M/s. Diagou Mudaliar Charity, CHENNAI V. ITO, Pondicherry

ITA 318/CHNY/2012

• Counselvise Citation: 31821714 RSA 2012
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-07-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SHUKLA
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Capital asset; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI ABRAHAM P. GEORGE , ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO. 318 /MDS/2012 ASST. YEAR : 2008 - 09 M/S. DIAGOU MUDALIAR CHARITY, NO.43, RANGA PILLAI S TREET, PONDICHERRY 605 001. PAN : AAATD6883A (APPELLANT) V. THE INCOME TAX OFFICER, WARD I(1), PONDICHERRY. (RESPONDENT) APPELLANT BY : SHRI A.S. SRIRAM AN , ADVOCATE RESPONDENT BY : MS. ANUPAMA SHUKLA, CIT(D.R) DA TE OF HEARING : 31 ST JULY 2012 DATE OF PRONOUNCEMENT : 9 TH AUGUST 2012 O R D E R PER S.S. GODARA , JUDICIAL MEMBER : THE ASSESSEE S APPEAL IS DIRECTED AGAINST THE ORDER OF CIT(APPEALS) - XII, CHENNAI DATED 23.1.2012 IN ITRA NO.28 9/10 - 11 FOR ASST. YEAR 2008 - 09 ARISING OUT OF PROCEEDINGS UNDER SEC.143(3)OF THE INCOME TAX ACT 1961 , IN SHORT 'THE ACT'. I.T.A. NO. 3 18 /MDS/12 2 2. BRIEF STATEMENT OF FACTS IS THAT ON 31.7.2008, THE ASSESSEE (AOP PRIVATE TRUST) FILED ITS RETURN ADMITTING INCOME OF 4,62,800/ - AND AGRICULTURAL INCOME OF 30,000/ - . IN SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE DURING THE PREVI OUS YEAR RELEVANT TO ASST. YEAR , THE ASSESSEE HAD SOLD ITS LAND FOR 4,83,23,160/ - . IT TOOK COST OF THE LAND AS 48 ,32,316/ - AS ON 1.4.1981 (BEING 10% OF SALE VALUE) AND COMPUTED INDEXED COST OF ACQUISITION @ 2,66,26,061/ - THEREBY ARRIVING AT LTCG OF 2,16,97,099/ - WHICH WAS CLAIMED AS EXEMPTED BEING ARISING OUT OF SALE OF AGRICULTURAL LAND. 3 . THE ASSESSING OFFICER SOUGHT REPORT FROM INCOME TAX INSPECTOR TO FIND OUT THE NATURE OF LAND WHO DEPOSED THAT IT FELL WITHIN 8 KMS OF PUDUCHERRY MUNICIPALITY AND WAS NOT AGRICULTURAL LAND. IN THE LIGHT OF THE REPORTS SUBMITTED BY THE INCOME TAX OFFICIAL, THE ASSESSING OFFICE R DECLINED TO ACCEPT THE ASSESSEE S PRAYER OF SALE OF AGRICULTURAL LAND. THEREFORE, IN THE ASSESSMENT ORDER, DATED 31.12.2010, THE ASSESSING OFFICER ALSO ADOPTED VALUE OF LAND AS 12,45,663/ - FOR THE PURPOSE OF CAPITAL GAINS INSTEAD OF 48 ,32,316/ - AS DECLARED . IN THIS MANNER, ASSESSING OFFICER COMPUTED ASSESSEE S INCOME AS 4,76,61,618/ - AND AFTER MAKING DEDUCTIONS UNDER SEC.80G, INCOME FROM AGRICULTURE ETC, RAISED DEMAND OF 1 ,40,83,310/ - . 4. IN APPEAL, THE CIT(A) HAS ALSO CONFIRMED THE FINDINGS OF ASSESSING OFFICER BY OBSERVING AS UNDER: I.T.A. NO. 3 18 /MDS/12 3 THUS, THE DISTANCE TO BE MEASURED IS BY WAY OF SHORTEST POSSIBLE WAY OR BY A STRAIGHT LINE METHOD. AS PER THE CERTIFICATE ISSUED BY THE COMMISSIONER OF PONDICHERRY MUNICIPALITY, THE LANDS UNDER CONSIDERATION ARE LOCATED WITHIN THE DISTANCE OF 8 KM FROM THE MUNICIPAL LIMITS OF PONDICHERRY. THEREFORE, THE SAME CONSTITUTES A CAPITAL ASSET FOR THE PURPOSE OF INCOME TAX ACT. ONCE THE LANDS A RELOCATED WITHIN THE PRESCRIBED LIMITS, THE SAME WILL BECOME A CAPITAL ASSET IRRESPECTIVE OF THE ACTIVITIES CARRIED ON IN THE SAID LANDS. THEREFORE, THE OBSERVATIONS OF THE ASSESSING OFFICER THAT NO AGRICULTURAL ACTIVITIES WERE CARRIED OUT IN THE SAID LA NDS, IS NO MORE SIGNIFICANT. FUR T H ER, QUA THE ISSUE OF CAPITAL GAINS AS WELL, THE ASSESSING OFFICER FINDINGS HAVE BEEN CONFIRMED. THEREFORE, THE ASSESSEE IS IN APPEAL. 5. BEFORE US, T HE AUT HORISED REPRESENTATIVE OF ASSESSEE HAS REITERATED THE SUBMISSI ONS MADE IN THE GROUNDS OF APPEAL AND PRAYED FOR ACCEPTANCE OF THE APPEAL. 6. THE DEPARTMENTAL REPRESENTATIVE , ON THE OTHER HAND, HAS CHOSEN TO SUPPORT THE ORDER OF CIT(A). THEREFORE, IN VIEW OF THE FACT THAT BOTH PARTIES ARE I.T.A. NO. 3 18 /MDS/12 4 AT VARIANCE IN THEIR RESPE CTIVE SUBMISSIONS, WE FRAME THE FOLLOWING ISSUES FOR OUR ADJUDICATION : - (A) WHETHER THE ORDER OF CIT(APPEALS) IN OBSERVING THAT DISTANCE OF 8 KMS O F LAND CONCERNED AND MUNICIPALITY UNDER SECTION 2(14)(III)(B) OF THE ACT IS TO BE MEASURED BY CROW - FLY ME THOD IS LIABLE TO BE UPHELD OR MODIFIED . MORE SO, WHEN THERE IS NO FINDING TO THE EFFECT THAT THE LAND IN QUESTION IS AGRICULTURAL OR OTHERWISE? (B) IF THE ISSUE IS DECIDED IN FAVOUR OF REVENUE, THEN WHETHER THE CIT(APPEALS) HAS RIGHTLY CONFIRME D ASSESSI NG OFFICER S FINDINGS REGARDING CAPITAL GAINS ? 7 . ISSSUE (A) : ON ASSESSEE S BEHALF, THE AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THE CIT(A) HAS ERRED IN OBSERVING THAT THE ASSESSEE S LAND SOLD DOES NOT FALL WITHIN 8 KMS OF THE PONDICHERRY MUNICIPA LITY BY FOLLOWING THE CROW - FLY METHOD. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE ASSESSING OFFICER S ORDER. 8 . WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES AND ALSO GONE THROUGH THE RELEVANT FINDINGS . IT EMER GES THAT THE ASSESSING OFFICER HAD REJECTED THE ASSESSEE S EXPLANATION BY FOLLOWING THE CROW - FLY METHOD (SUPRA) AND ON THE GROUND THAT THE LAND SOLD BY THE ASSESSEE WAS NON - AGRICULTURAL LAND. IN APPEAL, I.T.A. NO. 3 18 /MDS/12 5 THE ASSESSEE RAISED BOTH GROUNDS I.E. DISTANCE - WISE AS WELL AS QUALITY OF LAND. HOWEVER, A PERUSAL OF THE RELEVAN T FINDINGS OF THE CIT(A) TAKES U S TO THE CONCLUSION THAT THE ASSESSEE S PLEA REGARDING DISTANCE OF THE LAND FROM MUNICIPALITY AND THE CRITERIA TO BE FOLLOWED HAS BEEN EXAMINED BY THE CIT(A), N OT THE ARGUMENT REGARDING THE TYPE OF LAND I.E. AGRICULTURAL OR NON - AGRICULTURAL. THIS , ,IN OUR OPINION, IS NOT THE CORRECT APPRECIATION OF THE FACTS AND SUBMISSIONS BY THE CIT(A) BECAUSE THE BASIC ISSUE IN THIS CASE IS THE QUALITY OF LAND; THEN ONLY, ASP ECT OF DISTANCE OF 8 KMS COMES INTO PLAY. ONCE, THE VERY BASE OF THE ASSESSEE S CLAIM IS TO THE FACT THAT THE LAND IS AGRICULTURAL HA S NOT BEEN CONSIDERED IN DETAIL BY CIT(A) , THE OTHER ASPECT OF THE CASE CANNOT BE APPRECIATED IN THE LIGHT OF RELEVANT LAW . THEREFORE, FACED WITH THIS SITUATION, WE ARE OF THE OPINION THAT SINCE THERE IS NO ADJUDICATION BY THE CIT(A) QUA THE VITAL ISSUE , THE MATTER HAS TO BE REMITTED BACK TO THE FILE OF THE CIT(A), WHO SHALL RE - EXAMINE THE ISSUE IN ACCORDANCE WITH LAW AFT ER GRANTING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. CONSEQUENTLY, I SSUE NO.(A) STANDS ACCEPTED IN FAVOUR OF THE ASSESSEE FOR STATISTICAL PURPOSES. 9. ISSUE NO.(B) : SO FAR AS THE ISSUE NO.(B) IS CONCERNED, IN VIEW OF THE FACT THAT WE ARE REM ITTING BACK THE ISSUE NO.(A) TO THE CIT(A), THEREFORE, WE FEEL THAT IT WOULD BE IN TH E LARGER INTEREST OF JUSTICE THAT THIS ISSUE IS ALSO EXAMINED AFRESH BY THE CIT(A). I.T.A. NO. 3 18 /MDS/12 6 10 . IN TH E RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 11 . THE OR D ER IS PRONOUNCED ON THURSDAY , THE 9 TH DAY OF AUGUST 2012 AT CHENNAI. SD/ - SD/ - (ABRAHAM P. GEORGE) (S.S. GODARA ) ACCOUNTAT MEMBER JUDICIAL MEMBER CHENNAI, DATED : 9 TH AUGUST, 2012 K S SUNDARAM COPY TO: - (1) APPELLANT (2) RESPONDENT (3) CIT(A) - II, COIMBATORE (4) CIT - III, COIMBATORE (5) D.R. (6) GUARD FILE