Late K.Sengoda Gounder, L/R shri S.Kumar, CHENNAI V. ITO, Salem

ITA 306/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4500 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 15-02-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: S SRIDHAR
• Keywords: Cost of acquisition; Revised return

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER, AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.306/MDS/2016 /ASSESSMENT YEAR: 2011-12 SHRI LATE K. SENGODA GOUNDER, L/R, SHRI S.KUMAR, NO.9/150, ERUMAPALAYAM ROAD, SEELANAICKENPATTI, SALEM-636 201. VS. THE INCOME TAX OFFICER, WARD 2(3), SALEM. [PAN: CWBPS 4323 L ] ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.S.SRIDHAR, ADV. /RESPONDENT BY : MR.SHIVA SRINIVAS, JCIT /DATE OF HEARING : 30.03.2017 /DATE OF PRONOUNCEMENT : 30.05.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST OR DER DATED 05.02.2016 OF COMMISSIONER OF INCOME TAX (APPEALS), SALEM, IN ITA NO.144/2014-15 FOR THE AY 2011-12. 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO TH E ALTERNATE CLAIM MADE BY THE ASSESSEE U/S.10(37) OF THE INCOME TAX ACT. THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.9,81, 570/- ON 16.03.2012. THE ASSESSEE EXPIRED ON 17.12.2012 AND THE LEGAL HE IRS ARE SHRI S.SEKAR, ITA NO.306/MDS/2016 :- 2 -: SHRI S.RAMACHANDRAN AND SHRI S.KUMAR, THE SONS OF THE ASSESSEE ARE BROUGHT ON RECORD. DURING THE PREVIOUS YEAR RELEVA NT TO THE ASSESSMENT YEAR, THE ASSESSEE FILED THE RETURN OF INCOME ADMIT TING THE CAPITAL GAINS OF RS.2,15,42,069/- AND CLAIMED DEDUCTION OF RS.2,0 6,19,000/- IN RESPECT OF INDEXED COST OF ACQUISITION AND THE DIFFERENCE A MOUNT OF RS.9,23,069/- ALONG WITH THE BANK INTEREST OF RS.58,496/- WAS O FFERED TO TAX. THE CAPITAL GAINS AROSE ON ACCOUNT OF ACQUIRING THE UR BAN AGRICULTURAL LAND AND BUILDINGS BY THE SPECIAL DISTRICT REVENUE OFFICER, NATIONAL HIGHWAYS. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND CE RTAIN DISCREPANCIES WITH REGARD TO COST OF ACQUISITION AND RE-COMPUTED THE CAPITAL GAINS AT RS.1,52,41,012/- AS UNDER: ON ADOPTING THE ABOVE VALUES THE CAPITAL GAIN WORKS OUT AS FOLLOWS:- COMPENSATION RECEIVED (1,76,40,258 + 39,01,811) (IN VOLVING TWO TDS CERTIFICATES RS.2,15,42,069 (I) COST OF INDEXATION OF LAND: 1872 SQ.MTR (1401 + 471) 1872 X 1.23 = 2303 2303 X 711 =16374 100 (II) LAND ACQUIRED IN SURVEY NO.163/5A IS 450 SQ. MTR. 450 SQ.MTR. 450 X 12.5 = 5558 5558 X 711 = 16374 100 COST OF INDEXATION OF LANDS ACQUIRED (I) + (II) RS.55,891 COST OF INDEXATION OF BUILDING: 1898868 X 711 = 350 RS.38,46,425 COST OF INDEXATION OF BOREWELL: 543175 X 711 = 161 RS.23,98,741 (THE COMPENSATION RECEIVED FOR TREE VALUE OF RS.34, 520 IS TAKEN AS AGRICULTURE INCOME) RS.63,01,057 LONG TERM CAPITAL GAIN ARRIVES AT RS.1,52,41,012 WHILE MAKING THE ABOVE CALCULATION, THE MEASUREMENT TAKEN FOR 1 ACRE IS 4047 SQ. MTR. ITA NO.306/MDS/2016 :- 3 -: 3.0 THE AO ISSUED SHOW CAUSE NOTICE PROPOSING TO ASSESS THE CAPITAL GAINS AT RS.1,52,41,012/- AND IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE MADE AN ALTERNATE CLAIM U/S.10(37) OF THE INCOME TAX ACT AND REQUESTED THE AO TO ALLOW THE EXEMPTION OF LONG TER M CAPITAL GAINS. THE AO FOLLOWING THE ORDER OF THE HONBLE SUPREME COUR T IN THE CASE OF GOETZE (INDIA) LTD. V. CIT [2006] 284 ITR 323/157 TAXMAN 1 (SC) REJECTED THE ALTERNATE CLAIM MADE BY THE ASSESSEE, SINCE THE CLAIM FOR EXEMPTION WAS NOT MADE THROUGH REVISED RETURN OF INCOME. 4.0 THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) A ND THE LD.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE FOLLOWING THE DECISION OF HONBLE APEX COURT CITE (SUPRA) . FOR THE SAKE OF CONVENIENCE AND CLARITY WE EXTRAC T THE RELEVANT PARAGRAPH OF THE CIT(A) ORDER IN PARA NO.4 & 5 WHICH READS AS UNDER: 4. IT IS SEEN THAT THE ISSUE TO BE ADJUDICATED IS, WHETHER THE ASSESSEE IS ENTITLED FOR THE CLAIM OF EXEMPTION U/S.10(37) WHICH WAS NEITHER CLAIM ED IN HIS ORIGINAL RETURN NOR FILED A REVISED RETURN. I HAVE PERUSED THE ASSESSMENT ORDER AND WRITTEN SUBM ISSIONS OF THE AUTHORIZED REPRESENTATIVE, IT IS SEEN THAT THE ASSESSEE DID NO T MAKE HIS CLAIM OF EXEMPTION U/S.10(37) IN HIS ORIGINAL RETURN OF INCOME AND ALSO FILED NO REVISED RETURN CLAIMING THE ABOVE SAID EXEMPTIONS. THE CASE WAS SELECTED FOR SCRUTINY BY C ASS. DURING THE COURSE OF HEARING, THE ASSESSEE FOR THE FIRST TIME MADE A CLAIM U/S.10(37). THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE RELYING ON THE JUDGMENT OF TH E HONBLE SUPREME COURT ORDER IN THE CASE OF GOETZE (INDIA) LTD., VS.CIT IN 284 ITR 323. 5. AFTER PERUSING THE ASSESSMENT ORDER, THE DETAILS FILED B THE ASSESSEE AND ARGUMENTS OF THE AUTHORIZED REPRESENTATIVE IN MY CONSIDERED VIEW , THERE IS NO COMPELLING REASON TO INTERFERE WITH THE ASSESSMENT ORDER. HENCE, THE GROU NDS OF THE APPELLANT ARE DISMISSED. 5.0 APPEARING FOR THE ASSESSEE, THE LD.AR ARGUED TH AT THE GOVERNMENT HAS ACQUIRED THE URBAN AGRICULTURAL LAND OF THE ASS ESSEE IN PUBLIC INTEREST AND AWARDED THE COMPENSATION TO THE ASSESSEE, THERE FORE, ASSESSEE IS ITA NO.306/MDS/2016 :- 4 -: ENTITLED FOR EXEMPTION U/S.10(37) OF IT ACT. BY IG NORANCE, THE ASSESSEE HAS ADMITTED THE INCOME UNDER THE HEAD CAPITAL GAIN S, INSTEAD OF CLAIMING EXEMPTION U/S 10(37) OF INCOME TAX ACT. THOUGH THE ASSESSEE HAS NOT MADE THE CLAIM IN THE RETURN OF INCOME, THE CLAIM W AS MADE DURING THE ASSESSMENT PROCEEDINGS AND ALSO BEFORE THE CIT(A). THOUGH, THE HONBLE APEX COURT IN THE CASE RELIED UPON BY THE AO RESTR ICTS THE ASSESSING AUTHORITY TO ACCEPT THE FRESH CLAIM, OTHERWISE THA N REVISED RETURN IT DOES NOT IMPINGE THE POWER OF APPELLATE AUTHORITY TO ENT ERTAIN THE FRESH CLAIM OF THE ASSESSEE IN THE APPELLATE PROCEEDINGS, HENCE , REQUESTED TO ALLOW THE CLAIM MADE U/S 10(37) OF I.T. ACT. 6. ON THE OTHER HAND, THE LD. DR ARGUED THAT THE AS SESSEE HAS FILED THE BELATED RETURN, AGAINST THE DUE DATE OF 31.07.2 011 AS THE RETURN WAS FILED ON 16.03.2012 AND THE ASSESSEE HIMSELF HAD OF FERED THE INCOME UNDER THE HEAD CAPITAL GAINS AND HAS NOT CLAIMED T HE EXEMPTION U/S.10(37) OF IT ACT, HENCE, THE CLAIM OF EXEMPTIO N U/S.10(37) WAS AN AFTERTHOUGHT AND SHOULD NOT BE ALLOWED. 6.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THE ASSESSEE WAS OWNING URBAN AGRICULTU RAL LAND WHICH WAS ACQUIRED BY THE SPECIAL DISTRICT REVENUE OFFICER, N ATIONAL HIGHWAYS FOR PUBLIC PURPOSE AND AWARDED COMPENSATION OF RS.2,15, 42,069/- AS PER THE DETAILS GIVEN BELOW: ITA NO.306/MDS/2016 :- 5 -: IN RESPECT OF AWARD COPY LETTER DATED 11.08.2010 TH E DETAILS OF LAND ACQUIRED AND COMPENSATION AMOUNT GIVEN ARE AS FOLLOWS: SL.NO. SURVEY NO. AREA AS PER SUB DIVISION RECORDS AREA AS PER 3D IN SQ. MTR. AREA AS PER ADDL. 3A(1) IN SQ. MTR. (1) (2) (3) (4) (5) 1 158/8A 1872 1401 471 2 163/5A2 2322 1851 - TOTAL 2322 1851 471 AS PER LETTER DT.11.08.2010 WORKINGS OF COMPENSATIO N FOR THE ABOVE SAID LAND AND BUILDING ARE AS FOLLOWS:- 1 THE LAND VALUE FOR 1851 SQ. MTRS. AT RS.7531/- RS . 139,39,881 2 STRUCTURE VALUE RS. 16,56,147 3 DEDUCT SALVAGE AMOUNT (STRUCTURE VALUE X 6%) RS. 99,369 4 NET VALUE OF STRUCTURE RS. 15,56,778 5 WELL/BORE WELL VALUE RS. 5,05,419 6 TREE VALUE RS. 34,520 TOTAL RS. 1,60,36,598 IN RESPECT OF AWARD COPY LETTER DATED 01.10.2010 TH E DETAILS OF LAND ACQUIRED AND AWARD AMOUNT GIVEN IS AS FOLLOWS: SL.NO. SURVEY NO. AREA AS PER SUB DIVISION RECORDS EXTENT ALREADY AWARDED AREA AS PER 3D IN SQ. MTR. (1) (2) (3) (4) (5) 1 158/8A 1872 471 - TOTAL 1872 471 - WORKING OF COMPENSATION FOR THE ABOVE SAID LAND IS AS FOLLOWS:- 1 THE LAND VALUE FOR 471 SQ. MTRS. AT RS.7531/- RS. 35,47,101 2 STRUCTURE VALUE RS. 0 3 DEDUCT SALVAGE AMOUNT (STRUCTURE VALUE X 6%) RS. 0 4 NET VALUE OF STRUCTURE RS. 0 5 WELL/BORE WELL VALUE RS. 0 6 TREE VALUE RS. 0 7 10% ADDITIONAL VALUE USERS RIGHT COMPENSATION RS. 35,47,101 GRAND TOTAL RS. 39,01,811 6.1 THE ASSESSEE HAS OFFERED THE COMPENSATION AS CA PITAL GAINS AND CLAIMED THE INDEXED COST OF ACQUISITION, WHICH RESU LTED INTO TAXABLE INCOME OF RS.9,23,069/- AND THE AO RECOMPUTED THE CAPITAL GAINS AT RS.1,52,41,012/-. AT THIS JUNCTURE, THE ASSESSEE MA DE AN ALTERNATE CLAIM U/S.10(37) OF IT ACT. BOTH THE AO AND THE LD.CIT(A ) REFUSED THE ALTERNATE CLAIM MADE BY THE ASSESSEE FOLLOWING THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD., VS.CIT IN 284 ITR 323 CITED SUPRA. DURING THE APPEAL HEARING, THE LD.AR RELIED ON THE FOLLOWING JUDGMENTS OF THE HONBLE HIGH COURTS AND ARGUED THA T THE APPELLATE ITA NO.306/MDS/2016 :- 6 -: AUTHORITIES ARE NOT BARRED FROM ENTERTAINING THE FR ESH CLAIMS MADE DURING THE APPELLATE PROCEEDINGS. RAMCO CEMENTS LTD. VS. DCIT (2015) 373 ITR 0146 (MAD RAS) CIT V. PRUTHVI BROKERS & SHAREHOLDES [2012] 23 TAXMA NN.COM 23 (BOM.) CIT V. SAM GLOBAL SECURITIES LTD [2013] 38 TAXMANN.C OM 129 (DELHI) THOUGH THE HONBLE SUPREME COURT IN THE CASE OF G OETZE (INDIA) LTD., VS.CIT IN 284 ITR 323 PLACES RESTRICTIONS ON THE AO TO ENTERTAIN ANY FRESH CLAIM OTHERWISE THAN BY REVISED RETURN OF INCOME, I T DOES NOT PLACE ANY RESTRICTIONS TO ENTERTAIN ANY LEGAL AND VALID CLAIM BY THE TRIBUNAL. FOR READY REFERENCE, WE RE-PRODUCE THE RELEVANT PART OF THE JUDGMENT OF THE HONBLE SUPREME COURT, WHICH READS AS UNDER: 4. THE DECISION IN QUESTION IS THAT THE POWER OF THE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961, IS TO ENTERTAIN FOR THE FIRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISED BEFOR E THE TRIBUNAL. THE DECISION DOES NOT IN ANY WAY RELATE TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RETURN. IN THE CIRCUMSTANC ES OF THE CASE, WE DISMISS THE CIVIL APPEAL. HOWEVER, WE MAKE IT CLEAR THAT THE ISSUE IN THIS CA SE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME-TAX APPELLATE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961. THERE SHAL L BE NO ORDER AS TO COSTS. 6.2 THE ISSUE REGARDING ENTERTAINING THE FRESH CLA IM BY APPELLATE AUTHORITIES IS ALSO SETTLED BY THE HONBLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA 187 ITR 688 (SC). THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE LAW RELIED UPON BY THE LD.AR HELD THAT THERE IS NO PROVISIONS IN THE ACT, RESTRICTING THE APPELLATE AU THORITY TO ENTERTAIN ADDITIONAL GROUNDS IN THE APPEAL, IF, THE SAME ARE FOUND TO BE BONA-FIDE AND NOT UNREASONABLE. 7.0 IN THE INSTANT CASE, THE ASSESSEE WAS AN AGRICU LTURIST AND HAD EXPIRED. THE CASE IS BEING REPRESENTED BY THE LEGAL HEIRS. THE CLAIM MADE ITA NO.306/MDS/2016 :- 7 -: BY THE ASSESSEE REGARDING THE EXEMPTION U/S.10(37) OF IT ACT APPEARS TO BE A BONA-FIDE CLAIM AND THE CONTENTION OF THE A.R THAT THE ASSESSEE COULD NOT MAKE CLAIM U/S 10(37) IN THE RETURN OF INCOME D UE TO IGNORANCE APPEARS TO BE CORRECT. THEREFORE, WE ARE OF THE CO NSIDERED OPINION THAT IN THE INTEREST OF JUSTICE, THE ADDITIONAL CLAIM OF TH E ASSESSEE REQUIRED TO BE CONSIDERED. ACCORDINGLY, WE ADMIT THE ADDITIONAL C LAIM MADE BY THE ASSESSEE WITH REGARD TO EXEMPTION U/S.10(37) OF IT ACT AND REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE CLAIM AND IF THE ASSESSEE SATISFIES ALL THE CONDITIONS FOR ALLOW ING THE EXEMPTION U/S.10(37) OF IT ACT, THE SAME MAY BE CONSIDERED. ACCORDINGLY, WE SET- ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DIRE CT THE AO TO DECIDE THE CASE IN THE LIGHT OF THE DISCUSSION MADE IN THIS OR DER. 8.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2017, AT CHENNAI. SD/- SD/- ( DUVVURU RL REDDY )) /JUDICIAL MEMBER (D.S.SUNDER SINGH) * /ACCOUNTANT MEMBER /CHENNAI, + /DATED: 30 TH MAY, 2017. TLN ,- .- /COPY TO: 1. /APPELLANT 4. / /CIT 2. /RESPONDENT 5. - /DR 3. / ( ) /CIT(A) 6. /GF