE OF SURVE Y, IT WAS NOTICED THAT THE ASSESSEE ALONG WITH HIS BROTHER SHRI M.A.ANTONY AND ANOTHER PERSON SHRI A.K.THILAKAN HAD ENTERED INTO AN AGREEMENT FOR THE SALE OF CERTAIN LANDS AT KELAMBAKKAM WITH M/S.VIJAYSHANTI BUILDERS LTD., ON 21.08.2006 AND HAD RECEIVED SALE CONSIDERATION OF RS.8,72,90,0 00/- RESULTING A CAPITAL GAINS OF RS.8,61,41,416/-. SINCE THE ASSESSEE HAD NOT ADMITTED ANY CAPITAL GAINS FOR THE AY 2007-08, THE ASSESSMENT WA S RE-OPENED. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE HAD PURCHA SED AGRICULTURAL LAND SITUATED AT NO.46, THAIYUR B VILLAGE, CHINGLEPET TALUK, KANCHEEPURAM DISTRICT, COVERING UNDER PATTA NO.305, COMPRISED IN SY.NO.1273, MEASURING AN EXTENT OF 115 CENTS ON 04.05.1998. THE ASSESSEES BROTHER SHRI M.A.ANTONY HAD SIMILAR ON 04.05.1998 PURCHASED AN EXTENT OF 50 CENTS AGRICULTURAL LAND SITUATED AT NO.46, THAIYUR B VILLAGE, CHINGLEPET TALUK, KANCHEEPURAM DISTRICT, COVERING UNDER PATTA NO.305, COMPRISED IN SY.NO.1395/C5 ON 04.05.1998. SIMILARLY ON 04.05.19 98, SHRI A.K.THILAKAN HAD PURCHASED AN EXTENT OF 116 CENTS O F AGRICULTURAL LAND SITUATED AT NO.46, THAIYUR B VILLAGE, CHINGLEPET TALUK, KANCHEEPURAM DISTRICT, COVERING UNDER PATTA NO.305, COMPRISED IN SY.NO.1273. ALL THE THREE ASSESSEES TOGETHER HAD ENTERED INTO AGREEMENT FOR SALE ON 21.08.2006 WITH M/S.VIJAYSHANTI BUILDERS LTD., FOR THE SALE OF THEIR AGRICULTURAL LANDS. THE LD.AR DREW OUR ATTENTION TO PAGE NO.77 OF PAPER BOOK WHICH WAS ANNEXURE-1 TO THE SALE DEED, WHEREIN THE NAMES OF VARIOUS PERSONS, THE AREA OF THE LAND UNDER SURVEY NUMBERS AND SALE ITA NO.1878/MDS/2016 :- 3 -: CONSIDERATION HAS BEEN SPECIFICALLY MENTIONED. THE DETAILS OF THE PAYMENTS MADE BY M/S.VIJAYSHANTI BUILDERS LTD., WER E SHOWN AT PAGE NOS.78-81 OF THE PAPER BOOK IN RESPECT OF THE ASSES SEE AS ALSO SHRI M.A.ANTONY. THE LD.AR DREW OUR ATTENTION TO PAGE N OS.50-63 OF THE PAPER BOOK TO SUBMIT THAT THE LAND SOLD WAS PURELY AGRICULTURAL LAND, PAGE NOS.50 & 51 WAS THE CERTIFICATE ISSUED BY THE VILLA GE ADMINISTRATIVE OFFICER IN RESPECT OF THE ASSESSEE SHRI A. LALICHAN INTIMATING THE CROP. PAGE NO.51 IS THE ADANGAL IN WHICH KIST RATE 329 TO WARDS SINGLE CROP HAS BEEN LEVIED. PAGE NOS.52 & 53 SIMILARLY IS IN RESP ECT OF THE AGRICULTURAL LAND HELD BY SHRI A.K.THILAKAN SHOWING A KIST TAX O F 333 AND 39 TOWARDS SINGLE CROP AND DOUBLE CROP. PAGE NOS.54 & 55 IN R ESPECT OF SHRI A. LALICHAN BALANCE AREA 0.46.5, AT PAGE NO.58 IS THE RECEIPT ISSUED TO SHRI A. LALICHAN. PAGE NO.62-63 IS A DISTANCE FROM THE LAND TO CHINGLEPET SHOWN AT 25.3 KMS AND TO KANCHEEPURAM DISTRICT 64.1 KMS. PAGE NO.64 IS THE CENSUS IN RESPECT OF CHINGLEPET TALUK KANCHE EPURAM DISTRICT SHOWING THE TOTAL POPULATION AT 7609. IT WAS A SUB MISSION THAT CHITTA & ADANGAL REPRESENTING THE REVENUE RECORDS IN RESPECT OF THE LAND SOLD BY THE ASSESSEE CLEARLY SHOWED THAT THE LAND SOLD BY T HE ASSESSEE IS AGRICULTURAL LAND. THE DISTANCE FROM THE NEAREST M UNICIPALITY WAS MORE THAN 8 KMS AND THE POPULATION OF THE NEAREST TALUK WAS ALSO LESS THAN 10000. IT WAS A SUBMISSION THAT AS THE LANDS SOLD WERE AGRICULTURAL LANDS, THE ASSESSEE HAD NOT DISCLOSED THE LONG TERM CAPITA L GAINS IN RESPECT OF THE SAID LAND. IN THE RETURNS IN RESPONSE TO SEC.1 48, THE DETAILS OF THE LAND SOLD WAS INCLUDED BUT CLAIMED AS EXEMPT. IT W AS A SUBMISSION THAT ITA NO.1878/MDS/2016 :- 4 -: THE AO HAD ON THE GROUND THAT IN CLUASE-13 OF THE S ALE AGREEMENT HAD SPECIFIED THAT THE ASSESSEE WOULD IF NECESSARY IN O RDER TO FACILITATE THE PROCESS OF OBTAINING THE NECESSARY SANCTIONS AND AP PROVALS FROM THE AUTHORITIES TO EXTEND ALL NECESSARY CO-OPERATION TO THE PURCHASERS AS MAY BE REQUIRED BY SIGNING RELEVANT PAPERS/APPLICATIONS WHICH ARE TO BE SUBMITTED, AS ALSO IN CLUASE-14, THE ASSESSEE HAD A GREED TO PERMIT THE PURCHASERS UPON EXECUTION OF THE SALE AGREEMENT TO UNDERTAKE THE MARKETING OPERATIONS IN RESPECT OF THE PROPOSED DEV ELOPMENT OF THE SCHEDULED PROPERTY, AS ALSO ON ACCOUNT OF THE CLAUS E-19 OF THE SALE AGREEMENT WHICH SPECIFIES THAT THE ASSESSEE WOULD N ECESSARY TO EXTEND CO-OPERATION TO THE PURCHASERS TO ENABLE THE PURCHA SERS TO TRANSFER THE PROPERTIES PROPOSED TO BE DEVELOPED IN FAVOUR OF BU YERS IDENTIFIED BY THE PURCHASERS HAD TREATED THE SALE OF THE AGRICULTURAL LAND AS LIABLE FOR LONG TERM CAPITAL GAINS. IT WAS A SUBMISSION THAT ON AP PEAL LD.CIT(A) HAD CONFIRMED THE ASSESSMENT. IT WAS A SUBMISSION THAT THE ASSESSEE HAVING SOLD AGRICULTURAL LAND, THE SAME WAS NOT LIABLE FOR CAPITAL GAINS AND THE AGRICULTURAL LAND WHICH HAD BEEN SOLD COULD NOT BE TREATED AS A CAPITAL ASSET U/S.2(14) OF THE ACT. 4. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE ORD ER OF THE AO & THE LD.CIT(A). HE REITERATED THE STAND OF THE AO AS ME NTIONED IN THE ASSESSMENT ORDER. IT WAS SUBMITTED BY THE LD.DR T HAT THE SALE AGREEMENT WAS NOT A JOINT DEVELOPMENT AGREEMENT. THE LD.DR DREW OUR ATTENTION TO PAGE NO.87 OF THE PAPER BOOK TO SUBMIT THAT EVEN IN THE ITA NO.1878/MDS/2016 :- 5 -: COMPUTATION IN THE RECEIPTS & PAYMENTS ACCOUNT, NO EXPENDITURE HAS BEEN CLAIMED BY THE ASSESSEE TOWARDS AGRICULTURAL O PERATIONS FOR THE RELEVANT ASSESSMENT YEARS. THE LD.DR DREW OUR ATTE NTION TO PAGE NO.66- 76 OF THE PAPER BOOK WHICH IS A COPY OF THE SALE AG REEMENT TO SUBMIT THAT IN CLAUSE-11, THE ASSESSEE HAD PERMITTED THE PURCHA SERS TO CREATE MORTGAGES, LIEN, ETC., WITH FINANCIAL INSTITUTIONS OR BANKS, IN CLAUSE-13, THE ASSESSEE HAD AGREED TO EXECUTE POWER OF ATTORNEY IN THE NAME OF THE NOMINEE OF THE PURCHASER TO FACILITATE THE PROCESS OF OBTAINING THE NECESSARY SANCTION, IN CLAUSE-14, THE ASSESSEE HAD PERMITTED THE PURCHASER TO UNDERTAKE MARKETING OPERATIONS IN RESP ECT OF THE SAID LAND, IN CLUASE-16, THE ASSESSEE HAD SPECIFICALLY AGREED THAT THE SALE SHALL BE IN FAVOUR OF THE PURCHASERS OR THEIR NOMINEES. IT WAS A SUBMISSION THAT CLEARLY THE SALE OF THE LAND WAS NOT FOR AGRICULTUR AL PURPOSE BUT FOR CONSTRUCTION OF FLATS. IT WAS A SUBMISSION THAT TH E AO WAS RIGHT IN LAW IN HOLDING THE SALE OF THE SAID LANDS HAS LIABLE FOR L ONG TERM CAPITAL GAINS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE PROVISIONS OF SEC.2(14) DEFINES CAPITAL ASSET. SEC .2(14)(III) DEFINES AGRICULTURAL LAND AS FOLLOWS - (III) AGRICULTURAL LAND IN INDIA, NOT BEING LAND SIT UATE (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISD ICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMEN T BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND; OR (B) IN ANY AREA WITHIN THE DISTANCE, MEASURED AERIAL LY, (I) NOT BEING MORE THAN TWO KILOMETRES, FROM THE LOC AL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM (A) AND WHICH H AS A POPULATION OF MORE THAN TEN THOUSAND BUT NOT EXCEEDING ONE LAKH; OR ITA NO.1878/MDS/2016 :- 6 -: (II) NOT BEING MORE THAN SIX KILOMETRES, FROM THE LO CAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM (A) AND WHICH H AS A POPULATION OF MORE THAN ONE LAKH BUT NOT EXCEEDING TEN LAKH; OR (III) NOT BEING MORE THAN EIGHT KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM (A) AND WHICH H AS A POPULATION OF MORE THAN TEN LAKH. EXPLANATION FOR THE PURPOSES OF THIS SUB-CLAUSE, POPULATION MEANS THE POPULATION ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR; 6. THUS, WHETHER A PARTICULAR LAND SOLD IS AGRICULT URAL LAND OR NOT IS TO BE DETERMINED AS PER THE DEFINITION PROVIDED IN SEC .2(14)(III). WHAT FOR, THE PURCHASER OF THE LAND, USES THE SAID LAND, WILL NOT DETERMINE, THE CHARACTER OF THE LAND SOLD IN THE HANDS OF THE ASSE SSEE. WHEN THE FACTS IN THE ASSESSEES CASE ARE EXAMINED IN LINE WITH THE P ROVISIONS OF SEC.2(14)(III), IT SHOWS THAT THE NEAREST TALUK BEI NG CHINGLEPET TALUK KANCHEEPURAM DISTRICT AND THE VILLAGE TAIYUR SHOWS THAT A POPULATION OF ONLY 7609 AND THE DISTANCE FROM THE CHINGLEPET IS 2 3.5 KMS AND THE DISTANCE FROM KANCHEEPURAM IS 64.1 KMS. A PERUSAL OF THE CHITTA & ADANGAL SHOWS THE NAMES OF THE ASSESSEES AND THE KI ST HAVING BEEN PAID AS AGRICULTURAL LAND AND THE VILLAGE ADMINISTRATIVE OFFICER CERTIFIED AS SPECIFYING BOTH SINGLE CROP AND DOUBLE CROP. THE AS SESSEE HAS PLACED SUCH SUBSTANTIAL EVIDENCES AND THIS IS NOT REBUTTED BY T HE AO IN RESPECT OF THE NATURE OF THE LAND, AS TO WHETHER IT IS AGRICULTURA L OR NOT? THE AO HAS READ INTO ONLY THE SALE AGREEMENTS AND NO OTHER DOC UMENTS. ADMITTEDLY, THE ASSESSEE IS ENTITLED TO SELL HIS LAND FOR THE B EST POSSIBLE PRICE THAT CAN BE GENERATED, BUT IF THE NATURE OF THE LAND IS AGRI CULTURE, THE SAME CANNOT BE BROUGHT UNDER THE DEFINITION OF CAPITAL ASSET FO R THE PURPOSE OF LEVYING LONG TERM CAPITAL GAINS. FURTHER, WHAT HAS BEEN SOL D BY THE ASSESSEE IS ITA NO.1878/MDS/2016 :- 7 -: NOT CONVERTED LANDS. THIS BEING SO, IN THE PRESENT CASE, AS IT IS NOTICED THAT THE LAND SOLD BY THE ASSESSEE IS AGRICULTURAL LAND, WE ARE OF THE VIEW THAT THE SAME IS NOT GIVING RISE TO ANY LONG TERM C APITAL GAINS IN THE HANDS OF THE ASSESSEE. IN THESE CIRCUMSTANCES, THE FINDI NGS OF THE LD.CIT(A) AND THE AO ON THIS ISSUE STANDS REVERSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 05, 2017, AT CHENNAI. SD/- SD/- ( . ) ( ABRAHAM P GEORGE ) /ACCOUNTANT MEMBER ( ' ) (GEORGE MATHAN) % /JUDICIAL MEMBER /CHENNAI, 1 /DATED: DECEMBER 05, 2017. TLN , )%23 43 /COPY TO: 1. ( /APPELLANT 4. 5 /CIT 2. )*( /RESPONDENT 5. 3 )%% /DR 3. 5 ( ) /CIT(A) 6. ' /GF