Income Tax Officer (Ward ) 1(2), V. Mr. Tome Hilitor Silvester De Oliveira, Goa

ITA 202/PAN/2013

• Counselvise Citation: 20224114 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B BARTHAKUR LD
• Assessee Lawyers: ASHOK B NAIK TAX CONSULTANT
• Keywords: Capital asset
• Section: 54B; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 202/PNJ/2013 : (ASST. YEAR : 2007 - 08) INCOME TAX OFFICER, WARD - 1(2) (APPELLANT) VS. MR. TOME HILITOR SILVESTER DE OLIVEIRA H.NO. 124, BAIRRO BONDIR, ST. CRUZ, TISWADI, GOA (RESPONDENT) PAN : AAEPO1641D ITA NO. 203/PNJ/2013 : (ASST. YEAR : 2007 - 08) INCOME TAX OFFICER, WARD - 1(2) (APPELLANT) VS. MR S . JENNIFER TOME HILITOR OLIVEIRA H.NO. 124, BAIRRO BONDIR, ST. CRUZ, TISWADI, GOA (RESPONDENT) PAN : AAEPO164 0C ASSESSEE BY : ASHOK B. NAIK, TAX CONSULTANT REVENUE BY : B. BARTHAKUR, LD. DR DATE OF HEARING : 0 6 /08/2014 DATE OF PRONOUNCEMENT : 14 /08/2014 O R D E R PER P.K. BANSAL 1. THESE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST THE ORDERS OF CIT(A) DT. 22.5.2013 FOR A.Y 2007 - 08 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF CAPITAL GAINS TO THE TUNE OF RS.1,15,15,490/ - . 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING SET OFF CLAIMED BY THE ASSESSEE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE DEDUCTION U/S 54B WITHOUT CONSIDERING THE BASIC CONDITION OF THE SAID SECTION THE ASSESSEE SHOULD HAVE USED THE LAND FOR AGRICULTURAL PURPOSE FOR A PERIOD OF TWO YEARS. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN NOT CONSIDERING THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE NEW LAND PURCHASED BY HIM HAS BEEN USED BY HIM FOR AGRICULTURAL PURPOSE. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NO T DEMANDING THE ASSESSEE TO PRODUCE THE MATERIAL EVIDENCE SUCH AS CROPS GROWN, FERTILIZERS PURCHASE BILLS, SEED/SAPLINGS PURCHASE BILLS, LABOUR PAYMENTS VOUCHERS ETC., TO PROVE THAT THE ASSESSEE IS CARRYING ON THE AGRICULTURAL ACTIVITIES ON THE GIVEN POINT OF TIME TO ESTABLISH THAT HTELAND IS IN CULTIVABLE STATE. BOTH THESE APPEALS SINCE INVOLVE COMMON ISSUES, THEREFORE, THEY ARE DISPOSED OFF BY THIS COMMON ORDER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEES ARE ENGAGED IN THE BUSINESS OF FISHIN G. DURING THE IMPUGNED ASSESSMENT YEAR, ASSESSEES DECLARED INCOME FROM SALE OF FISH, CAPITAL GAINS AND BANK INTEREST. BOTH THE ASSESSEES ARE GOVERNED BY SEC. 5A OF THE INCOME TAX ACT BEING HUSBAND AND WIFE AND WHATEVER INCOME IS EARNED IS EQUALLY DIVIDED BETWEEN THE TWO. THE AO INITIATED PROCEEDINGS U/S 147 ON THE BASIS OF THE INFORMATION THAT IN THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE SOLD PROPERTY SITUATED AT CALAPUR VILLAGE, ST. CRUZ, GOA FOR A CONSIDERATION OF RS.1,75,00,000/ - AND THE SAID PROPERTY WAS LIABLE TO CAPITAL GAINS TAX. THE ASSESSEES IN THEIR RETURN CLAIMED SHORT TERM CAPITAL GAINS OF RS.1,15,15,490/ - AS EXEMPT U/S 54B AS THEY HAVE ALREADY PURCHASED OTHER AGRICULTURAL LAND ON 18.8.2006 AND 12.12.2006 FOR RS.98,80,260/ - AND RS.27,25,070/ - RESPECTIVELY. THE AO NOTED THAT THE AGRICULTURAL LAND WAS NOT USED BY THE ASSESSEE OR HIS PARENT FOR AGRICULTURAL PURPOSES FOR A PERIOD OF TWO YEARS IMMEDIATELY PRECEDING THE DATE OF THE TRANSFER AND, THEREFORE, THE PROVISIONS OF SEC. 54B WERE NOT APPLIC ABLE. THE ASSESSEE HAD PURCHASED THE LAND IN QUESTION ON 10.6.2005 AND SOLD THE SAME ON 24.5.2006 I.E. WITHIN A PERIOD OF LESS THAN A YEAR. WHEN THE MATTER WENT BEFORE THE CIT(A), CIT(A) ALLOWED THE DEDUCTION TO THE ASSESSEE BY HOLDING AS UNDER : 5.6 TH E WORD FOR A PERIOD OF TWO YEARS, WOULD MEAN A CONTINUOUS PROCESS, AS IF AGRICULTURAL OPERATION HAS TO BE CONTINUOUSLY CARRIED ON FOR THE ENTIRE LENGTH OF TWO YEARS TIME. ON THE OTHER HAND, IN T W O YEARS WOULD IMPLY THAT THE ASSESSEE MUST HAVE CARRIED AGRICULTURAL OPERATION SOMETIME WITHIN A SPAN OF TWO YEARS. THERE IS NO DOUBT ABOUT THE FACT THAT, THE APPELLANT IS A FISHERMAN BY PROFESSION AND NOT A LAND - DEVELOPER. HE SOLD AGRICULTURAL LAND AND PURCHASED AGRICULTURAL LAND ONLY. THUS, THROUGH HIS CON DUCT, HE PROVED THAT HIS INTENTIONS ARE TO CARRY OUT AGRICULTURAL, IN ACCORDANCE WITH THE LEGISLATIVE INTENT THAT HAS BEEN CONTAINED IN THE PROVISION OF SEC. 54B. THE APPELLANT HAS PLACED RELIANCE ON THE JUDGEMENT OF JURISDICTION HIGH COURT OF BOMBAY, AT G OA IN THE CASE OF MINGUEL CHANDRA PAIS AND CWT V/S HV MUNGALE. SIMILAR DECISION HAS ALSO BEEN GIVEN IN RESPECT OF TREATMENT OF AGRICULTURAL LAND IN THE CASE OF DEBBIE ALEMAO, BY HON'BLE BOMBAY HIGH COURT IN GOA. THE APPELLANT HAS SUBMITTED ENOUGH EVIDENC E TO PROVE THAT THE LAND SOLD AND PURCHASED ARE AGRICULTURAL LAND IN TERMS OF LAND REVENUE RECORDS AND PHOTOGRAPHS OF THE LAND AND THAT THE APPELLANT HAD ACTUALLY CARRIED ON AGRICULTURAL ACTIVITIES DURING THE PERIOD OF HIS HOLDING THE LAND IN QUESTION. TH EREFORE, IN MY OPINION, SINCE THE APPELLANT HAS FULFILLED ALL THE CONDITIONS PROVIDED IN SEC. 54B, THE A.O. IS DIRECTED TO ALLOW THE SET - OFF FOR PURCHASE OF LAND U/S 54B. THIS GROUND OF APPEAL OF THE APPELLANT IS ALLOWED ACCORDINGLY. 2.1 THE LD. DR BEFO RE US REFERRED TO THE PROVISIONS OF SEC. 54B AND RELIED ON THE ORDER OF THE AO WHILE THE LD. AR RELIED ON THE ORDER OF CIT(A) AS WELL AS ON THE FOLLOWING CASES : I) CIT VS. MINGUEL CHANDRA PAIS & ANR., 282 ITR 618 (BOM) II) CWT VS. H.V. MUNGALE, 145 ITR 208 (BOM) III) CIT VS. SMT. DEBBIE ALEMAO, 331 ITR 59 (BOM) 2.2 WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT IN THIS CASE WHEN THE PROCEEDINGS U/S 147 WERE INITIATED AGAINST THE ASSESSEES, THE ASSESSEES HAD COMPUTED SHORT TERM C APITAL GAINS AT RS.1,15,15,490/ - FROM THE SALE OF AGRICULTURAL LAND WHICH WAS PURCHASED BY THEM ON 10.6.2005 AND SOLD ON 24.5.2006. THE ASSESSEES CLAIMED EXEMPTION AGAINST THE SAID SHORT TERM CAPITAL GAINS U/S 54B OF THE INCOME TAX ACT. THE AO DISALLOWED THE EXEMPTION AS, IN HIS OPINION, THE ASSESSEES DID NOT COMPLY WITH THE CONDITIONS AS STIPULATED U/S 54B. THE ISSUE BEFORE US IS WHETHER THE ASSESSEES COMPLIED WIT H THE CONDITIONS FOR AVAILING EXEMPTION U/S 54B OR NOT. THE RELEVANT PROVISIONS OF SEC. 54B LAYS DOWN AS UNDER : 54B. CAPITAL GAIN ON TRANSFER OF LAND USED FOR AGRICULTURAL PURPOSES NOT TO BE CHARGED IN CERTAIN CASES. -- (1) SUBJECT TO THE PROVISIONS OF S UB - SECTION (2), WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A CAPITAL ASSET BEING LAND WHICH, IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE, WAS BEING USED BY THE ASSESSEE BEING AN INDIVIDUAL OR HIS PARENT, OR A HI NDU UNDIVIDED FAMILY FOR AGRICULTURAL PURPOSES (HEREINAFTER REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER THAT DATE, PURCHASED ANY OTHER LAND FOR BEING USED FOR AGRICULTURAL PURPOSES, THEN, INSTEAD OF THE CAPI TAL GAIN BEING CHARGED TO INCOME - TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, -- (I) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER T HAN THE COST OF THE LAND SO PURCHASED (HEREINAFTER REFERRED TO AS THE NEW ASSET), THE DIFFERENCE BETWEEN THE AMOUNT OF THE CAPITAL GAIN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR ; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHALL BE NIL ; OR (II) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHALL BE REDUCED BY THE AMOUNT OF THE CAP ITAL GAIN. FROM THE PERUSAL OF THE AFORESAID SECTION IT IS APPARENT THAT TO CLAIM BENEFIT OF THIS PROVISION, THE FOLLOWING CONDITIONS ARE REQUIRED TO BE SATISFIED : - I) CAPITAL GAINS MUST ARISE FROM THE TRANSFER OF LAND WHICH IN THE TWO YEARS IMMEDIATELY P RECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE WAS BEING USED BY THE ASSESSEE OR HIS PARENT FOR AGRICULTURAL PURPOSE; AND II) THE ASSESSEE MUST HAVE PURCHASED LAND WITHIN A PERIOD OF TWO YEARS FROM THE SALE OF THE ABOVE LAND FOR BEING USED FOR AGRICULTURA L PURPOSES. IN THE CASE OF THE ASSESSEE, WE NOTED, THAT THE ASSESSEE HAD PURCHASED THE LAND WHICH WAS SOLD BY HIM ON 10.6.2005 AND THE SAME WAS SOLD BY THE ASSESSEE ON 24.5.2006 WITHIN A PERIOD OF LESS THAN ONE YEAR. THE QUESTION BEFORE US IS WHETHER THE ASSESSEE HAS COMPLIED WITH BOTH THE CONDITIONS FOR AVAILING OF THE EXEMPTION U/S 54B. SO FAR AS THE SECOND CONDITION IS CONCERNED, THERE IS NO DISPUTE THAT THE ASSESSEE HAS PURCHASED THE LAND WITHIN A PERIOD OF TWO YEARS AFTER THE SALE OF THE LAND FOR BEING USED FOR AGRICULTURAL PURPOSES. SO FAR THE FIRST CONDITION IS CONCERNED, THE EXEMPT ION IS AVAILABLE TO THE SELLER OF A CAPITAL ASSET BEING LAND. THIS SECTION DOES NOT RESTRICT THE BENEFIT TO AGRICULTURAL LAND ONLY. HOWEVER, THE LAND AGAINST WHICH THE BENEFIT IS SOUGHT MUST HAVE BEEN USED BY THE ASSESSEE OR HIS PARENT FOR AGRICULTURAL P URPOSE IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE OF THE SALE. THE WORDS USED IN SEC. 54B(I) ARE IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE WAS BEING USED BY THE ASSESSEE OR A PARENT OF HIS FOR AGRICULTURAL PURP OSES (HEREINAFTER REFERRED TO AS THE ORIGINAL ASSET) . FROM THESE WORDS, IN OUR OPINION, IT IS ESSENTIAL THAT THE LAND AGAINST WHICH THE ASSESSEE IS CLAIMING EXEMPTION MUST HAVE BEEN IN THE IMMEDIATELY PRECEDING TWO YEARS USED BY THE ASSESSEE OR A PARENT OF HIS FOR AGRICULTURAL PURPOSES. THE WORDS BEING USED DENOTES THAT THE LAND MUST HAVE BEEN CONTINUOUSLY USED BY THE ASSESSEE OR HIS PARENT IN THE TWO YEARS IMMEDIATELY PRECEDING THE SALE. IN THE CASE OF THE ASSESSEE, WE NOTED, THE ASSESSEE HAS BOUGHT THE LAND ON 10.6.2005 AND SOLD IT ON 24.5.2006 I.E. THE ASSESSEE KEPT THE LAND WITH HIM FOR LESS THAN A YEAR. THEREFORE, UNDER THESE FACTS, THE ASSESSEE CANNOT HAVE USED THE LAND FOR AGRICULTURAL PURPOSE IN THE PRECEDING TWO YEARS. THE SECTION TALKS OF US ER OF THE LAND CONTINUOUSLY FOR AGRICULTURE BY THE ASSESSEE OR HIS PARENT; NOT BY ANY THIRD PARTY. 2.2.1 WE HAVE GONE THROUGH THE DECISION OF CIT VS. MINGUEL CHANDRA PAIS & ANR., 282 ITR 618 (BOM) . WE ARE OF THE VIEW THAT THIS DECISION WOULD NOT ASSIST THE ASSESSEE. IN THIS DECISION, THE QUESTION BEFORE THE HON'BLE HIGH COURT WAS WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSED LAND COULD BE TERMED AS AGRICULTURAL LAND. WH ILE ANSWERING THIS QUESTION, THE HON'BLE HIGH COURT , AFTER ANALYSING THE VARIOUS DECISIONS AND ON THE BASIS OF THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIDDHARTH J. DESAI , 139 ITR 628 HAS LAID DOWN 13 TESTS/FACTORS WHICH ARE RE QUIRED TO BE CONSIDERED FOR DECIDING WHETHER THE LAND IS AN AGRICULTURAL LAND OR NOT AND ULTIMATELY TOOK THE VIEW BY APPLYING THESE FACTORS THAT THE LAND INVOLVED IN THE IMPUGNED QUESTION WAS AGRICULTURAL LAND AND DISMISSED THE APPEAL FILED BY THE REVENUE. THE QUESTION BEFORE THE HIGH COURT IN THIS DECISION DOES NOT RELATE TO INTERPRETATION OF THE PROVISIONS OF SEC. 54B. THIS DECISION DOES NOT DEAL WITH THE QUESTION WHETHER THE LAND SHOULD HAVE BEEN CONTINUOUSLY USED IN THE PRECEDING TWO YEARS BY THE ASSE SSEE OR HIS PARENT FOR AVAILING OF THE EXEMPTION U/S 54B. 2.2.2 WE HAVE ALSO GONE THROUGH THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. DEBBIE ALEMAO, 331 ITR 59 . IN THIS CASE, THE QUESTION BEFORE THE HON'BLE HIGH COURT WAS WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IMPUGNED LAND COULD BE TERMED AS AGRICULTURAL LAND. IN THIS CASE, THE ASSESSEE PURCHASED LAND FOR A SUM OF RS. 8 LACS UNDER SALE DEED DT. 28.2.1988 AS AN AGRICULTURAL LAND BUT SOLD IT ON 3.9.1990 I.E. AF TER EXPIRY OF TWO YEARS. THE SALE WAS NOT PRIOR TO TWO YEARS. IN THIS CASE ALSO, THE QUESTION BEFORE THE HON'BLE HIGH COURT DID NOT RELATE TO THE INTERPRETATION OF PROVISIONS OF SEC. 54B WHETHER THE LAND SHOULD HAVE BEEN CONTINUOUSLY USED BY THE ASSESSEE OR HIS PARENT FOR AGRICULTURE FOR TWO YEARS PRIOR TO THE DATE OF THE SALE. THE QUESTION RELATES ONLY TO THE NATURE OF THE LAND; WHETHER THE IMPUGNED LAND IS AN AGRICULTURAL LAND OR NON - AGRICULTURAL LAND. THIS DECISION, IN OUR OPINION, IS ALSO NOT APPLIC ABLE TO THE FACTS BEFORE US. THE THIRD DECISION RELATE TO W.T. 2.2.3 IN VIEW OF THIS, WE SET ASIDE THE ORDER OF CIT(A) AS, IN OUR OPINION, THE PROVISIONS OF SEC. 54B MANDATES THAT THE LAND MUST HAVE BEEN IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE US ED BY THE ASSESSEE OR HIS PARENT FOR AGRICULTURAL PURPOSE. THIS SECTION NOWHERE TALKS THAT THE LAND MUST BE USED FOR AGRICULTURAL PURPOSE AT ANY TIME IN THE PRECEDING TWO YEARS FROM THE DATE WHEN THE TRANSFER TOOK PLACE. WE, ACCORDINGLY, SET ASIDE THE OR DER OF CIT(A) AND RESTORE THE ORDER OF THE AO AND DIRECT THE AO NOT TO ALLOW THE EXEMPTION TO THE ASSESSEE U/S 54B. 3. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE STAND ALLOWED . 4. ORDER PRONOUNCED IN THE OPEN COURT ON 14 /08/2014. SD/ - (D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI DATED : 14 /08/ 201 4 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER