Majeeda Shahida Begum, CHENNAI V. ITO International Taxation 1(1), CHENNAI

ITA 2626/CHNY/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7478 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 01-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N GOPIRKISHNAN IRS
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset
• Section: 54F; 2(14)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , !' . #$#% , & '' ( [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO. 2626/CHNY/2017 / ASSESSMENT YEAR : 2013-2014. SMT. MAJEEDA SHAHIDA BEGUM, FF-1, 48, ARCOT ROAD, SALIGRAMAM, CHENNAI 600 093 . [ PAN BQWPB 6448Q ] VS. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION 1(1) CHENNAI. ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI. N. GOPIRKISHNAN, IRS, JCIT. /DATE OF HEARING : 18-06-2018 ! /DATE OF PRONOUNCEMENT : 11-07-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE ASSESSEE, DIRECTED AGAINST AN ORDER DATED 01.09.2017 OF COMMISSIONER OF INCOME -TAX (APPEALS)- 16, CHENNAI, IT HAS TAKEN ALTOGETHER EIGHT GROUNDS OF WHICH GROUNDS 1, 7 & 8 ARE GENERAL, NEEDING NO SPECIFIC ADJUDICATIO N. ITA NO. 2626/CHNY/2017 :- 2 -: 2. THROUGH ITS GROUNDS 2 TO 4, ASSESSEE ASSAILS DISALL OWANCE OF A CLAIM MADE BY HER U/S.54F OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON LONG TERM CAPITAL GAINS. THROUGH ITS GROUNDS 5 & 6, ASSESSEE ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN SO FAR AS HE DECLINED TO ADMIT HER CL AIM THAT THE LAND SOLD WHICH GAVE RISE TO THE GAINS WAS AN AGRICULTURAL ONE AND HENCE OUTSIDE THE AMBIT OF LEVY OF CAPITAL GAINS TAX. 3. FACTS APROPOS ARE THAT ASSESSEE HAD FILED HER RETUR N FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSING INCOME OF D1,27 ,63,670/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE LD. ASSESSING OFFICER THAT ASSESSEE HAD CLAIMED DEDUCT ION OF D2,40,00,000/- UNDER SECTION 54F OF THE ACT FROM TH E GAINS ARISING OUT OF SALE OF 4.84 ACRES OF LAND AT SURVEY NOS.59/2A, 2B, 2C, 2D, 2E, 60/1,2,3,4 AT NO.127 PANRUTI VILLAGE, SRIPERUMPUDHU R TALUK. TOTAL SALE CONSIDERATION CAME TO D3,87,20,000/-. THE DEDUCTION WAS CLAIMED FOR INVESTMENT IN A NEW RESIDENTIAL HOUSE. LD. ASSESS ING OFFICER REQUIRED THE ASSESSEE TO PRODUCE EVIDENCE IN SUPPORT OF THE CLAIM OF DEDUCTION U/S.54F OF THE ACT. ASSESSEES LD. AUTHORISED REP RESENTATIVE THEREUPON STATED THAT THE RECORDS FURNISHED TO HIM BY HIS CLIENT WERE LOST DUE TO CHENNAI FLOODS AND THEY WERE UNABLE TO ITA NO. 2626/CHNY/2017 :- 3 -: RETRIEVE IT. HOWEVER, THEREAFTER ASSESSEE DID PROD UCE COPY OF BUILDING SANCTION PLAN, PROOF FOR PAYMENT OF BROKERAGE AND COMMISSION D7,75,000/-, PROOF FOR PURCHASE OF MATERIAL FOR OF CONSTRUCTION ETC. ON ANALYZING THE ABOVE DOCUMENTS, LD. ASSESSING OFF ICER NOTED THAT THERE WERE CERTAIN LACUNA WHICH WERE LISTED BY HIM AS UNDER:- 1. IN THE BUILDING PLAN, THE PROPOSED CONSTRUCTION WAS APPROVED BY ONE SMT. P.SHANTHI PANDIAN, PRESIDENT OF CHENNAKUPPAM PANCHAYAT ON 29.8.2013 ONLY. IT MEANS THAT THE BUILDING SHOULD HAVE BEEN STARTED ONLY AFTER GETTING THE BUILDING P LAN APPROVAL. HOWEVER, THE AR HAS STATED THAT THE PAYMENTS TO THE TUNE OF RS.58,75,000/- HAVE BEEN MADE TO THE VARIOUS PARTIES AND BALANCE AMOUNT OF RS.14 LACS HAVE BEEN SPENT ON 13.9.2013,23.1.2014 AND 18.10.2013. IT IS CLEAR FROM THE SANCTIONED BUILDING PLAN THAT THE CONSTRUCTION WAS NOT AT ALL STARTED BEFORE 29.8.2013. 2 .IN THE COPY OF PROPERTY RECEIPT FURNISHED, IT HA S BEEN NOTICED THAT THE ASSESSEE HAS STATED TO HAVE PAID RS.632/- FOR THE PROPERTY TAX FOR THE PERIOD 2014-15 AND IT IS NOT REASONABLE THAT FOR THE BUILD ING MEASURING 3398 SQ.FT, ONLY AN AMOUNT OF RS.632/- IS DETERMINED AS PROPERTY TAX. 4. LD. ASSESSING OFFICER THEREAFTER DEPUTED HIS INSPEC TOR FOR AN ENQUIRY. THE ENQUIRY REPORT RAN AS UNDER:- DURING THE COURSE OF INSPECTION ON 23.02.2015, THE UNDERSIGNED HAS MET ONE MR. RAMAMOORTHY, MANAGER, SURIYADEVI COMPLEX, WHO HAS LOCATED AND IDENTIFIED THE LAND PURCHASED BY THE ASSESSEE MRS. MAJEEDA SHAHIDA KAMALUDIN BEGUM. IT HAS BEEN NOTICED THAT THE LANDED PROPERTY PURCHASED BY THE ASSESSEE I.E, LAND TO THE EXTENT OF 8280 SQ.FT. AS PER PATTA NEW SURVEY NO.44/8B2 HAS NO BUILDING STRUCTURE ITA NO. 2626/CHNY/2017 :- 4 -: AS CLAIMED BY THE ASSESSEE VIDE BUILDING PLAN SUBMITTED TO THIS OFFICE THE LAND IS SITUATED DIAGO NALLY OPPOSITE TO THE CAR COMPANY M/S. RENAULT NISSAN AND THE LAND CONSIST OF BUSHES & OLD TREES AND IN THE RIGHT SIDE, THERE EXISTS ONE SMALL SHED MEASURING 6 0 TO 70 SQ.FT. AND IT SEEMS LIKE BATHROOM/TOILET/GEN-SET ROOM. THERE HAS BEEN NO EVIDENCE OF USING THIS LAND FOR ANY PURPOSE- AND IT WAS KEPT UNUSED FOR A LONG TIME. ON ENQUIRY ALSO, IT IS ASCERTAINED THAT THIS LAND WAS NOT USED BY ANYBODY AND IT WAS LOCKED WITH RUSTED GRILLED FRONT-GATE. IN VIEW OF THIS, THE UNDERSIGNED IS SATISFIED THAT THE LAND (WHERE THE BUILDING STATED TO HAVE BEEN BUILT) HAS NO STRUCTUR E AT ALL AND IT HAS AREAS COVERED UNDER BUSHES AND TREES AND NO AREA HAS EVIDENCE OF HABITABLE CONDITION. LD. ASSESSING OFFICER THEN CONSIDERED THE PHOTOS OF THE CONSTRUCTION DONE BY THE ASSESSEE AND CAME TO THE FOLLOWING CONC LUSION:- THE ASSESSEE'S CLAIM THAT THE CONTRACTORS HAVE CONSTRUCTED A CARETAKER QUARTER, COMPOUND WALL AND LAID FOUNDATION FOR THE NEW BUNGALOW IS ALSO NOT CORRECT WHEN THE FIRST HAND INFORMATION REVEALED TH AT THERE IS ONE SMALL ROOM MEASURING 70 TO 80 SQ.FT WHICH ALSO SEEMS TO BE NOT CONSTRUCTED RECENTLY AND IT HAS ALSO BEEN ASCERTAINED THAT IT WAS NOT IN HABITABLE CONDITION. A BUILDING, IN ORDER TO BE HABITABLE, IS ORDINARILY REQUIRED TO HAVE MINIMUM FACILITIES LIKE A WASHROOM, KITCHEN. LIVING ROOM, ELECTRICITY, SEWERAGE ETC. ONE COULD NOT PUT UP SHE DS FOR USE WITHOUT BASIC LIVING AMENITIES AND CLAIM TH AT THE STRUCTURE CONSTRUCTED IS A 'HOUSE'. THEREFORE, ONE SMALL ROOM MEASURING 70 TO 80 SQ.FT. EXISTED IN THE LAND COULD NOT BE CONSIDER ED AS HOUSE. THE PICTURES SHOWN ABOVE ARE THE CLEAR INDICATORS TO ARRIVE AT A CONCLUSION THAT THE ASSES SEE HAS NOT CONSTRUCTED ANY BUILDING WITHIN THE TIME LI MIT SPECIFIED IN THE SECTION. HE THUS DENIED THE DEDUCTION CLAIMED BY THE ASSESSE E U/S.54F OF THE ACT AND COMPLETED THE ASSESSMENT. ITA NO. 2626/CHNY/2017 :- 5 -: 5. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). APART FROM A SSAILING THE DISALLOWANCE OF CLAIM MADE U/S.54F OF THE ACT, ASSE SSEE ALSO PREFERRED A FRESH CLAIM STATING THAT THE ASSET SOLD, WHICH GA VE TO THE GAINS WAS NOT A CAPITAL ASSET SINCE IT WAS AN AGRICULTURAL L AND. AS PER THE ASSESSEE, BEFORE THE LD. ASSESSING OFFICER, SHE WA S UNABLE TO PROPERLY PRESENT THE FACTS AND HAD FAILED TO MAKE THE CLAIM THAT LAND SOLD WAS AGRICULTURAL IN NATURE. ASSESSEE ALSO FURNISHED THE FOLLOWING RECORDS BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) . 1. XEROX COPY OF THE CERTIFICATE ISSUED BY THE HQ DEPU TY TAHSILDAR, SRI PERUMBUDUR. 2. XEROX COPY OF THE CENSUS CALCULATION. 3. DOCUMENT EXTRACT FROM THE WEBSITE OF TAMILNADU GOV ERNMENTS REGISTRATION DEPARTMENT 4. EXTRACT FROM REVENUE RECORD (A REGISTRAR) 5. PATTA. 6. GOOGLE DISTANCE MAP. CONTENTION OF THE ASSESSEE WAS THAT THE LAND WHIC H WAS SOLD WAS AGRICULTURAL IN NATURE AND SO PROVED BY THE REVENU E RECORDS. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. MANSI FINANCE CHENNAI LTD, 388 IT R 514 A ND MRS. SAKUNTHALA VEDACHALAM & MRS. VANITHA MANICKAVASAGAM VS. ACIT, 369 ITR 558 . ASSESSEE ALSO SUBMITTED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT PROCEEDIN GS BEFORE THE LATTER WERE TO BE CONSTRUED AS AN EXTENSION OF THE ASSESSMENT ITA NO. 2626/CHNY/2017 :- 6 -: PROCEEDINGS AND HE HAD WIDE POWERS TO ENTERTAIN SU CH CLAIM. HOWEVER, LD. COMMISSIONER OF INCOME TAX (APPEALS) R EFUSED TO CONSIDER THE FRESH CLAIM OF THE ASSESSEE AND HELD A S UNDER:- THE APPELLANT FRESH CLAIM IN TERMS OF RULE 46A O F THE INCOME TAX RULES, 1962 IS NOT MAINTAINABLE ON THE G ROUND THAT APPELLANT WAS NOT PREVENTED BY SUFFICIENT CAUS E FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER. THEREFORE ADDITIONAL GROU ND OF APPEAL MADE BY THE APPELLANT IS DISMISSED. LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO UPHEL D THE ORDER OF THE LD. ASSESSING OFFICER, DENYING THE CLAIM OF DED UCTION MADE U/S.54F OF THE ACT. 6. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE STRONG LY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT THE QUESTION WHETHER LAND SOLD WAS A GRICULTURAL OR NOT WAS GERMANE FOR DECIDING THE EXIGIBILITY TO CAPIT AL GAINS TAX. ACCORDING TO HIM, THOUGH THE ASSESSEE DID NOT PREFE R SUCH A CLAIM BEFORE THE LD. ASSESSING OFFICER, WHEN THERE WERE I RREFUTABLE DOCUMENTS TO SHOW THAT THE LAND SOLD WAS AGRICULT URAL, LD. COMMISSIONER OF INCOME TAX (APPEALS) OUGHT HAVE ADJ UDICATED THE ISSUE. ACCORDING TO HIM, THE QUESTION OF DEDUCTION CLAIMED U/S.54F OF THE ACT WOULD ARISE ONLY IF THE LAND SOLD, WHICH GA VE RISE TO THE GAINS WAS NOT AGRICULTURAL. ITA NO. 2626/CHNY/2017 :- 7 -: 7. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTING THE ORDER OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS) SUBMITTED THAT ASSESSEE COULD NOT SHOW, WHAT PREVEN TED HER FROM CLAIMING THE NATURE OF THE LAND TO BE AGRICULTURAL BEFORE LD. ASSESSING OFFICER. ACCORDING TO HIM, LD. COMMISSIONER OF INC OME TAX (APPEALS) WAS JUSTIFIED IN REJECTING A FRESH CLAIM MADE BY T HE ASSESSEE. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUT ED BY THE ASSESSEE THAT NATURE OF LAND WHICH WAS SOLD GIVING RISE TO T HE GAINS WAS NEVER AN ISSUE BEFORE LD. ASSESSING OFFICER NOR RAISED BY HER BEFORE HIM. IT IS ALSO TRUE THAT ASSESSEE HERSELF HAD COMPUTED CAP ITAL GAINS FROM THE SALE OF SUCH PROPERTY AND CLAIMED DEDUCTION U/S.54 F OF THE ACT IN HER RETURN OF INCOME. NEVERTHELESS, ASSESSEE DID PREFE R A CLAIM BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT THE LAND SOLD WAS AGRICULTURAL IN NATURE AND WOULD NOT BE CAPITAL AS SET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. IN SUPPORT OF THIS ASSESSEE PLACED BEFORE LD. COMMISSIONER OF INCOME TAX (APPEA LS) A NUMBER OF RECORDS TO SUBSTANTIATE SUCH CLAIM. LD. COMMISSION ER OF INCOME TAX (APPEALS) DECLINED TO ADMIT THE CLAIM MADE BY THE A SSESSEE, CITING A REASON THAT RULE 46A DID NOT PERMIT ADMISSION OF A DDITIONAL EVIDENCE, DUE TO ASSESSEES FAILURE TO PRODUCE THE EVIDENCE B EFORE THE LD. ITA NO. 2626/CHNY/2017 :- 8 -: ASSESSING OFFICER . HOWEVER, A READING OF THE ASSE SSMENT ORDER CLEARLY SHOW THAT ASSESSEES REPRESENTATIVE HAD MENTIONED L OSS OF DOCUMENTS PROVIDED BY THE CLIENT TO HIM IN THE CHENNAI FLOODS . LETTER DATED 29.12.2015, FILED BY THE LD. AUTHORISED REPRESENTA TIVE BEFORE LD. ASSESSING OFFICER WHICH IS RELEVANT AND IT IS REPRO DUCED HEREUNDER:- WE ARE IN RECEIPT OF YOUR NOTICE DT.L1.12.2015 AN D NOTED THE CONTENTS AND IN THAT CONNECTION, WE WISH TO STATE A S FOLLOWS: WE HAVE RECEIVED DOCUMENTS/RECORDS FROM THE CLIENT, DUE TO RECENT FLOODS OUR OFFICE IS WORST AFFECTED. WE ARE RECOVERING ALL DOCUMENTS/RECORDS USING ROOM HEATERS/ HOT AIR B LOWERS ETC. WE ARE FACING UPHILL TASK SINCE OUR OFFICE IS SUBMERGED WITH 5 FEET WATER FOR TWO DAYS. WE REQUEST YOU TO GIVE US TWO WEEK'S TIME TO RECOVER THE DOCUMENTS/RECORDS. WE REGRET THE INCONVENIENCE CAUSED TO YOU' IF THE LAND SOLD BY THE ASSESSEE WAS INDEED AGRICUL TURAL IN NATURE, GAINS ARISING FROM SUCH SALE WOULD NOT BE EXIGIB LE FOR CAPITAL GAINS TAX, SINCE AGRICULTURAL LAND IS NOT A CAPITAL ASSE T UNDER SECTION 2(14) OF THE ACT. WE ARE OF THE OPINION THAT THE QUESTION W HETHER THE LAND SOLD WAS AGRICULTURAL OR NOT WAS A FUNDAMENTAL ISSUE AN D THIS CLAIM OUGHT NOT HAVE BEEN BRUSHED ASIDE BY THE LD. COMMISSION ER OF INCOME TAX (APPEALS), CITING RULE 46A OF THE INCOME TAX RULES, 1962. WHEN A PARTICULAR RECEIPT IS NOT TAXABLE UNDER THE ACT, IT WOULD NOT BECOME TAXABLE SOLELY FOR A REASON THAT AN ASSESSEE RETURN ED SUCH INCOME ON A WRONG UNDERSTANDING OF LAW. WHETHER A RECEIPT IS T AXABLE IS TO BE DETERMINED BY TESTING IT AGAINST THE PROVISIONS OF THE ACT. CONSIDERING THE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT ASSESSEES ITA NO. 2626/CHNY/2017 :- 9 -: CLAIM THAT LAND SOLD WAS AGRICULTURAL IN NATURE REQ UIRES CONSIDERATION. WE THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTH ORITIES AND REMIT THE ISSUE WHETHER LAND SOLD BY THE ASSESSEE WAS AGR ICULTURAL OR NOT AND WHETHER IT WAS EXIGIBLE TO CAPITAL GAINS TO TH E FILE OF THE ASSESSING OFFICER FOR CONSIDERATION IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THE QUESTION WHETHER ASSESSEES CLAIM U/S. 54F OF THE A CT MERITED ADMISSION IS KEPT OPEN. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 11TH DAY OF JULY , 2018, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( !' . #$#% ) (ABRAHAM P. GEORGE) & / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:11 TH JULY, 2018. KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF