Smt Yarlagadda Sri Lakshmi Neelima, Samalkot V. The DCIT Circle-1 Kakinada, Kakinada

ITA 211/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56811 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 30-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: TH LUCAS PETER
• Keywords: Sale consideration of property below Jantri Value; Gift
• Section: 54B; 50C; 54F; 148; 263; 154

Judgement Text

ITA NO 211 OF 2011 YARLAGADDA SRI LAKSHMI NEELIMA S AMALKOT PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.211/VIZAG/2011 ASSESSMENT YEAR: 2006 - 07 YARLAGADDA SRI LAKSHMI NEELIMA W/O VEERRAAJU, SAMALKOT VS. DY.COMMISSIONER OF INCOME TAX CIRCLE-1 KAKINADA (APPELLANT) PAN NO:APUPY 7475 J (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI TH. LUCAS PETER, CIT (DR) DATE OF HEARING: 9/8/2011 DATE OF PRONOUNCEMENT: 29/08/2011 ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 22.3.2011 PASSED BY LEARNED CIT, RAJAHMUNDRY UNDER SECTION 263 OF THE ACT AND IT RELATES TO THE ASSESSMENT YEAR 2006 -07. THE ASSESSEE IS CHALLENGING THE VALIDITY OF THE SAID ORDER. 2. THE FACTS RELATING TO THE ISSUES ARE STATED IN B RIEF. THE ASSESSEE IS AN INDIVIDUAL AND SHE FILED HER RETURN OF INCOME FO R THE YEAR UNDER CONSIDERATION DISCLOSING INCOME FROM MONEY LENDING AND INCOME FROM CAPITAL GAINS ON SALE OF 3.76 ACRES OF LAND, AFTER CLAIMING EXEMPTION UNDER SECTION 54B AND 54F OF THE ACT. THE RETURN OF INCOM E WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY THE A SSESSING OFFICER INITIATED RECTIFICATION PROCEEDING BY ISSUING A NOTICE UNDER SECTION 154 OF THE ACT IN ORDER TO WITHDRAW EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 54B OF THE ACT AND ALSO TO MODIFY THE AMOUNT OF EXEMPTION CLAIMED UNDER SECTION 54F OF THE ACT. WHEN THE ASSESSEE POINTED OUT THAT THERE IS NO MISTAKE APPARENT FROM THE RECORD WITHIN THE MEANING OF SEC. 154 OF THE ACT, THE ASSESSING OFFICER DROPPED THE SAID RECTIFICATION PR OCEEDINGS. THEREAFTER THE ITA NO 211 OF 2011 YARLAGADDA SRI LAKSHMI NEELIMA S AMALKOT PAGE 2 OF 4 ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUIN G NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSING OFFICER COMPLETED THE REOPENED ASSESSMENT BY ACCEPTING THE RETURN OF INCOME OF THE ASSESSEE A FTER OBSERVING THAT THE CLAIMS MADE BY THE ASSESSEE UNDER SECTION 54B AND 5 4F OF THE ACT ARE FOUND ALLOWABLE. THE LEARNED CIT INVOKED SEC. 263 O F THE ACT TO INITIATE REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT A S HE WAS OF THE VIEW THAT THE ASSESSING OFFICER DID NOT PROPERLY EXAMINE THE CLAIM OF EXEMPTION UNDER SECTION 54B AND 54F OF THE ACT. AFTER HEARING THE ASSESSEE, THE LEARNED CIT SET ASIDE THE ASSESSMENT ORDER AND ISSU ED DIRECTION TO THE ASSESSING OFFICER TO PASS FRESH ASSESSMENT ORDER AF TER CONDUCTING NECESSARY INQUIRIES AS INDICATED BY HIM IN THE REVISION ORDER . AGGRIEVED BY THE ORDER OF THE LEARNED CIT, THE ASSESSEE IS IN APPEAL BEFORE U S. 3. WITH REGARD TO THE CLAIM OF EXEMPTION UNDER SECT ION 54B OF THE ACT, THE LEARNED CIT HAS NOTICED FOLLOWING POINTS: (A) THE ASSESSEE HAS RECEIVED THE LAND SOLD BY HER FROM HER FATHER VIDE GIFT DEED DATED 12-1-2005. THERE IS NO PROOF THAT THE SAID LAND WAS PUT TO AGRICULTURAL USE IN THE PR ECEDING 2 YEARS BEFORE THE DATE OF SALE. (B) THE SAID LAND WAS CONVERTED INTO SEVERAL SMALL PLOTS AND THEY WERE SOLD TO APPROXIMATELY 40 PERSONS. BESIDES THE ABOVE, 6 PLOTS WERE TRANSFERRED TO MANDAPETTA MUNICIPALITY W ITHOUT CONSIDERATION. THESE FACTS SUGGESTS THAT THE ASSESS EE HAS ENTERED INTO ADVENTURE IN THE NATURE OF TRADE IN WH ICH CASE THE ASSESSEE WOULD NOT BE ENTITLED TO CLAIM EXEMPTI ON UNDER SECTION 54B AND 54F OF THE ACT. (C) THE ASSESSEE HAS PURCHASED 1.97 ACRES OF LAND F OR A CONSIDERATION OF RS.15.38 LAKHS AND CLAIMED EXEMPTI ON UNDER SECTION 54B ON THE SAID PURCHASE. HOWEVER, THERE IS NO EVIDENT THAT THIS LAND IS AN AGRICULTURAL LAND. 3.1 WE HAVE HEARD THE COUNSEL ON THIS ISSUE AND PERUSED THE RECORD. THE LEARNED AUTHORISED REPRESENTATIVE PLACED RELIANCE O N THE LETTER DATED 8.8.2008 SUBMITTED BY THE ASSESSEE TO THE ASSESSING OFFICER TO CONTEND THAT THE ASSESSING OFFICER HAS MADE DUE INQUIRIES ON THI S ISSUE. HOWEVER, ON A CAREFUL PERUSAL OF THE SAID LETTER, WE NOTICE THAT THE ASSESSEE DID NOT ITA NO 211 OF 2011 YARLAGADDA SRI LAKSHMI NEELIMA S AMALKOT PAGE 3 OF 4 DISCUSS ABOUT THE DETAILS OF CONVERSION OF THE IMPU GNED LAND INTO SEVERAL PLOTS. IT WAS ALSO NOT SHOWN TO US THAT THE ASSESSI NG OFFICER DID CONDUCT INQUIRIES ON THIS ASPECT. THE LEARNED AUTHORISED R EPRESENTATIVE RELIED UPON THE DECISION OF HON'BLE MADHYA PRADESH HIGH COURT I N THE CASE OF CIT VS. SMT. SARASWATI JAISWAL TO CONTEND THAT THE CONVERSI ON OF IMPUGNED LAND INTO SEVERAL PLOTS WOULD NOT AMOUNT TO ADVENTURE IN THE NATURE OF TRADE. HOWEVER, WE ARE DEALING WITH THE VALIDITY OF DIRECT ION ISSUED BY LEARNED CIT UNDER SECTION 263 OF THE ACT AND FURTHER THE FACTS OF THE CASE RELIED ON BY LEARNED A.R APPEAR TO BE DIFFERENT. IN THE INSTANT CASE, IT IS SEEN THAT THE IMPUGNED LAND WAS NOT SOLD IN TACT, BUT CONVERTED I NTO SEVERAL SMALL PLOTS BEFORE SALE AND THE SAID PLOTS WERE SOLD TO SEVERAL PERSONS. HENCE, THE QUESTION THAT ARISES IS WHETHER SUCH A SALE OF PLOT S CAN BE CONSIDERED AS SALE OF AGRICULTURAL LAND AND WHETHER THE SAME WOUL D AMOUNT TO ADVENTURE IN THE NATURE OF TRADE. THESE ASPECTS HAVE NOT BEE N EXAMINED BY THE ASSESSING OFFICER AND THERE CANNOT BE ANY DOUBT THA T SUCH AN EXAMINATION WOULD HAVE BEARING ON THE TOTAL INCOME OF THE ASSES SEE. HENCE, IN OUR VIEW, THE DECISION OF THE ASSESSING OFFICER TO ALLO W EXEMPTION UNDER SECTION 54B OF THE ACT WITHOUT LOOKING INTO THESE ASPECTS I S ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORD INGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT ON THIS I SSUE. 4. WITH REGARD TO THE CLAIM OF EXEMPTION U/W 54 F OF THE ACT, THE LEARNED CIT HAS OPINED THAT IF THE TRANSACTION OF SALE OF T HE IMPUGNED LAND IS TAKEN AS ADVENTURE IN THE NATURE OF TRADE, THE ASSESSEE W OULD NOT BE ENTITLED TO EXEMPTION UNDER SECTION 54F OF THE ACT. WITH OUT P REJUDICE TO THE ABOVE SAID OBSERVATION, THE LEARNED CIT HAS ALSO OPINED T HAT THE ASSESSEE IS NOT CORRECT IN COMPUTING THE EXEMPTION UNDER SECTION 54 F OF THE ACT BY TAKING THE ACTUAL SALE CONSIDERATION MENTIONED IN THE CONV EYANCE DEED AS FULL VALUE OF CONSIDERATION, INSTEAD OF ADOPTING THE SA LE CONSIDERATION DETERMINED UNDER SECTION 50C OF THE ACT. THE LEARN ED A.R, HOWEVER, HAS POINTED OUT THAT THE SAID ISSUE IS A DEBATABLE ONE AND HENCE THE REVISION PROCEEDING DOES NOT LIE ON IT. IN SUPPORT OF HIS CO NTENTION THAT THE ASSESSEE COULD ADOPT THE ACTUAL SALE CONSIDERATION STATED IN THE CONVEYANCE ITA NO 211 OF 2011 YARLAGADDA SRI LAKSHMI NEELIMA S AMALKOT PAGE 4 OF 4 DEED AS THE FULL VALUE OF CONSIDERATION FOR THE P URPOSE OF CLAIMING EXEMPTION UNDER SECTION 54F OF THE ACT, THE LEARNED A.R RELIED UPON THE DECISION OF ITAT, JAIPUR BENCH IN THE CASE OF GYAN CHAND BATRA VS. ITO (2010)(133 TTJ (JP) 482). ON A CAREFUL PERUSAL OF THE ORDER OF THE ITAT, JAIPUR BENCH, WE NOTICE THAT THE VIEW TAKEN BY THE ASSESSEE AND ACCEPTED BY THE ASSESSING OFFICER ON THE MEANING OF FULL VA LUE OF CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF EXEMPTION UNDER SECTI ON 54F IS ONE OF THE POSSIBLE VIEWS. HENCE, AS CONTENDED BY LEARNED A.R , THE REVISION PROCEEDING UNDER SECTION 263 OF THE ACT DOES NOT LI E UPON IT. ACCORDINGLY WE SET ASIDE THE ORDER OF LEARNED CIT ON THIS POINT . 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE:29-08-2011 COPY TO 1 SMT. YARLAGADDA SRI LAKSHMI NEELIMA, W/O VEERRAJU , D.NO.12-1-33 MAIN ROAD, SAMALKOT, EAST GODAARI DISTT. 2 THE DY.COMMISSIONER OF INCOME TAX CIRCLE-1 KAKINAD A 3 4. THE CIT RAJAHMUNDRY THE ADDL. CIT, KAKINADA RANGE, KAKINADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM