Sh. Narayan Prasad Pancharia, BIKANER V. ITO, BIKANER

ITA 233/JODH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4900 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 15-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Capital asset; Onus to prove
• Section: 54B; 2(14); 133(6); 54

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 233/JODH/2013 (A.Y. 2009-10) SHRI NARAYAN PRASAD PANCHARIA VS ITO, WARD-1(2) NAGAURI RAOD, NOKHA, BIKANER. BIKANER. PAN NO. ADYPP8720H (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. KISHAN GOYAL. DEPARTMENT BY : SH. N.A. JOSHI- DR. DATE OF HEARING : 20/08/2013. DATE OF PRONOUNCEMENT : 27/09/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2009-10 IS DI RECTED AGAINST THE ORDER OF LD. CIT(A), BIKANER, DATED 30/01/2013. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, AS INDIVIDUAL, FILED HIS RETURN OF INCOME (RETURN OF I NCOME [ROI]) FOR A.Y. 2008-09 ON 10/12/2009 DECLARING TOTAL INCOME OF RS. 1,09,590/- FROM 2 TRADING IN THE RETAIL ITEMS. HE HAS DECLARED PROFIT UNDER SECTION 44AF. DURING THE YEAR, THE ASSESSEE SOLD A PIECE OF AGRIC ULTURAL LAND FOR A CONSIDERATION OF RS. 65,29,000/- ON 31/03/2009 TO M /S.KHAKHI BABA COLONIZERS & DEVELOPERS PVT. LTD., NOKHA. THE ASSES SEE HAS CLAIMED DEDUCTION U/S 54B OF THE ACT IN RESPECT OF SALE PRO CEEDS. THE ASSESSEE HAS CLAIMED THAT HE HAS PURCHASED ANOTHER AGRICULTU RAL LAND IN THE NAME OF HIS WIFE SMT. PUSHPA DEVI FOR A CONSIDERATI ON OF RS. 40 LAKHS ON 27/06/2008 AND HAS PAID A STAMP DUTY OF RS. 2,85 ,250/- THEREON. HE HAS STATED THAT THE AGRICULTURAL LAND WHICH HE S OLD WAS PURCHASED IN THE YEAR 1996 FOR RS. 94,500/- AND INCURRED A SUM O F RS. 6 LAKH ON ITS DEVELOPMENT AND FENCING BEFORE SALE. AFTER SEEKING AND CONSIDERING THE EXPLANATION AS TO WHY THE BENEFIT OF SECTION 54 B SHOULD BE EXTENDED TO THE ASSESSEE THE A.O. HAS FINALLY COMPU TED THE L.T.C. GAINS AT RS. 61,52,150/- BY ADOPTING THE INDEXED CO ST OF THE AGRICULTURAL LAND SOLD AT RS. 3,92,850/-. HE HAS, T HUS, ADDED A SUM OF RS. 61,52,150/- TO ASSESSEES DECLARED INCOME AS LT CG. BEFORE THE APPELLATE TRIBUNAL, AS TWO ADDITIONAL LEGAL GROUNDS HAVE BEEN RAISED AS UNDER :- THAT AUTHORITIES BELOW ERRED IN LAW AND IN FACTS WHILE TREATED THAT AGRICULTURAL LAND SOLD BY THE APPELLANT AS CAP ITAL ASSETS WITHIN THE MEANING OF DEFINITION U/S 2(14) OF THE I .T. ACT 3 PARTICULARLY WHEN SAID AGRICULTURE LAND IS SITUATED OUTSIDE THE MUNICIPALITY LIMIT OF NOKHA AND ALSO NOT COVERED WI THIN 8 KM FROM THE NOTIFIED AREA (BIKANER), IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. WE HAVE ADMITTED THE ABOVE GROUND WHICH GOES TO THE VERY ROOT OF THIS CASE AND IT WAS NOT RESISTED FROM OTHER SID E. THIS GROUND SHALL BE READ AS GROUND NOS. 2 AND 3 OF THIS APPEAL. THE ABOVE GROUNDS ARE PURELY LEGAL GROUNDS FOR WHICH NO FURTHER INVESTIGA TION OF FACT IS REQUIRED. AFTER HEARING BOTH SIDES WE HAVE FOUND IT FOR A FACT FROM THE RECORDS INCLUDING THE ASSESSMENT ORDER, THAT THE AS SESSEE CHOSE TO DECLARE HIS INCOME FROM TRADING BUSINESS U/S 44AF, AT RS. 1,09,590/- AND THAT THE ASSESSEE HAD HIMSELF FILED A COMPUTATI ON OF CAPITAL GAINS AND HAS TREATED IT AS NON TAXABLE AFTER SQUARING UP ITS EFFECT BY CLAIMING DEDUCTION U/S 54B AS ANOTHER PIECE OF LAND IS STATED TO HAVE BEEN PURCHASED OUT OF THE SALE PROCEEDS IN THE NAME OF HIS WIFE. THE A.O. DID NOT FIND HIM ELIGIBLE U/S 54B ONLY BECAUSE THE LAND WAS PURCHASED IN HIS WIFES NAME, AND THEREFORE, HE HAS MADE THIS ADDITION. 4. BEFORE US, SEEMINGLY, ON THE ADVICE OF HIS AUTHO RISED REPRESENTATIVE, THE ASSESSEE BECAME MORE INTELLIGEN T AND HAS TAKEN THE ABOVE STATED ADDITIONAL GROUNDS WHICH MAY ABSOL VES HIM FROM ANY 4 TAX LIABILITY QUA THE SALE PROCEEDS IN QUESTION. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEES AUTHORISED RE PRESENTATIVE FILED A WRITTEN SUBMISSION ON 01/09/2011 STATING AS UNDER :- THE ASSESSEE HAS SOLD AGRICULTURE LAND DURING THE Y EAR OF RS. 65,29,000/- AND WHICH WAS PURCHASED BY THE ASSESSE E IN THE YEAR 1996 OF RS. 94,500/- BEING COST OF LAND AND SUM OF RS. 6,00,000/- WAS INCURRED ON ACCOUNT OF DEVELOPMENT AND FENCING CHARGE BEFORE SALE OF LAND AND COPY OF DETAILS OF EXPENDI TURE INCURRED BY THE ASSESSEE BEING A AGRICULTURE LAND BEYOND TH E MUNICIPAL LIMIT AS PER CERTIFICATE ENCLOSED, HENCE SAID LAND EXEMPT FROM TAX U/S 2(10) OF THE I.T. ACT, 1961. IN THIS REGARD THE A.O. ALSO GATHERED INFORMATION U /S 133(6) OF THE ACT FROM THE TEHSILDAR NOKHA VIDE LETTER DATED 28/09/20 11. THE TEHSILDAR, NOKHA VIDE LETTER DATED 17/10/2011 INFORMED THAT DI STANCE OF SUCH LAND IS 250 METERS AWAY FROM THE TERRITORIAL JURISD ICTION OF THE MUNICIPALITY, NOKHA. THE ADDITIONAL GROUND IS RESTE D ON THE FACTS AVAILABLE ON RECORD. THEREFORE, WE HAVE ADMITTED TH EM ON RECORD. 5. BEFORE US, A DETAILED WRITTEN SUBMISSION HAS BEE N FILED BY THE LD. A.R. WE EXTRACT THE SAME IN ITS ENTIRETY AS UNDER : - 5 THE APPELLANT DERIVES INCOME FROM RETAIL TRADING O F GENERAL ITEMS AND DECLARED THE INCOME IN ACCORDANCE WITH THE SECTION 44AF OF THE IT ACT, AS WAS IN EARLIER Y EAR. DURING THE YEAR UNDER APPEAL THE APPELLANT SOLD HI S AGRICULTURE LAND SITUATED OUT-SIDE OF TERRITORIAL JURISDICTION OF NOKHA MUNICIPALITY (PARA 2 AT PA GE-3 OF ASSESSMENT ORDER) AND MORE THAN 80 KILOMETER AWAY FROM THE NOTIFIED AREA OF BIKANER AND AS SUCH, THE SAID AGRICULTURE LAND IS NOT A CAPITAL ASSETS WITHIN THE MEANING OF SECTION 2(14)(III) OF THE IT ACT. AND AS SUCH AN Y GAIN ON SALE OF SUCH AGRICULTURE LAND IS NOT TAXABLE. THE APPELLANT HAS USED THE SALE PROCEEDS OF AGRICUL TURE LAND SOLD BY HIM IN PURCHASE OF ANOTHER AGRICULTUR E LAND IN THE NAME OF HIS WIFE. HOWEVER SOLD AGRICULTURE L AND WAS IS MISTAKENLY TREATED AS CAPITAL ASSETS AND ACCORDI NGLY EXEMPTION U/S 54B OF THE IT ACT WAS DISALLOWED BY THE A.O. AS WELL AS LD. CIT(A). THAT THE AGRICULTURE LAND IS NOT A CAPITAL ASSET WI THIN THE MEANING OF SECTION 2(14)(III) OF THE IT ACT. HENCE WE REQUEST BEFORE THIS HONBLE COURT TO KINDLY ALLOW U S TO RAISE THIS PURE LEGAL GROUND SO AS TO MEET THE ENDS OF JUSTICE & FAIR PLAY. 6 THAT WE MAY KINDLY BE PERMITTED TO BRING THE KIND ATTENTION OF THIS HONBLE COURT TO THE PROVISION O F SECTION 2(14)(III) OF THE IT ACT. SEC. 2(14)(III) AGRICULTURAL LAND IN INDIA, NOT BEI NG LAND SITUATE (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURIS DICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOW N AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND ACCORDING TO THE LAST PRECEDING C ENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFO RE THE FIRST DAY OF THE PREVIOUS YEAR ; OR (B) IN ANY AREA WITHIN SUCH DISTANCE, NOT BEING MOR E THAN EIGHT KILOMETERS, FROM THE LOCAL LIMITS OF ANY MUNI CIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM (A), AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBANIZATION OF THAT AREA AND OTHER RELE VANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICA TION IN THE OFFICIAL GAZETTE; YOUR HONOUR IT IS ACCEPTED FACT THAT AGRICULTURE LA ND SOLD WAS SITUATED ABOUT 250 METER AWAY FROM THE TERRITO RIAL JURISDICTION OF NOKHA MUNICIPALITY AS PER REPOT OF TEHSILDAR, NOKHA VIDE HIS LETTER NO. 278 DATED 17.1 0.2011 7 AS PER THE FINDING OF LD. A.O. IN ASSESSMENT ORDER AT PARA- 2AT PAGE 3 OF ASSESSMENT ORDER AND AS SUCH AGRICULT URE LAND IS NOT SITUATED IN AREA SPECIFIED IN PARA (A) OF SU B CLAUSE (III) OF SECTION 2(14) OF THE IT ACT. AND FURTHER WE ARE ENCLOSING THE RELEVANT PORTION O F NOTIFICATION NO. SO 9447 DATED 06.01.1994 (FILE NO. 164/3/87-ITA.I) FOR THE AREA NOTIFIED FOR THE PURPO SE OF SECTION 2(14)(III)(B) OF THE IT ACT AND YOUR HONOUR WILL FIND THAT IN ITEM NO. 19 RAJASTHAN STATE IS NOTIFIED AND NEAREST NOTIFIED AREA IS BIKANER AT SERIAL NO. 6 WHICH IS M ORE THAN 80 KMS AWAY FROM THE AGRICULTURAL LAND OF THE APPEL LANT HENCE AS SUCH AGRICULTURE LAND IS NOT SITUATED IN A REA SPECIFIED IN PARA (B) OF SUB CLAUSE (III) OF SECTIO N 2(14) OF THE IT ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE PRAY BEFORE THIS HONBLE COURT TO KINDLY ACCEPT OUR ADDITIONAL GROUND AND DELETE THE UNJUSTIFIED ADDITION / DISALLOWANCE MADE/CONFIRMED BY THE AUTHORITIES BELOW BY TREATING THE AGRICULTURE LAND AS CAPITAL ASSETS WHEREAS SAME IS NOT A CAPITAL ASSETS WITHIN THE MEANING OF SECTION 2(14)( III) OF THE IT ACT, SO AS TO MEET THE ENDS OF JUSTICE. 6. PER CONTRA LD. D.R. HAS STATED THAT THE NEW PLEA AMOUNTS TO A FLIP FLOP AS IT IS DIATONICALLY OPPOSITE TO WHAT WAS TAK EN EARLIER. ACCORDING TO HIM THIS IS A PLOY OF THE ASSESSEE TO EVADE PAYM ENT OF DUE TAXES ON 8 ONE SCORE OR THE OTHER. HE HAS FURTHER STATED THAT THE LAND IN QUESTION IS A CAPITAL ASSET ON WHICH TAX IS CHARGEABLE AS PE R LAW. HE HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO BOTH S IDES SUBMISSIONS. IN FACT, THE ASSESSEE HAS TAKEN A NEW LEGAL PLEA FOR THE FIRST TIME. WE DONT DENY THAT ASSESSEE HAS GOT SUC H A LIGHT. OTHERWISE ALSO, IT IS OUR DUTY TO DECIDE A CASE AS PER THE LA W WHEN EITHER THE ASSESSEE OR THE REVENUE OR BOTH HAVE APPLIED WRONG PROVISIONS OF LAW OR HAVE NOT APPLIED THE AVAILABLE PROVISIONS OF THE ACT. 8. IN THIS CASE, EMPHASIS IS ON THE EXEMPT SUB-CLAU SE (III) OF SECTION 2(14) OF THE ACT. AS PER THE ABOVE EXTRACTED SUBMIS SION THE AGRICULTURAL LAND SOLD BY THE ASSESSEE IS, IN FACT, DOES NOT TANTAMOUNT TO A CAPITAL ASSET. THE PREMISE ON WHICH THE ASSE SSEE HAS CHARGED HIS STANCE IS THAT THIS AGRICULTURAL LAND SOLD DOES NOT FALL WITHIN THE STIPULATED LIMIT OF A MUNICIPALITY ETC AND THUS IT IS NOT A CAPITAL ASSET. THERE IS NO DISPUTE BETWEEN THE PARTIES ABO UT THE NATURE OF THE LAND SOLD. IT WAS AGRICULTURAL LAND AT THE TIME OF SALE. IT FALLS WITHIN 250 MTRS. FROM THE TERRITORIAL JURISDICTION OF THE NOKH A MUNICIPALITY. THE DISPUTE HAS BEEN RAISED UP BY LD. A.R. THAT THE NOK HA MUNICIPALITY IS NOT THE BENCHMARK OF MEASURING DISTANCE BECAUSE THA T MUNICIPALITY HAS 9 NOT BEEN NOTIFIED US/ 2(14)(B)(III) OF THE ACT FOR THE RELEVANT PURPOSE. ACCORDING TO LD. A.R. THE NEAREST NOTIFIED MUNICIPA LITY IS THAT OF BIKANER AND FROM THE TERRITORY OF BIKANER THE AGRIC ULTURAL LAND SOLD FALLS AT A DISTANCE OF MORE THAN 80 KILOMETERS. CA PITAL ASSET: HAS BEEN DEFINED IN SECTION 2(14) TO MEAN PROPERTY OF ANY KI ND HELD BY AN ASSESSEE WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION EXCEPT FOR SPECIFICALLY EXCLUDED THEREFROM. THE WOR D MUNICIPALITY HAS NOT BEEN DEFINED IN THE ACT. INCLUSION OF LANDS SITUATED IN SPECIFIED AREAS WAS MADE THROUGH AMENDMENT EFFECTED W.E.F. 01 /04/1970 . THE ONUS IS ON THE ASSESSEE TO PROVE THAT A LAND IS AGR ICULTURAL. BUT THE ONUS TO PROVE THAT THE LAND IS NOT AGRICULTURAL OR IS NOT TO BE TREATED AS SUCH IN VIEW OF THE AMENDMENT. WHEN PRIMARY ONUS IS DISCHARGED BY THE ASSESSEE THE ONUS SHIFTS ON THE REVENUE TO DISP ROVE THE SAME. AS PER SUB CLAUSE (B) OF CLAUSE (III) OF SECTION 2(14) , ANY AGRICULTURAL LAND WHICH IS NOT SITUATED WITHIN 8 KMS FROM THE MUNICIP ALITY AS THE CENTRAL GOVERNMENT MAY SPECIFY IN THIS BEHALF BY NOTIFICATI ON IN THE OFFICIAL GAZETTE. A RELEVANT PORTION OF SUCH A GAZETTE NOTIF ICATION NO. (509447) (FILE NO. 164/3/87 ITA-1) DATED 06/01/1994 HAS BE EN PRODUCED FOR OUR PERUSAL AND CONSIDERATION. THIS NOTIFICATION RE ADS AS UNDER :- AREAS UP TO A DISTANCE OF 8 KMS FROM THE MUNICIP AL LIMITS IN ALL DIRECTIONS 10 ADMITTEDLY, THE NEAREST NOTIFIED MUNICIPALITY [AS P ER THE ABOVE NOTIFICATION] TO THIS AGRICULTURAL LAND SOLD IS BI KANER WHICH IS MORE THAN 79 KMS FROM THE SAME. OBVIOUSLY, THIS LAND WOU LD REMAIN AS AGRICULTURAL LAND AND WOULD NOT FALL WITHIN THE DEF INITION OF THE CAPITAL ASSET AS PER SECTION 2(14)(III)(B) OF THE ACT. THER EFORE, THE SALE OF AGRICULTURAL LAND, SIMPLICITER, WOULD NOT ATTRACT A NY CAPITAL GAINS CHARGEABLE TO TAX U/S 45 OF THE ACT. THIS ASPECT WA S NOT CONSIDERED BY ANY AUTHORITY. ANY RELIEF WHICH BECAME ALLOWABLE UN DER THE ACT CANNOT BE DEFEATED ON ACCOUNT OF IGNORANCE OF AN ASSESSEE OR IF IT IS NOT CLAIMED AS PER LAW. THEREFORE, WE ADMIT THE ADDITI ONAL GROUNDS RAISED. HOWEVER, IT IS NOT CLEAR AS TO WHETHER THE RE IS ANOTHER NOTIFICATION AFTER 6.1.1994 OR NOT AND THE SAID NOT IFICATION WAS BROUGHT TO THE NOTICE OF THE AUTHORITIES BELOW OR NOT. AND CONSIDERING THIS VITAL FACT THAT THE ISSUE RAISED IN ADDITIONAL GROU ND WAS NOT BEFORE THE AUTHORITIES BELOW, WE DEEM IT APPROPRIATE TO SET AS IDE THE ISSUE BACK TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION IN A CCORDANCE WITH LAW BY GIVING A DUE AND REASONABLE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. 9. IN VIEW OF OUR ABOVE FINDING, THE OTHER GROUNDS BECAME INFRUCTUOUS. 11 10. AS A RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 27 TH SEPTEMBER, 2013. SD/- SD/- (N.K.SAINI) [HARI OM MARATH A] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH SEPTEMBER, 2013. VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR