Shri Amrutbhai S.Patel, Ahmedabad V. The Income tax Officer,Ward-2(4), Ahmedabad

ITA 2042/AHD/2012

• Counselvise Citation: 204220514 RSA 2012
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 10-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D K PARIKH
• Keywords: Search and seizure
• Section: 45(5); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTAN T MEMBER I.T.A. NO.2042/AHD/2012 A.Y.2008-09 AMRUTBHAI S. PATEL C/O, S.L. PATEL & CO., NR. BANK OF BARODA, DEHLI CHAKLA, AHMEDABAD PAN-AHUPP6870A APPELLANT VS. THE INCOME TAX OFFICER, WARD-2(4), AHMEDABAD RESPONDENT DEPARTMENT BY : SHRI VIVEK ANAND OJHA, SR. D.R. ASSESSEE BY : SHRI D.K. PARIKH, A.R. DATE OF HEARING : 07.11.2012 DATE OF PRONOUNCEMENT : 23.11.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-6, AHMEDABAD DATED 18.07.2012. 2. THE ASSESSEE, IN THIS APPEAL, IS AGGRIEVED BY TH E ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.1,11,99,608/- ON ACCO UNT OF LONG TERM CAPITAL GAIN U/S 45(5) OF THE INCOME TAX ACT. 3. THE A.O., WHILE MAKING THIS ADDITION HAS OBSERVE D AS UNDER:- '4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEE DINGS OF SHRI JASUBHAI SOMABHAI PATEL FOR A.Y. 2008-09, THE FOLLO WING FACTS HAVE COME TO MY NOTICE. A. SHRI AMRUTBHAI S. PATEL, ALONGWITH HIS TWO BROTH ERS HAD RECEIVED A CHEQUE FOR RS.4,47,98,432/- ON 05.11.2007. I.T.A. NO.2042/AHD/2012 A.Y.2008-09 2 B. THE ABOVE AMOUNT OF RS.4,47,98,432/- HAS BEEN CL AIMED BY THE RECIPIENTS TO BE THE ENHANCED COMPENSATION ON COMPU LSORY ACQUISITION OF LAND BY THE GOVT. OF GUJARAT. C. THE RECIPIENTS HAVE CLAIMED THAT THEY WERE CO-OW NERS OF THE LAND SO ACQUIRED. 4.1 THE ABOVE FACTS PRIMARILY POINTED OUT TO THE F ACT THAT THE ADDITIONAL COMPENSATION SO RECEIVED BY THE RECIPIEN TS WAS LIABLE TO BE TAXED AS CAPITA GAINS AS DEPICTED IN SECTION 45(5) OF THE I.T. ACT, 1961. 4.2 SINCE THE ASSESSEE, SHRI AMRUTBHAI S. PATEL IS THE PRINCIPAL RECIPIENT AND CO-OWNER OF THE PROPERTY WITH L/3 RD SHARE, I/3 RD OF THE ADDITIONAL COMPENSATION BEING RS.4,47,98,432/- 3 = RS. 1,49,32,810- HAD TO BE TAXED IN HIS HANDS. HOWEVER, IN THE RETURN OF INCOME, THE ASSESSEE HAS NOT OFFERED THIS AMOUNT OF COMPENSATION FOR TAX. 4.3 IN VIEW OF THE ABOVE, THERE WAS AN ESCAPEMENT OF INCOME WITHIN THE MEANING OF SECTION 147. THEREFORE, NOTICE U/S. 148 ISSUED ON 02/02/2011, AFTER RECORDING THE REASONS. 5. SUBSEQUENTLY, NOTICE U/S. I42(1) WAS ISSUED ON 2 9/11/2011 ALONG WITH LETTER OF THE SAME DATE. NOTICE U/S 143(2) WAS ALSO ISSUED ON THE SAME DATE. 6. THE RELEVANT PART OF THE LETTER DATED 29/11/2011 IS REPRODUCED BELOW: 1. 'DURING F.Y 2007-08 RELEVANT TO A.Y. 2008-09, YO U HAVE RECEIVED ADHOC COMPENSATION OF RS.4,47,98,432/- FOR COMPULSO RY ACQUISITION OF LAND. THE PAYMENT WAS MADE BY PRINCIPAL, SR. JUDGE, GANDHINAGAR ON BEHALF OF THE JUDICIAL DEPARTMENT, GOVT. OF GUJARAT BY WAY OF CHEQUE. THE CHEQUE WAS ISSUED IN THE NAME OF SHRI AMRUTBHAI SOMNABHAI PATEL PLUS TWO OTHERS AND ON THE REVERSE OF THE CHE QUE THE NAMES OF TWO OTHER CLAIMANTS (APPLICANTS) HAVE BEEN MENTIONE D AS SHRI VIKRAM SOMABHAI PATEL & SHRI JASUBHAI SOMABHAI PATEL. IN THE CASE OF SHRI JASUBHAI SOMABHAI PATEL FOR A.Y . 2008-09 THE LD. CIT VIDE HIS ORDER IN APPEAL NO. CIT(A)- VI/ITO2(4)1565/10-11 DTD. 11.08.2011 VIDE PARA NO.3 .3 HAS OBSERVED AS UNDER. THE RELEVANT PART IS REPRODUCED BELOW. 'IF IS TRUE THAT IN THE REFERENCE COURT ORDER DATED 11. 10.2006, NAMES OF THREE BROTHERS WERE ONLY MENTIONED BY MISTAKE BUT THAT WI LL NOT CHANGE THE STATUS OF OWNERSHIP OF LAND BY FOUR BROT HERS. IN VIEW OF THIS, I DO NOT AGREE WITH THE ASSESSING OFFICER THA T THERE IS NOTHING ON RECORD TO SHOW THAT SHRI VIJAYBHAI SOMABHAI PATEL I S THE FOURTH I.T.A. NO.2042/AHD/2012 A.Y.2008-09 3 CLAIMANT. ASSESSING OFFICER IS DIRECTED TO TAX INCO ME ARISING OUT OF COMPENSATION RECEIVED ON COMPULSORY ACQUISITION IN THE HANDS OF ALL FOUR BROTHERS. APPEALS OF THREE BROTHERS ARE BEING DECIDED BY THE UNDERSIGNED AND THEREFORE THE TAXABILITY OF ONE FOU RTH SHARE OF THEM IS UPHELD IN EACH CASE. AS REGARD AMRUT SOMABHAI PATEL , IF ASSESSMENT WAS NOT MADE IN THE SCRUTINY, ASSESSING OFFICER CAN TAKE SUITABLE REMEDIAL MEASURES TO TAX ONE FOURTH SHARE OF HIS IN COME FROM COMPENSATION RECEIVED. THIS PART OF GROUND IS ACCOR DINGLY ALLOWED AND AO IS DIRECTED TO TAX ONE FOURTH SHARE IN THE HANDS OF APPELLANT'. THE ADDITIONAL COMPENSATION SO RECEIVED BY YOU IS L IABLE TO BE TAXED AS CAPITAL GAINS AS DEPICTED IN SEC.45 (5) OF I.T A CT 1961. SINCE YOU ARE THE PRINCIPAL RECIPIENT & CO-OWNER OF THE PROPERTY, L/4 TH OF THE ADDITIONAL COMPENSATION BEING RS.1,11,99,608 /- (4,47,98,432/4), IS TO BE TAXED IN YOUR HANDS.' 7. IN REPLY TO THE ABOVE REFERRED LETTER, SHRI MUKE SH PARIKH CA AND AR ATTENDED WITH SHRI AMRUTBHAI PATEL AND FILED SUBMIS SION DATED 14/12/2011 ON THE SAME DATE. THE FACTS OF THE CASE WERE DISCUSSED WITH THEM. THE RELEVANT PART OF THE ASSESSEE'S SUBMISSION IS REPRODUCED BELOW: 8.2 IN THE 3 RD POINT, THE ASSESSEE HAS STATED THAT THE DIRECTION GIVEN BY THE C.I.T. APPEALS TO TAX 1/4 RD SHARE OF ADDITIONAL COMPENSATION OF RS.11199608/- IN HIS ORDER DATED 11/8/2011 IN THE C ASE OF SHRI.JASUBHAI S. PATEL IS WHOLLY-ILLEGAL INCOMPETENT AND UNCALLED FO R. 8.3 THE DIRECTION GIVEN BY THE CIT(A) IS BINDING ON THE UNDERSIGNED. THEREFORE, NO COMMENTS ARE MADE ON THE ASSESSEE'S OBJECTION. 8.4 IN PARA 3.1 TO 4, THE ASSESSEE MAINLY HAS EMPHASIZED THAT IN VIEW OF PROVISION SECTION 10(37) THE 'CAPITAL GAIN' OF R S.1,11,99,608/- IS NOT CHARGEABLE TO TAX AND IS EXEMPT IN HIS CASE. THIS IS FACTUALLY INCORRECT. THE LAND IN QUESTION BEARING SURVEY NO. 61, 62, 64/2 AND 64/4 IS SITUATED WITHIN JURISDICTION OF A MUNICIPAL ITY I.E. GANDHINAGAR WHICH HAS POPULATION OF MORE THAN 10,000. THEREFORE, SECTION 10(37) DOES NOT APPLY IN THE ASS ESEE'S CASE. IN VIEW OF THIS, THE OBJECTIONS RAISED BY THE ASSESSEE ARE NOT ACCEPTED AND THE ADDITIONAL COMPENSATION IS ASSESSE D U/S 45(5) OF THE I.T. ACT. 10.3 CONSIDERING THE FACTS NARRATED ABOVE, AND A LSO THE SUBMISSION OF THE ASSESSEE, THE CAPITAL GAINS UNDER SECTION 45(5) IS ASSESSED AT RS.111 ,99,608/-(L/4 TH OF RS.447,98,432/-).' I.T.A. NO.2042/AHD/2012 A.Y.2008-09 4 4. BEFORE LD. CIT(A) RELIANCE WAS PLACED BY THE ASS ESSEE ON THE FOLLOWING WRITTEN SUBMISSIONS:- I. 'THE ID AO HAS PATENTLY ERRED BOTH IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS.1,11,99,608 /- UNDER S. 45(5) AS LOAN TERM CAPITAL GAINS ON COMPENSATION RECEIVED BY THE APPELLANT, BY IGNORING THE FACTS, EVIDENCES AND LEGAL POSITION FURNISHED TO HI M BY THE APPELLANT. THE ID AO MISERABLY FAILED FOR THE REASONS BEST KNO WN TO HIM, IN NOT APPRECIATING THAT THE CONDITIONS OF S. 10(37) OF TH E INCOME TAX ACT HAVING BEEN FULLY SATISFIED, THE COMPENSATION RECEI VED WAS FULLY EXEMPT UNDER S. 10(37). IT BE SO HELD NOW AND THE A DDITION OF RS.1,11,99,608 /- BE DELETED. 2. THE ID AO TOTALLY FAILED TO CONSIDER THE DETAILE D SUBMISSIONS AND THE DOCUMENTS FURNISHED TO HIM UNDER THE COVER OF APPEL LANT'S LETTER DATED 14/12/2011 FROM WHICH IT WAS ABUNDANTLY CLEAR THAT THE LAND ACQUIRED WAS USED FOR AGRICULTURAL PURPOSES AND THE EVIDENCE THEREOF WERE AVAILABLE FROM THE INCOME TAX RECORDS OF THE APPELL ANTS CASE AS AVAILABLE WITH ID AO AS ALSO FROM ABUNDANT GOVERNME NT EVIDENCES AS FURNISHED AND EXPLAINED TO THE ID AO. A COPY OF SAI D LETTER ALONG WITH ALL THE ENCLOSURES THERETO BEING EXHIBIT A TO E PAG E 1 TO 31 IS ATTACHED FOR YOUR CONSIDERATION AND MARKED ANNEXURE -1 HERETO PAGE 1 TO 6. 3. THE ID AO, IN PARA 8.4 OF HIS ORDER HAS ON INC ORRECT GROUND, REJECTED THE SAID LEGAL CLAIM IN JUST FIVE LINES TO STATE THAT AS THE RELEVANT LAND WHICH WAS ACQUIRED BY SPECIAL LAO WAS SITUATED WITHIN JURISDICTION OF MUNICIPALITY THE EXEMPTION WILL NOT BE GRANTED. AS A MATTER OF FACT, S. 10(37) ITSELF PROVIDES THAT EXEM PTION IS TO BE GRANTED BECAUSE THE LAND IS SO SITUATED WITHIN LIMI TS OF MUNICIPALITY AND AS CAPITAL FAIN WOULD HAVE BEEN OTHERWISE TAXAB LE, ON FULFILLMENT OF CONDITIONS OF S. 10(37), SUCH CAPITAL FAIN IS EX EMPT. IT THEREFORE CLEARLY APPEARS THAT THE VERY PROVISION OF S. 10(37 ) IS MISUNDERSTOOD (RATHER NOT UNDERSTOOD) BY ID AO WHICH HAS RESULTED IN TO ERRONEOUS REJECTION OF THE APPELLANT'S CLAIM. IT BE SO HELD N OW AND THE ADDITION OF RS.1,11,99,608/- BE DELETED. 4. IT IS ABUNDANTLY CLEAR FROM THE RECORDS THAT I MPUGNED LAND WAS USED FOR AGRICULTURAL PURPOSES AND FOR WHICH 7 & 12 EXTRACTS FOR RELEVANT SURVEY NOS. WERE FILED IN WHICH THE FACTUM OF AGRICULTURAL ACTIVITY WAS EVIDENT TILL 1996-97 AND TILL IT WAS T RANSFERRED IN THE NAME OF GOVERNMENT. ALSO THE VERY COPIES OF STATEMENTS O F INCOME FOR ASSESSMENT YEARS AS FILED WITH THE AO SHOWS THE AGR ICULTURAL INCOME FROM THE RELEVANT AGRICULTURAL LAND BEARING THOSE S URVEY NUMBERS WHICH IS ACQUIRED. MOST IMPORTANTLY, EVEN THE AWARD ITSELF CLEARLY MENTIONS THE FACT ABOUT CROPS IE JUWAR, BAJRI, GRAM , ARANDA AND RAIDA WERE BEING GROWN ON THE LAND WHICH WAS ACQUIRED. HO WEVER, SINCE THE ID AO HAS PROCEEDED ON A WRONG INTERPRETATION OF S 10(37) THAT AS THE I.T.A. NO.2042/AHD/2012 A.Y.2008-09 5 LAND WAS WITHIN LIMITS OF MUNICIPALITY, THOUGH USED FOR AGRICULTURAL PURPOSES AND ALSO AGRICULTURAL INCOME BEING SHOWN F OR LAST SEVERAL YEARS, HE HAS ERRONEOUSLY HELD THAT S. 10(37) DOES NOT APPLY AND HENCE HE HAS ASSESSED CAPITAL GAINS UNDER S. 45(5). THE VERY APPROACH OF THE ID AO BEING AGAINST THE EXPRESS PRO VISION OF LAW, THE ADDITION DESERVES TO BE DELETED AT ONCE. IT BE DELE TED NOW. 5. THE ID AO ALSO FAILED TO APPRECIATE THE ACADEMI C AND ALTERNATE SUBMISSION THAT LEGAL EXPENSES IN CONNECTION WITH P ROFESSIONAL FEES PAID TO ADVOCATE WHOSE BILLS WITH FULL ADDRESS AND ALSO RECEIPTS FOR PAYMENT BY CHEQUES WERE FURNISHED WERE ALLOWABLE AS DEDUCTION. 6. THE ID AO ALSO ERRED BOTH IN LAW AND ON FACTS I N NOT APPRECIATING AND CONSIDERING THE PRELIMINARY OBJECTION TO THE RE OPENING OF ASSESSMENT BY HOLDING AT PARA 8.3 OF HIS ORDER THAT DIRECTION OF CIT (A) IS BINDING ON HIM WITHOUT APPRECIATING THAT SUC H DIRECTION WERE NOT IN THE CASE OF APPELLANT IN ANY PROCEEDING BEFORE H ON'BLE CIT (A) AND FURTHER, S 147 CANNOT BE RESORTED TO WITHOUT SATISF YING PRIMARY CONDITIONS OF S. 147. IT BE SO HELD NOW AND ASSESS MENT BE QUASHED. 7. THE ERRONEOUS CALCULATION OF CAPITAL GAINS BE H ELD TO BE INCORRECT AND UNJUSTIFIED NOW. 8. THE ID AO FAILED TO CONSIDER THE VARIOUS EXPLANA TIONS AND SUBMISSIONS WHICH HE OUGHT TO HAVE CONSIDERED BEFOR E PASSING ERRONEOUS ORDER. IT BE SO HELD MOW AND ERRONEOUS AD DITIONS BE DELETED. 9. YOUR APPELLANT IS PLEASED TO SUBMIT HEREWITH T HE COPY OF DECISION OF 'CHANDIGARH BENCH IN THE CASE OF CHURA RAM VS ITO WHEREIN IT IS HELD THAT WHERE THE AND IS USED FOR AGRICULTURAL AS EVIDENCED BY KHASRA GIRDAWRI (EVEN WHERE THE AWARD IN THAT CASE DID NOT MENTION THE CROP), THE EXEMPTION UNDER S. 10(37) HAS TO BE ALLOWED. THE SAID DECISION IS ANNEXURE-2 HERETO PAGE 1 TO 6. 10. THE ORDER PASSED BY ID AO IS BAD IN LAW, INVALI D AND AGAINST THE SANCTION OF LAW. 11. THE ID AO OUGHT TO HAVE ACCEPTED RETURN OF INCO ME IN TOTO. DATED: 31/5/2012 'MY AGRICULTURAL LAND SITUATED AT SARGASAN VILLAGE, SURVEY NO. 61, 62,64/2 AND 64/4, WHICH WAS COMPULSORY ACQUISITION UNDER THE LAND ACQUISITION ACT 1894 AS ON 18-01-1996. 1. WE GOT INITIAL COMPENSATION AT THE RETE OF RS.17 /- PER SQUARE METER, THE XEROX COPY OF LAND ACQUISITION ORDER ALO NG WITH STATEMENT OF PAYMENT DETAILS. I.T.A. NO.2042/AHD/2012 A.Y.2008-09 6 2. I HAVE RECEIVED THE INITIAL PAYMENT AS ON 07-05 -1999, THE XEROX COPY OF BANK STATEMENT OF BANK OF BAORDA DEHLI CHAK LA BRANCH IS ENCLOSED FOR YOUR KIND CONSIDERATION. 3. I AM NOT SATISFIED WITH THE AWARD OF INITIAL PA YMENT ISSUED FROM GOVERNMENT OF GUJARAT. I HAVE FILED APPEAL BEFORE T HE HONORABLE HIGH COURT OF GUJARAT FOR ENHANCEMENT OF COMPENSATION OF COMPULSORY ACQUISITION OF AGRICULTURAL LAND. THE HONORABLE HIG H COURT HAS PASSED THE ORDER FOR ENHANCEMENT OF COMPENSATION AT THE RA TE OF RS. 231 /- PER SQ. METER. THE XEROX COPY OF HIGH COURT ORDER IS ENCLOSED HEREWITH.' 5. AFTER TAKING INTO CONSIDERATION THESE SUBMISSION S OF THE ASSESSEE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSE RVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE; ASSESSMEN T ORDER AND APPELLANT'S WRITTEN SUBMISSION. AGRICULTURAL LANDS BELONGING TO THE APPELLANT SITUATED WITHIN URBAN SETTLEMENT WERE COM PULSORILY ACQUIRED BY THE GOVERNMENT ON WHICH APPELLANT RECEIVED ENHAN CED COMPENSATION DURING THE YEAR. ASSESSING OFFICER TAX ED THE SAID COMPENSATION UNDER SECTION 45 (5) ON THE GROUND THA T THE LANDS WERE SITUATED NEAR GANDHINAGAR AND THEREFORE NOT AGRICUL TURAL LANDS WITHIN THE DEFINITION OF SECTION '2 (14) (III) OF IT ACT. APPELLANT SUBMITTED THAT BY VIRTUE OF SECTION 10(37) INSERTED BY FINANCE ACT 2004 WITH EFFECT FROM ASSESSMENT YEAR 2005-06 ENHANCED COMPENSATION RECEIVED ON COMPULSORY ACQUISITION OF URBAN AGRICULTURAL LAND A FTER 1-04-2004 IS EXEMPT FROM TAX. APPELLANT ALSO SUBMITTED THAT IF T HE LAND WAS AGRICULTURAL AND EXCLUDABLE AS PER DEFINITION OF CA PITAL ASSET, THE SAME WOULD HAVE BEEN OUTSIDE THE PURVIEW OF SECTION 45 A ND THERE WAS NO QUESTION OF INTRODUCING 'SECTION 10 (37). I AGREE W ITH THE APPELLANT TO THIS EXTENT THAT EXEMPTION UNDER SECTION 10(37) IS AVAILABLE TO AGRICULTURAL LAND SITUATED IN URBAN AREA THEREFORE ASSESSING OFFICER'S OBJECTION TO THIS EXTENT IS NOT TENABLE. HOWEVER SU CH EXEMPTION UNDER SECTION 10 -(37) IS AVAILABLE ONLY ON FULFILLMENT O F CERTAIN CONDITIONS. ONE OF THE VITAL CONDITION PRECEDENT TO SUCH EXEMPT ION IS AS UNDER- 10(37)(II) SUCH LAND DURING THE PERIOD OF TWO YEAR S IMMEDIATELY PRECEDING THE DATE OF TRANSFER, WAS BEING USED FOR AGRICULTURAL PURPOSES BY SUCH HINDU UNDIVIDED FAMILY FOR INDIVID UAL OR A PARENT OF HIS.' I.T.A. NO.2042/AHD/2012 A.Y.2008-09 7 FROM THE ABOVE, IT IS CLEAR THAT ALL URBAN AGRICULT URAL LANDS ARE NOT EXEMPT UNDER SECTION 10 (37). ONLY THOSE URBAN AGRI CULTURAL LANDS WHICH WERE USED FOR AGRICULTURAL PURPOSES IN PRECED ING TWO YEARS BY THE INDIVIDUAL ARE ELIGIBLE FOR SUCH EXEMPTION. IT IS NOT IN DISPU TE THAT THESE LANDS WERE USED FOR AGRICULTURAL PURPOSE S BEFORE TWO YEARS OF TRANSFER SINCE THE USE FOR AGRICULTURAL IS MENTI ONED IN THE DOCUMENT OF ACQUISITION. THE CROP BEING GROWN IN THE LANDS T RANSFERRED IS MENTIONED AND THEREFORE IT IS CLEAR THAT THE LANDS TRANSFERRED WERE USED FOR AGRICULTURAL PURPOSE. BUT THE USE FOR AGRI CULTURAL PURPOSE SHOULD BE BY THE APPELLANT HIMSELF OR BY HIS PARENT S. IF SOME- OTHER PERSONS WERE USING THE LAND FOR AGRICULTURAL PURPOSES, THE EXEMPTION IS NOT ALLOWABLE. IN THE CASE OF THE APPE LLANT, NO EVIDENCE WAS SUBMITTED THAT APPELLANT WAS USING THESE LANDS FOR AGRICULTURAL PURPOSES HIMSELF. ONLY THE OWNERSHIP OF AGRICULTURA L LANDS WERE SUBMITTED ALONG WITH COPY OF INCOME TAX COMPUTATION OF INCOME DECLARING AGRICULTURAL INCOME BUT THAT DOES NOT MEA N THAT LANDS WERE USED FOR AGRICULTURAL PURPOSES BY THE APPELLANT HIM SELF OR HIS PARENTS. FROM THE RECORDS IT IS SEEN THAT APPELLANT WAS INVO LVED IN BUSINESS ACTIVITY AND WAS STAYING FAR AWAY FROM THE LOCATION OF AGRICULTURAL LANDS THEREFORE THE VITAL CONDITION OF USING AGRICULTURAL LAND BY APPELLANT HIMSELF IS NOT FULFILLED. WHILE G RANTING ANY EXEMPTION, ONUS TO SHOW THAT APPELLANT STRICTLY FUL FILLED ALL THE CONDITIONS IS ON THE APPELLANT AND THERE CAN'T BE A NY PRESUMPTION WITH REGARD TO FULFILLMENT OF CONDITIONS PRECEDENT TO SU CH EXEMPTION. SINCE APPELLANT DID NOT SUBMIT ANY EVIDENCE TO PROVE THAT AGRICULTURAL LANDS TRANSFERRED BY HIM WERE USED FOR AGRICULTURAL PURPO SES BY HIMSELF OR BY HIS PARENT AND THERE IS MATERIAL ON RECORD SUGGE STING THAT APPELLANT WAS INVOLVED IN BUSINESS ACTIVITY AND STAYING AWAY FROM THE LOCATION OF LANDS, THE CONDITION REQUIRED FOR GRANTING EXEMPTIO N IS NOT FULFILLED. ACCORDINGLY IT IS HELD THAT APPELLANT IS NOT ENTITL ED TO CLAIM EXEMPTION ON ENHANCED COMPENSATION RECEIVED DURING THE YEAR O N COMPULSORY ACQUISITION OF URBAN AGRICULTURAL LANDS. ACCORDING LY, THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED. AFTER TAKING INTO CONSIDERATION THESE SUBMISSIONS O F THE ASSESSEE, APPEAL WAS DISMISSED. 6. BEFORE US LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT ASSESSEE WAS NOT ENTITLED TO CLAIM EXEMPTION U/S 10(37) OF THE ACT IN RESPECT OF ENHANCED COMPENSATI ON IN RESPECT OF COMPULSORY ACQUISITION OF AGRICULTURAL LAND. THOUG H LD. CIT(A) HAS ACCEPTED THAT THE LANDS WERE IN FACT USED FOR AGRICULTURAL P URPOSES BEFORE TWO YEARS OF I.T.A. NO.2042/AHD/2012 A.Y.2008-09 8 TRANSFER BUT WAS NOT JUSTIFIED IN REJECTING THE CLA IM OF EXEMPTION ON THE GROUND AND PRESUMPTION THAT THE PROVISION REQUIRED THAT TH E AGRICULTURAL ACTIVITIES SHOULD BE CARRIED OUT BY THE ASSESSEE HIMSELF. THE RE IS NO SUCH REQUIREMENT THAT ASSESSEE HIMSELF SHOULD CARRY OUT THE AGRICULT URAL ACTIVITIES. THE REQUIREMENT IS THAT THE LAND BE USED FOR AGRICULTUR AL PURPOSES BY HUF, INDIVIDUAL OR HIS PARENT. IT WAS FURTHER SUBMITTED THAT AGRICULTURAL INCOME HAS BEEN REGULARLY DECLARED BY THE ASSESSEE IN THE RETU RNS OF INCOME IN RESPECT OF AGRICULTURAL ACTIVITIES ON THE LANDS BEARING RELEVA NT SURVEY NUMBERS AND ALSO THE SAME WAS EVIDENT FROM 7 AND 12 EXTRACTS AS WELL AS BY THE COMPENSATION AWARD ITSELF. THUS, ALL THE CONDITIONS OF SECTION 1 0(37) WERE CLEARLY SATISFIED BY THE ASSESSEE AND THEREFORE, LD. CIT(A) WAS NOT JUST IFIED IN REJECTING THE CLAIM OF THE ASSESSEE. CONCLUDING HIS ARGUMENT HE SUBMITTED THAT CLAIM OF EXEMPTION U/S 10(37) MAY KINDLY BE ALLOWED. LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF LD. CIT(A). 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT DURING THE YEAR UNDER APPEAL AGRICULTURAL LANDS BELONGING TO THE ASSESSEE SITUATED WITHIN URBAN SETTLEMENT WERE COMPULSORILY ACQUIRED BY THE GOVERNMENT ON WHICH ASSESSEE RECEIVED ENHANCED COMPENSATION. THE A.O. TAXED THIS COMPENSATION U/S 45(5) OF THE ACT ON THE GROUND THA T THE LANDS WERE SITUATED NEAR GANDHINAGAR AND THEREFORE NOT AGRICULTURAL LAN DS WITHIN THE DEFINITION OF SECTION 2(14)(III) OF THE ACT. ASSESSEES CONTENTI ON BEFORE LD. CIT(A) WAS THAT BY VIRTUE OF SECTION 10(37) INSERTED BY FINANCE ACT , 2004 WITH EFFECT FROM A.Y. 2005-06 ENHANCED COMPENSATION RECEIVED ON COMPULSOR Y ACQUISITION OF URBAN AGRICULTURAL LAND AFTER 01.04.2004 WAS EXEMPT FROM TAX. IT WAS ALSO SUBMITTED THAT IF THE LAND WAS AGRICULTURAL LAND AND EXECUTAB LE AS PER DEFINITION OF CAPITAL I.T.A. NO.2042/AHD/2012 A.Y.2008-09 9 ASSET, THE SAME WOULD HAVE BEEN OUTSIDE THE PURVIEW OF SECTION 45 AND THERE WAS NO NEED OF INTRODUCING SECTION 10(37). LD. CIT (A) AGREED WITH THE ASSESSEE TO THIS EXTENT THAT EXEMPT U/S 10(37) WAS AVAILABLE TO AGRICULTURAL LAND SITUATED IN URBAN AREA. THEREFORE, A.O.S OBJ ECTION TO THIS EXTENT WAS NOT TENABLE. HOWEVER, HE WAS OF THE VIEW THAT SUCH EXE MPTION U/S 10(37) WAS AVAILABLE ON FULFILLMENT OF CERTAIN CONDITIONS. ON E OF THE VITAL CONDITIONS, ACCORDING TO HIM, FOR SUCH EXEMPTION WAS THAT SUCH LAND DURING THE PERIOD OF TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFE R, WAS BEING USED FOR AGRICULTURAL PURPOSE BY SUCH HINDU UNDIVIDED FAMILY OR INDIVIDUAL OR PARENT OF HIS AND THEN HE WENT ON TO SAY THAT SINCE ASSESSEE WAS STAYING AWAY FROM THESE AGRICULTURAL LANDS AND WAS ALSO INVOLVED IN S OME BUSINESS ACTIVITIES, HE COULD NOT HAVE CARRIED OUT AGRICULTURAL ACTIVITIES HIMSELF AND THEREFORE, EXEMPTION U/S 10(37) WAS NOT AVAILABLE TO HIM. IN OUR CONSIDERED OPINION THE PLAIN READING OF SECTION 10(37)(II) DOES NOT SUGGES T THAT THERE IS SUCH REQUIREMENT THAT ASSESSEE HIMSELF SHOULD CARRY OUT THE AGRICULTURAL ACTIVITIES ON THESE LANDS. ONLY REQUIREMENT IS THAT SUCH LAND, D URING THE PERIOD OF TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER, IS USED FOR AGRICULTURAL PURPOSES BY THE ASSESSEE OR HIS PARENT. ABOUT THIS THERE IS NO DISPUTE IN THIS CASE AS THE REVENUE HAS NOT DISPUTED THE FACT THAT AGRICULTURAL INCOME HAS BEEN REGULARLY DECLARED BY THE ASSESSEE IN THE RETURNS OF INCOME I N RESPECT OF AGRICULTURAL ACTIVITIES ON THESE LANDS AND THE SAME WERE ACCEPTE D BY THE REVENUE. THE ASSESSEE HAS ALSO FURNISHED EVIDENCE IN THE FORM OF 7 AND 12 EXTRACT IN WHICH THE CROP GROWN BY THE ASSESSEE ON THE LANDS WERE AL SO MENTIONED. IN THE LIGHT OF THIS FACTUAL POSITION OF THIS CASE, WE ARE SATIS FIED THAT ASSESSEE HAS FULFILLED THE CONDITION AS LAID DOWN FOR CLAIMING EXEMPTION U /S 10(37) OF THE ACT ON I.T.A. NO.2042/AHD/2012 A.Y.2008-09 10 ENHANCED COMPENSATION RECEIVED BY HIM DURING THE YE AR UNDER APPEAL ON COMPULSORY ACQUISITION OF URBAN AGRICULTURAL LANDS, THE ORDER PASSED BY THE LOWER AUTHORITIES ARE HEREBY SET ASIDE ON THIS ISSU E AND THE A.O. IS DIRECTED TO GRANT EXEMPTION AS CLAIMED BY THE ASSESSEE U/S 10(3 7) OF THE ACT. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23.11.2012 SD/- SD/- (A.MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD