Shri Hukumchand Choudhary , Indore V. ITO (3),Indore, Indore

ITA 205/Ind/2020

AI Insights

The case involves Hukumchand Choudhary, the appellant, who contested the assessment of Long Term Capital Gains on the sale of urban agricultural land. The Assessing Officer had assessed the capital gains in A.Y. 2012-13, despite the sale agreement and possession transfer occurring in A.Y. 2011-12. The appellant argued that the income from the sale was correctly disclosed in A.Y. 2011-12 and claimed exemptions under Sections 54F and 54B of the Income Tax Act, which were denied by the Assessing Officer. The CIT(A) upheld the Assessing Officer's decision, leading to the appeal in the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122457 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 13-07-2020
• Other Referred Cases: Balbir Singh Maini vs. CIT, Mahaveer Kumar Jain vs. CIT, Ajay Kumar Shah Jagati vs. CIT, Jasbir Singh Sarkaria vs. CIT, Bertha T. Almeida vs. ITO, S. Gurucharan Singh Anand vs. ITO, CIT vs. Excel Industries Ltd., Sanjeev Lal vs. CIT, Rukmani Devi Agarwal vs. ITO, ACIT vs. S. Balasundaram, Suraj Lamp & Industries vs. State of Madhya Pradesh
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 148; 2; 54B; 54F; 64; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (CONDUCTED THROUGH VIRTUAL COURT) BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER & SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER I .T .A . N o .2 0 5 /I nd /2 0 2 0 ( A s se ss m e nt Y e a r : 20 12- 13 ) H u k u mc ha nd C h o u d ha r y 1 2, N ir a nj a na p ur , L a su di ya , I nd or e, M . P. 4 5 2 0 1 0 V s.I T O - 1 ( 3 ) , I nd or e PA N N o .A GD P C 9 6 64 P (Appellant) .. (Respondent) Appellant by : Shri Pankaj Shah, C.A. Respondent by : Shri Ashish Porwal, Sr. D.R. D a t e of H ea r i ng 01.02.2023 D a t e of P r o no u n ce me nt 21.02.2023 O R D E R PER SUCHITRA KAMBLE - JM: This appeal is filed by the assessee against the order dated 14.01.2020 passed by the Ld. CIT-(Appeals)-I, Indore for A.Y. 2012-13. 2. The grounds of appeal raised by the assessee read as under: “1. That the order of AO is bad in law & wrong on facts. 2.(a) That the AO has erred in determining the long term capital gain from sale of urban agricultural land in the A.Y. 2012-13 without appreciating the fact that the long term capital gain had accrued to the assessee in the Asst. Year 2011-12 and the same had already been correctly disclosed in the computation and return of income. (b) That in addition to the AY 2012-13 the AO had also assessed the case of assessee for the AY 2011-12 wherein the assessee had offered his income from Long Term Capital Gain arising out of sale of urban agricultural land. The returned income of the assessee was accepted by the AO without rejecting the income from Long Term Capital Gain. Hence the same income cannot be assessed twice. (c) That the AO had wrongly interpreted the judgement of Apex Court held in the case of Balbir Singh Maini which was decided in the context of Joint Development Agreement and the facts of that case were entirely different from the facts of the assessee. ITA No.205/Ind/2020 Hukumchand Choudhary vs. ITO Asst.Year –2012-13 - 2 – (d) That with a present mind the AO had wrongly interpreted section 2(47)(v) just to deny the exemption claimed u/ 54F & 54B. The A.O had failed to appreciate that the transaction of the assessee not only falls under provision (v) of sec. 2(47) but it is also squarely covered under provision (i), (ii) and (vi) of sec. 2(47). (e) That the AO had erred in non relying on the sale agreement and possession receipt produced by the assessee without bringing any contrary material, other evidence on record and without confronting the buyer of the property. 3. That the appellant craves leave to add or amend any ground of appeal.” 3. The assessee is an individual and filed return of income declaring income of Rs. 1,76,250/-. As per the information available the Assessing Officer observed that the assessee sold immovable property at Rs. 4,31,75,600/- on 27.04.2011. As per registered deed of the sold property, the same was sold to the M/s. Brilliant Home Pvt. Ltd. Indore. The location of the land was within the municipal limits of Indore city, during the F.Y. 2011-12. Thus, as per the Section 2(14)(iii) of the Income Tax Act, the land sold was a capital asset thus the said transfer of property attracted Long Term Capital Gains on the sale consideration of Rs. 4,31,75,600/- which was not paid by the assessee as per the observation of the Assessing Officer. The satisfaction was recorded and notice under Section 148 of the Act was issued on 20.03.2018. Incompliance to the notice, the assessee filed return of income for the A.Y. 2012-13 on 28.05.2018 declaring total income of Rs. 78,910/-. After taking cognizance of the reply of the assessee the Assessing Officer made addition of Rs. 1,07,93,900/- as Long Term Capital Gain. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 5. The Ld. A.R. submitted that the assessee is an agriculturist who derives his income mainly from the agricultural activities. During the A.Y. 2011-12 the assessee sold his 1/4 th share of ancestral urban agricultural land co-owned ITA No.205/Ind/2020 Hukumchand Choudhary vs. ITO Asst.Year –2012-13 - 3 – by his other family members vide an agreement entered on 26.04.2010. Out of the sale proceeds received from the sale of the land he purchased new agricultural land in rural area and made investment in construction of his house. Since the large part of consideration was received in A.Y. 2011-12 and the assessee parted with the possessing of property to the buyer and finally sale deed was executed on 27.04.2011, i.e. just after 26 days from the end of the A.Y. 2011-12, hence in view of Section 2(47) of the Act the Long Term Capital Gain accrued to the assessee in the A.Y. 2011-12. The assessee offered the same in his return of income and claimed exemption under Section 54F & 54B out of the Long Term Capital Gain income. The income arising out of sale of urban agricultural land was correctly shown in the A.Y. 2011-12 and the same was assessed by the Assessing Officer. During the course of assessment proceedings the assessee produced the necessary documents and the Assessing Officer never doubted or made any adverse remarks in respect of genuineness of these documents. The income for the A.Y. 2011-12 was assessed and accepted as per the return filed by the assessee. While making for the A.Y. 2012-13, the Assessing Officer treated capital gain to have accrued in the A.Y. 2012-13 instead of A.Y. 2011-12 primarily on account of the fact that the sale deed was registered on 27.04.2011 i.e. in A.Y. 2012-13 and denied the exemption of the assessee under Section 54F and 54B. The Assessing Officer primarily relied upon the judgment of Balbir Singh Maini arising out of Civil Appeal No. 15619/2017. Consequently a huge addition of Rs. 1,07,93,900/- was made resulting into a tax demand of Rs. 39,86,910/-. The Ld. A.R. submitted that the Assessing Officer erred in determining the Long Term Capital Gain from sale of urban agricultural land in A.Y. 2012-13 without appreciating the fact that the Long Term Capital Gain had accrued to the assessee in the A.Y. 2011-12 and the same had already been correctly ITA No.205/Ind/2020 Hukumchand Choudhary vs. ITO Asst.Year –2012-13 - 4 – disclosed in the computation and return of income. In the instant case the sale deed was registered on 27.04.2011 and therefore, the Assessing Officer held that the same was taxable in A.Y. 2012-13 and not 2011-12, but the Assessing Officer failed to appreciate that the definition of word Transfer starts with word ‘includes’ which means it is an exhaustive definition. The ownership of an asset is assumed either when the possession of the asset has been handed over or when the sale deed is executed between the parties. The date of transfer of capital asset would be considered from the date of agreement and handing over possession of the property to be taken or retained in the part performance of the contract. The sale agreement was executed by both the parties in the A.Y. 2011-12 and the possession was also given alongwith the part performance of the contract hence the same is required to be taxed in the A.Y. 2011-12 and not in the A.Y. 2012-13. The return income of the assessee was accepted by the Assessing Officer without rejecting the income from Long Term Capital Gain and without denying the exemption claimed under Section 54B & 54F. The Ld. A.R. relied upon the decision of Hon’ble Supreme Court in case of Mahaveer Kumar Jain vs. CIT (Civil Appeal No. 4166 of 2006 order dated 19.04.2018). The Ld. A.R. further submitted that the Assessing Officer wrongly interpreted the judgment of Hon’ble Apex Court in case of Balbir Singh Maini vs. CIT (Civil Appeal No. 15619/2017 order dated 04.10.2017). The facts of the case of Balbir Singh Maini are totally different from the facts of the case of the assessee. As the former of the case of Joint Development Agreement and the particular assessee herein is an individual. The Ld. A.R. further submitted that all the relevant documents were produced before the Assessing Officer. The Ld. A.R. relied upon the following decision: • Ajay Kumar Shah Jagati v. CIT (2008) 168 Taxman 53 (SC) • Jasbir Singh Sarkaria, (2007) 164 Taxman 108 ITA No.205/Ind/2020 Hukumchand Choudhary vs. ITO Asst.Year –2012-13 - 5 – • Bertha T. Almeida v. ITO (2015) 53 taxmann 522 • S. Gurucharan Singh Anand (1993) 45 ITD 299 (JP) • CIT vs. Excel Industries Ltd. (2013) 38 taxmann.com 100 (SC) • Sanjeev Lal vs. CIT (2014) 46 TAXMANN.COM 300 (SC) • Rukmani Devi Agarwal vs. ITO (ITA 557/JP/2018) • ACIT vs. S. Balasundaram (ITA 1832/Mds/2012) 6. The Ld. D.R. submitted that since the sale deed was registered in A.Y. 2012-13 the same cannot be taken into account for A.Y. 2011-12 but in the current A.Y. i.e. 2012-13. The Ld. D.R. relied upon the decision of Hon’ble Supreme Court in Suraj Lamp & Industries vs. State of Madhya Pradesh (SLP No. 13917/2009 order dated 11.10.2011). The Ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. In rejoinder the Ld. A.R. submitted that the decision of Hon’ble Supreme Court in case of Suraj Lamp & Industries and Balbir Singh Maini the factual aspect is totally different. The Ld. A.R. in rejoinder further submitted that as regards alternate argument the Assessing Officer had wrongly interpreted Section 2(47)(v) only to deny the exemption claimed under Section 54F & 54B. The Ld. A.R. submitted that Assessing Officer failed to appreciate that the transaction of the assessee not only falls under provision (v) of Section 2(47) but it is also squarely covered under provision (i), (ii) and (vi) of Section 2(47). 8. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Ld. A.R. has distinguished the decision in factual aspect that of Balbir Singh Maini and Suraj Lamp & Industries. In this particular case the assessee is an individual and he has sold ITA No.205/Ind/2020 Hukumchand Choudhary vs. ITO Asst.Year –2012-13 - 6 – 1/4 th share of the said land and purchased the land (agricultural land) in A.Y. 2011-12 itself. The execution of the agreement related to purchase of land and possession of the land was in A.Y. 2011-12 only. The registration is in April 2011cannot debar the assessee when the assessee has claimed benefit of exemption under Section 54F & 54B is in A.Y. 2011-12 itself. The same has not been granted in that particular year. As the assessee has offered his income from Long Term Capital Gain in A.Y. 2011-12 only. These aspects were not taken into account by the Assessing Officer as well as CIT(A). Hence, the appeal of the assessee is allowed. 9. In result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 21/02/2023 Sd/- Sd/- (BHAGIRATH MAL BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 21/02/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण,इंदौर/ DR, ITAT, Indore 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, (Sr. Private Secretary) ITAT, Indore O r d e r p ro n o u n c e d o n 2 1/02/ 2 0 23 b y p l ac i n g t h e r e s u l t o n t h e N o t i c e B o a r d a s p e r R u l e 3 4 ( 4 ) o f t h e In c o m e T ax ( A p p e l l at e T r i b u n al ) R u l e, 1 9 6 3 .