M/s. Satyam Thermopack Industries, Ballabgarh V. ITO, Faridabad

ITA 3508/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3839 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 19-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SRUJAN MOHANTY
• Section: 54B; 2(14); 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A NO. 3508/DEL/10 ASSTT. YEAR 2003-04 M/S. SATYAM THERMOPACK INDUSTRIES, MOHNA MARG, BALLABGARH VS. ITO, WARD 1 (5), FARIDABAD (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VIJAY GUPTA, CA RESPONDENT BY: SHRI SRUJAN MOHANTY SR. DR. ORDER PER RAJPAL YADAV, JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LD. CIT(A) DATED 19 TH MAY, 2010 PASSED FOR ASSTT. YEAR 2003-04. THE SOLI TARY GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS ER RED IN AFFIRMING THE ORDER OF LD. AO PASSED U/S 154 OF THE INCOME TAX AC T, WHEREBY LD. AO ITA NO. 3508/DEL/10 ASSTT. YEAR 2003-04 2 HAS REJECTED THE APPLICATION OF ASSESSEE MOVED U/S 154 OF THE INCOME TAX ACT FOR GRANT OF EXEMPTION U/S 54D OF THE INCOM E TAX ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A FIRM MANUFACTURING THERMO COAL PACKING MATERIAL. ITS ACC OUNTS FOR ASSTT. YEAR 2003-04 WERE DULY AUDITED. IT HAS FILED ITS RETURN OF INCOME. THE AO RECEIVED AN INFORMATION THAT ASSESSEE GOT COMPENSAT ION FOR ACQUISITION OF ITS LAND BY THE HARYANA GOVT. HE ISSUED A NOTICE U/S 148 AND REOPENED THE ASSESSMENT. IT EMERGES OUT THAT ASSESS EE HAD RECEIVED A COMPENSATION OF ` 13,31,959/-. THE COST OF THE LAND WAS ` 1,13,000/-. ACCORDING TO THE AO, A CAPITAL GAIN OF ` 12,18,989/- HAD ACCRUED TO THE ASSESSEE. AN ASSTT. ORDER U/S 143 (3) READ WITH SEC TION 147 WAS PASSED ON 18.12.2008, INCOME OF THE ASSESSEE WAS DETERMINE D AT ` 13,41,937/- . THE ONLY ADDITION MADE BY THE AO IS THAT THE LONG TERM CAPITAL GAIN ARISEN TO THE ASSESSEE AMOUNTING TO ` 12,18,959/-. DURING THE COURSE OF ASSTT. PROCEEDING, ASSESSEE HAD RAISED TWO FOLD SUB MISSIONS. IT FIRSTLY CONTENDED THAT THE LAND OWNED BY THE ASSESSEE WAS A N AGRICULTURAL LAND. IT DOES NOT COME WITHIN THE DEFINITION OF CAP ITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE INCOME TAX ACT. OTH ER CONTENTION RAISED BY THE ASSESSEE WAS THAT IT HAS PURCHASED A LAND F ROM THE COMPENSATION RECEIVED ON ACQUISITION OF LAND AND, T HEREFORE, EXEMPTION ITA NO. 3508/DEL/10 ASSTT. YEAR 2003-04 3 FOR INVESTMENT IN AGRICULTURAL LAND OUT OF SALE PRO CEED OF THE EARLIER AGRICULTURAL LAND BE GRANTED TO IT U/S 54B OF THE INCOME TAX ACT. 3. LD. AO HAS REJECTED BOTH THESE CONTENTIONS OF TH E ASSESSEE. HE HELD THAT LAND IN QUESTION IS APPROXIMATELY 3.5 KM FROM THE MUNICIPAL LIMIT. HENCE, IT FALLS WITH THE AMBIT OF CAPITAL AS SET U/S 2 (14) OF THE INCOME TAX ACT. WITH REGARD TO THE CLAIM OF EXEMPTI ON U/S 54B IS CONCERNED, LD. AO HAS OBSERVED THAT SUCH EXEMPTION IS AVAILABLE TO AN INDIVIDUAL ASSESSEE AND NOT TO A FIRM. ACCORDING TO HIM, ASSESSEE IS A FIRM AND THAT SECTION IS NOT APPLICABLE IN THE CAS E OF THE FIRM. THE ASSESSEE DID NOT CHALLENGE THIS ORDER OF THE AO. TH ERE IS NO DISPUTE WITH REGARD TO THESE FACTS. 4. THE ASSESSEE MOVED AN APPLICATION U/S 154 ON THE GROUND THAT IF EXEMPTION U/S 54B IS NOT AVAILABLE THEN ALL THE FAC TS ARE ON THE RECORD AND EXEMPTION U/S 54D BE GRANTED. LD. AO HAS REJECT ED THIS APPLICATION OF THE ASSESSEE ON THE GROUND THAT CLAIM OF DEDUCTI ON U/S 54D IS ADMISSIBLE FOR THE LAND USED FOR INDUSTRIAL UNDERTA KING. THE ASSESSEE WAS HAVING AN AGRICULTURAL LAND WHICH WAS ACQUIRED BY THE STATE GOVT. FROM THE COMPENSATION, IT AGAIN PURCHASED THE AGRIC ULTURAL LAND . THEREFORE, SECTION 54D IS NOT APPLICABLE. THE AO HO WEVER GRANTED THE BENEFIT OF INDEXATION FOR THE PURPOSE OF COMPUTATIO N OF CAPITAL GAIN. ITA NO. 3508/DEL/10 ASSTT. YEAR 2003-04 4 5. ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF AO. HE OBSERVED THAT SUCH AN ISSUE CANNOT BE ADJUDICATED IN A PROCE EDING U/S 154 BECAUSE SECTION 54B AND 54D OPERATES UNDER TWO DIFF ERENT CONDITIONS. THE ISSUE WHETHER DEDUCTION U/S 54D IS ADMISSIBLE T O THE ASSESSEE OR NOT IS A DEBATABLE ISSUE AND, THEREFORE, SUCH CLAIM CANNOT BE ENTERTAINED U/S 154 OF THE INCOME TAX ACT. 6. LD. COUNSEL FOR THE ASSESSEE HAS REITERATED HIS CONTENTION AS WERE RAISED BEFORE THE AO. HE DREW OUR ATTENTION TOWARDS THE DETAILS OF COMPENSATION RECEIVED BY THE ASSESSEE DETAILS OF AG RICULTURAL LAND OWNED BY THE ASSESSEE WHICH WAS REQUIRED AND THE PU RCHASE DEED OF THE NEW LAND. HE POINTED OUT THAT THE EARLIER LAND WAS USED BY THE ASSESSEE FOR INDUSTRIAL PURPOSE. THOUGH IN THE REVE NUES RECORD, IT WAS SHOWN IN THE AGRICULTURAL LAND . THE PRESENT LAND IS ALSO BEING USED BY THE ASSESSEE FOR STORING ITS MATERIAL. IN THE REVEN UES RECORD, IT IS SHOWN AS AN AGRICULTURAL LAND BUT IN FACT IT CEASES TO BE AN AGRICULTURAL LAND BECAUSE OF ITS USER. NO AGRICULTURAL OPERATIONS ARE BEING CARRIED OUT. LD. DR RELIED UPON THE ORDER OF LD. CIT(A). SHE SUBMITT ED THAT POWER OF RECTIFICATION U/S 154 CAN BE EXERCISED ONLY WHEN TH E MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MIS TAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES T O BE ESTABLISHED ITA NO. 3508/DEL/10 ASSTT. YEAR 2003-04 5 THROUGH ARGUMENTS AND A LONG DRAWN PROCESS OF REASO NING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY, THERE IS NO DISPUTE THAT ASSE SSEE WAS OWNER IN POSSESSION OF LAND. IN THE REVENUE RECORD I.E. KHAS RA GIDAWARI, FOR THE PERIOD FROM 23.10.97 UPTO 11.3.98, AND FOR SUBSEQUE NT YEARS, UNDER THE COLUMN OF CROP SOWN, FACTORY HAS BEEN SHOWN, MEANIN G THEREBY, THIS LAND CEASES TO BE AGRICULTURAL LAND. IT WAS COMPRIS ED IN KHASRA NO. 6/14/1 KHEWAT NO. 160 THE AREA IS 5 KANAL 3 MARLA. THIS LAND WAS ACQUIRED AND A COMPENSATION OF ` 13,31,959/- WAS RECEIVED BY THE ASSESSEE. ACCORDING TO THE ASSESSEE, IT HAS PURCHAS ED A LAND VIDE REGISTERED DEED DATED 25 TH JUNE, 2003. THE COPY OF THE PURCHASE DEED HAS BEEN FILED BEFORE THE AO. THE ASSESSEE HAS CLAI MED DEDUCTION U/S 54B WHICH WAS DENIED TO IT ON THE GROUND THAT SUCH DEDUCTION IS ADMISSIBLE TO AN INDIVIDUAL ASSESSEE AND NOT A FIRM . ASSESSEE DID NOT CHALLENGE THIS FINDING. THE ASSESSEE THEREAFTER MOV ED THE PRESENT APPLICATION. THERE IS NO DISPUTE WITH REGARD TO THE ABOVE FACTS. ACCORDING TO THE ASSESSEE, ALL THE FACTS ARE ON TH E RECORD AND AO OUGHT TO HAVE GRANTED EXEMPTION U/S 54D OF THE INCOME TAX ACT. DEDUCTION U/S 54D IS ADMISSIBLE IF ANY LAND OR BUILDING FORMI NG PART OF INDUSTRIAL UNDERTAKING, BELONGING TO THE ASSESSEE WAS COMPULSO RILY ACQUIRED AND ITA NO. 3508/DEL/10 ASSTT. YEAR 2003-04 6 SUCH LAND OR BUILDING WAS USED IN THE IMMEDIATELY T WO PRECEDING YEARS ON THE DATE OF SUCH TRANSFER BY THE ASSESSEE FOR TH E PURPOSE OF ITS BUSINESS AND THE AMOUNT OF CAPITAL GAIN ARISEN ON S UCH TRANSFER HAS BEEN USED FOR THE PURCHASE OF ANY OTHER LAND OR BUI LDING OR FOR CONSTRUCTING ANY OTHER BUILDING FOR THE PURPOSE OF SHIFTING OR REESTABLISHING THE UNDERTAKING. IN THAT SITUATION, A DEDUCTION U/S 54D CAN BE GRANTED TO THE ASSESSEE. THE QUESTION BEFORE US IS WHETHER SUCH ISSUE CAN BE ADJUDICATED IN A PROCEEDING U/S 154 O F THE INCOME TAX ACT. 8. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSEE FO R TWO REASON. FIRSTLY THE POWER OF RECTIFICATION U/S 154 OF THE ACT CAN B E EXERCISED ONLY WHEN THE MISTAKE, WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE, WHICH IS APPARENT FROM THE RECORD AND NOT A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY ARGUMENTS AND LONG DR AWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVAB LY BE TWO OPINIONS. THUS U/S 154 IT IS QUITE DIFFICULT TO DET ERMINE WHETHER THE NEW LAND PURCHASED BY THE ASSESSEE HAS BEEN USED FOR TH E PURPOSE OF THE BUSINESS OR NOT. GOING INTO THIS QUESTION WOULD BE BEYOND THE SCOPE OF PROCEEDING U/S 154. KEEPING IN MIND THE PRINCIPLE O F EQUALITY AND FAIR PLAY, EVEN IF FOR THE SAKE OF ARGUMENT WE HAVE A LO OK ON THE FACTS THEN ITA NO. 3508/DEL/10 ASSTT. YEAR 2003-04 7 ALSO APART FROM THE PURCHASE DEED THERE IS NO EVIDE NCE TO INDICATE THAT THE NEW LAND WAS USED FOR THE PURPOSE OF SHIFTING O R REESTABLISHING THE UNDERTAKING. THE ASSESSEE HAS ONLY PLACED ON RECORD THE PURCHASE DEED WHICH SIMPLICITOR EXHIBIT THE PURCHASE OF AG RICULTURAL LAND. WHETHER ANY BUILDING WOULD BE CONSTRUCTED OVER IT OR IT WAS USED FOR THE PURPOSE OF BUSINESS NO EVIDENCE HAS BEEN PLACED ON RECORD. THEREFORE, THE APPEAL OF THE ASSESSEE IS DEVOID OF ANY MERIT. IT IS DISMISSED ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 31.5.2011. SD/- SD/- [K.G. BANSAL] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31.5.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT