Shri M.D. Venkatesan, CHENNAI V. DCIT, CHENNAI

ITA 3082/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4865 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 01-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 04-11-2016
• Court: TRIBUNAL
• Department Lawyers: R DURAI
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Assessment record; Reassessment proceedings
• Section: 143(3); 2(14); 148

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 3 0 8 2 /MDS/2016 / ASSESSMENT YEAR :20 1 0 - 1 1 SHRI M.D. VENKATESAN, NO. 35, BAGIRATHI AMMAL STREET, T. NAGAR, CHENNAI 600 0 17 . [PAN: A A GPV6353B ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 2 , CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE / RESPONDENT BY : SHRI R. DURAI PANDIAN , J CIT / DATE OF HEARING : 01 . 0 2 .201 7 / DATE OF P RONOUNCEMENT : 19 . 0 4 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 2 , C HENNAI DAT ED 3 1 . 0 8 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 12 - 1 3 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE TOWARDS CLAIM OF EXEMPTION FROM CAPITAL GAINS ON SALE OF LAND. I.T.A. NO . 3 0 8 2 /M/ 1 6 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 201 0 - 1 1 ON 3 1 .0 3 .2012 ADMITTING TOTAL INCOME OF . 19,95,660 / - . NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] DATED 17.01.2013 WAS ISSUED AND SERVED ON THE ASSESSEE. FURTHER, NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 19.11.2013. IN RESPONSE THERETO, THE ASSESSEE FURNISH ED ALL DETAILS BEFORE THE ASSESSING OFFICER. AFTER EXAMINING THE DETAILS FILED BY THE ASSESSEE AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT WAS COMPLETED ON 0 7 .03.201 4 ASSESSING TOTAL INCOME OF THE ASSESSEE AT . 4, 25 , 36 ,9 02 / - AFTER MAKING DISALLOWANCE OF EXEMPTION CLAIMED FROM CAPITAL GAINS ON SALE OF LAND . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER VERIFYING THE ASSESSMENT RECORDS AND CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL CHALLENGING THE CONFIRMATION OF DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE ASSESSEE HAS VEHEMENTL Y ARGUED THAT THE LAND PURCHASED BY THE ASSESSEE IN JANUARY AND MARCH, 1988 WAS AGRICULTURAL LAND AND FILED RELEVANT REVENUE DOCUMENTS BEFORE THE ASSESSING OFFICER, WHICH WERE NOT DISPUTED. THE ASSESSEE HAS NOT APPLIED FOR AND OBTAINED PERMISSION TO SELL T HE LAND FOR NON - AGRICULTURAL PURPOSES AND THE ASSESSEE I.T.A. NO . 3 0 8 2 /M/ 1 6 3 HAS NOT CARRIED OUT ANY NON - AGRICULTURAL OPERATION SUCH AS DEVELOPING THE LAND BY PLOTTING AND PROVIDING ROADS AND OTHER FACILITIES AND MOREOVER, THE ASSESSEE SOLD THE LAND AS IT WAS PURCHASED. EITHER THE COURT OF LAW OR ANY ACT OR RULE INSISTS ANYBODY TO CARRY OUT CULTIVATION POSSESS ING AGRICULTURAL LAND. IT IS NOT THE CASE OF THE ASSESSEE THAT NO AGRICULTURAL OPERATION WAS DONE AFTER THE PURCHASE OF AGRICULTURAL LAND, BUT ONLY IN SOME YEARS, THE ASSES SEE COULD NOT CARRIED CULTIVATION, WHICH WILL NOT CHANGE THE TITLE OF THE LAND AS NON - AGRICULTURAL LAND. THEREFORE, THE CASE LAW RELIED ON BY THE DEPARTMENT HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 5. ON THE OTHER HAND, THE LD. DR STRONGLY S UPPORTED THE ORDERS OF AUTHORITIES BELOW. 6 . WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAS SOLD IMMOVABLE PROPERTIES BEING AGRICU LTURAL LANDS SITUATED AT THAIYUR VILLAGE, CHENGALPUT TALUK TO M/S. LAND MARVEL CONSTRUCTION (INDIA) PRIVATE LTD. THE ASSESSEE HAS CLAIMED THE CAPITAL GAINS ARISING ON THE SALE OF THE ABOVE LANDS AS EXEMPT ON THE GROUND THAT THE SAME IS ARISING ON SALE OF A GRICULTURAL LANDS. IN SUPPORT OF CLAIM FOR EXEMPTION, THE ASSESSEE HAS FURNISHED COPIES OF CHITTA/ADANGAL ISSUED BY THE VILLAGE ADMINISTRATIVE OFFICER AS PROOF FOR AGRICULTURAL OPERATIONS CARRIED I.T.A. NO . 3 0 8 2 /M/ 1 6 4 OUT. THE ABOVE LANDS IN QUESTION WERE ORIGINALLY PURCHASED B Y THE ASSESSEE BETWEEN JANUARY AND MARCH, 1988 AND FILED COPIES OF DEEDS OF PURCHASE BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOTICED THAT ONLY MEAGER AGRICULTURAL INCOME HAS BEEN RETURNED IN RESPECT OF ASSESSMENT YEARS 2008 - 09 AND 2009 - 10. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PRODUCE DOCUMENTARY EVIDENCE IN RESPECT OF AGRICULTURAL INCOME IN TERMS OF SALE PROCEEDS OF AGRICULTURAL PRODUCE, INPUT COST ON SEEDS, MANURE, LABOUR ETC. DESPITE OPPORTUNITIES GRA NTED, THE ASSESSEE HAS NOT FURNISHED SUCH PROOF. THEREFORE, THE ASSESSING OFFICER HAS HELD THAT WHEN THE ASSESSEE COULD NOT DEMONSTRATE THE ACTUAL USER OF THE LAND FOR AGRICULTURAL PURPOSES, NO WEIGHTAGE DESERVES TO BE GIVEN TO THE ASSESSEE S CLAIM OF AGRI CULTURAL INCOME . FURTHER, BY FOLLOWING VARIOUS JUDGMENTS, THE ASSESSING OFFICER HAS HELD THAT THE LAND SOLD BY THE ASSESSEE WAS NON - AGRICULTURAL LAND IN NATURE AND THE CASE OF THE ASSESSEE DOES NOT FALL UNDER THE EXCEPTION PROVIDED UNDER SECTION 2(14) OF T HE ACT. THEREFORE, HE DETERMINED THE TAXABLE CAPITAL GAINS AND BROUGHT TO TAX. THE LD. CIT(A) UPHELD THE DISALLOWANCE MADE ON THIS ACCOUNT. 6. 1 ADMITTEDLY, THE ASSESSEE HAS PURCHASED AGRICULTURAL LAND BETWEEN JANUARY AND MARCH, 1988, WHEN THERE WAS NO I T CORRIDOR IN AND AROUND THE VICINITY OF THE LOCATION OF THE AGRICULTURAL LANDS. THE DEEDS OF PURCHASE MENTION ED THE DESCRIPTION OF LANDS AS AGRICULTURAL LANDS AND THE SAME WAS I.T.A. NO . 3 0 8 2 /M/ 1 6 5 NOT DISPUTED BY THE DEPARTMENT . WHETHER THE LAND USED FOR AGRICULTURAL PURPOSE OR NOT IS NOT THE MATERIAL FOR DETERMINING THE QUESTION AS TO WHETHER THE LAND WAS AGRICULTURAL LAND OR NOT. IN THE CASE OF CIT VS OFFICER - IN - CHARGE [COURT OF WARDS] (105 ITR 133) , HON'BLE SUPREME COURT HELD THAT AGRICULTURAL LAND MUST BE A LAND WHICH COUL D BE SAID TO BE EITHER ACTUALLY USED OR ORDINARILY USED OR MEANT TO BE USED FOR AGRICULTURAL PURPOSES, AND DETERMINATION OF THE CHARACTER OF LAND, ACCORDING TO THE PURPOSE FOR WHICH IT IS MEANT OR SET APART AND CAN BE USED, IS A MATTER OF WHICH HAVE TO BE DETERMINED ON THE FACTS OF EACH PARTICULAR CASE. IN THE PRESENT CASE THERE WAS NO DOUBT WHATSOEVER, ON THE NATURE OF THE LAND BEING AGRICULTURAL LAND, EXCEPT IT IS FACT THAT THE ASSESSEE HAS NOT CLAIMED ANY AGRICULTURAL INCOME IN THE ASSESSMENT YEARS 2003 - 04 TO 2007 - 08. THE VILLAGE ADMINISTRATIVE OFFICER FURNISHED THE CHITTA / ADANGAL REPORT OF THE ABOVE LANDS AND THE SAME ARE NOT DISPUTED. IF THE ASSESSEE HAS NOT CARRIED OUT AGRICULTURAL OPERATION IN SOME YEARS, CANNOT BE SAID THAT THE LAND IS NOT AN AGRICUL TURAL LAND. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD AS TO WHETHER THE ASSESSEE HAS OBTAINED ANY APPROVAL TO USE THE LAND FOR NON - AGRICULTURAL USE OR THE ASSESSEE HAS CARRIED OUT ANY NON - AGRICULTURAL ACTIVITIES IN THAT LAND S . FURTHER, THERE WAS NO E VIDENCE TO SHOW THAT THE ASSESSEE HAS APPLIED FOR CHANGE OF THE LAND FOR NON - AGRICULTURAL PURPOSES. IN THIS CASE, IT MAY BE REASONABLE TO HOLD THAT THE A SSESSING O FFICER RELIED ON VARIOUS CASE I.T.A. NO . 3 0 8 2 /M/ 1 6 6 LAWS RATHER THAN CONSIDERING THE FACTS OF THE CASE UNDER REFERE NCE AND EXAMINING THE APPLICABILITY OF THOSE CASE LAWS, TO THE FACTS OF THE CASE. THE LANDS HELD AND SOLD BY THE ASSESSEE WERE CERTIFIED AND PROVED TO BE AGRICULTURAL LANDS AS PER REVENUE RECORDS. JUST BECAUSE THE ASSESSEE HAS NOT SHOWN ANY AGRICULTURAL IN COME IN THE RETURNS FOR SOME ASSESSMENT YEARS OR EVEN NO AGRICULTURAL OPERATIONS WERE CARRIED OUT BY THE ASSESSEE, THE NATURE OF THE LAND SHALL NOT CHANGE UNTIL UNLESS, THE LAND IN QUESTION WAS SUBSEQUENTLY DEVELOPED FOR COMMERCIAL EXPLOITATION. FURTHER, T HE NATURE OF THE LAND HAS NOT UNDERGONE A NY CHANGE, WITH THE LAND REVENUE TAX PAID BY THE ASSESSEE AND THE RECORDS TILL SALE OF THEM TO BE AGRICULTURAL LANDS. THE A SSESSING O FFICER HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT THE LAND WAS DEVELOPED FO R COMMERCIAL EXPLOITATION BEFORE SALE OF LAND , IN SPITE OF ITS PROXIMITY TO THE IT CORRIDOR. IT IS ALSO AN UNDISPUTED FACT THAT THE IT PARK HAS BEEN STATED IN CHENNAI DURING LATE 1990S AND AT THE TIME OF PURCHASE OF AGRICULTURAL LAND BY THE ASSESSEE, THE RE WAS NO IT HUB IN CHENNAI. THUS, BASED ON THE FACTS OF THE CASE, IT IS REASONABLE TO HOLD THAT THE LANDS UNDER REFERENCE ARE CONTINUED/REMAINED TO BE AGRICULTURAL LANDS , WHEN THE LAND WAS NOT PUT TO NON - AGRICULTURAL USE WITHOUT ANY CONVERSION OF SUCH LAN DS INTO FURTHER DEVELOPMENTS SUCH AS COMMERCIALISATION / PLOTTING OF LANDS, DO NOT AMOUNT TO CHANGE ITS NATURE TO TREAT THE LAND SOLD BY THE ASSESSEE AS NON - AGRICULTURAL LAND . THE SALE OF LAND , I.T.A. NO . 3 0 8 2 /M/ 1 6 7 IRRESPECTIVE OF THEIR VALUE, AS LONG AS THE SAID ASSETS / LAND S DID NOT LOSE THE BASIC CHARACTER OF AGRICULTURAL LANDS; WE CANNOT CONSIDER IT TO BE A NON - AGRICULTURAL LAND. 6.2 FURTHER, IN THE ASSESSMENT ORDER BY PLACING STRONG RELIANCE ON THE JUDGEMENT OF THE HON BLE SUPREME COURT IN THE CASE OF SARIFABIBI MOHMED I BRAHIM AND OTHERS 204 ITR 631, THE ASSESSING OFFICER HAS PRESUMED THAT THE LAND IS NON - AGRICULTURAL LAND. IN THAT CASE, THE ASSESSEE HAS APPLIED FOR AND OBTAINED PERMISSION TO SELL THE LAND FOR NON - AGRICULTURAL PURPOSES AND THAT LAND IN Q UESTION WAS NOT AT ALL CULTIVATED EVER SINCE INHERITED AND ITS SUBSEQUENT SALE. IN THAT CASE OF THE ASSESSEE, THE HON BLE GUJARAT HIGH COURT [136 ITR 621] HAS HELD THAT THE LAND WAS NON AGRICULTURAL LAND AT THE TIME OF ITS SALE SINCE PRIOR TO SALE OF THE L AND, THE ASSESSEE HAS APPLIED FOR AND OBTAINED PERMISSION TO SELL THE LAND FOR NON - AGRICULTURAL PURPOSES. 6.3 IN THE INSTANT CASE, THE ASSESSEE HAS PURCHASED THE AGRICULTURAL LAND FOR CULTIVATION PURPOSES AND ADMITTED SOME AGRICULTURAL INCOME IN SOME ASS ESSMENT YEARS. FURTHER, THE ASSESSEE HAS NOT APPLIED FOR AND OBTAINED PERMISSION TO SELL THE LAND FOR NON - AGRICULTURAL PURPOSES. AS ON THE DATE OF SALE OF THE AGRICULTURAL LAND, AS PER DEED S OF PURCHASE MENTIONED THE DESCRIPTION OF LANDS AS AGRICULTURAL LA ND AND MOREOVER, THE ASSESSEE HAS NOT CARRIED OUT ANY CONVERSION OF THE LANDS INTO NON - I.T.A. NO . 3 0 8 2 /M/ 1 6 8 AGRICULTURAL PURPOSES. JUST BECAUSE THE ASSESSEE HAS NOT CARRIED OUT CULTIVATION IN THE AGRICULTURAL LAND, THE STATUS OF THE LAND CANNOT BE CHANGED INTO NON - AGRICULTURAL LAND. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, THE DISALLOWANCE MADE ON ACCOUNT OF LONG TERM CAPITAL GAINS STANDS DELETED AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED O N THE 19 TH APRIL, 201 7 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 19 . 0 4 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.