YATIN HARIRAM RUPAREL, MUMBAI V. ITO 8(2)(2), MUMBAI

ITA 2424/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2660 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 20-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DINESH SHAH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Additional evidence; Competent authority
• Section: 50C; 2(14); 147; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SANJAY ARORA , A M AND SHRI AMARJIT SINGH , J M ./ I.T.A. NO. 2424/MUM/2014 ( / ASSESSMENT YEAR: 2009 - 10 ) YATIN HARIRAM RUPAREL 7, VIEW VILLA, 425, SHRADHANAND CROSS ROAD, MATUNGA, MUMBAI - 400 019 / VS. ITO - 17(3)(4), PIRAMAL CHAMBERS, LALBAUG, PAREL - 12 ./ ./ PAN/GIR NO. AACPR 2921 D ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI DINESH SHAH / RESPONDENT BY : SHRI AIR I JU JAIKARAN / DATE OF HEARING : 20.6.2016 / DATE OF PRONOUNCEMENT : 04 . 10 .2016 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 19, MUMBAI (CIT(A) FOR SHORT) DATED 07.2.2014 , PARTLY ALLOWING THE A SSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 19 61 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2009 - 10 VIDE ORDER DATED 28.12.2011. 2. THE ISSUE ARISING IN THE INSTANT APPEAL, RAIS ED PER SEVERAL GROUNDS, IS THE EXIGIBILITY TO TAX OF THE GAINS ARISING TO THE ASSESSEE ON THE SALE OF HIS INTER EST IN A LAND AND , IN CASE TAXABLE, THE VALUE AND THE MANNER OF TAXABILITY OF SUCH GAIN UNDER THE ACT. 2 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO THE FACTS 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE - INDIVIDUAL, ALONG WITH HIS BROTHER, SHRI ASHWIN H . RUPAREL, INHERITED A PLOT OF LAND ADMEASURI NG 4960 SQ. MTRS ON THE DEMISE ON THEIR SISTER, VIJA Y L AXMI HARIRAM RUPAREL, ON 07.4.19 9 4 (*) THE SISTER HAVING NO OTHER SURVIV OR . THE SAID LA ND WAS INITIALLY ALLOTTED TO ONE, NARAIN LI LARAM CHANDWANI, BY GOVERNMENT OF INDIA (A CTING THROUGH THE MIN I STR Y O F LABOUR , EMPLOYMENT AND REHABILITATION, DEPARTMENT OF REHABILITATION, O FFICE OF CUSTODIAN OF E VACUEE P ROPERTY) ON 22.5.1971 (REFER PB PGS. 241 - 242, 2 5 7 - 258) AS A N EVACUEE PROPERTY UNDER THE D ISPLACED P ERSONS (C OMPENSAT I ON AND REHABILITATION ) ACT, 19 5 4; HE HAVING MIGRATED TO BOMBAY FROM , AND IN LIE U OF HIS AGRICUL TURAL LAND IN, SINDH (NOW IN PAKISTAN ). NARA IN CHANDWANI, THE ORIGINAL CLAIMANT , HAD EARLIER (IN 1967) SOLD HIS RIGHT TO COMPENSATION AGAINST HIS CLAIM UNDER THE SAID ACT, SINCE VERIFIED, TO VIJAYL AXMI H. RUPAREL, VIDE AGREEMENT DATED 28.9.1967 (PB PGS. 225 - 229), FOR A CONSIDERATION OF RS.3,200/ - ; ALSO EXECUTING AN IRRECOVERABLE GENERAL POWER OF ATTORNEY IN HER FAVOUR , AS ALSO HER FATHER , H ARIRAM D. RUPAREL AND ONE , S. P. JOSHI, ON 3 0.9.1967 (PB PGS . 230 - 234) . THE INTIMATION OF THE GPOA, CONSTITUTING ATTORNEYS, BOTH JOINTLY AND SEVERALLY, BY THE OC WAS DULY MADE BY HIM TO THE REGIONAL SETTLEMENT COMMISSIONER (PB PG. 243). THE SAME CLEARLY CONSTITUTES A TRANSFER U/S. 2(47) OF THE ACT. THE CLAIM OF THE ORIGINAL CLAIMANT (OC) HAD BEEN , AS AFORE - STATED, SINCE VERIFIED, BEARING I NDEX NUMBER S/ D D - 7/1187 - C AND REGISTRATION NUMBER B/T/UT/4493/IV - NT DATED 29.8.1967 FOR 8 - 30 STANDARD ACRES OF AGRICULTURAL LAND OR , IN THE ALTERNATIVE , A PAYMENT OF RS.3,786/ - , AS COMPENSATION (PB PGS. 255 - 256). THE AGRICULTURAL LAND (14 - 37 LOCAL ACRES), ALLOTTED SUBSEQUENTLY , WAS AT VILLAGE HEDUTANE, TALUKA KALYAN , DIST . THANE, MAHARASHTRA . (*) THOUGH WE OBSERVE A MENTION OF THE SAID DATE AS 07.4.1974 AT MORE THAN ONE PLACE, T HE SAME APPEARS TO BE A TYPOGRAPHICAL MISTAKE IN VIEW OF HER HAVING EXECUTED A GPOA ON 10.12.1974 (PB PGS. 218 - 223) AS WELL AS HER DATE OF DEATH BEING STATED AS ON OR ABOUT 31.3.1994 IN THE GPOA DATED 18.10.2008 BY NARAIN L. CHANDWANI (OC) AS WELL AS IN THE STATEMENT OF FACTS (SOF) (PB PGS. 10 - 11). 3 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO THE ASSESSEE , DURING THE RELEVANT YEAR, ALONG WITH HIS BROTHER, ASHWIN H . R U P AR EL, TRANSFERRED ALL THEIR RIGHTS IN THE SAID PROPERTY TO M / S . LO DHA D WELLERS PVT. LTD. (LDPL) , A COMPANY IN THE BUSINESS OF DEVEL OPMENT OF REAL ESTATE ON AS IS, WHERE IS BASIS, FOR A CONSIDERATION OF RS.1 2,41, 750 / - , RETURNING 50% THEREOF (RS. 6,20,875 / - ), BEING THE ASSESSEES SHARE, AS HIS BUSINESS INCOME. THE RESPECTIVE CASES 4. AS PER THE ASSESSEE, T HE AGRICULTURAL L AND WAS NOT IN THE POSSESSION OF THE ASSESSEE AND HIS BROTHER OR EVEN THE OC , BUT OF THE AGRICULTURAL TENANTS, WHOSE NAMES FIND MENTION IN THE 7/12 EXTRACTS (PB PGS. 259 - 261). THE AGREEMENT , TITLED A GREEMENT O F A SSIGNMENT , DATED 18 . 2 . 2009, HAD IN FACT BEEN SIGNED B Y THEM AS CONFIRMING PARTIES (PB P G S . 14 7 - 15 8 ) . W HAT THE ASSESSEE HAD THUS SOLD WAS ONLY A RIGHT TO CONV EYANCE OR THE RIGHT TO LEGAL TITLE. THE ASSESSEES RIGHT TO LAND WAS LIMITED TO ITS USER. THE TENANTS WERE , IN FACT, PROTECTED BY THE BOMBAY T ENANCY AN D A GRICULTURAL L AND S A CT. DE HORS POSSESSION , THERE COULD BE NO TRANSFER EVEN IN TERMS OF SECTION 2(47) OF THE A CT. AN AGREEMENT TO SELL, WHICH IS WHAT THE AGREEMENT DATED 28 . 9 .1967 IS, WOULD NOT CONFER EITHER LEGAL OR BENEFICIAL OWNERSHIP OF THE SUBJECT P ROPERTY. THE SAID AGRICULTUR AL LAND, NOT FALLING WITHIN THE EXCEPTIONS LAID DOWN IN, OR THE AREAS REFERRED TO U NDER, S.2(14) ( III) (A) / (B) , THE GAIN ON THE TRANSFER OF THE SAID LAND COULD NOT BE IN ANY CASE C HARGED TO TAX. IN VIEW OF THE R EVENUE, ON THE OTHE R HAND, WHAT THE ASSESSEE HAD SOLD WAS AGRICULTURAL LAND, GAIN ON WHICH IS CHARGEABLE UNDER THE HEAD CAPITAL GAINS . THE LAND HAVING NOT BEEN CULTIVATED BY EITHER THE ASSESSEE OR HIS PARENT AT ANY TIME, MUCH LESS IN THE TWO YEARS PRECEDING THE TRANSFER, T HE CONDITION OF EXEMPTION U /S. 10(37) W AS NOT MET. THE LAND IS A N AGRICULTURAL LAND AND NOT MEANT FOR BUSINESS. IT HAD EVEN OTHERWISE NOT BEEN CONVERTED INTO THE ASSESSEE S STOCK - IN - TRADE AT ANY TIME. WHY, THE ASSESSEE HIMSELF DOES NOT DISPUTE IT BEING SO, CLAIMING IT AS NOT EXC EPTED BY SECTION 2 ( 14 )(III)(A) / (B) . FURTHER, BEING LAND, THE GAIN ON ITS TRANSFER WOULD STAND TO BE COMPUTED U /S. 50C OF THE A CT. ITS VALUE , INITIALLY ADOPTED AT 4 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO RS.146.60 L ACS, I.E., AS PER THE STAMP VALUATION, ON BEING OBJECTED TO B Y THE ASSESSEE, WAS REFERRED TO THE V ALUATION O FFICER, WHO VALUED THE SAME AT RS.66.06 L ACS, 50% OF WHICH HAS ACCORDINGLY BEEN ASSESSED IN THE ASSESSEES HANDS. DISCUSSION 5 . W E HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 5 .1 THE FOREGOIN G ( PARAS 3 & 4 ) DELINEATE THE BRO AD FACTS OF THE CASE AS WELL AS THE RESPECTIVE CASES OF BOTH THE PARTIES . T HE FIRST QU ESTION BEFORE US IS IF THE LAND UNDER QUESTION AND, THEREFORE, WHAT HAS BEEN SOLD, CAN BE REGARDED AS A PART OF THE ASSESSEES STOCK - IN - T RADE. THIS IS AS ONLY IN THAT CASE IT COULD BE REGARDED AS A BUSINESS INCOME, I.E., AS RETURNED. ELSE, EVEN IF CONNECTED WITH THE ASSESSEES BUSINESS, THE GAIN WOULD BE ONLY ON CAPITAL ACCOUNT. NO CONNECTION WITH THE ASSESSEES A PROPRIETOR OF A FIRM RU PAREL E LECTRONICS , BUSINESS HAS BEEN SHOWN. IT IS RATHER THE ASSESSEES FATHER WHO IS STATED TO PURCHASE EVACUEE CLAIMS FROM THE PERSONS IN NEED OF FUNDS ; THE ASSESSEE AND HIS BROTHER HAVING ONLY INHERITED THE SAME. THE ASSESSEE , IN FACT, HIMSELF ADMITS T HE SAME PER THE SOF BEFORE THE FIRST APPELLATE AUTHORITY ; THE RELEVANT PART OF WHICH READS AS UNDER : HOWEVER ALTHOUGH IT IS NOT BUSINESS ASSET IT IS ALSO NOT CAPITAL ASSET AS IT IS AGRICULTURAL LAND AS PER CLAUSE (14)(III) OF SECTION 2. W E ACCORDINGLY FIND NO BASIS FOR, OR A N Y MATERIAL ON RECORD TOWARD , THE SUBJECT LAND BEING THE ASSESSEE S BUSINESS ASSET OR THE GAIN ON ITS TRANSFER BEING ASSESSABLE AS BUSINESS INCOME. 5 .2 T HE SECOND QUESTION BEFORE US IS IF THE SUBJECT LAND IS A C APITAL ASSET U /S. 2 (14)( III) OF THE A CT, WHICH WOULD DETERMINE WHETHER THE INCOME BY WAY OF GAIN ON ITS TRANSFER IS CHARGEABLE TO TAX OR NOT. HOWEVER, BEFORE WE ADDRESS THIS ISSUE, IT WOULD BE RELEVANT TO EXAMINE AND DETERMINE THE NATURE OF THE ASSESSEES INTEREST IN LAND, I .E., WHETHER PROPRIETARY OR , AS CLAIMED, A MERE RIGHT TO USE THE LAND . THAT IS , WHAT THE ASSESSEE TRANSFERRED IS LAND ITSELF OR A RIGHT TO CULTIVATE IT. THE LAND WAS FINALLY ALLOTTED 5 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO TO NARA I N CHANDWANI , THE OC , ON 22.5. 1971; THE ASSESSEES FATHER A POWE R OF ATTORNEY HOLDER, PRED ECEAS ING (THE ALLOTMENT OF LAND) ON 10 . 5 . 1970. THE SAME REA DS AS UNDER, CLARIFYING TH US THAT A GRICULTURAL LAND HAS BEEN ALLOTTED, IN SATIS F AC TION OF AN EVACUEE CLAIM IN LIEU OF THE AGRICULTURAL LAND OF THE OC (OR HIS ANCESTORS) IN WEST PAKISTAN: GOVERNMNET OF INDIA MINISTRY OF LABOUR, EMPLOYMENT AND REHABILITATION DEPARTMENT OF REHABILITATION OFFICE OF THE CUSTODIAN OF EVACUEE PROPERTY CONTRACTOR. BLDG. NICOL BOND, BELLARD ESTATE, BOMBAY - 1, DATED 22.5.91. ALLOTMENT ORDER NO. TH ANA/50 ORDER NO. S/DD - 1/1187 - C & S/DD - 1/1230 - D CIF NO. B/T/UT/4493/IV NT NAME AND ADDRESS OF THE ALLOTTEE PARTICULARS OF THE VERIFIED CLAIM. UNDER THE I.T. ACT. _____________________________________________________________________ SHRI NARA IN LILARAM ASSESSEE IN 42 - 15 499/2560 ST. ACRES C/O. SHRI V. H. RUPAREL AREA DUE AFTER PUNJAB CUT. 28 - 14 3059/5120 S.A NURSI NATHA TRUST BLDG., BALANCE COMPENSATION RS.3860/ - 18/20, KAZI SYED STREET, BOMBAY - 9. 1. YOU ARE HEREBY ALLOTTED FOLLOWING AGRL . LAND IN THANA DISTRICT ON QUASI PERMANENT BASIS FROM THE DATE OF THIS ORDER. DISTRICT TALUKA VILLAGE S R . NOS. ALLOTTED LOCAL ACRES ALLOTTED STD. AREAS ALLOTTED THANA KALYAN HEDUTANE 131/1, 146, 147 14 - 37 6 - 10/ 4/5 2. YOU WILL BE LIABLE TO PAY LAND REVEN UE/RENT/CESS AND ANY OTHER DUES WHICH MAY BE PAYABLE TO THE GOVERNMENT OR TO LOCAL BODIES UNDER ANY LAW FOR THE TIME BEING IN FORCE IN MAHARASHTRA STATE 3. THE ALLOTMENT WILL BE LIABLE TO BE CANCELLED IF: I. YOU ARE FOUND TO HAVE MADE FALSE STATEMENT OR DECLARAT ION IN THE APPLICATION OR IN THE COURSE OF SCRUTINY THEREOF OR HAVE COMMITTED FRAUD IN OBTAINING ALLOTMENT OF THE SAID LAND. II. YOU FAIL TO DISCHARGE ANY OBLIGATIONS AS MENTIONED ABOVE OR THAT MAY BE PRESCRIBED HEREAFTER. III. YOU FAIL TO PAY THE LAND REVENUE/REN T/CESS OR ANY OTHER DUES WHICH MAY BE PAYABLE BY YOU TO THE GOVERNMENT OR LOCAL BODIES. YOU ARE REQUESTED TO CONTRACT THE COLLECTOR THANA FOR POSSESSION SD/ - (MANAGING OFFICER) BOMBAY 6 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO THE ALLOTMENT , AS APPARENT, CASTS NO OBLIGATION ON TH E ALLOTTEE ( OR THE PERSON CLAIMING T HROUGH HIM ) , SO THAT F AI LING THE SAID CONDITION WHERE STIPULATED - THE PROPERTY WOULD GET RESUMED OR THE ALLOTMENT CANCELLED . THAT IS , THE ALLOTMENT IS CONDITION ED ONLY BY THE CIRCUMSTANCES STATED IN THE ALLOTMENT LETT ER AND , ACCORDINGLY , SUBJECT TO THE SOME PRE - EMPTIVE STIPULAT IONS AS TO PAYMENT OF LAND REVENUE/RENT; THE DECLARATION/S MADE BEING TRUE (NOT FALSE) , ETC., ABSOLUTE IN ITS SCOPE. ALL THE RIGHTS, TITLE AND INTEREST QUA THE SAID LAND VESTS ON ALLOTMENT WITH T HE OC, WHO HAD, IN TURN, AND IN FACT APRIORI, ASSIGNED THE SAME TO THE ASSESSEE S SISTER, WHOM THE ASSESSEE AND HIS BROTHER SUCCEED , FOR A CONSIDERATION. INTEREST IN THE PROPERTY INCLUDES RIGHT TO POS SESS ION AS WELL AS RIGHT TO CULTIVATE . IN FACT , THE RIGH T TO USE OR CULTIVATE THE LAND, WHICH THE ASSESSEE CLAIMS THE OC AND, THUS, THE PERSON/S CLAIMING THROUGH HIM, TO HAVE OBTAINED, ITSELF INCLUDES THE RIGHT TO POSSESSION . IN FACT, THE ASSIGNMENT DEED ITSELF CLARIFIES THAT THE ASSIGNEE HAS THE RIGHT TO, AM ONG OTHERS, TAKE POSSESSION OF LAND IN QUESTION, TOWARD WHICH WE MAY REPRODUCE FROM THE ASSIGNMENT DEED (DATED 28.9.1967): (PB PG. 228) 10) THAT YOU WILL BEAR AND PAY ALL THE EXPENSES FOR OBTAINING ALLOTMENT OF THE LANDS, THEIR POSSESSION, TRANSFER, R EGISTRATION ETC., IN YOUR NAME OR IN THE NAME OF YOUR NOMINEE OR NOMINEES. 11) THAT AS SOON AS THE LANDS ARE PROPOSED TO BE ALLOTTED BY THE AUTHORITIES, YOU WILL BE ENTITLED TO OBTAIN POSSESSION AND ALL DOCUMENTS IN CONNECTION WITH THE SAME AND TO DO SUCH THINGS AS ARE NECESSARY FOR FULLY ASSURING THE SAME PERMANENTLY TO YOURSELF OR YOUR NOMINEE/NOMINEES. THE IRREVOCABLE GENERAL POWER OF ATTORNEY (GPOA) DATED 28.9.1967 REITERATES THE SAME, THE ATTORNEY HOLDER BEING ALSO ENTITLED TO SELL OR OTHERWISE DIS POSE THE LAND IN QUESTION, AS UNDER: (PB PG. 231 - 232) B) TO MAKE APPLICATION FOR ALLOTMENT OF LAND OR PROPERTY AND OBTAIN POSSESSION THEREOF FROM THE REGIONAL SETTLEMENT COMMISSIONER OR ANY OTHER AUTHORITY COMPETENT TO GRANT THE SAME. 7 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO C) TO TAKE POSSESSI ON OF SUCH LAND OR OTHER PROPERTY THAT IS ULTIMATELY ALLOTTED AND TO ENTER IN SUCH AGREEMENT OR LIABILITIES WITH SUCH AUTHORITY AS THE AUTHORITY MAY REQUIRE. D) TO MAKE POSSESSION OF AND HOLD AND MANAGE AND/OR DEVELOP THE LAND AND OR PROPERTY ALLOTTED (WH ETHER THE POSSESSION IS PROVISIONAL OR FINAL). IF LAND IS GRANTED TO CULTIVATE, RAISE CROPS, SELL THE SAME AND DO ALL THINGS INCIDENTAL TO MANAGEMENT AND DEVELOPMENT THEREOF. IF ANY OTHER PROPERTY TO RECEIVE RENTS, OR SELL THE SAME, CARRY OUT REPAIRS, IMPR OVEMENTS, DEVELOP SUCH PROPERTY OR PROPERTIES AND MANAGE THE SAME. THE GPOA DATED 10.12.1974 EXECUTED BY VIJAYLAXMI H . RUPAREL (ALIAS VIJAYLAXMI JITENDRA DHABLIWALA) IN FAVOUR OF HARISH H. RUPAREL AND ASHWIN H. RUPAREL (PB PGS. 218 - 224) AND AS WELL AS T HE GPO DATED 18.10.2008 BY THE OC CONTAIN SIMILAR CLAUSES, WHICH WE MAY REPRODUCE AS UNDER: (PB PGS. 219 - 220) 3. TO TAKE POSSESSION OF SUCH LANDS OR OTHER PROPERTY THAT IS ULTIMATELY ALLOTTED AND TO ENTER IN SUCH AGREEMENT OR LIABILITIES WITH SUCH AUTHOR ITY OR THE AUTHORITIES WHICH MAY BE REQUIRED. 4. TO TAKE POSSESSION OF AND HOLD AND MANAGE AND/OR DEVELOP THE PROPERTIES ACQUIRED. IF LAND IS GRANTED TO CULTIVATE, RAISE CROPS, SELL THE SAME IF ANY OTHER PROPERTY IS ACQUIRED TO RECEIVE RENTS, OR SELL THE SAM E, CARRY OUR REPAIRS, IMPROVEMENTS, DEVELOP SUCH PROPERTY OR PROPERTIES AND DO THINGS INCIDENTAL THERETO. T HAT THE ASSESSEE, BEING NOT A N AGRICULTURIST, WAS, AS IT APPEARS, NOT INTERESTED IN CULTIVATING THE LAND, OR DID NOT , TAKE ANY STEPS (SINCE ALLOTM ENT IN MAY, 1971) TO TAKE POSSESSION OF THE AGRICULTURAL LAND , OR DID NOT CONSIDER IT FEASIBLE TO DO SO , ETC., IS ANOTHER MATTER. HE MAY ALSO HAVE, AFTER ALL THESE YEARS OF ADVERSE POSSESSION, FOUND IT INFEASIBLE TO DO SO. H OW, ONE MAY ASK, WOULD THEN THE PURCHASER, LDPL, T AKE POSSESSION OF THE LAND? THAT IS, IF THE ASSESSEE (AND HIS BROTHER ) , FROM WHOM IT DERIVE S ITS RIGHTS, DID NOT HAVE THE RIGHT TO PO S S ESS ION. THE REFERENCE, THEREFORE, TO THE CLAUSES IN THE AGREEMENT DATED 18.2.2009 (PB PGS. 147 - 158) TO THE EFFECT THAT THE OC OR THE CONFIRMING PARTIES (THE ASSESSEE AND HIS BROTHER) ARE NOT IN POSSESSION OF THE LAND, IS 8 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO TO NO MOMENT; THE SAID AGREEMENT CLEARLY TRANSFERRING ALL THE RIGHTS CONFERRED BY THE ALLOTMENT LETTER, INCLUDING THE RIGHT TO POSSESSI ON, WHICH IS IN FACT ADMITTED (REFER CLAUSE 4(A)) THEREOF. THAT THE LAND USER MAY BE REQUIRE D TO BE CHANGE D; THE LAND BEING ADMITTEDLY AGRICULTURAL, FOR THE TRANSFEREE TO USE IT FOR ITS PURPOSE S , IS ANOTHER MATTER. THEN, AGAIN, HOW DOES THE ASSESSEE EXPLAI N THE NON - POSSESSION OF THE LAND CLAIM ED TO BE BARREN ? (R EFER PARAGRAPH 4.6.1 OF THE ASSESSMENT ORDER). THE NON - POSSESSION OF LAND BY THE ASSESSEE, PART OF WHICH IS STATED TO BE IN THE POS SESS ION OF THE TENANTS AND THE REST BARREN, IS THUS ONLY DELIBERATE AND, AT BEST, AN ENCUMBRANCE, WHICH MAY IMPACT ITS VALUATION. IN FACT, THE ASSESSEE HIMSELF ( VIDE HIS REPLY DATED 8/12/2011) STATES IT AS ONE OF THE ENCUMBRANCES ADVERSELY IMPACTING IT S VALUATION (REFER PARAGRAPH 4.6.1 OF THE ASSESSMENT ORDER ) . T HE ASSE SSEE ALSO CLAIMS TO BE NOT TH E ASSIGN OR , BUT ONLY THE CONFIRMING PARTY AND, THEREFORE, THAT IT IS NOT HE WHO HAS TRANSFERRED THE RIGHTS . WHO, THEN, WE WONDER, IS, TH E ASSIGN O R ? PUT DIFFERENTLY, IF A CONFIRMING PARTY, COULD THE ASSESSEE HAVE SOLD THE RIGH T TO CONVEYANCE, OR ANY RIGHT FOR THEIR MATTER? THE OC, NARAIN CHANDWANI, HAS ALREADY ASSIGNED ALL HIS RIGHTS IN FAVOUR OF THE ASSESSEES SISTER FOR A CONSIDERATION , RESERVING NO RIGHT. H IS, THEREFORE, EXECUTING THE DEED OF CONFIRMATION ON 18.10.2008 (PB P GS. 175 - 178) OR GPOA OF EVEN DATE (PB PGS. 160 - 168) IN FAVOUR OF THE ASSESSEE AND HIS BROTHER , IS OF NO MOMENT. IN FACT, THE SAID DOCUMENTS ITSELF CLARIFY THIS ASPECT, I.E., OF VIJAYLAXMI H . RUPAREL (ALIAS VIJAYLAXMI JITENDRA DHABLIWALA) BEING ENTITLED TO LAND, INCLUDING ITS POSSESSION, AND OF THE ASSESSEE AND HIS BROTHER, ASHWIN H . RUPAREL , BECOMING ENTITLED TO THE SAID PROPERTY AS HER LEGAL HEIRS. THE EXECUTION OF THE GPOA BY THE ASSIGNEE VIJAYLAXMI H RUPAREL (ALIAS VIJAYLAXMI JITENDRA DHABLIWALA), AS EXP LAINED THEREIN, IS ONLY BY WAY OF DELEGATING THE POWERS ACQUIRED UNDER THE IRRECOVERABLE POWER OF ATTORNEY IN HER FAVOUR, SO AS TO ENABLE THE EXECUTION OF THE NECESSARY ACTS. SIMILARLY, THE EXECUTION OF THE GPOA/S, AS EXPLAINED THEREIN IS ONLY AS THE OC CO ULD NOT PURCHASE THE LAND OR THE PROPERTY UTILIZING THE CLAIM CERTIFICATE. THE SAME, THUS, IS ONLY A CONFIRMING DOCUMENT, AFFIRMING HIM HAVING ASSIGNED HIS INTEREST 9 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO IN THE LAND AND , THUS , TO HA VE NO INTEREST IN THE SUBJECT PROPERTY. THIS IS, IN FACT, THE A DMITTED POSITION ; THE ASSESSEE AND HIS BROTHER , ASHWIN R U P AR EL, INHERIT ING THE PROPERTY FROM THE IR SISTER (AND FATHER) AS T HE IR LEGAL HEIR S . IT IS TH EREFORE TH EY, I.E., THE ASSESSEE A N D HIS BROTHER, WHO ARE THUS THE AS SIGN O RS, AND WHO HAVE AGREED TO TRANSF ER THE LAND ON A S - IS - WHERE - IS BASIS , TO LDPL , THE PURCHASE R , FOR A CONSIDERATION. THAT IS, NOTWITHSTANDING THE AGR EEMENT STATING THE OC AS THE ASSIGN O R, O N WHOSE BEHALF THE ASSESSEE AND HIS BROTHER HAVE SIGNED AS G POA HOLDERS. THE G POA DATED 18.10.200 8 (PB PG. 160 - 168) ADMITS TO THIS POSITION . THE ASSESSEES OBJECTION OF BEING ONLY A CONFIRMING PARTY IS THEREFORE T O NO CONSEQUENCE. T HE ASSESSEES CLAIM, THEREFORE, OF HAVING ONLY A LIMITED RIGHT OF CULTIVATION OF THE SUBJECT AGRICULTURAL LAND, OR ONL Y TO ACQUIRE LEGAL TITLE, U/S.54 OF THE TRANSFER OF PROPERTY ACT, 1882, IS UNTENABLE AND INCONSISTENT WITH THE ADMITTED FACTS AND CIRCUMSTANCES AS WELL AS THE MATERIAL ON RECORD. THE SAME ALSO MEETS THE ASSESSEES OBJECTION TO THE IN - APPLICATION OF SECTION 50C OF THE ACT ON THAT GROUND. THE ASSESSEES CONSTANT REFRAIN TO HAVING NO RIGHT OF POSSESSION IS THUS ALSO MISPLACED. THE REFERENCE IN THIS REGARD TO THE BOMBAY TENANCY AND AGRICULTURAL LANDS ACT IS AGAIN NOT CLEAR, WITH WE BEING EVEN NOT AS MUCH AS TAK EN THROUGH THE SAID ACT (P B PGS. 112 - 116) DURING HEARING NOR DO WE FIND ANY REFERENCE THERETO IN THE G ROUNDS OF A PPEAL OR SOF OR EVEN THE ORDERS OF THE REVENUE AUTHORITIES. THE LAND IS AGRICULTURAL, AND IF THE SAME STATUS IS SOUGHT TO BE ENSURE D AND SUSTAI NED THROUGH THE LAW BY, INTER ALIA , PROHIBITING I T S TRANSFER TO A NON - AGRICULTURALIST, IT WOULD NOT MAKE THE ASSESSEE ANY LESS THE OWNER OR IMPACT HIS OWNERSHIP STATUS (OF THE SAID LAND) . EVEN REGARDING IT AS AN ENCUMBRANCE, THE SAME IS BY LAW, APPLICABLE FOR ALL OWNERS, AND WOULD ONLY IMPACT THE USE TO WHICH THE LAND CAN BE PUT TO AND, CONSEQUENTIALLY, ITS VALUE, WHICH ASPECT IS ADMITTED. THE ASSESSEE IS THUS UNDER THE TERMS OF THE ALLOTMENT DEEMED TO BE AN AGRICULTURALIS T WITH CONSTRUCTIVE POSSESSION OF THE LAND. AGAIN, HOW THEN , ONE MAY ASK, THE SAME STANDS ASSIGNED/ SOLD TO L DPL , WHICH IS PER A REGISTERED DOCUMENT? AS IT 10 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO APPEARS, T HE LAND USER WOULD BE REQUIRE D TO BE CHANGED FOR BEING PUT TO USE FOR OTHER THAN AGRICULTURE , WITH T HE SAME PURCHASED IN ANT ICIPATION THEREOF . 5 .3 C OMING BACK TO THE STATUS OF THE LAND UNDER THE A CT , THE LAND IS ADMITTEDLY A N AGRICULTURAL LAND. HOWEVER, FOR THE PURPOSES OF THE A CT, IT IS STILL REGARDED AS A CAPITAL ASSET WHERE IT FALLS IN THE AREAS REFERRED TO IN SUB - CLAUSE ( A ) OR ( B ) OF SECTION 2 ( 14 )(III) . TOWARD THIS, THE ASSESSEE CLAIMS IT AS FALLING UNDER NEITHER, SO THAT IT IS AN AGRICULTURAL LAND AS DEFINED U /S. 2 ( 14 )(III) OF THE A CT AND, THUS, NOT A CAPITAL ASSET. THAT BEING SO, A GAIN ON ITS TRANSFER WOULD STAND TO BE CHARGEABLE AS CAPITAL GAINS . SECTION 10 (37) OF THE A CT , READING AS UNDER, STIPULATES EXCLUSION BY WAY OF EXEMPTION OF GAIN ON THE TRANSFER OF AGRICULTURAL LAND SITUATE IN AREAS REFERRED TO IN SECTION 2 ( 14 )(III)(A) / (B) IN CERTAIN CIRCUMSTANCES , SO THAT I T WOULD THEREFORE NOT APPLY : INCOMES NOT INCLUDED IN TOTAL INCOME. 10. IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YEAR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAUSES SHALL NOT BE INCLUDED (1) (2) (37) IN THE CASE OF AN AS SESSEE, BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, ANY INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' ARISING FROM THE TRANSFER OF AGRICULTURAL LAND, WHERE (I) SUCH LAND IS SITUATE IN ANY AREA REFERRED TO IN ITEM ( A ) OR ITEM ( B ) OF SUB - CLAUSE ( III ) OF CLAUSE ( 14 ) OF SECTION 2 (II) SUCH LAND, DURING THE PERIOD OF TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER, WAS BEING USED FOR AGRICULTURAL PURPOS ES BY SUCH HINDU UNDIVIDED FAMILY OR INDIVIDUAL OR A PARENT OF HIS; (III) SUCH TRANSFER IS BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW, OR A TRANSFER THE CONSIDERATION FOR WHICH IS DETERMINED OR APPROVED BY THE CENTRAL GOVERNMENT OR THE RESERVE BANK OF INDIA; (IV) SUCH INCOME HAS ARISEN FROM THE COMPENSATION OR CONSIDERATION FOR SUCH TRANSFER RECEIVED BY SUCH ASSESSEE ON OR AFTER THE 1ST DAY OF APRIL, 2004. EXPLANATION .. 11 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO WE AGREE WITH THE ASSESSEE IN PRINCIPLE. THE FIRST THING TO A S CERTAIN, THER EFORE, IS IF THE SUBJECT LAND IS SITUATE IN THE AREAS REFERRED TO IN SUB - CLAUSE S ( A ) OR (B) OF SECTION 2 ( 14 )(III) . TOWARD THIS, THE ASSESSEE HAS FURNISHED A CERTIFICATE DATED 0 1.8.2012 , ISSUED BY SUB - WARD OFFICERS OFFICE, KALYAN IN RESPONSE TO THE ASSESSE ES REQUEST DATE D 0 9.7.2012 , PURPORTEDLY TO THE E F FE CT THAT THE DISTANCE OF THE SUBJECT LAND FROM THE LOCAL LIMITS OF KALYAN (STATED TO BE THE NEAREST TOWN) MUNICIPALITY IS 9 KM (PB PAGE 30). THE SAME, FIRSTLY, WAS NOT PRODUCED BEFORE THE AO. EVEN THE IMPU GNED ORDER BEARS NO REFERENCE THERETO, INCLUDING QUA ADMISSION OR, AS THE CASE MAY BE, NON - ADMISSION OF THE SAID ADDITIONAL EVIDENCE. AS IT APPEARS, THE ASSESSEE MADE NO APPLICATION FOR ADMISSION OF THE SAME AS ADDITIONAL EVIDENCE BEFORE THE FIRST APPELLAT E AUTHORITY , SO THAT THE SAME WAS NOT REGARDED AS REQUIRING ADJUDICATION QUA ITS ADMISSION BY HIM . WE SAY SO AS THERE IS NO GROUND OR EVEN PRAYER BEFORE US WITH REGARD TO ITS NON - ADMISSION OR NON - CONSIDERATION OF ADMISSION. THERE IS ACCORDINGLY NO FINDING QUA THE SATISFACTION OR OTHERWISE OF THE CONDITION/S ( AS TO LOCATION ) OF S. 2(14)(III)(A)/(B) IN THE IMPUGNED ORDER. THE SAME, THOUGH , THEREFORE , TECHNICALLY NOT IN CORRECT IN - AS - MUCH AS NO INFIRMITY COULD BE S AID TO INFLICT THE SAID ORDE R ON THAT SCORE, WE W OULD BE DISINCLINED TO PROCEED TO DECIDE THE MATTER ON THE BASIS OF THE SAID CERTIFICATE NOT FORMING PART OF THE RECORD. THE ASPECT SOUGHT TO BE EVIDENCED GOES TO THE RO O T OF THE MATTER, I.E., WHETHER THE SUBJECT (AGRICULTURAL) LAND IS A CAPITAL ASSET U/ S. 2 ( 14 )(III) OF THE A CT OR NOT ? WE, ACCORDINGLY, RELYING ON PRABHAVATI S . SHAH VS. CIT [1998] 231 ITR 1 ( BOM ), DIRECT THE ADMISSION OF THE SAID EVIDENCE BY THE FIRST APPELLATE AU THORITY. THE SAME IS IN FACT, IN VERNACULAR, AND WOULD THEREFORE REQUIRE BEIN G TRANSLATED IN E NGLISH . WE ARE AWARE OF AN ENGLISH TRANSLATION ON RECORD. THE SAME, HOWEVER, HAS TO BE BY AN AUTHORIZED PERSON. THE SAME ALSO BEARS NO REFERENCE TO THE SURVEY NUMBERS OF THE SUBJECT AGRICULTURAL LAND , AND INDEED IT IS NOT EVEN CLEAR IF IT STANDS ISS UED BY THE COMPETENT AUTHORITY. THE LD. CIT(A) SHALL CAUSE EXAMINATION OF THE SE ASPECTS AS WELL. THEN, AGAIN, THE MATTER WOULD REQUIRE BEING VERIFIED AND CONSIDERED BY THE REVENUE AUTHORITIES. RATHER, THE RELIANCE ON THE SAID EVIDENCE IS SUBJECT TO THE MANDATORY 12 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO PROCEDURE PRESCRIBED UNDER R ULE 46A. HE SHALL DECIDE TH IS MATTER AFTER HEARING BOTH THE PARTIES BEFORE HIM, ISSUING DEFINITE FINDINGS OF FACT, AND IN ACCORDANCE WITH LAW. CLEARLY, IF THE LAND IS, AS CLAIMED, AN AGRICULTURAL L AND (I.E., A RURAL AGRICULTURAL LAND IN THE ASSESSEES WORDS), WHICH IS TO BE DETERMINED AS ON THE DATE OF TRANSFER, I.E., 18.02.2009 , THE SAME IS NOT A CAPITAL ASSET U/S. 2(14) OF THE ACT AND, ACCORDINGLY, NO CAPITAL GAIN CHARGEABLE TO TAX ARISES TO THE A SSESSEE ON ITS TRANSFER. THE LD. CIT(A) SHALL IN THIS REGARD ALSO; THE ASSESSEE HAVING RETURN ED THE SAME AS BUSINESS INCOME, DWELL ON THE ASPECT OF REDUCTION IN INCOME TO THAT EXTENT. 5.4 BEFORE PARTING , WE MAY ADD THAT THE ASSESSEE HAS PLACED ON RECORD SEVERAL ORDERS/DECISIONS, WHICH WERE NOT REFERRED TO DURING HEARING, MUCH LESS READ THEREAT. THE ISSUES ARISING AND DECIDED BY US ARE PRINCIPALLY FACTUAL, SO THAT THE SAME WOULD BE OF LITTLE MOMENT. AS REGARDS THE LEGAL ISSUE, Q UA WHICH THE ASSESSEE RELIE D ON CIT VS. NITISH RAMESHCHANDRA CHORDIA [2015] 374 ITR 531 (BOM), WE HAVE RESTORED THE MATTER BACK TO THE FILE OF THE FIRST APPELLATE AUTHORITY, WHO SHALL DECIDE THE SAME , DETERMINING THE FACTS, IN ACCORDANCE WITH LAW , AND BEFORE WHOM THE ASSESSEE SHALL BE AT LIBERTY TO RELY ON ANY DECISION DEEMED PROPER. 5.5 WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 04 , 201 6 S D/ - SD/ - ( AMARJIT SIN GH ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 04 . 10 .201 6 . . ./ ROS HANI , SR. PS 13 ITA NO. 2424/MUM/2014 (A.Y. 2009 - 10) YATIN HARIRAM RUPAREL VS. ITO / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI