SHRI RAM CHARAN MEENA, ALWAR V. PR. COMMISSIONER OF INCOME TAX, ALWAR

ITA 370/JPR/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9547 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 18-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR DHK
• Keywords: Capital asset; Set aside
• Section: 143(3); 54B; 147; 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA -@ ITA NO. 370/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2011-12 SHRI RAM CHARAN MEENA, HOUSE NO. 152, NEAR RAM MANDIR, VILLAGE- BHOOGOR, DISTRICT- ALWAR. CUKE VS. PR.CIT, ALWAR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: CYHPM 4974 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RANJAN KUMAR (CIT-DR) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28/05/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 01/07/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE REVISION ORDER DATED 18/02/2019 OF LD. PR.CIT, ALWAR PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) FOR THE A.Y. 2011-12. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDER PASSED BY THE LD. PCIT U/S 263 IS ILLEGAL AND BAD IN LAW AND THE SAME BE QUASHED. 2. THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT DEDUCTION U/S 54B ALLOWED BY THE AO IN RESPECT OF AGRICULTURAL LAND PURCHASED FROM SH. GIRIRAJ ( A SC COMMUNITY PERSON) ON THE BASIS OF AGREEMENT IS NOT ENTITLED TO DEDUCTION U/S 54B SINCE NO LEGAL TITLE ITA 370/JP/2019_ RAM CHARAN MEENA VS PCIT 2 HAS PASSED TO THE ASSESSEE AND THEREFORE, THE ORDER PASSED BY AO ON INCORRECT ASSUMPTION OF LAW IS AN ORDER WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 3. THE APPELLANT CRAVES TO ALTER, AMEND AND MODIFY ANY GROUND OF APPEAL. 4. NECESSARY COST BE AWARDED TO THE ASSESSEE. 2. THE ASSESSEE IS AN INDIVIDUAL AND FILED RETURN OF INCOME SHOWING NIL CAPITAL GAIN FOR THE YEAR UNDER CONSIDERATION AFTER CLAIMING DEDUCTION U/S 54B OF THE ACT OF RS. 34,35,418/-. THE ASSESSEE CLAIMED THAT OUT OF THE SALE CONSIDERATION OF RS. 43,57,500/- AND CAPITAL GAIN OF RS. 34,45,418/-, THE ASSESSEE INVESTED IN AN AGRICULTURAL LAND OF RS. 42.00 LACS. THUS, THE ASSESSEE INVESTED MORE THAN THE CAPITAL GAIN AND CONSEQUENTLY NO CAPITAL GAIN WAS TAXABLE. THE A.O. ACCEPTED THE CLAIM OF DEDUCTION U/S 54B WHILE PASSING THE ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT. SUBSEQUENTLY THE LD. PCIT FOUND THAT THE ORDER PASSED BY THE A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE SO FAR AS THE A.O. HAS ALLOWED CLAIM OF DEDUCTION U/S 54B OF THE ACT. ACCORDINGLY, THE LD. PCIT ISSUED A SHOW CAUSE NOTICE U/S 263 OF THE ACT ON 10/01/2019. IN RESPONSE, THE ASSESSEE HAS EXPLAINED THAT THE ASSESSEE HAS PURCHASED AGRICULTURAL LAND THROUGH AGREEMENT TO SELL DATED 20/6/2011. THOUGH, THE SALE DEED WAS NOT EXECUTED DUE TO THE REASON THAT THE AGRICULTURAL LAND OF A SCHEDULED CASTE PERSON IS NOT ALLOWED TO BE TRANSFERRED TO NON- SCHEDULED CASTE PERSON IN THE STATE OF RAJASTHAN. ITA 370/JP/2019_ RAM CHARAN MEENA VS PCIT 3 HOWEVER, THE ASSESSEE CLAIMED THAT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD. VS CIT 239 ITR 775 AND THE DECISION IN THE CASE OF CIT VS. PODAR CEMENT (P) LTD. 226 ITR 625. ONCE THE ASSESSEE HAS TAKEN POSSESSION OF THE LAND AND PAID THE CONSIDERATION THEN THE ASSESSEE ACQUIRED THE OWNERSHIP OVER THE LAND AND ENTITLED TO HOLD THE PROPERTY TO THE EXCLUSION OF ALL OTHERS. THE LD. PCIT DID NOT ACCEPT THIS EXPLANATION OF THE ASSESSEE AND HELD THAT ONCE THE LAND IN QUESTION CANNOT BE TRANSFERRED BY THE ALLEGED SELLER IN FAVOUR OF THE ASSESSEE DUE TO PROHIBITION OF LAW THEN THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 54B OF THE ACT. CONSEQUENTLY, THE ORDER PASSED BY THE A.O. WAS SET ASIDE WITH A DIRECTION TO THE A.O. TO PASS FRESH SPEAKING ORDER AFTER MAKING PROPER ENQUIRIES AND AFFORDING ADEQUATE OPPORTUNITIES. 3. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE AO AFTER CONSIDERING THE EKRARNAMA OF THE PURCHASE OF LAND, THE STATEMENT OF SHRI GIRRAJ FROM WHOM THE LAND IS PURCHASED AND CONSIDERING THE FACT THAT THE REGISTRATION / SALE DEED OF LAND HAS NOT BEEN EXECUTED IN FAVOUR OF THE ASSESSEE, ALLOWED THE CLAIM U/S 54B SINCE THE SELLER HAS HANDED OVER THE POSSESSION OF THE LAND TO THE ASSESSEE AFTER RECEIPT OF THE FULL PAYMENT. THUS, WHEN AO HAS ALLOWED THE CLAIM OF DEDUCTION U/S 54B AFTER EXAMINING ALL THE FACTS AND CONDUCTING PROPER ENQUIRY, IT CANNOT BE SAID THAT HE HAS NOT MADE PROPER ENQUIRY IN ALLOWING THE CLAIM. THEREFORE, THE ITA 370/JP/2019_ RAM CHARAN MEENA VS PCIT 4 ORDER PASSED BY AO BY NO STRETCH OF IMAGINATION CAN BE CONSIDERED AS ERRONEOUS FOR WANT OF PROPER ENQUIRY. IT IS SUBMITTED THAT SECTION 2(47) OF THE ACT DEFINES 'TRANSFER'. THEREFORE, WHETHER THE LAND PURCHASED BY THE ASSESSEE UNDER CONSIDERATION FALLS WITHIN THE DEFINITION OF TRANSFER WOULD BE GOVERNED UNDER THE DEFINITION OF TRANSFER PROVIDED UNDER THE INCOME TAX ACT AND NOT THE DEFINITION PROVIDED IN THE TRANSFER OF PROPERTY ACT. THERE IS NO REQUIREMENT THAT UNDER THE INCOME TAX ACT THAT THE LEGAL OWNERSHIP OF AN IMMOVABLE PROPERTY SHOULD VEST ON THE ASSESSEE TO CONSTITUTE A TRANSFER AS REQUIRED UNDER THE TRANSFER OF PROPERTY ACT. AS PER SECTION 2(47) OF THE ACT, ANY TRANSACTION WHICH HAS THE EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY IS CONSTITUTED AS TRANSFER WHICH READS AS UNDER: ''TRANSFER', IN RELATION TO A CAPITAL ASSET, INCLUDES, (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY. THUS, WHEN THE PURCHASE OF LAND IS EFFECTED BY WAY OF A NOTARIZED AGREEMENT, FULL CONSIDERATION HAS BEEN PAID AND THE PROPERTY IS BEING ENJOYED BY THE ASSESSEE, THE SAME WOULD CONSTITUTE TRANSFER UNDER THE ACT. WITHOUT PREJUDICE TO THE ABOVE, WHEN THE LD. CIT HAS HELD THAT THE DEDUCTION ALLOWED BY THE AO U/S 54B IS BASED ON MISTAKEN VIEW OF LAW / ITA 370/JP/2019_ RAM CHARAN MEENA VS PCIT 5 ERRONEOUS APPLICATION OF THE PROVISIONS OF THE ACT THEN HE SHOULD HAVE DIRECTED THE AO TO DISALLOW THE CLAIM INSTEAD OF SETTING ASIDE THE ORDER TO AO FOR MAKING PROPER ENQUIRIES WITHOUT SPECIFYING AS TO WHAT ENQUIRY HE SHOULD MAKE AND IGNORING THAT AO HAS ALREADY MADE THE ENQUIRIES WHILE ALLOWING THE CLAIM OF DEDUCTION U/S 54B. THE LD. AR HAS RELIED ON THE FOLLOWING DECISIONS: (I) CIT VS. KWALITY STEEL SUPPLIERS COMPLEX (2017) 395 ITR 1 (SC). (II) TORRENT PHARMACEUTICALS LTD. VS DCIT ITA NO. 164/AHD/2018 ORDER DATED 08/08/2018 (2018) 196 TTJ 318 (AHD. TRIB) (III) AMBO AGRO PRODUCTS LTD. VS PCIT (2017) 160 DTR 25 (KOL. TRIB). 4. ON THE OTHER HAND, THE LD CIT-DR HAS RELIED ON THE IMPUGNED REVISION ORDER OF THE LD. PCIT PASSED U/S 263 OF THE ACT AND SUBMITTED THAT WHEN THE LAND IN QUESTION CANNOT BE TRANSFERRED AS PROHIBITED BY LAW THEN THE SAME CANNOT BE TREATED AS ACQUIRED BY THE ASSESSEE BY WAY OF THIS ILLEGAL AGREEMENT DATED 20/06/2011. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ONLY DISPUTE IS THE CLAIM OF DEDUCTION U/S 54B OF THE ACT WAS ALLOWED BY THE A.O. BASED ON THE AGREEMENT TO PURCHASE OF AGRICULTURAL LAND AS RELIED UPON BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS NOT DISPUTED THE FACT THAT THE SAID AGRICULTURAL LAND CLAIMED TO HAVE BEEN PURCHASED BY THE ASSESSEE THROUGH THE ALLEGED ITA 370/JP/2019_ RAM CHARAN MEENA VS PCIT 6 AGREEMENT DATED 20/06/2011 BELONGS TO A SCHEDULED CASTE PERSON AND THEREFORE, AS PER THE LAND REFORMS ACT OF STATE OF RAJASTHAN, AN AGRICULTURAL LAND OF A SCHEDULED CASTE OR SCHEDULED TRIBE PERSON CANNOT BE TRANSFERRED TO OTHER THAN THE SAID CLASS. THE ASSESSEE HAS ALSO ACCEPTED THE FACT THAT AFTER THE SAID AGREEMENT, SALE DEED COULD NOT BE EXECUTED DUE TO THE REASON THAT THE AGRICULTURAL LAND COULD NOT BE TRANSFERRED BY THE SELLER IN FAVOUR OF THE ASSESSEE AS PROHIBITED BY THE LAW. HOWEVER, THE ASSESSEE HAS CLAIMED THAT ONCE THE ASSESSEE HAS PAID THE CONSIDERATION AND THE POSSESSION WAS HANDED OVER TO THE ASSESSEE THEN IT AMOUNTS TO TRANSFER IN TERMS OF SECTION 2(47)(V) & (VI) OF THE ACT. WE DO NOT FIND ANY MERIT IN THIS CONTENTION OF THE LD AR BECAUSE OF THE SIMPLE FACT THAT THE AGRICULTURAL LAND BELONGING TO THE SCHEDULED CASTE CANNOT BE TRANSFERRED TO NON- SCHEDULED CASTE PERSON UNTIL AND UNLESS THE SAME IS CONVERTED TO NON-AGRICULTURAL LAND. EVEN IF THE SAID AGRICULTURAL LAND CAN BE TRANSFERRED IN FUTURE AFTER CONVERTING THE SAME FROM AGRICULTURAL TO NON-AGRICULTURAL LAND, IT WOULD NOT BE A CASE OF PURCHASE OF AGRICULTURAL LAND BUT IT MUST BE PURCHASE OF NON-AGRICULTURAL LAND. THE MOMENT, THE AGRICULTURAL LAND IS CONVERTED TO NON-AGRICULTURAL LAND, IT LOSES THE CHARACTER OF AGRICULTURAL LAND AND CONSEQUENTLY THE SAID INVESTMENT WOULD NOT BE ELIGIBLE FOR DEDUCTION U/S 54B OF THE ACT. AS REGARDS THE OTHER CONTENTION OF THE LD. AR OF THE ASSESSEE RELYING ON ITA 370/JP/2019_ RAM CHARAN MEENA VS PCIT 7 VARIOUS DECISIONS, WE NOTE THAT THIS IS NOT A CASE WHERE THE ASSESSEE HAS TAKEN AN ASSET WITHOUT FORMAL DEED OF TITLE BUT THERE WAS NO PROHIBITION FOR TRANSFER OF THE ASSET IN FAVOUR OF THE ASSESSEE. IN THE CASE IN HAND WHEN THE TRANSFER ITSELF IS PROHIBITED THEN THE ALLEGED AGREEMENT WOULD NOT BRING THE CASE IN THE CATEGORY OF TRANSFER OF OWNERSHIP WITHOUT ANY FORMAL DEED OF TITLE. FURTHER WE FIND THAT THE ORDER OF THE A.O. IS ERRONEOUS SO FAR AS THE CRUCIAL ASPECT AND THE VERY BASIS OF ALLOWABILITY OF DEDUCTION U/S 54B OF THE ACT WAS NOT CONSIDERED BY THE A.O. AND HENCE WE FIND THAT THE LD. PCIT HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT WHEN THE CLAIM OF THE ASSESSEE IS ABSOLUTELY IMPERMISSIBLE UNDER LAW. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED REVISION ORDER OF THE LD. PCIT, ALWAR PASSED U/S 263 OF THE ACT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST JULY, 2019. SD/- SD/- JES'K LH 'KEKZ FOT; IKY JKO (RAMESH C SHARMA) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKA D@ DATED:- 01 ST JULY, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI RAM CHARAN MEENA, ALWAR. ITA 370/JP/2019_ RAM CHARAN MEENA VS PCIT 8 2. IZR;FKHZ @ THE RESPONDENT- THE PR.CIT, ALWAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 370/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR