ITO, WARD-2(2), Nagpur V. SHRI INDER SUNDERDAS SETHIYA, Nagpur

ITA 336/NAG/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1015 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 21-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C W AWGULKAR
• Assessee Lawyers: V V SARANJAME; SATISH GIDWANI
• Keywords: Capital asset
• Section: 143(3); 2(14)

Judgement Text

1 ITA NO. 336/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T. A. NO. 336/NAG/2013 ASSESSMENT YEAR : 2009 - 10. THE INCOME - TAX OFFICER, SHRI INDER SUNDERDAS SETHIYA, WARD - 2(2), NAGPUR. V/S. C/O SUNDER INDUSTRIES, KORADI ROAD, NAGPUR. PANAFPPS7321N. (APPELLANT) RESPONDENT. APPELLANT BY : SHRI C.W. AWGULKAR. RESPONDENT BY : SHRI V.V. SARANJAME AND SHRI SATISH GIDWANI. DATE OF HEARING : 20 - 05 - 2015 DATE OF PRONOUNCEMENT : 17 TH JULY, 2015. O R D E R PER SHRI MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 11 - 06 - 2013 AND THE GROUNDS RAISED ARE REPRODUCED BELOW : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE C IT(A) ERRED IN HOLDING THAT THE LAND IS BEYOND 8 KM. ON ROAD WHEN THE AO HAS OBTAINED INFORMATION FROM NAGPUR IMPROVEMENT TRUST THAT THE SAID LAND IS WITHIN 8 KMS I.E., 6.87 KM FROM THE NAGPUR MUNICIPALITY. 2 ITA NO. 336/NAG/2013 2. 1. ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT THE AGRICULTURAL LAND WHICH IS WITHIN 8 KMS FROM MUNICIPAL LIMITS IS NOT A CAPITAL ASSET. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 30 - 12 - 2 011 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS STATED TO BE IN THE BUSINESS OF MANUFACTURING BISCUITS. HOWEVER, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD SOLD AN AGRICULTURAL LAND DURING THE YEAR UNDER CONSIDERATION. FACTS OF THE CASE HAVE REVEALED THAT THE LAND IN QUESTION WAS PURCHASED BY THE ASSESSEE FROM ONE SHRI ARUN JAISWAL ON 26 TH FEBRUARY, 2008 FOR A CONSIDERATION OF RS 16 LAKHS. LATER ON IN THE MONTH OF NOVEMBER, 2008 THE SAID LAND WAS SOLD TO THAT VERY PERSON, I.E., SHR I ARUN JAISWAL FOR A CONSIDERATION OF RS. 50 LAKHS. THE ASSESSING OFFICER HAD INVESTIGATED AND SOUGHT INFORMATION FROM NAGPUR IMPROVEMENT TRUST REGARDING THE DISTANCE OF THE LAND FROM THE MUNICIPAL LIMIT OF NAGPUR CITY. THE NAGPUR IMPROVEMENT TRUST HAD IN FORMED THAT THE LAND IN QUESTION BEARING KH. NO. 5, ADMEASURING 1.27 HECTORS SITUATED AT PATWARI HALKA NO. 48, GUMGAON WAS 6.875 KMS. FROM THE LIMITS OF NAGPUR MUNICIPALITY. THE ASSESSING OFFICER HAS, THEREFORE, HELD THAT THE LAND BEING NOT AN AGRICULTURAL LAND AND THAT IT WAS WITHIN 8 KMS. OF THE MUNICIPAL LIMIT, THEREFORE, NOT EXEMPT FROM TAX. THE ASSESSING OFFICER HAD ALSO RECORDED A STATEMENT OF SHRI ARUN JAISWAL. HE HAD INFORMED THAT THERE WAS NO AGRICULTURAL ACTIVITY AND THERE WAS NO CROP ON THE LAND WHEN HE TOOK THE POSSESSION. THE ASSESSING OFFICER HAS THEREUPON CONCLUDED AS UNDER : ON PERUSAL OF THE LAND PURCHASE AND SALE AGREEMENT PRODUCED BY THE ASSESSEE, IT IS NOTICED THAT THE ASSESSEE HAS PURCHASED AND SOLD LAND WITHIN 7 MONTHS. DURING THE STATEMENT SHRI ARUN JAISWAL WAS ASKED WHETHER THERE WAS ANY CROPS ON THE LAND WHEN THE LAND WAS PURCHASED BACK BY HIM, SHRI ARUN JAISWAL IN RESPONSE TO Q.17, STATED THAT THERE WAS NO CROP ON THE LAND 3 ITA NO. 336/NAG/2013 WHEN TOOK POSSESSION IN OCTOBER, 2008. THUS IT IS CLE AR THAT ASSESSEE HAS NO INTENTION TO DO ANY AGRICULTURE ON THE LAND. THE TOTAL RETENTION PERIOD OF THE SAID LAND WAS ONLY APPROXIMATELY 7 MONTHS, AND ASSESSEE HAS NOT SHOWN ANY AGRICULTURAL ACTIVITIES ON THE ABOVE SAID LANDS. HENCE AMOUNT OF PROFIT ON SALE OF LAND OF ` .34,00,000/ - IS TO BE TAXED AS SHORT TERM CAPITAL GAINS. PENALTY PROCEEDINGS U/S 271(1)(C) ARE HEREBY INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, IT IS WORTH TO MENTION AT THE OUT SET ITSELF THAT ON CAREFUL READING OF THE ORDER OF LEARNED CIT(APPEALS) WE HAVE NOTED THAT UPTO PARA 14 LEARNED CIT(APPEALS) HAD DISCUSSED THE FACTS OF THE CASE AND FINALLY ON PARA 14 MADE AN OBSERVAT ION THAT THE LAND IN QUESTION WAS TO BE TREATED AS CAPITAL ASSETS. THE OBSERVATION CUM FINDING OF LEARNED CIT(APPEALS) AS PER PARA 14 WAS AS UNDER: THE ABOVE ARGUMENTS OF THE AO ARE VERY RELEVANT AND APT FOR THE FACTS OF THIS PARTICULAR CASE. THE SA ID LANDS ARE LOCATED DEFINITELY WITHIN 8 KMS. OF MUNICIPAL LIMITS BY AERIAL DISTANCE AND ARE VERY NEAR TO THE MAXIMUM DEVELOPMENT TAKEN PLACE IN THE ADJOINING AREAS OF NAGPUR CITY IN RESPECT OF URBANIZATION DUE TO CERTAIN PRESTIGIOUS PROJECTS LIKE MIHAN . THERE ARE NUMBER OF REAL ESTATE PROJECTS HAVE BEEN COME UP IN THESE AREAS. EVEN THE NEWLY DEVELOPED INTERNATIONAL CRICKET STADIUM IS VERY NEAR TO THE SAID LAND. HENCE, THE APPRECIATION IN THE VALUE IS MAINLY DUE TO THE URBANIZATION FACTORS AND NOT DU E TO INCIDENTAL RISE IN PRICES. THEREFORE, I AM OF THE OKPINION THAT THIS PARTICULAR ASPECT OUGHT TO HAVE BEEN CONSIDERED AND THE AGRICULTURAL LAND IN QUESTION TO BE TREATED AS CAPITAL ASSET WITHIN THE MEANING OF SEC.2 (14(III)(B) READ WITH THE NOTIFICA TION NO. 9447 OF CBDT. 3.1 HOWEVER, FROM PARA 15 ONWARDS LEARNED CIT(APPEALS) HAS TAKEN A U - TURN AND AFTER REFERRING FEW DECISIONS OF THE TRIBUNAL AS WELL AS HIGH COURTS CAME TO THE CONCLUSION THAT THOSE DECISIONS WERE BINDING UPON HIM, HENCE FINALLY CO NCLUDED IN CRYPTIC MANNER VIDE PARA 17 AS UNDER : 4 ITA NO. 336/NAG/2013 RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HONBLE ITAT, NAGPUR, I HOLD THAT THE LAND IN QUESTION IS BEYOND 8 KMS ON ROAD FROM THE MUNICIPAL LIMITS OF NAGPUR AND THE AGRICULTURAL LAND IS NOT CAP ITAL ASSET. ACCORDINGLY, THE AO IS DIRECTED TO ALLOW EXEMPTION U/S 2(14) IN RESPECT OF THE AGRICULTURAL LAND AS CLAIMED BY THE APPELLANT. 4. FROM THE SIDE OF THE REVENUE, LEARNED D.R. MR. C.W. AWAGULKAR APPEARED AND VEHEMENTLY ARGUED THAT LEARNED CIT( APPEALS) HAS TOTALLY ERRED IN TAKING A DECISION THAT THE LAND IN QUESTION WAS NOT A CAPITAL ASSET WITHOUT APPRECIATING THE FACTS OF THE CASE. ON ONE HAND LEARNED CIT(APPEALS) HAS GIVEN A FINDING THAT IT WAS A CAPITAL ASSET BUT ON THE OTHER HAND, TAKEN A CO NTRARY VIEW AND HELD THAT IT WAS NOT A CAPITAL ASSET. LEARNED D.R. HAS ARGUED THAT ALTHOUGH IT IS CORRECT THAT A DECISION OF HONBLE HIGH COURT OR TRIBUNAL IS BINDING UPON HIM BUT THE FACTS OF THE CASE SHOULD ALWAYS MATCH WITH THE QUOTED PRECEDENT. IN THIS CASE THE FACTS HAVE REVEALED THAT THE LAND IN QUESTION WAS NEVER USED FOR AGRICULTURAL PURPOSE AND THAT THE DISTANCE WAS ABOUT 6 KMS FROM THE MUNICIPAL LIMIT. THEREFORE, IT WAS A CAPITAL ASSET REQUIRED TO BE TAXED UNDER THE INCOME - TAX ACT. HE HAS STRONGLY PLEADED THAT THE ORDER OF LEARNED CIT(APPEALS) SHOULD BE REVERSED. 5. FROM THE SIDE OF THE RESPONDENT - ASSESSEE, THE LEARNED A.R. SHRI V.V. SARANJAME APPEARED AND SUPPORTED THE ORDER OF LEARNED CIT(APPEALS) MAINLY ON THE GROUND THAT THERE WAS NO FALLACY IN THE SAID ORDER BECAUSE LEARNED CIT(APPEALS) HAS FOLLOWED THE VIEW TAKEN BY THE RESPECTED TRIBUNAL AS WELL AS BY SEVERAL HIGH COURTS. IT WAS THE DUTY OF THE LEARNED CIT(APPEALS) TO FOLLOW THOSE DECISIONS. 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH A ND ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON PERUSAL OF THE FACTS OF THE CASE IN THE LIGHT OF FEW EVIDENCES PLACED ON RECORD, AT THE OUTSET ITSELF, WE ARE OF THE VIEW THAT LEARNED CIT(APPEALS) HAS GROSSLY ERRED IN IGNORING ALL THOSE FACTS AND AD OPTED A CONTRARY 5 ITA NO. 336/NAG/2013 VIEW, THAT TOO BY TAKING A TURTLE TURN SIMPLY ON THE PRETEXT THAT THE CASE LAWS OF HIGHER FORUM WERE BINDING UPON HIM. IT IS A WELL ESTABLISHED LAW THAT AN APPEAL IS TO BE DECIDED ON ITS OWN FACTS AS AVAILABLE ON RECORD. IN THIS APPE AL IT IS EVIDENT FROM THE PARAGRAPHS, REPRODUCED ABOVE, THAT ALTHOUGH THE FACTS OF THIS CASE WERE FOUND TO BE NOT MATCHING WITH THE FACTS OF CERTAIN PRECEDENTS CITED, BUT STILL LD CIT(A) HAD DECIDED NOT ONLY TO FOLLOW BUT TO APPLY THE VIEW TAKEN IN THOS E CITED CASES SO AS TO GIVE RELIEF ON THE PRETEXT THAT THOSE CASE - LAWS BEING PRONOUNCED BY THE HIGHER FORUM HENCE BINDING UPON HIM. IT IS AN INCORRECT WAY OF FOLLOWING OR APPLYING A PRECEDENT. LAW DOES NOT PERMIT TO BLINDLY FOLLOW A PRECEDENT. THERE ARE CI RCUMSTANCES WHERE THE BINDING FORCE OF A PRECEDENT GETS DESTROYED OR WEAKENED. RIGHT NOW THERE IS NO POINT IN DISCUSSING ALL THOSE CIRCUMSTANCES BECAUSE WE ARE ON THE PRINCIPLES OF RATIO - DECIDENDI OF A DECIDED CASE AND HOW IT IS TO BE RATIONALLY APPLIE D. A PRECEDENT IS AN AUTHORITY ONLY FOR WHAT IT ACTUALLY DECIDES. HENCE A JUDGMENT MUST BE READ AS A WHOLE . AN OBSERVATION IN A JUDGMENT SHOULD BE CONSIDERED IN THE CONTEXT IN WHICH THEY ARE MADE THAT TOO IN THE LIGHT OF THE FACTS/CIRCUMSTANCES OF THAT CA SE. IT IS NOT DESIRABLE TO PICK FEW WORDS FROM THE JUDGMENT WHICH IS OTHERWISE DIVORCED FROM THE CONTEXT IN WHICH IT WAS USED. WE ARE OF THE CONSIDERED OPINION THAT RELIANCE SHOULD NOT BE PLACED ON A DECISION WITHOUT DISCUSSING HOW THE FACTUAL SITUATION FI TS IN, WITH THE FACTUAL SITUATION OF THE DECISION ON WHICH RELIANCE IS TO BE APPLIED. THIS MUCH CAUTION OUGHT TO BE EXERCISED BEFORE RELYING UPON A PRECEDENT . A PRECEDENT IS TO BE FOLLOWED IF THE FACTS ARE IDENTICAL. THE DECISIONS WHICH WERE DISCUSSED BY CIT(APPEALS) WERE BASED UPON CERTAIN FACTS SUCH AS THE NATURE OF THE AGRICULTURAL LAND ALONG WITH THE DISTANCE FROM THE MUNICIPAL LIMIT. IF ON ONE HAND LEARNED CIT(APPEALS) HAS GIVEN A FINDING ON CERTAIN FACTS VIDE PARA 14 (REPRODUCED ABOVE), THAT THERE WERE NUMBER OF REAL ESTATE PROJECTS IN THAT AREA AND THAT THERE WAS INTERNATIONAL CRICKET STADIUM LOCATED VERY NEAR TO THE SAID LAND , THEREFORE, IN THE ABSENCE OF ANY AGRICULTURAL 6 ITA NO. 336/NAG/2013 ACTIVITY IT WAS A CAPITAL ASSET FOR THE PURPOSE OF LEVYING TAX AS PER T HE PROVISIONS OF INCOME - TAX ACT, IT IS VERY STRANGE THAT EVEN AFTER RECORDING OF THOSE FACTS OF THE CASE, THE LEARNED CIT(APPEALS) HAS TAKEN A VIEW THAT BECAUSE FEW DECISIONS OF THE TRIBUNAL AND THE HIGH COURTS HAVE TAKEN A VIEW THAT DISTANCE IS TO BE MEA SURED THROUGH APPROACH ROAD AND NOT BY STRAIGHT LINE DISTANCE, THEREFORE, THE LAND IN QUESTION WAS EXEMPT FROM THE TAX. SUCH AN ORDER OF AN APPELLATE AUTHORITY CANNOT BE APPROVED. IT WAS AT LEAST EXPECTED FROM HIM TO ANALYZE AND SCRUTINIZE BOTH THE ASPECTS I.E. THE DISTANCE AND THE AGRICULTURE ACTIVITY. THEREFORE, WE DEEM IT PROPER TO RESTORE THE ISSUE BACK TO HIM WITH A DIRECTION TO PROVIDE A REASONABLE OPPORTUNITY OF HEARING TO BOTH THE SIDES. LEARNED CIT(APPEALS) IS HEREBY DIRECTED TO EITHER CALL FOR A REMAND REPORT OR ASK THE ASSESSING OFFICER TO REPRESENT THE CASE OF THE REVENUE DEPARTMENT, SIDE BY SIDE, NEEDLESS TO MENTION, GIVE AN OPPORTUNITY OF HEARING TO THE ASSESSEE OR HIS REPRESENTATIVE. WE AGAIN REPEAT THAT THE CASE IS TO BE DECIDED ON ITS OWN FACTS IN THE LIGHT OF A LEGAL RATIO LAID DOWN BY THE HONBLE COURTS. RESULTANTLY, THE GROUND OF THE REVENUE MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSE BEING RESTORED TO THE FILE OF LEARNED CIT(APPEALS) FOR DENOVO ADJUDICATION. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF JULY, 2015. SD/ - SD/ - ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER. JUDICIAL MEMBER NAGPUR, DATED: 17 TH JULY, 2015. 7 ITA NO. 336/NAG/2013 COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE