ITO, CHENNAI V. Shri S.Erajan & Others, L/R of Late Shri T.K.Somasundaram Pillai, CHENNAI

ITA 1885/CHNY/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52019 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K MEENAKSHISUNDHARAM ITP
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 1885/MDS/2010 ASSESSMENT YEAR : 2006-07 THE INCOME TAX OFFICER, COMPANY WARD-V(1), CHENNAI. V. SHRI S. ERAJAN, LEGAL HEIR OF (LATE) T.K. SOMASUNDARAM PILLAI, 100, TRADE CENTRE, WALLAJAH ROAD, CHENNAI-600 002. [PAN: AHYPS1639] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, SR. DR RESPONDENT BY : SHRI K. MEENAKSHISUNDHARAM, ITP DATE OF HEARING : 08-11-2011 DATE OF PRONOUNCEMENT : 14-11-2011 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-V. CHENNAI IN ITA NO. 321/2008-09 DATE D 13-08-2010 FOR THE ASSESSMENT YEAR 2006-07. I.T.A. NO. 1885/MDS/10 2 2. SHRI SHAJI P. JACOB, LEARNED SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI K. MEENAKSHISUNDHARAM, ITP REPRESENTED ON BEHA LF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO LEVY CAPITAL GAIN TAX IN RESPECT OF SALE OF LAND TO THE EXTENT OF 0.74 ACRES. 2.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE TAHSILDAR, CHENGALPATTU BY HIS LETTER DATED 28.7.08 HAS CLASSIFIED 0.90 HECTARES (2.22 ACRES) ONLY AS LAND USED FOR AGRICULTURAL OPERATIONS. 2.3 THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT T HE TAHSILDAR IS NOT DIRECTLY CONCERNED WITH THE MAINTE NANCE OF LAND RECORDS AND INSTEAD RELYING UPON THE CERTIFICATE OF THE VILLAGE ADMINISTRATIVE OFFICER. 2.4 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED T HAT THE TAHSILDAR IS PLACED IN A HIGHER HIERARCHICAL POSITI ON IN THE REVENUE DEPARTMENT THAN THE VAO. 2.5 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE VAO VIDE LETTER DATE 25.6.08 STATED THAT INFORMATION AS TO T HE EXTENT OF LAND USED BY THE ASSESSEE FOR AGRICULTURAL PURPOSE CAN BE OBTAINED ONLY FROM THE TAHASILDAR, CHENGALPATTU. 2.6 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE ASSESSMENT WAS SET ASIDE WITH A DIRECTION TO VERIFY THE LAND REVENUE RECORDS AND THE ASSESSING OFFICER HAS VERIF IED IT WITH THE MOST AUTHENTIC SOURCES, NAMELY THE TAHSILDAR. I.T.A. NO. 1885/MDS/10 3 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF TH E LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING O FFICER RESTORED. IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSESSE E HAD SOLD 9.2 ACRES OF LAND IN PUDUPAKKAM. IT WAS THE SUBMISSION THAT THE ASSESSE E WAS RUNNING AN AMUSEMENT PARK UNDER THE NAME AND STYLE OF OASIS PARK IN TH E SAID LAND. IT WAS SUBMITTED THAT THE ASSESSEE HAD SOLD THE SAID LAND FOR A TOTA L CONSIDERATION OF ` 3.6 CRORES. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD CLAIMED TH E LAND SOLD AS AGRICULTURAL LAND. IT WAS THE SUBMISSION THAT THE ASSESSING OF FICER HAD TREATED THE SALE OF THE LAND AS GIVING RISE TO LONG TERM CAPITAL GAINS. IT WAS THE FURTHER SUBMISSION THAT THE ISSUE HAD ORIGINALLY TRAVELLED UPTO THE TRIBUNAL WH ICH HAD VIDE ITS ORDER DATED 24- 08-2007 IN ITA NO. 2281/MDS/06 RESTORED THE ISSUE T O THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING DIRECTIONS : 14. ..HENCE, IN OUR OPINION, THE ENTIRE LAND CAN NOT BE TREATED AS CAPITAL ASSET FOR LEVYING TAX ON CAPITAL GAINS. IF THE ASSESSEE CARRIED OUT THE NON-AGRICULTURAL ACTIV ITY IN THE AGRICULTURAL LAND, IT CANNOT BE A REASON TO CONSIDE R THE LAND AS NON-AGRICULTURAL LAND. WE SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR THE LIMITED PURPOSE OF VER IFYING THE LAND REVENUE RECORDS AND TREAT ONLY THAT PORTION OF LAND WHICH IS CONVERTED FOR COMMERCIAL USE AS A CAPITAL ASSET LIABLE TO CAPITAL GAINS TAX AND THAT PORTION OF LAN D WHICH WERE NOT CONVERTED FOR NON AGRICULTURAL PURPOSE HAS TO BE TREATED AS AGRICULTURAL LAND ONLY AND NO CAPITAL GA IN IS TAXABLE ON SUCH LAND. THE ASSESSEE SHALL PRODUCE T HE LAND REVENUE RECORDS BEFORE THE ASSESSING OFFICER. I.T.A. NO. 1885/MDS/10 4 IT WAS THE SUBMISSION THAT CONSEQUENTLY THE ASSESSE E HAD PRODUCED THE LETTER FROM THE VILLAGE ADMINISTRATION OFFICER (VAO FOR SHORT ) WHEREIN IT WAS CLARIFIED THAT THE LAND AREA WAS 9.2 ACRES. THERE WAS CONSTRUCTION OF 2684 S.FT. AND APPURTENANT LAND THERETO TO THE EXTENT OF 0.74 ACRES APPROXIMATELY. IT WAS ALSO SUBMITTED THAT THE CERTIFICATE ALSO STATED THAT THE LANDS WERE DRY LAN DS, AGRICULTURAL OPERATIONS WERE CARRIED OUT ON AN APPROXIMATELY 5.25 ACRES OF THE L AND, ON 2.75 ACRES OF LAND AGRICULTURAL OPERATION WAS CARRIED ON A NON-CONTINU OUS BASIS AND THE COMMERCIAL AREA AND AGRICULTURAL AREA WERE INDEPENDENTLY DEMAR CATED. IT WAS THE SUBMISSION THAT THIS LETTER PRODUCED BY THE ASSESSEE WAS SENT TO THE VAO WHO HAD VIDE LETTER DATED 25-06-2008 CLARIFIED THAT THE DETAILS CALLED FOR ARE USUALLY PROVIDED BY THE TAHSILDAR OF CHENGALPATTU TALUK. OFFICE. IT WAS TH E SUBMISSION THAT CONSEQUENTLY THE ASSESSING OFFICER HAD REFERRED THE ISSUE TO THE TEHSILDAR, CHENGALPATTU TALUK WHO HAD CONFIRMED THAT THE EXTENT OF THE LAND USED FOR AGRICULTURAL PURPOSE WAS ONLY 0.90.0 HECTARES AND THE LAND TAX HAD BEEN PAID AT ` 180/- FOR THE EXTENT OF THE LAND USED FOR AMUSEMENT PARK PURPOSES. IT WAS THE FURTHER SUBMISSION THAT THE LEARNED CIT(A) HAD HELD THAT CAPITAL GAINS WAS LIAB LE TO BE LEVIED ONLY TO THE EXTENT OF 0.74 ACRES OUT OF THE 9.2 ACRES OF LAND SOLD INS OFAR AS ONLY 0.74 ACRES OF LAND HAD BEEN PUT TO COMMERCIAL USE. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) FURTHER HELD THAT THE TAHSILDAR IS AN AUTHORITY IN THE REVE NUE DEPARTMENT AND HE WAS NOT CONCERNED WITH THE MAINTENANCE OF THE LAND RECORDS OF THE VILLAGE. IT WAS THE I.T.A. NO. 1885/MDS/10 5 SUBMISSION BY THE LEARNED DR THAT THE FINDINGS OF T HE LEARNED CIT(A) WERE NOT CORRECT AND THE ORDER OF THE LEARNED CIT(A) WAS LIA BLE TO BE REVERSED. 4. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). IT WAS THE SUBMISSION THAT THE TRIBUNAL HAD RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFYING THE LAND REVENUE RECORDS AND TO TREAT ONLY THAT PORTION OF THE LAND WHICH WAS CONVERTED FOR COMMERCIAL USE AS A CAPITAL ASSET LIABLE TO CAP ITAL GAINS TAX AND THAT PORTION OF THE LAND WHICH WAS NOT CONVERTED FOR NON-AGRICULTUR AL PURPOSE HAD TO BE TREATED AS AGRICULTURAL LAND ONLY AND NO CAPITAL GAINS WAS TAX ABLE ON THE SALE OF SUCH LAND. IT WAS THE SUBMISSION THAT AS PER THE VAOS LETTER, ON LY 0.74 ACRES OF THE LAND WAS USED FOR RUNNING THE AMUSEMENT PARK. IT WAS THE SU BMISSION THAT THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE VAOS LETTER, AS PRODUCED BY THE ASSESSEE, SHOWS THAT THOUGH IT IS S IGNED BY THE VAO, THERE IS NO SEAL OF THE SAID OFFICE. FURTHER A PERUSAL OF THE REPLY FILED BY THE VAO TO THE ASSESSING OFFICER CLEARLY SHOWS THAT THE DETAILS IN REGARD TO THE LAND AND THE CONVERSION THEREOF COULD BE GIVEN ONLY BY THE TAHSI LDAR. THUS IT WOULD BE THE TAHSILDARS LETTER WHICH WOULD HAVE TO BE CONSIDERE D FOR DECIDING THE ISSUE. A PERUSAL OF THE LETTER OF THE TAHSILDAR DATED 28-07- 2008 SHOWS THAT THE EXTENT OF THE LAND USED FOR AGRICULTURAL PURPOSES IS 0.90.0 HECTA RES AND THE EXTENT OF THE LAND USED FOR THE PURPOSE OF AMUSEMENT PARK IS NIL. FU RTHER IT IS NOTICED THAT THE LAND I.T.A. NO. 1885/MDS/10 6 TAX PAID IN RESPECT OF THE EXTENT OF THE LAND USED FOR THE AMUSEMENT PARK WAS ` 180/-. IN THESE CIRCUMSTANCES, OBVIOUSLY, THE TAHS ILDARS REPORT SHOWS THAT NO LAND HAS BEEN USED FOR THE AMUSEMENT PARK PURPOSE. THIS CONTRADICTS WITH THE LETTER PRODUCED BY THE ASSESSEE FROM THE VAO WHICH SPECIFI CALLY SAYS THAT 0.74 ACRES APPROXIMATELY IS USED FOR THE PURPOSE OF THE AMUSEM ENT PARK ALONG WITH 0.45 ACRES FOR THE ROADS INSIDE THE LAND. THIS BEING SO, IF T HE CERTIFICATE ISSUED BY THE TAHSILDAR IS TAKEN INTO CONSIDERATION, THEN IT WOUL D END UP THAT THERE IS NO PORTION OF THE AGRICULTURAL LAND WHICH HAS BEEN USED FOR TH E NON-AGRICULTURAL PURPOSES. HOWEVER, AS IT IS NOTICED THAT THE LEARNED CIT(A) H AS HELD THAT 0.74 ACRES OF LAND ONLY HAS BEEN USED FOR RUNNING THE AMUSEMENT PARK A ND HAS HELD THAT THE CAPITAL GAINS WAS LIABLE TO BE LEVIED ONLY TO THE EXTENT OF 0.74 ACRES OF THE AGRICULTURAL LAND AND AS THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINS T THIS FINDING, THE FINDING OF THE LEARNED CIT(A) IN HOLDING THAT CAPITAL GAINS IS LEV IABLE ON THE SALE OF 0.74 ACRES OF THE LEND IS UPHELD. IN THE CIRCUMSTANCES, THE APPE AL OF THE REVENUE IS DISMISSED. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON MONDAY, 14 TH NOVEMBER, 2011. SD/- SD/- (DR. O. K. NARAYANAN) (GEORGE MATHAN) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 14 TH NOVEMBER, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE