Kum. Devisankari Chockalingam, CHENNAI V. DCIT, CHENNAI

ITA 2223/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77407 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 13-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2013
• Court: TRIBUNAL
• Keywords: Capital asset; Revised return
• Section: 2(14)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHE NNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . I.T.A. NO. ASSESSMENT YEAR !% APPELLANT &'!% RESPONDENT 2222/MDS/2013 2008-09 SHRI S.CHOCKALINGAM, L/R OF LALITHA CHOKALINGAM, 15, MAHALAKSHMI AVENUE, VANNANTHURAI, THIRUVANMIYUR, CHENNAI-600 041 [PAN: AAAPL 1951 H] DEPUTY COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-III, CHENNAI 464/MDS/2014 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-IV, CHENNAI-34 SMT. LALITHA CHOCKALINGAM (DECEASED), L/R. SHRI S.CHOCKALINGAM, 15, MAHALAKSHMI AVENUE, VANNANTHURAI, THIRUVANMIYUR, CHENNAI-600 041 [PAN: AAAPL 1951 H] 2223/MDS/2013 2008-09 KUMARI DEVISANKARI CHOCKALINGAM, 15, MAHALAKSHMI AVENUE, VANNANTHURAI, THIRUVANMIYUR, CHENNAI-600 041 [PAN: AGMPC 2493 H] DEPUTY COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-III, CHENNAI 466/MDS/2014 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-III, CHENNAI KUMARI DEVISANKARI CHOCKALINGAM, 15, MAHALAKSHMI AVENUE, VANNANTHURAI, THIRUVANMIYUR, CHENNAI-600 041 [PAN: AGMPC 2493 H] 2224/MDS/2013 2008-09 SHRI S. CHOCKALINGAM, 15, MAHALAKSHMI AVENUE, VANNANTHURAI, THIRUVANMIYUR, CHENNAI-600 041 [PAN: AEPPC 1751 H] DEPUTY COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-III, CHENNAI 449/MDS/2014 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-III, CHENNAI SHRI S. CHOCKALINGAM, 15, MAHALAKSHMI AVENUE, VANNANTHURAI, THIRUVANMIYUR, CHENNAI-600 041 [PAN: AEPPC 1751 H] ITA. NOS. 2222-2224/MDS/13 ITA NOS. 449, 464 & 466/MDS/14 :- 2 -: REVENUE BY ASSESSEE BY : : MR. HARI RAO, JCIT MR. B. RAMAKRISHNAN , CA., / DATE OF HEARING : 13-05-2014 /DATE OF PRONOUNCEMENT : 24-07-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE ASSESSEES HAVE FILED APPEALS FOR THE ASSESSMEN T YEAR (AY) 2008-09 ASSAILING THE ORDER OF THE COMMISSIONE R OF INCOME TAX(APPEALS)-VI, CHENNAI, DATED 28-10-2013 IN THEIR RESPECTIVE CASES. THE REVENUE HAS ALSO FILED CROSS-APPEALS IM PUGNING THE ORDER OF CIT(APPEALS) IN RESPECT OF ALL THE THREE A SSESSEES. 2. THE BRIEF FACTS AS EMANATING FROM THE RECORDS AR E AS UNDER: THE ASSESSEES DURING THE PERIOD RELEVANT TO THE AY UNDER CONSIDERATION, SOLD AGRICULTURE LAND ALONG WITH STA NDING TREES. IN THE RETURN OF INCOME, THE ASSESSEES CLAIMED EXEMPTI ON U/S.54B OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) ON ACCOUNT OF PURCHASE OF NEW AGRICULTURE LAND FROM TH E SALE PROCEEDS OF AGRICULTURE LAND. THE ASSESSMENT IN CAS E OF ALL THE ASSESSEES WAS MADE U/S.143(3). THE ASSESSING OFFIC ER WHILE MAKING ASSESSMENT IN CASE OF KUMARI DEVISANKARI CHO KALINGAM ITA. NOS. 2222-2224/MDS/13 ITA NOS. 449, 464 & 466/MDS/14 :- 3 -: (ITA NO.2223/2013) AND S. CHOKALINGAM (ITA NO.2224/ 2013) HELD, THAT THE NUMBER OF TREES AS MENTIONED BY THE ASSESSEES IN DEED OF SALE APPEARS TO BE HIGHLY EXAGGERATED. THE ASSESSING OFFICER ESTIMATED AGRICULTURE INCOME FROM THE SALE OF STANDING TREES AS 1/3 RD OF THE VALUE SHOWN IN THE DEED OF SALE AND THUS, MADE ADDITION OF REMAINING 2/3 RD AMOUNT IN THE INCOME RETURNED BY THE ASSESSEES. AS REGARDS DEDUCTION U/S.54B CLA IMED BY THE ASSESSEES, THE ASSESSING OFFICER HELD THAT THE PURC HASE DEED SHOWS THAT ALONG WITH NEW AGRICULTURE LAND, THE ASS ESSEES HAVE PURCHASED A PLOT DESCRIBED AS HOUSE-SITE. THE ASSE SSEES HAD ALSO CLAIMED EXPENDITURE TOWARDS DEVELOPMENT OF THE NEW AGRICULTURE LAND. THE SAID DEVELOPMENT CHARGES REL ATE TO REMOVING ROCKS, LEVELING AND FENCING OF THE LAND. THE ASSESSING OFFICER HELD THAT THE AMOUNT SPENT TOWARDS PURCHASE OF HOUSE-SITE AND DEVELOPMENT CHARGES CANNOT BE ALLOWED AS PART O F INVESTMENT U/S.54B. THE ASSESSING OFFICER ACCORDIN GLY DIS- ALLOWED THE AMOUNT OF EXEMPTION CLAIMED BY THE ASSE SSEE TO THE EXTENT OF AFORESAID TWO EXPENDITURES. THE ASSESSEE IN ITA NO.2222/2013 HAS CLAIMED EXEMPT ION U/S.54F FOR INVESTING IN RESIDENTIAL PROPERTY. THE SAME WAS ITA. NOS. 2222-2224/MDS/13 ITA NOS. 449, 464 & 466/MDS/14 :- 4 -: DENIED BY THE ASSESSING OFFICER FOR THE REASON, THA T ON THE DATE OF ACQUIRING NEW RESIDENTIAL PROPERTY, THE ASSESSEE AL READY OWNED TWO RESIDENTIAL HOUSES. THE ASSESSEE IS RECEIVING RENTAL INCOME FROM THE SAID HOUSES, TAXABLE UNDER THE HEAD INCOM E FROM HOUSE PROPERTY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEES SUBMITTED REVISED COMPUTATION OF INCOME, CLAIMING SALE OF AGRICULTURE LAND AS EXEMPT FROM TAX. THE A SSESSING OFFICER DECLINED TO CONSIDER REVISED COMPUTATION FI LED BY THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEES C ARRIED APPEAL TO THE CIT(APPEALS). THE CIT(APPEALS) REVER SED THE FINDINGS OF THE ASSESSING OFFICER WITH REGARD TO TH E ESTIMATIONS MADE BY HIM IN RESPECT OF SALE OF STANDING TREES. AS REGARDS THE FINDINGS OF THE ASSESSING OFFICER FOR DIS-ALLOWING EXEMPTION U/S.54B, THE CIT(APPEALS) UPHELD THE SAME. THE CIT (APPEALS) ALSO ENDORSED THE ACTION OF ASSESSING OFFICER IN RE JECTING THE REVISED COMPUTATION FILED BY THE ASSESSEES. NOW, B EFORE THE TRIBUNAL, BOTH ASSESSEE AND REVENUE HAVE COME IN AP PEAL ASSAILING THE FINDINGS OF THE FIRST APPELLATE AUTHO RITY. ITA. NOS. 2222-2224/MDS/13 ITA NOS. 449, 464 & 466/MDS/14 :- 5 -: 3. SHRI B.RAMAKRISHNAN, APPEARING ON BEHALF OF THE ASSESSEES SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN NOT TAKING INTO CONSIDERATION THE REVISED COMPUTATION FILED AT THE TIME OF ASSESSMENT PROCEEDINGS. IN THE REVISED COMPUTATION , THE ASSESSEES HAVE ONLY CLAIMED THAT THE SALE PROCEEDS ARISING FROM THE SALE OF AGRICULTURE LAND DOES NOT GIVE RISE TO LIABILITY OF CAPITAL GAIN TAX. THE CLAIM WAS MADE ON THE FACTUAL MATRIX OF THE CASE. THE INCOME GENERATED FROM THE SALE OF AGRICULTURE LAND FALLS WITHIN THE AMBIT OF SECTION 2(1A) OF THE ACT WHICH DEFINES AGRICULTURE INCOME AND IS THUS EXEMPT FROM TAX. TH E LD.AR FURTHER SUBMITTED THAT THE TAHSILDAR OF THE VILLAGE HAS CON FIRMED THE NATURE OF LAND, AS AGRICULTURE. MOREOVER, THE ASSE SSING OFFICER HAS NOT RAISED ANY DOUBT OVER THE NATURE OF LAND. THEREFORE, INCOME ARISING FROM THE SALE OF LAND AND TREES BEIN G AGRICULTURE INCOME IS EXEMPT FROM TAX. THE LD.AR MADE AN ALTER NATIVE SUBMISSION THAT THE ASSESSING OFFICER HAS ERRED IN PARTLY DIS- ALLOWING EXEMPTION CLAIMED BY THE ASSESSEES U/S.54B . THE ENTIRE INVESTMENT MADE BY THE ASSESSEES SHOULD BE CONSIDER ED FOR GRANTING EXEMPTION U/S.54B. ITA. NOS. 2222-2224/MDS/13 ITA NOS. 449, 464 & 466/MDS/14 :- 6 -: 4. AU CONTRAIRE SHRI HARI RAO, APPEARING ON BEHALF OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND CONTENDE D THAT THE CIT(APPEALS) HAS ERRED IN TREATING THE TOTAL AMOUNT OF SALE PROCEEDS OF STANDING TREES AS EXEMPT. THE ASSESSIN G OFFICER AFTER INSPECTING THE SITE HAD CAME TO THE CONCLUSIO N THAT NUMBER OF TREES AS MENTIONED IN THE DEED OF SALE IS HIGHLY EXAGGERATED. ON THE ISSUE OF REVISED COMPUTATION FILED BY THE A SSESSEES AT THE TIME OF ASSESSMENT, THE LD.DR SUBMITTED THAT FOR REVISING THE CLAIM, THE ASSESSEES SHOULD HAVE FILED REVISED RETURN OF INCOME, BUT NO REVISED RETURN WAS FILED BY THE ASSE SSEES. THE ASSESSING OFFICER HAS NO POWER TO CONSIDER FRESH CL AIM AT THE TIME OF ASSESSMENT EXCEPT BY WAY OF REVISED RETURN FILED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. FROM THE SUBMIS SIONS AND THE PLEADINGS OF THE RIVAL PARTIES, ISSUES WHICH HAVE C OME UP BEFORE US FOR ADJUDICATION ARE AS UNDER: ITA. NOS. 2222-2224/MDS/13 ITA NOS. 449, 464 & 466/MDS/14 :- 7 -: A. WHETHER THE CIT(APPEALS) HAS ERRED IN ACCEPTING THE ENTIRE CLAIM OF THE ASSESSEES WITH REGARD TO SALE O F STANDING TREES AS AGRICULTURE INCOME? ; B. WHETHER THE REVISED COMPUTATION FILED BY THE ASSESSEES AT THE TIME OF ASSESSMENT WITHOUT FILING REVISED RETURN OF INCOME CAN BE CONSIDERED BY THE ASSESSING OFFICER OR THE APPELLATE AUTHORITIES? ; C. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ASSESSEES ARE ENTITLED FOR EXEMPTION U/S.54B OF THE ACT OF THE ENTIRE AMOUNT, AS CLAIMED? 6. THE FIRST QUESTION HEREIN ARISES OUT OF APPEALS FILED BY THE REVENUE ASSAILING THE ORDER OF CIT(APPEALS). A PER USAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER H AS PARTLY DIS- ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF AGR ICULTURE INCOME ARISING FROM SALE OF STANDING TREES. THE ASSESSING OFFICER HAS MADE PARTIAL DIS-ALLOWANCE MERELY ON ESTIMATION BAS IS. NO DETAILED SURVEY WAS CONDUCTED BY THE ASSESSING OFFI CER ALTHOUGH HE VISITED THE SITE PERSONALLY WITH ONE INSPECTOR. THE ITA. NOS. 2222-2224/MDS/13 ITA NOS. 449, 464 & 466/MDS/14 :- 8 -: CIT(APPEALS) IN HIS ORDER HAS GIVEN THE DETAILS OF THE PROPERTY SOLD BY THE ASSESSEES. ALONG WITH THE DETAILS OF A GRICULTURAL LAND, THE DETAILS OF TREES PLANTED IN THE SCHEDULED PROPE RTY IS ALSO GIVEN. THE PRECISE NUMBER OF TREES ALONG WITH VARIE TIES IS MENTIONED. IT HAS BEEN STATED THAT 679 TREES CONSI STING OF MANGO, TEAK, COCONUT, GUAVA, JACK, LIME AND SAPOTTA ARE STANDING ON THE TWO PARCELS OF LAND SOLD BY THE ASSESSEES. IN VIEW OF THOROUGH DETAILS GIVEN IN THE SALE DEED, THERE WAS NO QUESTION OF MAKING ANY ESTIMATIONS BY THE ASSESSING OFFICER. M OREOVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS FOR MAKIN G SUCH ESTIMATION. SUBSEQUENTLY, IN THE REMAND REPORT DT. 15-05-2013, IN THE CASE OF SHRI S.CHOKALINGAM, THE ASSESSING OFFI CER IN HIS COMMENTS TO PARA NO.6A TO 6F HAS STATED THAT SALE DEED EXECUTED HAS BEEN PROMPTLY REGISTERED AND THE VALUE OF THE SAID LAND AND TREES HAVE BEEN ARRIVED BASED ON RELEVANT MARKET VALUE. HENCE, THE ASSESSEES CLAIM MAY BE ACCEPTED. IN VI EW OF SPECIFIC ADMISSION IN THE REMAND REPORT BY THE ASSE SSING OFFICER AND THE DETAILED FINDINGS OF THE CIT(APPEALS) ON TH E ISSUE, WE DO NOT FIND ANY MERIT IN THE APPEALS OF THE REVENUE. ACCORDINGLY, THE SAME ARE DISMISSED. ITA. NOS. 2222-2224/MDS/13 ITA NOS. 449, 464 & 466/MDS/14 :- 9 -: 7. THE SECOND QUESTION WHICH ARISES FOR CONSIDERATI ON IS, WHETHER THE ASSESSING OFFICER CAN CONSIDER THE REVI SED COMPUTATION OF INCOME AT THE TIME OF ASSESSMENT? T HE ASSESSEES HAVE SOLD AGRICULTURE LAND. THIS FACT HA S NOT BEEN DISPUTED BY THE ASSESSING OFFICER. IN THE RETURN O F INCOME, THE ASSESSEES HAVE TREATED THE AGRICULTURE LAND AS CAPI TAL ASSET AND HAVE CLAIMED EXEMPTION U/S.54B/54F ON ACCOUNT OF IN VESTING SALE PROCEEDS IN PURCHASE OF NEW AGRICULTURE LAND/R ESIDENTIAL PROPERTY. SECTION 2(14) DEFINES CAPITAL ASSET. ACCORDING TO CLAUSE-(III) OF SECTION 2(14) , AGRICULTURE LAND NO T SITUATED WITHIN THE JURISDICTION OF A MUNICIPALITY OR A CANTONMENT BOARD HAVING POPULATION OF MINIMUM TEN THOUSAND OR IN ANY AREA W ITHIN THE DISTANCE OF 8 KMS FROM THE LOCAL LIMITS OF ANY MUNI CIPALITY OR CANTONMENT BOARD, IS NOT CONSIDERED AS CAPITAL ASSE T. IN THE PRESENT CASE, IT HAS NOT BEEN ALLEGED THAT THE LAND OF THE ASSESSEE FALLS WITHIN THE RADIUS OF 8 KMS OF ANY MU NICIPALITY OR CANTONMENT BOARD OR HAVING POPULATION EXCEEDING THE LIMIT AS PRESCRIBED U/S.2(14)(III)(A) OF THE ACT. THUS, AGR ICULTURE LAND OF THE ASSESSEE IS CLEARLY OUTSIDE THE AMBIT OF THE TERM CAPITAL ASSET. INITIALLY, THE ASSESSEES HAVE TREATED THE AGRICULTU RE LAND AS CAPITAL ITA. NOS. 2222-2224/MDS/13 ITA NOS. 449, 464 & 466/MDS/14 :- 10 - : ASSET AND ACCORDINGLY CLAIMED EXEMPTION U/S.54B/54F ON ACCOUNT OF PURCHASE OF NEW AGRICULTURE LAND/RESIDENTIAL PRO PERTY. SUBSEQUENTLY, THE ASSESSEES REALIZED THEIR MISTAKE, AND AT THE TIME OF ASSESSMENT FILED REVISED COMPUTATION BY APP LYING CORRECT PROVISIONS OF THE LAW. THE ASSESSING OFFICER REJEC TED THE REVISED COMPUTATION. THE CIT(APPEALS) CONFIRMED THE FINDING S OF THE ASSESSING OFFICER. THE HON'BLE SUPREME COURT OF IND IA IN THE CASE OF M/S.GOETZE INDIA LTD., VS. CIT REPORTED AS 284 ITR 323 HAS HELD THAT THE ASSESSING OFFICER HAS NO POWER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY REVISED RETUR N. THE HON'BLE APEX COURT FURTHER MADE IT CLEAR THAT IT IS THE POW ER OF ASSESSING OFFICER THAT IS LIMITED TO ENTERTAIN FRESH CLAIM BU T DOES NOT IMPINGE THE POWER OF THE INCOME TAX APPELLATE TRIBUNAL U/S. 254 OF THE ACT. IN VIEW OF THE WELL SETTLED LAW AND THE FACTS OF TH E CASE, WE ARE OF CONSIDERED OPINION THAT THE CLAIM OF THE ASS ESSEES TO TREAT THE SALE PROCEEDS OF AGRICULTURAL LAND AS EXEMPT FR OM TAX HAS MERIT. THE APPEALS ARE REMITTED BACK TO THE ASSESS ING OFFICER TO CONSIDER THE REVISED COMPUTATION FILED BY THE ASSES SEES AND THEREAFTER, DECIDE THE ISSUE AFRESH IN ACCORDANCE W ITH LAW. ITA. NOS. 2222-2224/MDS/13 ITA NOS. 449, 464 & 466/MDS/14 :- 11 - : 8. SINCE THE PRIMARY ISSUE RAISED IN THE APPEALS OF THE ASSESSEES HAVE BEEN ANSWERED IN THEIR FAVOUR, THE Q UESTION ARISING FROM THEIR ALTERNATE SUBMISSIONS HAS BECOME ACADEMIC. THEREFORE, WE NEED NOT ANSWER THE SAME. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 24 TH JULY, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) / VICE PRESIDENT !' / JUDICIAL MEMBER #$ /CHENNAI, %! /DATED: 24 TH JULY, 2014 TNMM !$& ' () *$) /COPY TO: 1. +, /APPELLANT 2. '-+, /RESPONDENT 3. . () /CIT(A) 4. . /CIT 5. )12 ' 3 /DR 6. 24 5 /GF