ITO, Mathura V. M/s Radha Madhav Trust, Mathura

ITA 271/AGR/2006

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7697 (ITAT-AGRA)
• Duration Of Justice: 5 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-04-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 01-08-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: WASEEAM ARS HAD
• Assessee Lawyers: R C TOMAR I T P
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Business income; Cost of acquisition; Fair market value; Corroborative evidences; Valuation report
• Section: 144; 45(2); 50C; 142(1); 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.207/AGR/2006 ASSESSMENT YEAR: 2003-04 SHRI RADHA MADHAV TRUST, VS. INCOME TAX OFFICER, C/O. SHRI O.P. BHARGAVA, WARD 3(3), MATHURA. BHARGAVA MOTORS, INDUSTRIAL AREA, HALDWANI DISTT. NAINITAL (UTTARANCHAL). (PAN : AAATR 9151 P) ITA NO.271/AGR/2006 ASSESSMENT YEAR: 2003-04 INCOME TAX OFFICER, VS. SHRI RADHA MADHAV TRUST, WARD 3(3), MATHURA. C/O. SHRI O.P. BHARGAVA, BHARGAVA MOTORS, INDUSTRIAL AREA, HALDWANI DISTT. NAINITAL (UTTARANCHAL). (PAN : AAATR 9151 P) (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI R.C. TOMAR, I.T.P. REVENUE BY : SHRI WASEEAM ARSHAD, SR. D.R. DATE OF HEARING : 03.04.2012 DATE OF PRONOUNCEMENT : 20.04.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 2 THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND R EVENUE AGAINST THE ORDER DATED 23.03.2006 PASSED BY THE LD. CIT(A)-I, AGRA F OR THE ASSESSMENT YEAR 2003- 04. ITA NO.207/AGR/2006 BY THE ASSESSEE FOR A.Y. 2003-0 4 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL ARE AS UNDER :- - THAT THE LD. CIT (APPEAL) HAS ERRED IN LAW AND O N FACTS IN SUSTAINING OF ASSESSEES BUSINESS PROFIT FROM ADVEN TURE IN THE NATURE OF TRADE AS LONG TERM CAPITAL GAIN WITHOUT PROPERLY APPRECIATING THAT THE ASSESSEE-OWNER OF THE CAPITAL ASSET HAS CO NVERTED THE SAME AS HIS STOCK IN TRADE IN ACCORDANCE WITH THE PROVISION S OF SECTION 45(2) OF THE INCOME TAX ACT, 1961. - THAT THE LD. CIT (APPEAL) HAS ERRED TO TAKE THE V ALUE OF ` 73.50 PER SQ. METER AS COST OF LAND AS ON 01.04.1981 WITH OUT PROPERLY APPRECIATING THE EVIDENCE FILED BY THE ASSESSEE AND BY IGNORING THE IMPORTANCE OF LOCALITY, SITUATION OF THE LAND. - THAT THE LD. CIT (APPEAL) HAS ERRED IN CALCULATIN G LONG TERM CAPITAL GAIN, SALE VALUE OF PLOT AS DETERMINED BY V ALUATION OFFICER FOR ` 1100/- PER SQ. METER WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. - THAT THE LD. CIT (APPEALS) HAS ERRED IN DISALLOWI NG THE CLAIM OF INCOME TAX LIABILITY OF ` 11,64,500/- WHILE CALCULATING LONG TERM CAPITAL GAIN WITHOUT PROPERLY APPRECIATING THE FACT S AND CIRCUMSTANCES OF THE CASE. ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 3 - THAT THE LD. CIT (APPEAL) HAS ERRED IN DISALLOWIN G THE CLAIM OF DEVELOPMENT EXPENSES OF ` 5,23,500/- WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. - THAT THE LD. CIT (APPEAL) HAS ERRED IN DISALLOWIN G THE REBATE U/S 80-L REGARDING INCOME FROM BANK INTEREST WITHOU T APPRECIATING THE FACTS. - THAT THE APPELLANT CRAVES AND LEAVES TO HIS RIGHT TO ADD, DELETE, ALTER, SUBSTITUTE OR MODIFY ANY OR ALL THE GROUNDS OF APPEAL AT ANY SUITABLE TIME. 3. THIS IS AN OLD APPEAL FILED BY THE ASSESSEE IN 2 006. THE APPEAL OF THE ASSESSEE IS REGULARLY ON BOARD SINCE FILING OF THE APPEAL BUT THE CASE WAS ADJOURNED ON NUMBER OF TIMES ON THE REQUEST OF THE LD. AUTHOR ISED REPRESENTATIVE STATING ONE OR OTHER REASON INCLUDING THE REASON THAT THE LD. A UTHORISED REPRESENTATIVE TO COLLECT CERTAIN RECORDS. ON THE LAST DATE WHEN THE CASE WAS FIXED FOR HEARING I.E. 05.03.2012, THE LD. AUTHORISED REPRESENTATIVE SOUGH T ADJOURNMENT AND THE CASE WAS ADJOURNED TO 03.04.2012 AS LAST OPPORTUNITY OF HEARING. ACCORDINGLY HEARD ON 3.4.2012 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E TRUST IS A LEGAL HEIR IN ACCORDANCE WITH WILL OF LATE SHRI PRABHU DAYAL BHAR GAVA DATED 06.08.2001. DURING THE ASSESSMENT PROCEEDINGS OF LATE SHRI P.D. BHARGAVA FOR ASSESSMENT YEAR 2000-01 IT WAS NOTICED THAT THE ASSESSEE TRUST SOLD LAND OF 8, CIVIL LINES, MATHURA DIVIDED X 30 PLOTS FOR ` 61,02,380/-. THE REVENUE WAS OF THE VIEW THAT ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 4 THE TRUST SHOULD OFFER TAX ON LONG TERM CAPITAL GAI N ON THIS SALE TRANSACTION OF 30 PLOTS BY THE ASSESSEE TRUST. BUT THE ASSESSEE TRUS T DID NOT FILE ANY RETURN OF INCOME INSPITE OF ISSUE OF NOTICE UNDER SECTION 142(1) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) BY THE DEPARTMENT. THE ASSESSING OFFICER MADE THE ASSESSMENT UNDER SECTION 144 OF THE ACT AS THE ASSESSEE DID NO T COMPLY WITH THE NOTICES AND SHOW CAUSES ISSUED BY THE ASSESSING OFFICER. THE A SSESSING OFFICER HAS TAKEN THE SALE CONSIDERATION OF HOUSE AS PER SALE DEED AT ` 2,16,69,423/- ACCORDING TO SECTION 50C(1) OF THE ACT. THE ASSESSING OFFICER HAS ALSO NOTED THAT WHILE MAKING ASSESSMENT IN CASE OF LATE SHRI P.D. BHARGAVA FOR T HE ASSESSMENT YEAR 2002-03 THE VALUATION OF THESE PLOTS AS ON 01.04.1981 WAS T AKEN AT ` 60/- PER SQ. MTR. THE ASSESSING OFFICER ACCORDINGLY CALCULATED THE LONG T ERM CAPITAL GAIN AS UNDER :- 1) AREA OF DEVELOPED PLOTS 10480.06 SQ. MTR. 2) SALE CONSIDERATION OF PLOTS SOLD ` 61,02,380/- 3) VALUATION OF PLOTS IN ACCORDANCE WITH SECTION 50 C(1) ` 2,16,69,423/- 4) VALUE OF PLOTS AS ON 01.04.19891 ` 10,480.06 X 60 = ` 6,28,804/- 5) COST INDEX OF PLOTS 6,28,804 X 447/100 = ` 28,10,753/- 6) LTCG ` 2,16,69,423 - 28,10,753 = ` 1,88,58,670/- 5. THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSI NG OFFICER BEFORE THE CIT(A) AND FILED WRITTEN SUBMISSION. A COPY OF WRI TTEN SUBMISSION FILED BY THE ASSESSEE WAS SENT TO THE ASSESSING OFFICER BY THE C IT(A) FOR GIVING HIS COMMENTS. THE CIT(A) ALSO DIRECTED THE ASSESSING OFFICER TO R EFER THE VALUATION OF THE CAPITAL ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 5 ASSET TO THE VALUATION CELL AND TO CONFRONT THE REP ORT OBTAINED FROM THE VALUATION CELL. THE ASSESSING OFFICER SUBMITTED HIS REMAND R EPORT DATED 04.01.2006. COPY OF THE SAME WAS GIVEN TO THE ASSESSEE FOR FILING RE JOINDER, IF ANY. 6. THAT THE ASSESSEE CLAIMED THAT THE TRUST HAS REC EIVED THE UNSOLD PLOTS OF LAND AS STOCK IN TRADE. THE SAID LAND HAS BEEN CONVERTE D IN STOCK IN TRADE BY THE OWNER OF LAND SHRI P.D. BHARGAVA IN THE ASSESSMENT YEAR 2 000-01 AT THE FAIR MARKET VALUE OF ` 90,00,000/- AS PER PROVISIONS OF SECTION 45(2) OF T HE ACT. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN AS SESSING THE SALE CONSIDERATION AS LONG TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME A S CLAIMED BY THE ASSESSEE AFTER A DETAILED DISCUSSION FROM PAGE NOS.7 TO 18. THE CIT(A) HELD THAT THE FACTS AND CIRCUMSTANCES OF THE CASE DURING THE YEAR UNDER CONSIDERATION ARE SIMILAR TO THE FACTS OF THE CASE OF LATE SHRI P.D. BHARGAVA FOR AS SESSMENT YEAR 2002-03 WHEREIN THE CIT(A) HELD THAT THE SALE CONSIDERATION IS ASSE SSABLE AS CAPITAL GAIN. THUS THE FIRST GROUND OF APPEAL OF ASSESSEES APPEAL IS THAT THE LD. CIT (APPEAL) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING OF ASSESSEES BUSINE SS PROFIT FROM ADVENTURE IN THE NATURE OF TRADE AS LONG TERM CAPITAL GAIN WITHOUT P ROPERLY APPRECIATING THAT THE ASSESSEE-OWNER OF THE CAPITAL ASSET HAS CONVERTED T HE SAME AS HIS STOCK IN TRADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 45(2) OF THE INCOME TAX ACT, 1961. ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 6 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE HAS CON VERTED THE IMPUGNED LAND INTO STOCK IN TRADE IN THE YEAR 1999-2000 AND HAD STARTE D DEVELOPMENT WORK AND COLONY WAS NAMED AS RADHA MADHAV NAGAR. THE CIT(A), AFTER A DETAILED DISCUSSION ON THE ISSUE, CONSIDERED THE VARIOUS JUDGEMENTS AT PAG E NOS.8 & 9 AND HELD THAT IN THE CASE UNDER CONSIDERATION THERE IS NO INDICATION THA T LATE SHRI P.D. BHARGAVA HAS ANY INTENTION OF CARRYING OUT BUSINESS OF TRADING IN LA ND. EVIDENCE AVAILABLE, ON THE OTHER HAND, INDICATES CONTRARY STATE OF AFFAIRS. T HE CIT(A) HAS ALSO RECORDED THE FACT THAT SINCE LATE SHRI P.D. BHARGAVA IS NO MORE, THEREFORE, THE ISSUE IS REQUIRED TO BE EXAMINED ON THE BASIS OF RECORDS AVAILABLE. THE CIT(A) NOTED THAT THE CLAIM OF THE ASSESSEE THAT THE LAND WAS CONVERTED INTO STOCK IN TRADE IN THE YEAR 1999-2000 IS NOT A CORRECT FACT AS THE CIT(A) NOTED FROM PARAGRA PH NO.3 OF THE WILL DATED 06.08.2001 THAT SUCH PROPERTY SITUATED AT BUNGALOW NO.8, CIVIL LINES WAS NOT IN THE POSSESSION OF LATE SHRI P.D. BHARGAVA. AS IT I S STATED IN THE WILL DATED 06.08.2001 THAT IF LATE SHRI P.D. BHARGAVA COULD NO T GET THE POSSESSION DURING HIS LIFE TIME OF THE PROPERTY SITUATED AT BUNGALOW NO.8 , CIVIL LINES, MATHURA THEN SHRI O.P. BHARGAVA, S/O. LATE SHRI P.D. BHARGAVA AND SHR I GOVIND PRASAD AGARWAL, S/O. SHRI JAGDISH NARAYAN SHOULD CONTEST THE MATTER AND OBTAIN POSSESSION AS PER THE ORDER OF HONBLE DELHI HIGH COURT. IT HAS ALSO BEE N MENTIONED THAT IF IT WAS REQUIRED TO SELL THIS PROPERTY BY MAKING INTO PLOTS , THEN SHRI O.P. BHARGAVA, S/O. ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 7 LATE SHRI .P.D BHARGAVA, CHAIRMAN OF RADHA BALLABH TRUST MAY GET IT REGISTERED UNDER HIS SIGNATURE. THUS, THE CIT(A) NOTED THAT T HERE WAS NO CONVERSION OF THE LAND INTO STOCK IN TRADE IN THE YEAR 1999-2000 AS C LAIMED BY THE ASSESSEE. IN THE WILL THERE IS NO MENTION OF CARRYING ON ANY BUSINES S IN TRADE OF PLOT OF LAND BY CONVERTING LAND SITUATED AT BUNGALOW NO.8, CIVIL LI NES, MATHURA. THERE IS NO DIRECTION IN THE WILL THAT AFTER THE DEATH OF THE A SSESSEE TRUST WILL CARRY OUT BUSINESS OF THE PLOTS. AT PAGE NO.12 OF CIT(A)S ORDER IT H AS ALSO BEEN NOTED THAT THE PROPERTY WAS SOLD NOT IN THE COURSE OF RUNNING OF B USINESS BUT FOR THE PURPOSE OF GETTING MONEY FOR TREATMENT OF LATE SHRI P.D. BHARG AVA AND ALSO TO MEET THE COST OF LITIGATION EXPENSES. LATE SHRI P.D. BHARGAVA HAD A GREED THROUGH AGREEMENT TO SELL ALL THE PLOTS IN THE SAID PROPERTY FOR A CONSIDERAT ION OF ` 90,00,000/-. THERE IS NO MENTION THAT THE LAND WAS SELLING AS PART OF THE ST OCK IN TRADE. ON THE BASIS OF FACTS OF THE CASE, THE CIT(A) HELD THAT THERE WAS NO INTE NTION ON THE PART OF LATE SHRI P.D. BHARGAVA AT ALL TO CONVERT THE SAID LAND INTO STOCK IN TRADE. 8. APART FROM THE ABOVE DISCUSSION MADE BY THE CIT( A) ON MERIT OF THIS CASE, IT HAS ALSO BEEN NOTICED THAT ON IDENTICAL SET OF FACT S, THE CIT(A) DECIDED SIMILAR ISSUE THAT SALE CONSIDERATION OF PLOTS IS SUBJECT TO TAX UNDER THE HEAD CAPITAL GAIN AND NOT BUSINESS INCOME IN THE CASE OF LATE SHRI P.D. BHARGAVA FOR ASSESSMENT YEAR 2002-03. IN THE CASE OF LATE SHRI P.D. BHARGAVA TH E ASSESSEE FILED APPEAL BEFORE ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 8 THE I.T.A.T. RAISING THE IDENTICAL GROUNDS. FOR TH E PURPOSE OF READY REFERENCE, THE SAME IS REPRODUCED AS UNDER:- 1. THAT THE LD. CIT (APPEAL) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING OF ASSESSEES BUSINESS PROFIT FROM ADVEN TURE IN THE NATURE OF TRADE AS LONG TERM CAPITAL GAIN WITHOUT PROPERLY APPRECIATING THAT THE ASSESSEE-OWNER OF THE CAPITAL ASSET HAS CO NVERTED THE SAME AS HIS STOCK IN TRADE IN ACCORDANCE WITH THE PROVISION S OF SECTION 45(2) OF THE INCOME TAX ACT, 1961. 2. THAT THE LD. CIT (APPEAL) HAS ERRED TO TAKE THE VALUE OF ` 73.50 PER SQ. METER AS COST OF LAND AS ON 01.04.1981 WITH OUT PROPERLY APPRECIATING THE EVIDENCE FILED BY THE ASSESSEE AND BY IGNORING THE IMPORTANCE OF LOCALITY, SITUATION OF THE LAND. 3. THAT THE LD. CIT APPEAL HAS ERRED IN CONFIRMING THE DISALLOWANCE OF EXPENDITURE OF ` 4,05,120/- INCURRED ON DEVELOPMENT OF SAID PLOTS OF LAND AND OTHER REVENUE EXPENSES WI THOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E. 4. THAT THE APPELLANT CRAVES LAND LEAVES TO HIS RIG HT TO ADD, DELETE, ALTER, SUBSTITUTE OR MODIFY ANY OR ALL THE GROUNDS OF APPEAL AT ANY SUITABLE TIME. 9. THE I.T.A.T. VIDE ORDER DATED 27 TH NOVEMBER, 2007 IN ITA NO.57/AGR/2006 HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE, THA T MEANS THE ISSUE BECAME FINAL AT THE STAGE OF I.T.A.T. 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF CIT(A). ORDER OF THE CIT(A) ON THE ISSUE IS CONFIRMED AND GROUND NO.1 OF ASSESSEES APPEAL IS DISMISSED. ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 9 11. GROUND NOS.2 & 3 IN ASSESSEES APPEAL IS IN RES PECT OF VALUATION OF PROPERTY AS ON 01.04.1981 @ ` 73.50 PER SQ. MTR. AND VALUATION DETERMINED BY THE VALUATION OFFICER FOR SALE CONSIDERATION OF ` 1,100/- PER SQ. MTR. THE REVENUE HAS ALSO CHALLENGED THE ORDER OF THE CIT(A) VIDE GROUND NO.1 THAT THE CIT(A) WAS NOT LEGALLY JUSTIFIED IN DIRECTING THE ASSESSING OFFICE R TO MOVE A REFERENCE TO THE VALUATION OFFICER UNDER SECTION 50C(2) OF THE ACT A S NO SUCH CLAIM WAS MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. 12. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE CLAI M OF THE ASSESSEE THAT RATE OF ` 100/- PER SQ. MTR. SHOULD BE TAKEN AS THE FAIR MARK ET VALUE OF THE ASSET AS ON 01.04.1981. THE ASSESSING OFFICER APPLIED THE RATE @ ` 60/- PER SQ. MTR. ON THE BASIS OF SALE DEED. THE CIT(A) DIRECTED THE ASSESS ING OFFICER TO ADOPT THIS RATE AS ON 01.04.1981 AT ` 73.50 PER SQ. MTR. THE SALE CONSIDERATION OF THE P ROPERTY SOLD HAS BEEN TAKEN BY THE ASSESSING OFFICER AT ` 2,16,69,423/- APPLYING SECTION 50C(1) OF THE ACT. THE CIT(A) REFERRED THE MATTER TO THE VALUATION OFFICER AS THE CIT(A) WAS HAVING CO-TERMINUS POWER OF THE ASSESSING OFFI CER. THE CIT(A), ON THE BASIS OF VALUATION REPORT, HAS TAKEN SALE CONSIDERATION A T ` 1,100/- PER SQ. MTR. CONSIDERING ALL ASPECTS WHICH WERE POINTED OUT BY T HE ASSESSEE. THE RELEVANT FINDING OF THE CIT(A) IS REPRODUCED AS UNDER :- ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 10 3.5 THE OTHER CONTENTION OF THE LD. REPRESENTATIVE OF THE APPELLANT IS THAT THE RATE OF ` 100 PER SQ. MT. SHOULD HAVE BEEN TAKEN AS THE FAIR MARKET VALUE OF THE ASSETS AS ON 1.4.81. THIS ISSU E HAS ALSO BEEN DISCUSSED BY ME IN THE APPEAL ORDER REFERRED TO ABO VE. I HAVE GIVEN MY FINDINGS IN PARA 3.1 OF THE APPEAL ORDER WHICH I S BEING REPRODUCED BELOW:- 3.1 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ARGUMENTS OF THE LD. REPRESENTATIVE OF THE APPELLANT. THE LAND RATE OF ` 100 PER SQ MT. TAKEN BY THE APPELLANT FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS WAS ADOPTED ON THE BASIS OF GOVERNMENT NOTIFICATION WHERE IN AS ON 29. 07.1981 THE RATE OF LAND HAS BEEN SHOWN @ ` 100/- PER SQ. MT. THE ASSESSING OFFICER HAD APPLIED THE RATE OF ` 60/- PER SQ MT. ON THE BASIS OF SOME SALE DEED DATED 28.11.1980 IN WHICH T HE SALE RATE OF ` 47/- SQ. MT. WAS MENTIONED. WHILE THE GOVERNMENT NOTIFICATION IS AFTER ABOUT THREE MONTHS FROM THE R ELEVANT DATE I.E. 1.4.81 THE RATE OF ` 47/- PER SQ. MT. IS IN RESPECT OF THE LAND WHICH WAS SOLD ABOUT 4 MONTHS PRIOR TO THE RELEVANT DATE. IN MY VIEW IT WILL BE REASONABLE IF A RATE OF ` 73.50 PER SQ. MT. IS ADOPTED WHICH IS THE AVERAGE OF THESE TWO RATES. T HE ASSESSING OFFICER IS DIRECTED TO ADOPT THE RATE OF LAND AT ` 73.50 PER SQ. MT. AS ON 1.4.81 FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE ARE I DENTICAL THE FINDINGS GIVEN IN THE CASE OF SHRI P.D. BHARGVA FOR A.Y. 2002-03 WILL BE APPLICABLE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO ADOPT THE RATE O F LAND AT ` 73.50 PER SQ. MT. AS ON 1.4.81 FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. THE APPELLANT HAS ALSO STATED THAT THE DEDUCTION TO WARDS VALUE OF LAND USED IN ROAD, PARK ETC. SHOULD BE ALLOWED AS COST O F IMPROVEMENT. IT IS SEEN THAT THIS PROPERTY WAS REFERRED TO THE VALU ATION CELL FOR GETTING ITS MARKET VALUE. AS PER SUB-SECTION (2) OF SECTIO N 50(C) THERE IS A PROVISION FOR REFERRING THE VALUATION OF THE CAPITA L ASSETS TO A VALUATION OFFICER. IT IS TRUE THAT THE APPELLANT H AD NOT MADE ANY SUCH CLAIM BEFORE THE ASSESSING OFFICER. IN THIS CONNEC TION IT MAY BE APPRECIATED THAT THE ASSESSMENT ORDER IN QUESTION W AS PASSED U/S 144 FOR THE REASON THAT THE LEGAL HEIR SHRI O P BHARGAV A WAS RESIDING IN HALDWANI AND WAS A HEART PATIENT AND DUE TO BAD HEA LTH AND OTHER ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 11 REASONS HE COULD NOT FILE REPLY IN PROPER MANNER. IT HAS EVEN HELD IN VARIOUS DECISIONS THAT THE POWERS OF THE CIT(A) ARE CO-TERMINUS WITH THE POWERS OF THE ASSESSING OFFICER. ANY CLAIM WHI CH IS ADMISSIBLE BEFORE THE ASSESSING OFFICER AS PER THE LAW CAN, TH EREFORE, BE MADE DURING THE COURSE OF APPEAL PROCEEDINGS. THE REFER ENCE TO VALUATION OFFICER WAS, THEREFORE, IN ACCORDANCE WITH THE LAW. THE VALUATION OFFICER IN HIS REPORT HAS SUBMITTED THAT JOINT INSP ECTION OF THE PROPERTY WAS DONE IN PRESENCE OF A.R. OF THE APPELLANT AND J .E. VALUATION ON 16.12.2005. THE VALUATION OFFICER HAD TAKEN INTO C ONSIDERATION THE SALE INSTANCE DURING THE SAME PERIOD IN CIVIL LINES AREA OF MATHURA WHILE SUBMITTING HIS REPORT. THE VALUATION OFFICER HAS ALSO MENTIONED THAT THE SECRETARY MVDA HAD REFUSED THE APPROVAL OF PLANS DUE TO THE FACT THAT THE LAND IN QUESTION WAS NAZUL LAND, VIDE THEIR LETTER NO.256 DATED 20.03.2004. UNDER THE FACTS AND CIRCUMSTANCE S OF THE CASE THE VALUATION MADE BY THE VALUATION CELL HAS TO BE ACCE PTED. IN THE ABSENCE OF ANYTHING ELSE GIVEN IN THE REPORT THE RA TE OF ` 1100/- PER SQ. MT. SHOULD BE TAKEN TO BE ARRIVED AT AFTER CONSIDER ING ALL THE POSSIBLE FACTORS INCLUDING LOCATION OF THE LAND, NATURE OF T HE LAND, THE FACT THAT THE LAND WAS BEING SOLD IN PLOTS ETC. THE RATE OF ` 1100/- PER SQ. MT. HAS BEEN ARRIVED AT AFTER CONSIDERING ALL THE RELEV ANT FACTS INCLUDING THE FACT THAT PART OF THE LAND WAS TO BE LEFT IN TH E SHAPE OF ROAD, PARK ETC. I AM, THEREFORE, OF THE VIEW THAT NO FURTHER MODIFICATION IN COMPUTATION OF CAPITAL GAINS IS REQUIRED TO BE MADE ON ACCOUNT OF THE REASON THAT PART OF THE LAND WAS USED IN ROAD PARK ETC. BECAUSE THE SAME HAS ALREADY BEEN TAKEN INTO CONSIDERATION BY T HE VALUATION OFFICER WHILE ARRIVING AT THE RATE OF ` 1100/- PER SQ. MT. 13. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE CONTENTION OF THE ASSESSEE THAT SECTION 50C IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION, I.E. ASSESSMENT YEAR 2003-04, IS NOT CORRECT AS SECTION 50C HAS BEEN INSERTED BY THE FINANCE ACT, 2002 W.E.F. 01.04.2003 WHICH IS APPLICABLE TO ASSESSMENT YEAR 2003-04. WE, THEREFORE, DO NOT FIN D ANY SUBSTANCE IN THIS SUBMISSION OF THE ASSESSEE. THE CIT(A) REFERRED TH E MATTER TO THE VALUATION CELL ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 12 OF THE DEPARTMENT. THE OBJECTION OF THE REVENUE HA S BEEN DEALT BY THE CIT(A) IN HIS ORDER REGARDING REFERENCE TO VALUATION CELL ADM ITTED THE FACT THAT THE ASSESSEE DID NOT MAKE ANY SUCH CLAIM BEFORE THE ASSESSING OF FICER . THE CIT(A) NOTED THAT THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 144 O F THE ACT. THE CIT(A) FURTHER NOTED THAT THE ASSESSEE COULD NOT REPRESENT THE CAS E BEFORE THE ASSESSING OFFICER AS LEGAL HEIR SHRI O.P. BHARGAVA WAS A HEART PATIENT A ND DUE TO BAD HEALTH AND OTHER REASONS HE COULD NO FILE REPLY IN PROPER MANNER BEF ORE THE ASSESSING OFFICER. THE CIT(A) FURTHER NOTED THAT HE HAS CO-TERMINUS POWER OF THE ASSESSING OFFICER, THEREFORE, A REQUEST WAS MADE BY THE ASSESSEE DURIN G THE COURSE OF APPEAL PROCEEDINGS. THEREFORE, THE REFERENCE TO VALUATION OFFICER WAS IN ACCORDANCE WITH LAW. IT HAS ALSO BEEN NOTED BY THE CIT(A) THAT THE VALUATION OFFICER IN HIS REPORT HAS SUBMITTED THAT JOINT INSPECTION OF THE PROPERTY WAS DONE IN PRESENCE OF LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE AND J.E. VALUATION ON 16.12.2004. THE CIT(A) NOTED THAT WITH REFERENCE TO NOTE OF VALUATI ON OFFICER THAT THE SECRETARY MVDA HAD REFUSED THE APPROVAL OF PLANS DUE TO THE F ACT THAT THE LAND IN QUESTION WAS NAZUL LAND. THE CIT(A), UNDER THE FACTS AND CI RCUMSTANCES OF THE CASE, WAS OF THE VIEW THAT IN ABSENCE OF ANYTHING ELSE GIVEN IN THE VALUATION REPORT, THE VALUE SHOWN IN THE VALUATION REPORT @ ` 1,100/- PER SQ. MT. SHOULD BE TAKEN AS SALE CONSIDERATION AS THAT RATE OF ` 1,100/- PER SQ. MT. HAS BEEN REPORTED IN VALUATION REPORT AFTER CONSIDERING ALL POSSIBLE FACTORS INCLU DING LOCATION OF THE LAND, NATURE OF ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 13 THE LAND AS NAZUL LAND. THE FACT THAT THE ASSESSEE SOLD THE LAND IN PLOTS THAT PART OF THE LAND WAS TO BE LEFT IN THE SHAPE OF ROAD, PARK ETC. WE FIND THAT THE CIT(A) HAS RIGHTLY EXERCISED THE POWERS OF THE ASSESSING OFFIC ER. IT IS SETTLED LAW THAT THE CIT(A) IS HAVING CO-TERMINUS POWER OF THE ASSESSING OFFICER. IN THE LIGHT OF THE FACTS, WE FIND THAT THE CIT(A) HAS RIGHTLY REFERRED THE MATTER TO THE VALUATION CELL IN ACCORDANCE WITH SECTION 56(2) OF THE ACT FOR DET ERMINING THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER. SINCE THERE IS NO CONTRARY MATERIAL AVAILABLE ON RECORD, UNDER THE CIRCUMSTANCES, WE CO NFIRM THE ORDER OF CIT(A) ON THE ISSUE. THUS, GROUND NOS.2 & 3 OF ASSESSEES AP PEAL AND GROUND NO.1 OF REVENUES APPEAL ARE DISMISSED. 14. THE BRIEF FACTS OF GROUND NO.4 OF ASSESSEES AP PEAL ARE THAT THE ASSESSEE CLAIMED DEDUCTION OF INCOME TAX LIABILITY OF ` 11,64,500/- FROM THE SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAP ITAL GAIN. THE ASSESSING OFFICER REJECTED THE ASSESSEES CLAIM AND THE SAME HAS BEEN CONFIRMED BY THE CIT(A) HOLDING THAT INCOME TAX LIABILITY WAS AGAINS T LATE SHRI P.D. BHARGAVA WHICH IS NOT LIABILITY DEDUCTIBLE UNDER SECTION 48 OF THE IT ACT. 15. AFTER HEARING THE LD. REPRESENTATIVES OF THE PA RTIES, WE NOTICED THAT FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN THE FULL VAL UE OF CONSIDERATION IS REQUIRED TO ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 14 BE REDUCED ONLY IN RESPECT OF THE EXPENDITURE INCUR RED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER. FROM THE FACTS OF T HE CASE, WE FIND THAT THE ASSESSEE HAS FAILED TO POINT OUT THE INCOME TAX LIABILITY OF LATE SHRI P.D. BHARGAVA WAS IN NATURE OF EXPENDITURE INCURRED WHOLLY AND EXCLUSIVE LY IN CONNECTION WITH SUCH TRANSFER. IN ABSENCE OF MATERIAL AND NECESSARY EXP LANATION, WE INCLINE TO UPHOLD THE ORDER OF CIT(A). ORDER OF THE CIT(A) IS THERE FORE, CONFIRMED ON THE ISSUE. 16. THE BRIEF FACTS OF GROUND NO.5 OF THE ASSESSEE S APPEAL ARE THAT THE ASSESSEE CLAIMED DEVELOPMENT EXPENSES OF ` 5,23,500/- FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. THE ASSESSING OFFICER REJECTED THE A SSESSEES CLAIM AND THE CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER A S UNDER :- 3.4 SO FAR AS THE ALTERNATIVE SUBMISSIONS IS CONCE RNED, THE CLAIM OF DEDUCTION OF DEVELOPMENT EXPENSES OF ` 5,23,500/- CAN NOT BE CONSIDERED FOR THE DETAILED REASONS GIVEN IN THE AP PEAL ORDER OF LATE SHRI P.D. BHARGAVA. I HAVE GIVEN MY FINDINGS IN PA RA 4.1 OF THIS ORDER WHICH IS BEING REPRODUCED BELOW :- 4.1 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ARGUMENTS OF THE LD. REPRESENTATIVE OF THE APPELLANT. I HAVE ALSO GONE THROUGH THE DETAILS OF THE EXPENSES FURNISHED BY THE A.R. OF THE APPELLANT BEFORE THE ASSESSING OFFI CER. IT IS SEEN FROM THE DETAILS FURNISHED THAT ONLY COMPUTERIZED P RINTOUT HAD BEEN PRODUCED UNDER THE HEADING DEVELOPMENT EXPENS ES, LEDGER ACCOUNT 1.4.2001 TO 1.12.2001. ALL THE ENT RIES MADE ARE IN CASH. NO SUPPORTING BILLS ETC. ARE AVAILABLE. INSPITE OF GIVING VARIOUS OPPORTUNITIES BY THE ASSESSING OFFIC ER THE BOOKS OF ACCOUNT/VOUCHER BOOK COULD NOT BE PRODUCED. THU S THERE WAS NO SUPPORTING EVIDENCE IN RESPECT OF CLAIM OF D EVELOPMENT ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 15 EXPENSES. TWO PERSONS PRODUCED BEFORE THE ASSESSIN G OFFICER WERE NOT ABLE TO GIVE INFORMATION IN RESPECT OF THE PERIOD DURING WHICH THE DEVELOPMENT WORK WAS CARRIED OUT. ONE OF THEM SHRI RAJ KARAN GAUTAM STATED THAT THE WORK OF ROAD CONSTRUCTION WAS CARRIED OUT FOR ABOUT 20 TO 22 DAY S. THE APPELLANT ON THE OTHER HAND HAD SHOWN THE EXPENSES INCURRED FROM 1.4.2001 TO 1.12.2001. IT WAS ALSO STATED BY HIM THAT ONE BOUNDARY WALL WAS CONSTRUCTED. THE BOUNDARY WALL W AS ALREADY EXISTING WHICH IS CLEARLY MENTIONED IN THE AGREEMENT TO SALE DEED DATED 24.5.99. SHRI RAJKARAN GAUTAM WAS AN EMPLOYEE OF THE APPELLA NT AND WAS DURING THE WORK OF POOJA, ARCHANA IN THE TEMPLE AND WAS ALSO LOOKING AFTER THE MAINTAINING OF GARDEN OF THE TEMP LE FOR WHICH HE WAS BEING PAID ` 4,250/- PER MONTH. HE WAS UNDER THE INFLUENCE OF T HE APPELLANT. THE SALARY PAID TO HIM CAN NOT BE CONSI DERED FOR ALLOWING AS EXPENSES INCURRED ON DEVELOPMENT OF THE PROPERTY . SHRI KUWAR PAL WAS AN AGRICULTURIST HAVING AGRICULTURAL LAND IN VI LLAGE JHARU. HE WAS ALSO ALLEGEDLY LOOKING AFTER THE WORK OF SUPERV ISION AFTER HE ARRIVED AT MATHURA. HE HAD STATED THAT CONSTRUCTIO N OF ROAD WAS DONE DURING THE PERIOD OF 1 YEARS. HOWEVER AS MENTIONE D EARLIER THERE WERE NO BOOKS OF ACCOUNT MAINTAINED. THUS THERE WA S NO VERIFIABLE EVIDENCE OF THE EXPENSES INCURRED. IT IS ALSO NOT VERIFIABLE AS TO WHEN THE EXPENSES IF ANY HAD BEEN INCURRED ON THE CONSTR UCTION OF ROAD. AS MENTIONED EARLIER BY ME AGRICULTURAL OPERATIONS WER E BEING CARRIED ON THE LAND AT THE TIME OF SALE OF THE LAND. THE L AND WAS IN THE POSSESSION OF SSP, MATHURA AND LITIGATION WAS GOING ON. THERE WAS NO WAY OF CARRYING OUT ANY ACTIVITY OF ROAD CONSTRU CTION ETC. WHEN THE PROPERTY WAS IN THE POSSESSION OF THE POLICE DEPART MENT. THE ASSESSING OFFICER HAS, THEREFORE, RIGHTLY NOT ACCEP TED THE CLAIM OF THE APPELLANT REGARDING ANY EXPENSE INCURRED ON THE DEV ELOPMENT OF THE LAND. THE ACTION OF THE ASSESSING OFFICER IS CONFI RMED. 17. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE NOTICE THAT THE CIT(A) HAS FOLLOWED HIS ORDER IN THE CASE OF LATE SHRI P.D. BHARGAVA WHERE DETAILED REASONS WERE GIVEN FOR REJE CTION OF ASSESSEES CLAIM. THE ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 16 CIT(A) FOUND THAT THE EXPENSES INCURRED WAS NOT FOU ND SUPPORTED BY ANY EVIDENCE IN RESPECT OF CLAIM OF DEVELOPMENT EXPENSES. IN TH E DETAILS OF THE EXPENDITURE, IT WAS MENTIONED THAT THE EXPENDITURE WERE INCURRED FO R CONSTRUCTION OF BOUNDARY WALL WHEREAS BOUNDARY WALL WAS ALREADY IN EXISTENCE WHICH WAS CLEARLY MENTIONED IN THE AGREEMENT TO SALE DATED 24.05.1999. IT HAS ALSO BEEN NOTED BY THE CIT(A) THAT THE LAND WAS IN POSSESSION OF POLICE DEPARTMEN T. THEREFORE, THE QUESTION OF DEVELOPMENT OF LAND DOES NOT ARISE. THE CIT(A) HAS ALSO HELD THAT NO EVIDENCE WAS PRODUCED BY THE ASSESSEE IN SUPPORT OF CLAIM O F EXPENDITURE. APART FROM THE ABOVE FACTS NOTED BY THE CIT(A) IN HIS ORDER, IT IS ALSO TO STATE THAT THE ASSESSEE FAILED TO SUBMIT ANY CONTRARY MATERIAL TO THE FINDI NG OF THE CIT(A). WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ). ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 18. GROUND NO.6 IS IN RESPECT OF DISALLOWANCE OF DE DUCTION UNDER SECTION 80L OF THE ACT. 19. THE LD. AUTHORISED REPRESENTATIVE FAILD TO POIN T OUT HOW THIS GROUND WAS RAISED BECAUSE THE ASSESSING OFFICER HIMSELF ALLOWE D DEDUCTION UNDER SECTION 80L OF ` 12,000/- WHILE COMPUTING THE TOTAL INCOME OF THE AS SESSEE. IT APPEARS FROM THE RECORD THAT THE ASSESSEE DID NOT TAKE THIS GROUND B EFORE THE CIT(A) AND THERE IS NO ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 17 FINDING OF CIT(A) IN RESPECT OF DEDUCTION UNDER SE CTION 80L OF THE ACT. UNDER THE CIRCUMSTANCES, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED AS THE SAME DOES NOT COME OUT FROM THE ORDER OF CIT(A). 20. GROUND NO.7 OF THE APPEAL OF THE ASSESSEE IS GE NERAL IN NATURE, REQUIRES NO FINDING. ITA NO.271/AGR/2006 BY THE REVENUE FOR A.Y. 2003-04 21. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ARE AS UNDER :- 1. THAT THE CIT(A)-I, AGRA IS NOT LEGALLY JUSTIFIE D IN DIRECTING THE ASSESSING OFFICER TO MOVE A REFERENCE TO THE VALUAT ION OFFICER U/S 50C(2) OF INCOME TAX ACT, 1961 AS NO SUCH CLAIM WAS MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND THUS, THE CIT(A) HAS NO JURISDICTION TO ACCEPT THE ASSESSEES CLAIM. 2. THAT THE CIT(A)-I, AGRA IS NOT LEGALLY JUSTIFIED IN HOLDING THAT THE POWERS OF THE CIT(A) ARE CO TERMINUS TO THE POW ERS OF THE ASSESSING OFFICER AND ANY CLAIM WHICH IS ADMISSIBLE BEFORE THE A.O. CAN BE MADE DURING THE COURSE OF THE APPEAL PROCEED INGS. 3. THAT THE CIT(A)-I, AGRA IS NOT LEGALLY JUSTIFIED IN ADMITTING THE VALUATION REPORT OF THE VO WITHOUT APPRECIATING THE CORRECT LEGAL POSITION THAT ANY CLAIM WHICH WAS MADE BEFORE THE A SSESSING OFFICER, AS PER LAW, CAN ONLY BE MADE DURING THE APPEAL PROC EEDINGS AND CONSEQUENTLY IN ALLOWING THE RELIEF OF ` 1,01,41,340/-. 4. THAT THE CIT(A)-I, AGRA IS NOT LEGALLY JUSTIFIED IN DETERMINING THE COST OF ACQUISITION OF THE LAND AS ON 1.4.1981 @ ` 73.50 PER SQ. ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 18 MTR. INSTEAD OF ` 60/- ADOPTED BY THE ASSESSING OFFICER AND HAS FAILE D TO PROPERLY APPRECIATE THE FACTS OF THE CASE. 5. THAT THE CIT(A)-I, AGRA IS NOT LEGALLY JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO GET THE VALUE OF BOUNDARY WAL L DETERMINED AS ON 1.4.1981 FROM THE VALUATION OFFICER AND ALLOW DEDUC TION BECAUSE ITS COST WAS NOT INCLUDED IN THE VALUE DETERMINED U/S 5 0C(2) OF I.T. ACT, 1961 AND IT WAS NOT SOLD DURING THE PREVIOUS YEAR U NDER CONSIDERATION. 6. THAT THE CIT(A)-I, AGRA IS NOT LEGALLY JUSTIFIED IN DELETING THE ADDITION OF ` 71,250/- MADE ON ACCOUNT OF INTEREST EARNED ON FDR OF ` 7,50,000/- WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE. 7. THAT THE CIT(A)-I, AGRA IS NOT LEGALLY JUSTIFIED IN DELETING THE ADDITION OF ` 52,800/- MADE ON ACCOUNT OF INTEREST EARNED ON FDR OF ` 6,60,000/- WITHOUT PRO0PERLY APPRECIATING THE FACTS OF THE CASE. 8. THAT THE APPELLANT CRAVES LEAVE TO ADD OR ALTER OR MODIFY OR DELETE ANY ONE OR MORE GROUND(S) OF APPEAL DURING T HE APPEAL PROCEEDINGS. 9. THAT THE ORDER OF THE CIT(A)-I, AGRA BEING ERRON EOUS IN LAW AND ON FACTS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 22. GROUND NOS.1 TO 5 RAISED IN REVENUES APPEAL AR E IN RESPECT OF REFERENCE TO VALUATION OFFICER UNDER SECTION 50C(2) OF THE ACT W HICH HAS ALREADY BEEN DECIDED WHILE ADJUDICATING GROUND NOS.2 & 3 OF ASSESSEES A PPEAL WHEREIN ORDER OF THE CIT(A) HAS BEEN CONFIRMED. ACCORDINGLY, GROUND NOS .1 TO 5 OF THE REVENUE ARE DISMISSED. ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 19 23. GROUND NO.6 OF THE REVENUE IS IN RESPECT OF DEL ETION OF ADDITION OF ` 71,250/-. THE BRIEF FACTS OF THE ISSUE ARE THAT DU RING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALCULATED INTEREST ON INVEST MENT OF ` 7,50,000/- ON PRESUMPTION THAT ON THE DEATH OF SHRI P.D. BHARGAVA THE INTEREST ON FDR AND SAVINGS BANK ACCOUNTS ARE ASSESSABLE IN THE HANDS O F THE ASSESSEE AS THE ASSESSEE TRUST IS LEGAL HEIR OF LATE SHRI P.D. BHARGAVA. TH E ASSESSING OFFICER CALCULATED INTEREST APPLYING RATE OF 9.5% ON ` 7,50,000/-. THE AMOUNT RECEIVED BY LATE SHRI P.D. BHARGAVA WAS ADVANCE AMOUNT ON SALE OF LAND. THE ASSESSING OFFICER ADDED ` 71,250/- AS INTEREST EARNED ON ` 7,50,000/-. THE CIT(A) HELD THAT THE SIMILAR ISSUE INVOLVED IN ASSESSEES CASE FOR ASSESSMENT YE AR 2002-03 AND DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION AS PER REA SONS GIVEN BY THE CIT(A) IN PARAGRAPH NO.5.1 OF THE APPEAL ORDER FOR THE ASSESS MENT YEAR 2002-03. THE CIT(A) ALSO HELD THAT THE ASSESSING OFFICER WILL BE FREE TO TAKE REMEDIAL ACTION IF AT LATER STAGE IT IS FOUND THAT THE AMOUNT OF ` 7,50,000/- HAS BEEN INVESTED IN ANY INCOME EARNING ASSETS. 24. AFTER HEARING THE LD. REPRESENTATIVES OF THE PA RTIES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AS THE CIT(A) HAS FOLLOWED THE ORDER FOR ASSESSMENT YEAR 2002-03 THOUGH BOTH THE LD. REPRESE NTATIVES OF THE PARTIES FAILED TO POINT OUT FINAL OUTCOME OF ASSESSMENT YEAR 2002- 03 IN ASSESSEES OWN CASE. ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 20 HOWEVER, THE CIT(A), IN THE INTEREST OF REVENUE, AL LOWED ASSESSING OFFICER TO TAKE REMEDIAL ACTION IF IT IS FOUND THAT THE AMOUNT OF ` 7,50,000/- HAS BEEN INVESTED IN ANY INCOME EARNED ASSET. WE, THEREFORE, DO NOT FIN D ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE ORDER OF CIT(A) ON THE ISSUE IS CO NFIRMED. 25. GROUND NO.7 IS IN RESPECT OF ADDITION OF ` 52,800/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST EARNED ON FDR. THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSING OFFICER CALCULATED INTEREST OF ` 1,01,200/- ON THE BASIS OF PRESUMPTION THAT THE ASSESSEE TRUST EARNED INTEREST ON FDR OF ` 6,05,000/- AND FURTHER INTEREST EARNED ON ` 6,60,000/- ASSUMING THAT THIS AMOUNT WAS ALSO INVES TED IN FIXED DEPOSITS. THE ASSESSING OFFICER CALCULATE D THE AMOUNT OF ADDITION ON ACCOUNT OF INTEREST BY APPLYING 8% INTEREST. THE C IT(A) HAS HELD AS UNDER :- 6. THE GROUND OF APPEAL NO.7 IS AGAINST THE ADDITI ON OF ` 1,01,200/- AS INTEREST BASED ONLY ON ASSUMPTION. THIS ADDITIO N HAS BEEN MADE IN RESPECT OF INTEREST EARNED ON FDR OF ` 6,05,000/- AND FURTHER INTEREST EARNED ON ` 6,66,000/- ASSUMING THAT THIS AMOUNT WAS ALSO INVE STED IN FDR. IN THIS CONNECTION THE LD. REPRESENTATIVE OF THE APPELLANT HAS SUBMITTED THAT THERE WAS NO FDR OF ` 6,66,000/-. THE ASSESSING OFFICER HAS NOT BROUGHT ANY EVIDENCE THAT THE AMOUN T OF ` 6,66,000/- WAS INVESTED IN FDR AND EARNING INTEREST @ 8%. UND ER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION OF ` 52,800/- MADE BY THE ASSESSING OFFICER CAN NOT BE SUSTAINED AND IS DIREC TED TO BE DELETED. HERE AGAIN THE ASSESSING OFFICER WILL BE FREE TO TA KE REMEDIAL ACTION IF AT LATER STAGE EVIDENCE IS FOUND THAT THE AMOUNT OF ` 6,66,000/- HAD BEEN INVESTED IN ANY INCOME EARNING ASSETS. ITA NOS.207 & 271/AGR/2006 A.Y. 2003-04 21 26. AFTER HEARING LD. REPRESENTATIVES OF THE PARTIE S, WE NOTICE THAT THE CALCULATION OF THE AMOUNT OF ADDITION ON ACCOUNT OF INTEREST IS ON THE BASIS OF ASSUMPTION. HOWEVER, IN THE INTEREST OF REVENUE, T HE CIT(A) HAS GIVEN LIBERTY TO THE ASSESSING OFFICER TO TAKE REMEDIAL ACTION IF IT IS FOUND THAT THE AMOUNT OF ` 6,60,000/- HAS BEEN INVESTED IN ANY INCOME EARNING ASSETS. WHEN THERE IS SUCH DIRECTION IN THE INTEREST OF REVENUE, THE REVENUE S HOULD NOT HAVE ANY GRIEVANCE. UNDER THE CIRCUMSTANCES, WE CONFIRM THE ORDER OF TH E CIT(A) ON THE ISSUE. 27. IN THE RESULT, APPEAL BY THE ASSESSEE AND APPEA L BY THE REVENUE BOTH ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 20.04.2012) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 20 TH APRIL, 2012 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT (APPEALS) CO NCERNED/D.R., ITAT, AGRA BENCH, AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY