ITO, New Delhi V. Sh. Pankaj Gupta, Delhi

ITA 3741/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6958 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 23-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Capital asset; Business income
• Section: 142(1); 143(1); 143(2)

Judgement Text

1 ITA NO. 3741/DEL./2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE MS SUCHITRA KAMBLE, JU DICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEM BER I.T.A. NO. 3741/DEL/2 016 (A.Y. 2012-13) ITO WARD-34(2), ROOM NO. 807, 8 TH FLOOR, E-2 BLOCK, CIVIC CENTRE, MINTO ROAD NEW DELHI (APPELLANT) VS . PANKAJ GUPTA BP-39, WEST SHALIMAR BAGH DELHI PAN : AAFPG4970Q (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER DATED 30.03.2016 PASSED BY THE CIT(A)-12, NEW DELHI FOR ASSESSMENT Y EAR 2012-13. 2. THE GROUNDS OF APPEAL ARE AS UNDER : 1. THE CIT (A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BY DELETING THE ADDITION OF RS. 1,71,86,776/- MADE UNDER THE HEAD LONG TERM CAPITAL GAIN AND TREATING THE CAPITAL ASSET AS AGRICULTURAL LAND? 2. THE CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. BY NOT APPRECIATING THE FACTS THAT THE ASSESSEE HAS NE ITHER HAS PRODUCED EVIDENCE WITH REGARD TO AGRICULTURAL OPERATIONS CAR RIED OUT NOR HAS AGRICULTURAL INCOME GENERATED ON THAT LAND IN THE C URRENT OR PREVIOUS YEAR? APPELLANT BY SH. S.C.GUPTA, AR RESPONDENT BY SH. AMIT KATOCH, SR. DR DATE OF HEARING 08.08.2019 DATE OF PRONOUNCEMENT 22.10.2019 2 ITA NO. 3741/DEL./2016 3. WHETHER THE CIT(A) ERRED BY DISMISSING THE CO NTENTION OF AO THAT THE LAND WAS A CAPITAL ASSET U/S 2(14)(III)(B) OF THE A CT? 4. THE CIT(A) ERRED BY IGNORING THE FACT THAT DIS TANCE MEASURED FROM MUNICIPAL LIMITS OF SOHNA MUNICIPALITY TO ASSESSEE S LAND WAS NO AERIAL DISTANCE AND THEREFORE CANNOT BE RELIED UPON? 5. THE CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BY IGNORING THE FACT THAT THE LAND COMES UNDER THE REC ENT URBANIZATION MASTER PLAN OF HARYANA GOVT, INTRODUCED IN 2012, AND POSSI BLY USE OF NON- AGRICULTURAL PURPOSE? 3. THE ASSESSEE IS DERIVING BUSINESS INCOME AS A PA RTNER IN FIRM, M/S. PRATHAM (INDIA) INTERNATIONAL IN THE NATURE OF SHAR E IN PROFIT, SALARY AND INTEREST INCOME. IN ADDITION TO IT, THE ASSESSEE IS HAVING INCOME UNDER THE HEAD OF INCOME FROM CAPITAL GAIN AND INCOME FROM OTHE R SOURCES. RETURN OF INCOME DECLARING GROSS TOTAL OF INCOME OF RS. 20,27,886/- WAS FILED BY THE ASSESSEE ON 02.01.2013. THE RETURN WAS PROCESSED U/S 143(1) AN D WAS SELECTED FOR SCRUTINY. NOTICE U/S 143(2) WAS ISSUED ON 12.08.201 3 AND WAS DULY SERVED UPON THE ASSESSEE. SUBSEQUENTLY NOTICE U/S 142(1) W AS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE ABOVE NOTICES, AUTHORISED REPRES ENTATIVE OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TI ME AND FILED NECESSARY DETAILS AS CALLED FOR. ON PERUSAL OF THE COMPUTATIO N OF INCOME FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2012-13, THE ASSES SING OFFICER OBSERVED THAT THE ASSESSEE CLAIMED LONG TERM CAPITAL GAIN ON SALE OF LIG FLAT LOCATED AT SHALIMAR BAGH, DELHI AT RS. 12,47,505/-. ALSO DURIN G THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD ANOTHER LAND SITU ATED AT VILLAGE BASAI, DIST. NUH (MEWAT), GURGAON FOR A CONSIDERATION OF RS. 2,1 0,22,780/-. THE ASSESSEE SUBMITTED REPLY DATED 20.10.2014 THEREBY STATING TH AT THE LAND IN THE QUESTION IS RURAL AGRICULTURAL LAND AND THEREFORE IT IS BEYO ND THE AMBIT OF LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER ADDED TO RS. 1, 71,86,776/- TO THE INCOME OF THE ASSESSEE UNDER THE HEAD LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER ALSO MADE ADDITION IN RESPECT OF INTEREST EXPENSES AMOUN TING TO RS. 5,08,600/-. 3 ITA NO. 3741/DEL./2016 THUS, THE ASSESSING OFFICER MADE ADDITION OF RS. 1, 76,95,376/- AND COMPUTED THE TOTAL INCOME AT RS. 1,97,23,260/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. DR SUBMITTED THAT THE ASSESSEE DID NOT P RODUCED EVIDENCE WITH REGARD TO AGRICULTURAL OPERATIONS CARRIED OUT AND A LSO REGARDING AGRICULTURAL INCOME GENERATED ON THAT LAND IN THE CURRENT OR PRE VIOUS YEARS. THE LD. DR FURTHER SUBMITTED THAT THE LAND WAS A CAPITAL ASSET U/S 2(14)(III)(B) OF THE ACT. THE LD. DR FURTHER SUBMITTED THAT THE DISTANCE MEAS URED FROM MUNICIPAL LIMITS OF SOHNA MUNICIPALITY TO ASSESSEES LAND WA S NO ARREAR DISTANCE AND THEREFORE CANNOT BE RELIED UPON. THE LD. DR FURTHER SUBMITTED THAT THE LAND COMES UNDER THE RECENT URBANIZATION MASTER PLAN OF HARYANA GOVERNMENT INTRODUCED IN 2012 AND POSSIBLY USE OF NON-AGRICULT URAL PURPOSE. 6. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER :- 9.10 GROUND NO. 3 & 4 RELATES TO ADDITION OF RS. 1,71,86,776/- HOLDING THAT SAID LAND WAS CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III) OF THE ACT. THE MAIN CONTENTION OF ASSESSING OFFICER I S THAT THE DISTANCE OF APPELLANTS LAND IS LESS THAN FIVE KILOMETER FROM T HE MUNICIPAL LIMITS OF SOHNA MUNICIPAL COMMITTEE. IT IS SEEN THAT BOUNDARY OF SOHNA MUNICIPAL COMMITTEE WAS CHANGED IN 2014, AS PER HARYANA GOVER NMENT NOTIFICATION NO. 18/39/2014-3C-1 DATED 04.03.2014. PRIOR TO THIS , THE BOUNDARY OF SOHNA MUNICIPAL COMMITTEE WAS DEFINED BY HARYANA GO VERNMENT NOTIFICATION OF 1998. THE SOHNA MUNICIPAL COMMITTEE WAS UPGRADED TO SOHNA MUNICIPAL COUNCIL VIDE NOTIFICATION NO. 18/16 3/2014-3C-1 DATED 05.09.2014 ISSUED BY GOVERNMENT OF HARYANA AND THE MUNICIPAL LIMITS 4 ITA NO. 3741/DEL./2016 WERE EXTENDED UPTO VILLAGE RAIPUR VIDE NOTIFICATION NO. 18/39/2014-3C-1. THEREFORE, IT IS APPARENT THAT THE NOTIFICATION 18/ 39/2014-3C-1 DATED 04.03.2014 IS NOT RELEVANT AS THE CASE OF APPELLANT RELATES TO SALE OF LAND DURING A.Y. 2012-13 RELEVANT TO F.Y. 2011-12. FURTH ER, AS PER NOTIFICATION NO. SO 9447 DATED 06.01.1994, THE SPECIFIED DISTANC E FROM SOHNA MUNICIPAL LIMITS FOR THE PURPOSE OF TREATING AGRICU LTURAL LAND AS CAPITAL ASSET IS ONLY 5 KMS. AND, THEREFORE, IT IS TO BE SE EN WHETHER THE SAID LAND FALLS WITHIN 5 KMS. FROM OLD MUNICIPAL LIMITS OF SO HNA MUNICIPAL COMMITTEE. ASSESSING OFFICER IN PARA 3.2 OF ASSESSM ENT ORDER HAS STATED THAT SUB-REGISTRAR NUH VIDE REPLY DATED 17.11.2014 HAS SUBMITTED THAT THE LAND IN VILLAGE BASAI WAS LOCATED AT A DISTANCE OF 17 KMS. FROM NUH NAGAR PALIKA AND IT IS SITUATED AT A DISTANCE OF 8 KMS. F ROM SOHNA NAGAR PALIKA. THEREFORE, AS PER THE REPORT OF SUBREGISTRAR SOHNA NAGAR PALIKA, THE DISTANCE OF LAND OF APPELLANT IN BASAI VILLAGE FROM OUTER LIMITS OF SOHNA NAGAR PALIKA WAS MORE THAN 5 KMS. FURTHER, APPELLAN T HAS SUBMITTED THAT THE DISTANCE BETWEEN OLD M.C. LIMIT AND EXTENDED M. C. LIMIT ON SOHNA- NUH-ALWAR ROAD IS ALMOST 1.35 KMS. HE HAS RELIED ON LETTER DATED 09.07.2015 OF DISTRICT TOWN PLANNER, GURGAON, WHERE IN IT IS STATED THAT AERIAL DISTANCE BETWEEN OLD M.C. LIMIT AND EXTENDED M.C. LIMIT OF SOHNA MUNICIPAL COMMITTEE IS ALMOST 1.35 KMS. THEREFORE, THE DISTANCE OF APPELLANTS LAND IN BASAI VILLAGE FROM OLD MUNICIPA L BOUNDARY OF SOHNA MUNICIPALITY IS ABOUT 6.25 KMS. EVEN IF DISTANCE OF 4.9 KMS. IS TAKEN AS REPORTED BY ITI IN HIS REPORT DATED 20.11.2014. IT APPEARS THAT REPORT OF ITI WAS BASED ON CURRENT MUNICIPAL LIMIT OF OUTER BOUND ARY OF SOHNA MUNICIPAL COUNCIL WHICH IS APPARENT FROM THE ASSESS MENT ORDER IN WHICH ASSESSING OFFICER HAS CONSIDERED THE DISTANCE OF AP PELLANTS LAND IN BASAI VILLAGE FROM MUNICIPAL LIMITS OF SOHNA MUNICIPAL CO MMITTEE EXTENDED UPTO RAIPUR. ASSESSING OFFICER IN HER REMAND REPORT HAS NOT STATED THE AERIAL DISTANCE BETWEEN APPELLANTS LAND IN BASAI VILLAGE AND THE OUTER BOUNDARY OF SOHNA MUNICIPAL COMMITTEE. IT IS TRUE THAT AS PE R GREATER GURGAON MASTER PLAN OF 2031 THERE IS GREAT IMPETUS TO GROWT H IN THIS AREA WHEREIN 5 ITA NO. 3741/DEL./2016 A WELL DEVELOPED INDUSTRIAL AREA IS COMING UP AND B ASAI VILLAGE IS SITUATED IN CLOSE PROXIMITY TO SOHNA WHICH IS ALSO PART OF G REATER GURGAON. HOWEVER, LD. ASSESSING OFFICER HAS NOT BROUGHT OUT ANYTHING ON THE ISSUE WHETHER THE LAND WAS NOT BEING USED FOR AGRICULTURA L PURPOSES. ITI IN HIS REPORT DATED 20.11.2014 HAS NOT STATED ANYTHING ON THE ISSUE OF LACK AGRICULTURAL OPERATIONS ON THE SAID LAND. THEREFORE , IN VIEW OF THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THA T APPELLANTS LAND WAS AN AGRICULTURAL LAND AT THE TIME OF SALE AND, THERE FORE, IT IS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III) OF T HE INCOME TAX ACT, 1961. ACCORDINGLY, ADDITION OF RS. 1,71,86,776/- IS DELET ED. IT IS PERTINENT TO NOTE THAT THE BOUNDARY OF SOHNA MUNICIPAL COMMITTEE WAS DEFINED BY HARYANA GOVERNMENT NOTIFICATION OF 1998. THE SOHNA MUNICIPAL COMMITTEE WAS UPGRADED TO SOHNA MUNICIPAL COUNCIL V IDE NOTIFICATION NO. 18/163/2014-3C-1 DATED 05.09.2014 ISSUED BY GOVERNM ENT OF HARYANA AND THE MUNICIPAL LIMITS WERE EXTENDED UPTO VILLAGE RAI PUR VIDE NOTIFICATION NO. 18/39/2014-3C-1. THUS THE NOTIFICATION 18/39/2014-3 C-1 DATED 04.03.2014 IS NOT RELEVANT AS THE CASE OF ASSESSEE RELATES TO SALE OF LAND DURING A.Y. 2012- 13 RELEVANT TO F.Y. 2011-12. BESIDES THIS, AS PER N OTIFICATION NO. SO 9447 DATED 06.01.1994, THE SPECIFIED DISTANCE FROM SOHNA MUNIC IPAL LIMITS FOR THE PURPOSE OF TREATING AGRICULTURAL LAND AS CAPITAL ASSET IS O NLY 5 KMS. AND, THEREFORE, IT IS TO BE SEEN WHETHER THE SAID LAND FALLS WITHIN 5 KMS . FROM OLD MUNICIPAL LIMITS OF SOHNA MUNICIPAL COMMITTEE. ASSESSING OFFICER IN PARA 3.2 OF ASSESSMENT ORDER HAS STATED THAT SUB-REGISTRAR NUH VIDE REPLY DATED 17.11.2014 HAS SUBMITTED THAT THE LAND IN VILLAGE BASAI WAS LOCATE D AT A DISTANCE OF 17 KMS. FROM NUH NAGAR PALIKA AND IT IS SITUATED AT A DISTA NCE OF 8 KMS. FROM SOHNA NAGAR PALIKA. THEREFORE, AS PER THE REPORT OF SUB-R EGISTRAR SOHNA NAGAR PALIKA, THE DISTANCE OF LAND OF ASSESSEE IN BASAI VILLAGE F ROM OUTER LIMITS OF SOHNA NAGAR PALIKA WAS MORE THAN 5 KMS. FROM THE RECORDS IT CAN BE SEEN THAT REPORT OF ITI WAS BASED ON CURRENT MUNICIPAL LIMIT OF OUTE R BOUNDARY OF SOHNA MUNICIPAL COUNCIL WHICH IS APPARENT FROM THE ASSESS MENT ORDER IN WHICH 6 ITA NO. 3741/DEL./2016 ASSESSING OFFICER HAS CONSIDERED THE DISTANCE OF AS SESSEES LAND IN BASAI VILLAGE FROM MUNICIPAL LIMITS OF SOHNA MUNICIPAL COMMITTEE EXTENDED UPTO RAIPUR. THE ASSESSING OFFICER IN THE REMAND REPORT HAS NOT STATED THE AERIAL DISTANCE BETWEEN ASSESSEES LAND IN BASAI VILLAGE AND THE OU TER BOUNDARY OF SOHNA MUNICIPAL COMMITTEE. THESE FACTS WERE NOT DISTINGUI SHED BY THE LD. DR DURING THE COURSE OF HEARING. THUS, THE CIT(A) HAS GIVEN T HE DETAIL FINDING AND THERE IS NO NEED TO INTERFERE WITH THE SAME. THE APPEAL OF T HE REVENUE IS DISMISSED. 9. IN RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND OCTOBER, 2019 . SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 22/10/2019 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NO. 3741/DEL./2016 DATE OF DICTATION 22 . 10 .2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22 . 1 0.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK