Shri Amit Ashok Khurana, Baroda V. The Addl.CIT.,Range-4, Baroda

ITA 2303/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9535 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 12-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Revised return; Set aside; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2303/AHD/2012 (ASSESSMENT YEAR: 2009-10) AMIT ASHOK KHURANA 1, VIKRAM SOCIETY, OPP. AXIS BANK, GOTRI ROAD, VADODARA-390001 V/S ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-4, BARODA (APPELLANT) (RESPONDENT) PAN: ADDPK 6791N APPELLANT BY: SHRI S. N. SOPARKAR WITH PARIN SHAH , AR RESPONDENT BY: SHRI VILAS V. SHINDE, SR. D.R. ( )/ ORDER DATE OF HEARING : 02-01-201 7 DATE OF PRONOUNCEMENT : 05-01-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)- III, BARODA DATED 19.07.2012 PERTAINING TO A.Y. 200 9-10. ITA NO. 2303 /AHD/2012 . A.Y. 2009-10 2 2. THE SUBSTANTIVE GRIEVANCE OF THE ASSESSEE READS AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS IN UPHOLDING THE FINDING OF THE ID. A.O. THAT THE 'LAN D' TRANSFERRED TO THE PARTNERSHIP FIRM WAS NOT 'AGRICULTURAL' LAND AND THEREFORE CONS IDERATION OF RS.56,85,282/- IS TAXABLE AS LONG TERM CAPITAL GAIN BEING NOT EXEMPT UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS IN HOLDING THAT THE APPELLANT HAD NOT BEEN ELIGIBLE TO CLAIM RELIEF UNDER THE PROVISIONS OF SECTION 54F OF THE INCOME TAX ACT, 1961 IN RESPECT OF NEW PROPERTY ACQUIRED. 3. WITHOUT PREJUDICE TO THE GROUND NO. 2, THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN CONFIRMI NG THE ACTION OF THE ID. A.O. IN RESPECT OF DISALLOWANCE OF COST OF IMPROVEMENT AMOU NTING TO RS.7,84,901/- WHILE WORKING OUT THE QUANTUM OF CAPITAL GAIN. 3. THE ASSESSEE IS AN INDIVIDUAL AND WAS A DIRECTOR IN THE COMPANY M/S. MSK PROJECTS INDIA LTD. RETURN OF INCOME SHOWING TOTAL INCOME OF RS. 1,07,67,200/- WAS FILED ON 31.03.2010 WHICH WAS REV ISED ON 31.03.2011 SHOWING TOTAL INCOME OF RS. 90,58,390/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER CASS AND ACCORDINGLY STAT UTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS SOLD AGRICULTURAL LAND AND CL AIMED THE CAPITAL GAINS ARISING ON THE SALE OF THE AGRICULTURAL LAND AS EXE MPT FROM TAX. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM. THE ASSESSEE REPLIE D THAT THE CAPITAL GAIN ON SALE OF AGRICULTURAL LAND IS ARISING OUT OF THE LAN D WHICH WAS USED FOR AGRICULTURAL PURPOSES. RELATED DOCUMENTARY EVIDENCE S WERE FURNISHED. IT ITA NO. 2303 /AHD/2012 . A.Y. 2009-10 3 WAS FURTHER CLAIMED THAT SINCE THE LAND IS AGRICULT URAL IN NATURE, THE SALE PROCEEDS OF THE SAME IS NOT SUBJECT TO TAX. THE CLA IM OF THE ASSESSEE WAS DISMISSED BY THE A.O. WHO WAS OF THE OPINION THAT T HE SAID LAND WAS TRANSFERRED TO THE FIRM M/S. ATTUNE INC., AHMEDABAD WHEREIN THE ASSESSEE IS ONE OF THE PARTNERS. THE A.O. FURTHER OBSERVED T HAT THE SAID FIRM HAS SHOWN THE SAID AGRICULTURAL LAND AS ITS STOCK -IN - TRADE FOR CARRYING ON THE BUSINESS. THE A.O. WAS OF THE FIRM BELIEF THAT SINC E THE FIRM WAS IN THE BUSINESS OF CONSTRUCTION, DEVELOPMENT OF LANDS, CLU B, RENTING CONSULTANCY SERVICE AND MAINTENANCE CONTRACTS ETC. THEREFORE, IT IS CLEAR THAT FOR ALL PRACTICAL PURPOSE, THE LAND HAS BEEN HELD AS A NON- AGRICULTURAL LAND, NOR THERE WAS ANY INTENTION OF THE FIRM TO USE THE SAID LAND FOR AGRICULTURAL PURPOSE. THE A.O. CONCLUDED BY TREATING THE INCOME ARISING OUT OF THE SALE OF SAID AGRICULTURAL LAND AT RS. 56,85,282/- AS LON G TERM CAPITAL GAIN. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY STATED THAT THE ASSESSEE WAS HOLDING AGRICULTURAL LAND SITUATED AT VILLAGE ALUVA OF TALUKA KALOL, DIST. GANDHINAGAR. IT IS THE SAY OF THE LD. COUNSEL THAT THE LAND IS PUT FOR AGRICULTURAL PURPOSE AND ACCORDINGLY RESPECTIVE 7/12 EXTRACT AND 8A WERE SUBMITTED TO THE ASSESSING OFFICER GIVING A CO NCLUSIVE PROOF THAT THE SAID LAND IS AGRICULTURAL IN NATURE. 7. THE LD. COUNSEL CONTINUED BY STATING THAT THE LOWER AUTHORITIES HAVE DISCARDED THE CLAIM OF THE ASSESSEE SOLELY ON THE S TRENGTH OF ITS USES BY THE ITA NO. 2303 /AHD/2012 . A.Y. 2009-10 4 PURCHASER THAT IS FIRM. THE LD. COUNSEL VEHEMENTLY STATED THAT THE ASSESSEE CANNOT BE HELD RESPONSIBLE FOR THE FUTURE USES OF T HE SAID AGRICULTURAL LAND BY THE PURCHASER. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL RELIED UPON THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY SM T. DEBBIE ALEMAO IN TAX APPEAL NOS. 1 & 2 OF 2006. THE LD. COUNSEL PLAC ED RELIANCE ON THE DECISION OF THE TRIBUNAL HYDERABAD BENCH IN THE CAS E OF HARNIKS PARK (P.) LTD. 41 TAXMANN.COM 109 AND SMT. M. VIJAYA 49 TAXMA NN.COM 26. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE ORDER O F THE REVENUE AUTHORITIES. 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW AND WITH THE ASSISTANCE OF THE LD. COUNSEL; W E HAVE GONE THROUGH THE RELEVANT DOCUMENTARY EVIDENCES PLACED BEFORE US IN THE FORM OF A PAPER BOOK IN THE LIGHT OF RULE 18(6) OF THE INCOME TAX A PPELLATE TRIBUNAL RULES. IT IS TRUE THAT ON THE DATE OF THE TRANSFER OF THE IMP UGNED AGRICULTURAL LAND, IT WAS USED FOR AGRICULTURAL PURPOSES. THIS FACT HAS N OT BEEN DENIED BY THE LOWER AUTHORITIES. THE FACT THAT THE IMPUGNED LAND WAS USED FOR AGRICULTURAL PURPOSES IS WELL SUPPORTED BY THE DOCUMENTARY EVIDE NCES. THE SUMMARY OF DETAILS HAS BEEN EXTRACTED BY THE FIRST APPELLATE A UTHORITY IN HIS ORDER AT PAGES 9 TO 12. 9. WE FIND THAT BOTH THE LOWER AUTHORITIES HAVE GROSSL Y ERRED IN DISMISSING THE CLAIM OF THE ASSESSEE MERELY ON THE STRENGTH OF THE PROBABLE USES OF THE SAID AGRICULTURAL LAND BY THE PURCHASER M/S. ATTUNE INC. WE FAIL TO UNDERSTAND THE OBSERVATIONS OF THE A.O. WHICH HAS B EEN CONFIRMED BY THE LD. CIT(A), THAT THE ONUS FOR CONVERTING THE AGRICU LTURAL LAND FOR NON- ITA NO. 2303 /AHD/2012 . A.Y. 2009-10 5 AGRICULTURAL PURPOSE IS UPON THE FIRM M/S. ATTUNE I NC. AS PER THE MOU. AS MENTIONED EARLIER, THE ASSESSEE IS NOT RESPONSIBLE FOR THE ACTS OF THE PURCHASER OF THE LAND. ALL THAT WE ARE CONCERNED AB OUT IS WHETHER THE SAID AGRICULTURAL LAND WAS USED FOR AGRICULTURAL PURPOSE S BEFORE THE DATE OF TRANSFER AND AFTER GOING THROUGH THE DOCUMENTARY EV IDENCES, THE ANSWER IS YES. IN OUR CONSIDERED OPINION, IF AN AGRICULTUR AL OPERATION DOES NOT RESULT IN GENERATION OF SURPLUS THAT CANNOT BE A GR OUND TO SAY THAT THE LAND WAS NOT USED FOR THE AGRICULTURAL PURPOSE. THE SAID LAND WAS ENTERED IN THE REVENUE RECORDS AS AN AGRICULTURAL LAND. IT IS ALSO NOT IN DISPUTE THAT NO PERMISSION WAS EVER OBTAINED FOR NON-AGRICULTURAL U SE BY THE ASSESSEE. SINCE NO EVIDENCE HAS BEEN BROUGHT TO SHOW THAT IT WAS USED FOR NON- AGRICULTURAL PURPOSES, NOR THERE IS ANY EVIDENCE TO SHOW THAT THE ASSESSEE HAS EVER TAKEN PERMISSION FOR NON-AGRICULTURAL USES , THE PROFIT EARNED ON SALE OF THE IMPUGNED LAND WAS AGRICULTURAL INCOME O F ASSESSEE LIABLE TO BE EXEMPT FROM TAX. 10. WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CI T(A) AND DIRECT THE A.O. TO TREAT THE SALE PROCEEDS ARISING FROM THE SALE OF T HE IMPUGNED LAND EXEMPT FROM TAX. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 11. THE NEXT GRIEVANCE RELATES TO THE DENIAL OF THE CLA IM OF DEDUCTION U/S. 54F OF THE ACT. 12. WHILE SCRUTINIZING THE CLAIM OF THE ASSESSEE, THE A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED INVESTMENT OF RS. 42.25 LACS A ND CLAIMED ITA NO. 2303 /AHD/2012 . A.Y. 2009-10 6 PROPORTIONATE DEDUCTION FROM THE SALE CONSIDERATION OF RS. 75 LACS U/S. 54F OF THE ACT. THE ASSESSEE WAS ASKED TO JUSTIFY HIS C LAIM. THE ASSESSEE EXPLAINED THAT HE HAS ENTERED INTO TWO BANAKHATA WI TH THE SELLER ONE DATED 23.10.2007 FOR SALE OF LAND AT RS. 21 LACS AND ANOT HER DATED 24.10.2007 FOR COST OF CONSTRUCTION AT RS. 21.25 LACS. 13. THE CLAIM OF THE ASSESSEE WAS DENIED BY THE A.O. ON THE GROUND THAT THE ASSESSEE HAS INVESTED RS. 21.25 LACS ONLY TOWARDS T HE COST OF THE HOUSE MEASURING 102.86 SQ. MTRS. IN GROUND FLOOR AND 107. 63 SQ. MTRS. ON FIRST FLOOR. THE A.O. WAS OF THE OPINION THAT THE ASSESSE E IS ELIGIBLE FOR DEDUCTION AGAINST THE COST OF THE HOUSE ALONG WITH THE COST F OR THE SAID CONSTRUCTION. THE A.O. CONCLUDED BY HOLDING THAT THE AMOUNT ELIGI BLE FOR DEDUCTION U/S. 54F WOULD BE RS. 31,55,563/-. THE A.O. FURTHER OBSE RVED THAT SINCE THE ORIGINAL RETURN OF THE ASSESSEE WAS A BELATED RETUR N, THE SAME COULD NOT HAVE BEEN REVISED BY THE ASSESSEE AND, THEREFORE, T HE CLAIM OF DEDUCTION U/S. 54F MADE IN THE REVISED RETURN OF INCOME CANNO T BE ENTERTAINED. THE A.O. FINALLY DENIED THE CLAIM. 14. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 15. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN APPRECIATING THE FACTS IN THE CORRECT PERSPECTIVE. IT IS THE SAY OF THE LD. COUNSEL THAT BOTH THE LOWER A UTHORITIES HAVE SIMPLY IGNORED THE FACT THAT ONE BANAKHATA WAS FOR THE PUR CHASE OF LAND AND THE SECOND BANAKHATA WAS FOR THE PURCHASE OF HOUSE CONS TRUCTED ON THE SAID ITA NO. 2303 /AHD/2012 . A.Y. 2009-10 7 PIECE OF LAND. THE LD. COUNSEL CONTINUED BY STATING THAT IN NUTSHELL THE ASSESSEE HAD PURCHASED A CONSTRUCTED HOUSE FOR WHIC H THE TOTAL CONSIDERATION WAS 42.25 LACS AND SINCE THE ASSESSEE HAS FULFILLED ALL THE MANDATORY CONDITIONS FOR CLAIMING EXEMPTION U/S. 54 F OF THE ACT, THE SAME SHOULD BE ALLOWED. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE LD. CIT(A). 16. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FAC TUAL MATRIX EMANATING FROM THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE ASSESSEE HAS PAID A SUM OF RS. 42.25 LACS. IT IS AL SO NOT IN DISPUTE THAT THE ASSESSEE HAS ENTERED INTO TWO BANAKHATA ONE PERTAIN ING TO THE LAND AND THE OTHER PERTAINING TO THE CONSTRUCTION. THE ASSE SSEE HAD PURCHASED ONE CONSTRUCTED HOUSE FOR A TOTAL CONSIDERATION OF RS. 42.25 LACS WITHIN THE PRESCRIBED PERIOD MENTIONED IN SECTION 54F OF THE A CT. MERELY, BECAUSE THE CLAIM WAS MADE BY A REVISED RETURN WHICH WAS N OT A VALID RETURN IN THE EYES OF THE LAW, THE CLAIM OF EXEMPTION CANNOT BE D ENIED BECAUSE A LEGAL CLAIM CAN BE MADE BEFORE THE FIRST APPELLATE AUTHOR ITY ALSO AND THE FIRST APPELLATE AUTHORITY SHOULD HAVE ENTERTAINED THE CLA IM OF THE ASSESSEE. THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. 349 ITR 336 HELD AS UNDER:- AN ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITI ONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO R AISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE THE DISCRETION TO PERMIT SUCH ADDITIONAL CLAIMS TO BE RAISED. THE APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GROUNDS, WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF ITA NO. 2303 /AHD/2012 . A.Y. 2009-10 8 CIRCUMSTANCES OR LAW, BUT WITH ADDITIONAL GROUNDS W HICH WERE AVAILABLE WHEN THE RETURN WAS FILED. THE WORDS 'COULD NOT HAVE BEEN RA ISED' MUST BE CONSTRUED LIBERALLY AND NOT STRICTLY. THERE MAY BE SEVERAL FA CTORS JUSTIFYING THE RAISING OF A NEW PLEA IN AN APPEAL AND EACH CASE MUST BE CONSIDE RED ON ITS OWN FACTS. HELD, DISMISSING THE APPEAL, THAT THE ORDERS OF THE COMMISSIONER (APPEALS) AND THE TRIBUNAL CLEARLY INDICATED THAT BOTH THE APPELL ATE AUTHORITIES HAD EXERCISED THEIR JURISDICTION TO CONSIDER THE ADDITIONAL CLAIM . THE CONCLUSION THAT THE ERROR IN NOT CLAIMING THE DEDUCTION IN THE RETURN OF INCO ME WAS INADVERTENT COULD NOT BE FAULTED FOR MORE THAN ONE REASON. IT WAS A FINDING OF FACT WHICH COULD NOT BE TERMED PERVERSE. THERE WAS NOTHING ON RECORD THAT M ILITATED AGAINST THE FINDING. THE REVENUE HAD NOT SUGGESTED MUCH LESS ESTABLISHED THAT THE OMISSION WAS DELIBERATE OR MALA FIDE. BOTH THE APPELLATE AUTHORI TIES HAD THEMSELVES CONSIDERED THE ADDITIONAL CLAIM AND ALLOWED IT. THEY HAD NOT R EMANDED THE MATTER TO THE ASSESSING OFFICER TO CONSIDER IT. BOTH THE ORDERS E XPRESSLY DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTION OF RS. 40 LAKHS UNDE R SECTION 43BOF THE INCOME-TAX ACT, 1961. THE ASSESSING OFFICER HAD, THEREFORE, NO W ONLY TO COMPUTE THE ASSESSEE'S TAX LIABILITY WHICH HE MUST DO IN ACCORD ANCE WITH THE ORDERS ALLOWING THE ASSESSEE A DEDUCTION OF RS. 40 LAKHS UNDER SECT ION 43B. 17. RESPECTFULLY FOLLOWING THE AFOREMENTIONED RATIO LAI D DOWN BY THE HONBLE HIGH COURT OF BOMBAY, WE DIRECT THE A.O. TO ALLOW T HE CLAIM OF THE ASSESSEE U/S. 54F OF THE ACT. THIS GRIEVANCE OF THE ASSESSEE IS ALSO ALLOWED. 18. THE OTHER GRIEVANCES OF THE ASSESSEE RELATE TO NOT ALLOWING BUILDING LOAN INTEREST AS CLAIMED U/S. 24(2) OF THE ACT AND NOT C ONSIDERING THE COST OF IMPROVEMENT INCURRED BY THE ASSESSEE. THE LD. COUNS EL FOR THE ASSESSEE STATED THAT UNDER THE INSTRUCTIONS HE IS NOT PRESSI NG THESE GRIEVANCES OF THE ASSESSEE AND THE SAME ARE DISMISSED AS NOT PRESSED. ITA NO. 2303 /AHD/2012 . A.Y. 2009-10 9 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 05- 01- 20 17. SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 05/01/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD