The ACIT, Circle-9, Ahmedabad V. Shri Govindbhai C.Patel, Ahmedabad

ITA 2264/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0226 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-09-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 23-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Keywords: Capital asset; Salary income; Cost of acquisition; Capital Gains

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.2264/AHD/2009 ASSESSMENT YEAR:2006-07 DATE OF HEARING:14.9.09 DRAFTED:27.10.09 ACIT, CIRCLE-9, AHMEDABAD V/S . SHRI GOVINDBHAI C PATEL, 2 ND FLOOR, MUNICIPAL BUILDING, PATTHARKUVA, RELIEF ROAD, AHMEDABAD PAN NO.AEHPP8754K (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI DHIREN SHAH, AR REVENUE BY:- SMT. NEETA SHAH, SR. DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE D IFFERENT ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD IN APPEAL NO.CIT(A)- XV/DCIT(OSD)/CR.9/218/08-09 DATED 18-06-2009 RESPEC TIVELY. THE ASSESSMENT WAS FRAMED BY THE DCIT (OSD), CIRCLE-9 AHMEDABAD U/S.14 3(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HI S ORDERS DATED 26-12-2008 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) ALLOWING THE CLAIM OF ASSESSEE OF RS.87,02,510/- OF STCG FROM TRANSACTION OF AGRICULTURAL LAND AND HELD THAT THE STCG IS EXEMPT U/S.2(14) OF THE ACT. ITA NO. 2264/AHD/2009 AY 2006-07 DCIT CIR-9 ABD V. SH. GOVINDBHAI C PATEL PAGE 2 3. THE SIMILAR ISSUE, EXACTLY ON IDENTICAL FACTS HA S BEEN ADJUDICATED IN ITA NO.1610/AHD/2009 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 200 5-06 AS UNDER:- 2 THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR THE ASSESSEE HAS SOLD AGRICULTURAL LAND FOR AN AMOUNT OF RS.93,90,50 0/- ON 14-02-2004. THE PURCHASE COST OF ACQUISITION AND THE DOCUMENT EXPEN SES FOR PURCHASE OF THE SAID LAND WAS RS.7,11,754/-. THE SURVEY-WISE DETAIL S OF LAND ALONG WITH DETAILS OF PURCHASE COST AND DOCUMENT EXPENSES, DATE OF PUR CHASES, SALES PRICE AND SALES DATE ARE AS UNDER:- SR. NO. SUR. NO. AREA SQ. M PURCH PRICE PURCH DOC. EXP. PURCH TOTAL PURCH DATE SALES PRICE SALES DATE 1 237 5564 48000 10315 58315 23/4/04 836500 14/12/04 2 496/1/B 2023 17500 7925 25425 23/4/04 3 475/2 7689 115335 18925 134260 07/5/04 4 475/2 7689 66500 18457 84957 19/5/04 5 475/2 7588 65500 18242 83742 19/5/04 8554000 14/12/04 6 497/2 8701 75000 15090 90090 21/7/04 7 494.495/1 23163 ===== 200000 ====== 34965 ===== 234965 ====== 21/7/04 587835 ===== 123919 ===== 711754 ===== 9390500 ====== THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS REQUIRED THE ASSESSEE AS TO WHY THE SALE OF AGRICULTURAL LAN D SHOULD NOT BE TREATED AS SHORT-TERM CAPITAL GAINS. THE ASSESSEE STATED THAT THE SAID AGRICULTURAL LAND IS SITUATED AT MOTODA, TALUKA SANAND, DISTRICT AHMEDAB AD, WHICH IS HAVING THE POPULATION OF LESS THAN 10,000 AS WELL AS IS MORE T HAN 20 KM AWAY FROM THE LOCAL LIMITS OF AHMEDABAD MUNICIPAL CORPORATION. TH E CERTIFICATE DATED 20-03- 2005 REGARDING THE SAME ISSUED BY THE TALATI OF MAT ODA GRAM PANCHAYAT WAS PRODUCED BEFORE THE ASSESSING OFFICER. ACCORDING TO THE ASSESSEE, THE SAID AGRICULTURAL LAND IS SITUATED IN AN AREA WHICH HAS POPULATION OF LESS THAN 10,000 AS WELL AS AT A DISTANCE OF MORE THAN 8 KM F ROM THE LOCAL LIMITS OF MUNICIPALITY (AHMEDABAD MUNICIPAL CORPORATION), THE SAID AGRICULTURAL LAND DOES NOT FALL AS A CAPITAL ASSET IN VIEW OF THE P ROVISIONS OF CLAUSE (III) TO SUB-SECTION 14 OF SECTION 2 OF THE ACT. ACCORDINGLY , SINCE THE SAID AGRICULTURAL LAND IS NOT A CAPITAL ASSET, THERE IS NO CAPITAL GA IN ON THE SALE OF SAID AGRICULTURAL LAND. THE ASSESSEE IN SUPPORT OF THE C ONTENTION THAT VILLAGE MATODA, TALUKA SANAND IS HAVING A POPULATION OF LES S THAN 10,000 AND IT IS LOCATED MORE THAN 20 KM FROM AWAY FROM AHMEDABAD MU NICIPAL CORPORATION, THE CERTIFICATE OF GRAM PANCHAYAT WAS ALSO FILED AL ONG WITH THE RETURN OF INCOME. THE AO CONSIDERED THE CONTENTION OF THE ASS ESSEE THAT HE PURCHASED THE AGRICULTURAL LAND AND SOLD THE SAME DURING THE SAME FINANCIAL YEAR I.E. 2004-05 DOES NOT APPEAR TO BE AN EVENT WHICH OCCURR ED BY CHANCE AND THEREBY THE ASSESSEE EARNED STCG. BECAUSE THE ASSES SEE PURCHASED THE LAND WITH CONFIRMING PARTY AS GANESH INDUSTRIAL EST ATE DEVELOPMENT ITA NO. 2264/AHD/2009 AY 2006-07 DCIT CIR-9 ABD V. SH. GOVINDBHAI C PATEL PAGE 3 CORPORATION AND SOLD TO GANESH HOUSING CORPORATION LTD AND BOTH THESE PARTIES ARE THE SAME IN WHICH THE ASSESSEE HIMSELF IS MANAGING DIRECTOR. AFTER CONSIDERING ALL THE FACTS, IT IS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS PURCHASED THE AGRICULTURAL LAND FOR RS .7,11,754/- ON 21-07-2004 FROM SHRI KHUSHALBHAI AND THE TRANSACTION WAS CONFI RMED BY M/S GANESH INDUSTRIAL ESTATE DEVELOPMENT CORPORATION, REGD. OF FICE, 2 ND FLOOR, PATTHARKUVA, RELIEF ROAD, AHMEDABAD. THE ASSESSEE H IMSELF IS MANAGING DIRECTOR OF M/S GANESH HOUSING CORPORATION AND SHOW ING INCOME FROM SALARY. THIS COMPANY IS ALSO OWNED BY THE ASSESSEE HIMSELF AS ALSO THE M/S GANESH INDUSTRIAL ESTATE DEVELOPMENT CORPORATION. T HIS LAND HAS BEEN SHOWN TO BE SOLD TO GANESH HOUSING CORPORATION LTD. BY THE ASSESSEE HIMSELF ON 14-12-2004. CONSIDERING THE FACTS THAT T HE ASSESSEE IS HIMSELF PURCHASING ON BEHALF OF GANESH CORPORATION AND SELL ING THE SAME TO THE GANESH CORPORATION SHOWS THAT THE TRANSACTION CAN N OT BE SAID TO BE CATEGORIZED AS SALE OF CAPITAL ASSETS BUT IT BECOME S APPARENT THAT THE ASSESSEE HAS BEEN SYSTEMATICALLY PLANNING TO PURCHA SE THE LAND AS AN ADVENTURE IN BUSINESS OF LAND AND THEREBY A PART OF THE LAND TRANSACTION BUSINESS. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE ASSESSEE WAS ASKED TO FURNISH THE FULL AND COMPLETE DETAILS OF T HE TRANSACTION ALONG WITH EVIDENCE FOR AGRICULTURAL LAND LIKE FORM NO.6-HAKK PATRAK, FORM NO.8A & 7/12 EXTRACTS. HOWEVER, THE ASSESSEE DID NOT FILE THE RE QUISITE DETAILS. AFTER CONSIDERING ALL THE FACTS, THE ASSESSEES CLAIM THA T THE SHORT TERM CAPITAL GAIN OF RS.86,78,746/- IS EXEMPT U/S 2(14)(III) OF THE ACT, IS NOT CORRECT AND THE INCOME FROM SALE OF LAND IS TAXABLE AS BUSINESS INC OME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A). THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER:- 4 GROUND NO. I IS ADDITION ON ACCOUNT OF SHORT TER M CAPITAL GAIN OF RS.86,78,746/- THIS HAS BEEN DISCUSSED ON PAGE 13, 14 AND 15 OF TH E ASSESSMENT ORDER. THE AO ADDED SHORT TERM CAPITAL GAIN OF RS.86,78,746 CL AIMED EXEMPT BY THE APPELLANT U/S 2(14)(III) OF THE I.T. ACT WHICH EXEM PTS AGRICULTURAL LAND FROM THE CATEGORY OF CAPITAL ASSET, THUS MAKING GAINS ON TRA NSFER OF THE SAME EXEMPT FROM TAXATION. THE AO WHILE MAKING THE ADDITION STA TED THAT THE APPELLANT DID NOT SUBMIT SUFFICIENT PROOFS IN THE FORM OF 7/12 EX TRACTS WITH RESPECT TO THE AGRICULTURAL LAND AND THAT HE PURCHASED AND SOLD TH E AGRICULTURAL LAND IN THE SAME FINANCIAL YEAR. DURING THE COURSE OF APPELLATE PROCEEDINGS THE SUBM ISSIONS OF THE APPELLANT ALONG WITH 7/12 EXTRACTS ETC. WERE SENT TO THE AO V IDE THIS OFFICE LETTER DATED 1- 5-2008. IN RESPONSE THROUGH HIS LETTER DATED 14-5-0 8 THE AO SIMPLY REITERATED WHAT HE HAD STATED IN THE ASSESSMENT ORDER THAT THE REQUISITE DETAILS WERE NOT SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. AFTER GOING THROUGH SUBMISSIONS I FIND THAT 7/12 EX TRACTS SUBMITTED DO SHOW THE APPELLANT AS THE OWNER OF AGRICULTURAL LAND. TH IS LAND IS SITUATED IN A VILLAGE KNOWN AS MATODA, TALUKA SANANA WITH POPULATION OF L ESS THAN TEN THOUSAND WHICH ALSO PROVES THIS LAND TO BE AGRICULTURAL. IT WAS ALSO EXPLAINED THAT THIS ITA NO. 2264/AHD/2009 AY 2006-07 DCIT CIR-9 ABD V. SH. GOVINDBHAI C PATEL PAGE 4 LAND WAS SOLD TO GANESH HOUSING CORPORATION FOR THE PURPOSE OF BONA FIDE INDUSTRIAL USE AND ON THIS LAND AN INDUSTRIAL PARK IS COMING UP AS PER SANCTION LETTER DATED 5-11-2004 ISSUED BY MINISTRY OF COMMER CE AND INDUSTRY. AS THE LAND PURCHASED AND SOLD HAS BEEN PROVED TO BE AN AG RICULTURAL LAND, THE ADDITION MADE BY THE AO OF RS.86,78,746 IS DIRECTED TO BE DELETED. 4. AFTER HEARING THE RIVAL CONTENTIONS AND GOING TH ROUGH THE CASE RECORDS WE FIND THAT THE ASSESSEE HAS SUBMITTED THE DETAILS LIKE 7/12 EXTRACTS, WHICH SHOW THAT THE ASSESSEE IS THE OWNER OF THAT AGRICUL TURAL LAND AND THE SAID LAND IS SITUATED IN VILLAGE KNOWN AS MATODA, TALUKA SANA ND WITH POPULATION OF LESS THAN TEN THOUSAND WHICH ALSO PROVES THAT THIS LAND IS AGRICULTURAL LAND AND NOT A CAPITAL ASSETS WITHIN THE MEANING OF SECTION 2(1 4)(III) OF THE ACT. THAT APART, THE LAND PURCHASED AND SOLD BY THE ASSESSEE HAS BEE N PROVED TO BE AN AGRICULTURAL LAND AND ACCORDINGLY, THE ADDITION HAS RIGHTLY BEEN DELETED BY THE CIT(A) AND WE CONFIRM THE SAME. THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. RESPECTFULLY FOLLOWING THE ABOVE, WE DISMISS THE RE VENUES APPEAL. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30/10/2009 SD/- SD/- (P.K.BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 30/10/2009 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- XV, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD