ITO, WD-29(4), KOLKATA, Kolkata V. Goutam Brahma, Kolkata

ITA 244/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1695 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K SINHA
• Assessee Lawyers: MONOJ DUTT
• Keywords: Capital asset; Additional evidence; Cost of acquisition; Fair market value; Valuation report; Capital receipt
• Section: 45(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI M.BA LAGANESH, AM] I.T.A NO. 244/KOL/201 5 ASSESSMENT YEAR : 2008-0 9 I.T.O., WARD-29(4) -VS.- GOUTAM BRAHMA KOLKATA KOLKATA [PAN : ADJPB 3427 E] (APPELLANT) (RESPONDENT) C.O.NO.53/KOL/2017 (A/O I.T.A NO. 244/KOL /2015 ) ASSESSMENT YEAR : 2008-0 9 GOUTAM BRAHMA -VS- I.T.O., WARD-29(4) KOLKATA KOLKATA [PAN : ADJPB 3427 E] (CROSS OBJECTOR) (RESPONDENT) FOR THE DEPARTMENT : SHRI A.K.SINHA, ADDL. CIT FOR THE ASSESSEE : SHRI MONOJ DUTT, FCA DATE OF HEARING : 02.08.2017. DATE OF PRONOUNCEMENT : 18.08.2017. ORDER PER N.V.VASUDEVAN, JM I.T.A.NO.244/KOL/2015 IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 29.01.2015 OF C.I.T.(A)-8, KOLKATA RELATING TO A.Y .2008-09. THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE VERY SAME ORDER OF CIT( A). 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READ A S FOLLOWS :- 1. THAT THE LD. CIT(A) HAS ERRED IN ACCEPTING NEW DOCUMENTS LIKE PRIVATE VALUERS REPORT AND LTCG CLCULATION, WITHOUT GIVING ANY OPPO RTUNITY TO THE ASSESSING OFFICER TO VERIFY THE ISSUE AND THUS VIOLATING THE PROVISIONS OF RULE 46A OF THE I.T.RULE. 2 ITA NO.244/KOL/2015 & C.O.NO.53/KOL/2017 GOUTAM BRAHMA A.YR.2008-09 2 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, M ODIFY, DELETE OR INCLUDE ANY OF THE GROUNDS OF APPEAL. 3. IN THE CROSS OBJECTION THE ASSESSEE HAS SUBMIT TED THAT PROPER OPPORTUNITY WAS AFFORDED TO THE AO BEFORE CIT(A) AND THEREFORE THER E IS NO MERIT IN THE GROUNDS OF APPEAL OF THE REVENUE. GROUNDS OF APPEAL OF CROSS O BJECTION READ AS FOLLOWS :- 1. THAT AS PER DIRECTION OF THE THEN CIT(A)-XVI KO L NOTICE DT. 3/10/2012, COPY OF WRITTEN SUBMISSION ALONG WITH THE PAPER BOOK INCLUS IVE OF VALUATION REPORT WAS FILED WITH THE ITO WD. 29(4) KOL ON 16/11/2012 AS P ER RULE 46A(3) GIVING HIM FULL OPPORTUNITY TO EXPRESS HIS VIEWS. 2. THAT THE ITO WD. 29(4) KOL IN HIS REMAND REPORT DT. 31/01/2013 HAD ADMITTED THE RECEIPT OF THE VALUATION REPORT AT P. 3, CONSID ERED THE SAME AND EXPRESSED HIS COMMENTS, THE CIT(A) HAD ALSO DISCUSSED THE REMAND REPORT AT PARA 5 PAGE 4 OF THE APPEAL ORDER AND AS SUCH, THE QUESTION OF FRESH EVIDENCE DOES NOT ARISE. 3. THAT IN THE ABOVE CONTEXT, NO APPEAL LIES UNDER RULE 46A. THE CROSS OBJECTION IS THEREFORE ONLY SUPPORTIVE OF THE ORDER OF CIT(A). 4. THE FACTS AND CIRCUMSTANCES GIVING RISE TO TH E APPEAL BY THE REVENUE AND THE CORSS OBJECTION BY THE ASSESSEE ARE AS FOLLOWS :- THE ASSESSEE IS AN INDIVIDUAL. HE OWNED PROPERTY ME ASURING 27.50 SATAKS(16.667 COTTAHS) OF VACANT LAND AT J.L.NO.31, KH.NO.326, MOUZA-BADEMASUR, DISTRICT-24 PARGANAS (SOUTH) HEREIN REFERRED TO AS PROPERTY. THE PROPERTY WAS ORIGINALLY PURCHASED BY THE FATHER OF THE ASSESSEE SHRI PHANIN DRA NATH BRAHMA AND REGISTERED CONVEYANCE DEED DATED 26.02.1930. ON THE DEATH OF T HE ASSESSEES FATHER THE ASSESSEE BECAME ENTITLED TO THE PROPERTY. THE PROPERTY IS CL AIMED TO BE AN AGRICULTURAL LAND AND AGRICULTURAL OPERATIONS HAVE BEEN CARRIED OUT ON TH E LAND. IN THE YEAR 1959-60 THE REFUGEES FROM EAST PAKISTAN FORCIBLY OCCUPIED THE P ROPERTY. THE ASSESSEE COULD NOT RETRIEVE THE PROPERTY FROM THE ILLEGAL OCCUPANTS. S UBSEQUENTLY THE PROPERTY WAS ACQUIRED BY THE STATE GOVERNMENT FOR USE AS A REFUG EE COLONY. THE ASSESSEE RECEIVED A 3 ITA NO.244/KOL/2015 & C.O.NO.53/KOL/2017 GOUTAM BRAHMA A.YR.2008-09 3 SUM OF RS.61,62,177/- AS COMPENSATION ON COMPULSORY ACQUISITION. THE DISPUTE IN THIS APPEAL IS WITH REGARD TO THE TAXABILITY OF THE COMP ENSATION RECEIVED ON COMPULSORY ACQUISITION AND THE QUANTUM OF THE CAPITAL GAIN ON COMULSORY ACQUISITION. 5. INITIALLY THE ASESSEE TOOK A PLEA THAT THE SU M RECEIVED BY THE ASSESSEE WAS A CAPITAL RECEIPT NOT CHARGEABLE TO TAX BECAUSE THE PROPERTY IN QUESTION IS AN AGRICULTURAL LAND AND THE MONEY RECEIVED ON COMPULSORY ACQUISITION OF AN AGRICULTURAL LAND WOULD BE AKIN TO AGRICULTURAL INCOME NOT CHARGEABLE TO TAX. THIS PLE A WAS REJECTED BY THE AO AS WELL AS CIT(A) AND HAS NOT BEEN CHALLENGED BY THE ASSESSEE BEFORE THE TRIBUNAL. 6. THE ISSUE TO BE DECIDED IS COMPUTATION OF CA PITAL GAIN U/S 45(5) OF THE ACT. THE AO TREATED THE ENTIRE RECEIPT OF COMPENSATION BY TH E ASSESSEE AS LONG TERM CAPITAL GAIN. IT IS NOT IN DISPUTE THAT THE ASSESSEE DID NO T GIVE ANY COMPUTATION OF LTCG (LONG TERM CAPITAL GAIN) BEFORE THE AO. 7. THE ASSESSEE, HOWEVER FILED BEFORE CIT(A) A R EPORT OF REGISTERED VALUE ONE SHRI KALYAN BHATTACHARYA DATED 26.11.2011. IN THIS REP ORT, THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 WAS DETERMINED BY THE REG ISTERED VALUER AT A SUM OF RS.11,00,000/-. THE REGISTERED VALUERS REPORT WAS FORWARDED BY THE AO TO CIT(A) AND THE REMAND REPORT WAS ALSO OBTAINED FROM THE AO . IN THE REMAND REPORT THE AO FOCUSSED ATTENTION MORE ON THE FACT THAT THE LAND I N QUESTION WAS NOT AN AGRICULTURAL LAND AND THEREFORE THE COMPENSATION RECEIVED BY THE ASSE SSEE IS LIABLE TO LONG TERM CAPITAL GAIN TAX. IN THE REMAND REPORT THE AO FOCUSSED ON T HE FACT THAT THE ASSESSEE DID NOT GIVE ANY SUPPORTING DOCUMENTS TO SUBSTANTIATE THE COMPUT ATION OF CLAIM OF CAPITAL GAIN. 8. THE CIT(A) ON A CONSIDERATION OF THE REMAND R EPORT OF THE AO AND OTHER MATERIAL BEFORE HIM NAMELY THE REPORT OF THE REGISTERED VALU ER COMPUTED THE LONG TERM CAPITAL GAIN AT RS. NIL . THE FOLLOWING ARE THE RELEVANT OBSERVATIONS OF CIT(A) :- 4 ITA NO.244/KOL/2015 & C.O.NO.53/KOL/2017 GOUTAM BRAHMA A.YR.2008-09 4 7. THE CONTENTIONS OF BOTH SIDES HAVE BEEN ANALYZE D WITH THE RELEVANT MATERIALS ON RECORD. IN THE ULTIMATE ANALYSIS, IT IS THE CONTENT ION OF THE AR OF THE APPELLANT THAT EITHER THE COMPENSATION OF RS.61 ,62,177/-, RECEIVE D BY THE APPELLANT FROM THE STATE GOVT. OF WEST BENGAL ON ACCOUNT OF LAND REQUI SITION BE TREATED AS AGRICULTURAL INCOME WHICH IS EXEMPT U/S 10(37) OF THE ACT, OR, T HAT THE LTCG, AS ADMITTED BY THE AO, BE COMPUTED TAKING INTO ACCOUNT THE COST OF ACQUISITION AS PER THE INDEXATION IN ACCORDANCE WITH LAW. I FIND THAT WHIL E COMPUTING THE LTCG VIS-A-VIS THE SAID COMPENSATION, THE AO HAS NOT GIVEN THE BEN EFITS AS MENTIONED ABOVE. AS DISCUSSED BY THE AO IN THE ASSESSMENT ORDER, I FIND THAT THE COMPENSATION RECEIVED BY THE APPELLANT SHOULD BE TREATED AS CAPITAL CONSI DERATION ON ACCOUNT OF TRANSFER OF CAPITAL ASSET. IN THIS RESPECT, AS PER THE SCHEME O F WORKING OUT THE CAPITAL GAINS, THE APPELLANT WOULD BE ENTITLED TO THE BENEFITS OF COS T INDEXATION AND OTHER RELATED EXPENSES INCURRED IN RELATION TO THE TRANSFER OF CA PITAL ASSET. THE CALCULATION OF LTCG IN THIS REGARD, AS SUBMITTED BY THE APPELLANT, IS AS FOLLOWS: 1. COST OF LAND AS ON 01.04.1981 AS PER I.T.APPROVE D VALUERS REPORT DATED 26.11.2011 : RS.11,00,0 00/- 2. COST INDEXATION APPLIED FOR FY 2007-08 : 11,00,0 00X551 100 RS.60,61,000/- 3. MISC. & INCIDENTAL EXPENSES AS PER DETAILS AND E VIDENCES FILED ON 6.3.2013 ALL PAID BY CHEQUES RS. 10,15,000/- RS.70,76,000/- 4. COMPENSATION AMOUNT RECEIVED RS.61,62,177/- 5. HENCE L.T.C.G. IF ANY NIL I FIND THAT THE ABOVE CALCULATION TO BE FAIRLY ACCU RATE AND THERE DOES NOT SEEM TO BE ANY CAPITAL GAIN ON ACCOUNT OF THE COMPENSATION REC EIVED BY THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. IN VIEW OF THE ABOVE AND CONSIDERING THE MATERIALS ON RECORD WITH REGARD TO COMPUTATION OF LTCG, THE ADDI TION MADE BY THE AO ON THIS COUNT DOES NOT STAND TO ANY MERIT AND, THEREFORE, T HE SAME IS DIRECTED TO BE DELETED. 9. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A) TH E REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD . DR POINTED OUT THAT THE REGISTERED VALUERS REPORT WAS NO DOUBT AVAILABLE BEFORE THE A O WHEN THE AO GAVE THE REMAND REPORT BEFORE CIT(A). THE REMAND REPORT OF CIT(A) I S DATED 31.10.2013 AND IT DULY 5 ITA NO.244/KOL/2015 & C.O.NO.53/KOL/2017 GOUTAM BRAHMA A.YR.2008-09 5 ACKNOWLEDGES THE FACT THAT THE REMAND REPORT TO SUB STANTIATE THE FAIR MARKET VALUE AS ON 01.04.1981 WAS FILED BY THE ASSESSEE DURING THE REM AND PROCEEDINGS BEFORE THE AO. THE LD. DR HOWEVER POINTED OUT THAT WHEN THE COMPUTATIO N OF CAPITAL GAIN GIVEN BY CIT(A) IN HIS ORDER HAS ALLOWED DEDUCTION OF EXPENSES IN C ONNECTION WITH TRANSFER OF A SUM OF RS.10,50,000/- AND THE DETAILED EVIDENCE IN SUPPORT OF THESE EXPENSES WERE FILED BY THE ASSESSEE ONLY 06.03.2013. IT WAS ARGUED BY THE LD.D R THAT IN SO FAR AS THESE EXPENSES ARE CONCERNED THE EVIDENCE WAS NOT CONFRONTED TO THE AO AS THE REMAND REPORT OF THE AO WAS DATED 31.01.2013 AND HAD BEEN GIVEN PRIOR TO TH E FILING OF THE EVIDENCE IN SUPPORT OF THE DEDUCTION OF EXPENSES IN CONNECTION WITH THE TRANSFER OF THE CAPITAL ASSET. HIS PRAYER WAS THAT ORDER OF CIT(A) WITH REGARD TO THE ALLOWING THESE EXPENSES SHOULD BE SET ASIDE AND THE AO SHOULD BE AT LIBERTY TO EXAMIN E THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE FOR THE AFORESAID DEDUCITON. THE LD. COUNS EL FOR THE ASSESSEE DID NOT OBJECT TO REMAND THE ISSUE WITH REGARD TO ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION IN RESPECT OF ADDITION OF RS.10,15,000/- WHICH WAS CLAIMED AS DEDUCTION IN COMPUTING THE CAPITAL GAIN AS EXPENSES IN CONNECTION WITH THE TRANSFER OF THE CAPITAL ASSET. HOWEVER, WITH REGARD TO THE OTHER ASPECTS OF THE LONG TERM CAPITA L GAIN HE PLACED RELIANCE ON THE ORDER OF CIT(A). 11. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION T O THE RIVAL SUBMISSIONS AND ARE OF THE VIEW THAT THERE IS NO MERIT IN THE CONTENTION OF TH E REVENUE IN THE GROUNDS OF APPEAL THAT THE AO DID NOT HAVE OPPORTUNITY TO VERIFY THE AFORE SAID EVIDENCE FILED BY THE ASSESSEE BEFORE CIT(A). AS WE HAVE ALREADY MENTIONED IN THE EARLIER PARAGRAPHS THE VALUATION REPORT OF REGISTERED VALUER IN SUPPORT OF THE ASSES SEES CLAIM FOR FAIR MARKET VALUE AS ON 01.04.1981 AT RS.11,00,000/- WAS FILED BY THE ASSES EE BEFORE CIT(A). THE SAID ADDITIONAL EVIDENCE WAS DULY CONFRONTED BY CIT(A) T O THE AO IN THE REMAND REPORT DATED 31.01.2013 AS ALSO FILED BY THE AO BEFORE CIT (A). HOWEVER, AS RIGHTLY POINTED OUT BY THE LD. DR WITH REGARD TO THE DEDUCTION ON A CCOUNT OF EXPENSES INCIDENTAL TO THE TRANSFER OF A SUM OF RS.10,15,000/-.THE EVIDENCE WA S FILED BY THE ASSESSEE BEFORE 6 ITA NO.244/KOL/2015 & C.O.NO.53/KOL/2017 GOUTAM BRAHMA A.YR.2008-09 6 CIT(A) ON 06.03.2013 AND THE AO DID NOT HAVE AN OPP ORTUNITY TO EXAMINE THIS EVIDENCE. WE THEREFORE ARE OF THE VIEW THAT THERE W AS A CONTRAVENTION OF RULE 46A OF THE I.T.RULES IN RELATION TO THE ABOVE EXPENDITURE. WE THEREFORE DEEM IT FIT AND APPROPRIATE TO SET ASIDE THE ORDER OF CIT(A) FOR TH E LIMITED EXTENT OF VERIFICATION OF THE EVIDENCE WITH REGARD TO THE CLAIM OF THE ASSESSEE F OR DEDUCTION OF RS.10,15,000/- WHILE COMPUTING THE CAPITAL GAIN AS EXPENSES IN CONNECTIO N WITH THE TRANSFER OF THE CAPITAL ASSET. IN ALL OTHER RESPECTS COMPUTATION OF LONG TE RM CAPITAL GAIN AS DONE BY CIT(A) IS UPHELD. THE AO WILL AFFORD OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. FOR STATISTICAL PURPOSES THE APPEAL OF T HE REVENUE IS TREATED AS PARTLY ALLOWED. 12. THE CROSS OBJECTION IS PURELY SUPPORTIVE OF THE ORDER OF CIT(A) AND THEREFORE DISMISSED AS NOT MAINTAINABLE. 13. IN THE RESULT THE APPEAL OF THE REVENUE IS P ARTLY ALLOWED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 18.08.20217. SD/- SD/- [M.BALAGANESH] [ N.V.VASU DEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18.08.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. GOUTAM BRAHMA, 38, CHETLA CENTRAL ROAD, CHETLA, KOLKATA-700027. 2. I.T.O., WARD-29(4), KOLKATA. 3. CIT(A)-8, KOLKATA 4. C.I.T.-10, KOLKAT A. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PR IVATE SECRETARY HEAD OF OFFICE/ D.D.O., ITAT, KOLKATA BENCHE S 7 ITA NO.244/KOL/2015 & C.O.NO.53/KOL/2017 GOUTAM BRAHMA A.YR.2008-09 7