I.T.O. WARD -1(4), Nagpur V. SHRI PRABODH SADASHIV SADAVARTE(HUF), Nagpur

ITA 377/NAG/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5010 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 06-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI; AGNES THOMAS
• Keywords: Capital asset; Tax effect
• Section: 143(3); 54B; 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL BENCH, NAGPUR (AT E-COURT, PUNE) BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.377/NAG/2016 / ASSESSMENT YEAR : 2006-07 ITO, WARD-1(4), NAGPUR. ....... / APPELLANT / V/S. PRABODH SADASHIV SADAVARTE (HUF), 38, RAM NAGAR, NAGPUR. PAN : AAHHP0169E / RESPONDENT REVENUE BY : DR. MILIND BHUSARI, CIT (DR) & SMT. AGNES THOMAS, JCIT (DR) ASSESSEE BY : SHRI MUKESH AGRAWAL / DATE OF HEARING : 18.02.2020 / DATE OF PRONOUNCEMENT : 19.02.2020 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-1, NAGPUR DATED 17.03.2016 FOR THE ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER :- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT DEDUCTION U/S 54B OF THE I.T. ACT, 1961 OF RS.24,57,440/- IS ALLOWABLE TO THE ASSESSEE. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) HAS ERRED IN SO HOLDING WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS A HUF NOT ENTITLED TO SUCH DEDUCTION DURING ASSESSMENT YEAR 2006- 07. 2 ITA NO.377/NAG/2016 (III) ANY OTHER GROUND WHICH MAY BE TAKEN WITH THE PERMISSION OF HONBLE TRIBUNAL. 3. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE HOLDS AGRICULTURAL LAND AT VILLAGE SHANKARPUR, DISTRICT NAGPUR WHICH WAS UNDER CULTIVATION AS AN AGRICULTURE LAND UNDER THE URBAN AGGLOMERATION UNDER THE URBAN LAND CEILING ACT. THE ASSESSEE-HUF FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,87,390/- WITH AGRICULTURAL INCOME OF RS.1,00,000/-. DURING THE YEAR, ASSESSEE SOLD AGRICULTURAL LAND AND CLAIMED EXEMPTION U/S 54B OF THE ACT. THE ASSESSEE PURCHASED ANOTHER AGRICULTURE LAND BY INVESTING ENTIRE CAPITAL GAIN ARISING ON SALE OF LAND. THE CASE WAS REOPENED U/S 147 OF THE ACT AND NOTICE U/S 148 WAS ISSUED AND SERVED ON THE ASSESSEE. THE REASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT WAS COMPLETED ON 26.03.2014 AND DETERMINING THE TOTAL INCOME AT RS.26,44,829/-. ASSESSING OFFICER RAISED THE ISSUE OF NON-ELIGIBILITY OF DEDUCTION U/S 54B OF THE ACT. ASSESSING OFFICER HELD THAT THE ASSESSEE, BEING THE HUF IS NOT ELIGIBLE FOR DEDUCTION FOR THE ASSESSMENT YEAR 2006-07. AMENDMENT TO SECTION 54B OF THE ACT APPLIES FROM ASSESSMENT YEAR 2013-14 ONLY. AGAINST THE SAID ACTION OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE ASSESSEE FILED THE WRITTEN SUBMISSION IN SUPPORT OF THE CLAIM OF DEDUCTION U/S 54B OF THE ACT. THE CIT(A), AFTER CONSIDERING THE WRITTEN SUBMISSION OF THE ASSESSEE AND ACTION OF THE ASSESSING OFFICER AGAINST THE ASSESSEE, FOUND THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISCARDING THE CLAIM OF THE ASSESSEE IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE. THE CIT(A), AS PER DISCUSSION GIVEN IN PARA 9 ONWARDS OF HIS ORDER, 3 ITA NO.377/NAG/2016 ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE. THE CONTENTS OF PARA 9.2 OF THE ORDER OF THE CIT(A) IS RELEVANT AND THE SAME IS EXTRACTED HEREUNDER :- 9.2 THE AO IN THE CONCLUDING PARA OF THE ASSESSMENT ORDER HAS RECORDED A FINDING THAT THE APPELLANT HUF IS NOT ELIGIBLE FOR EXEMPTION U/S.54B IN VIEW OF THE AMENDED PROVISIONS OF SECTION 54B W.E.F. 1ST APRIL, 2013. IN THIS REGARD THE APPELLANT VIDE PARA 10 OF HIS SUBMISSION REPRODUCED ABOVE HAD FILED A DETAILED EXPLANATION. THE AMENDED PROVISIONS ARE APPLICABLE W.E.F. 1ST APRIL, 2013 PROSPECTIVELY AND CANNOT BE APPLIED RETROSPECTIVELY. THERE IS NO DISPUTE THAT PRIOR TO THE AMENDMENT IN SECTION 54B THE BENEFIT OF DEDUCTION WAS BEING EXTENDED TO AN ASSESSEE WHICH DEFINITION INCLUDES HUF. THEREFORE, THE APPELLANT HUF IS ELIGIBLE FOR DEDUCTION U/S.54B OF THE ACT. THE AO IS DIRECTED TO ALLOW EXEMPTION U/S 54B OF THE ACT. 5. AGGRIEVED WITH THE ABOVE ERRONEOUS DECISION OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REITERATIVE THE SUBMISSIONS AS MADE BEFORE THE CIT(A) AND SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE APPROVED WITHOUT ANY CHANGES. 7. ON THE OTHER HAND, LD. DR FOR THE REVENUE ARGUED VEHEMENTLY STATING THAT THE ASSESSMENT YEAR 2006-07 IS UNDER LITIGATION AND THE OLD LAWS APPLIED TO THE PRESENT CASE. AS PER THE OLD PROVISIONS OF SECTION 54B OF THE ACT, 1961, THE DEDUCTION IS AVAILABLE ONLY IN RESPECT OF PERSON WITH THE STATUS OF INDIVIDUAL AND NOT TO THE HUF PERSON. IN THIS REGARD, LD. DR FOR THE REVENUE BROUGHT OUR ATTENTION TO THE SAID OLD PROVISIONS OF SECTION 54B OF THE ACT AND THE SAME READS AS UNDER :- 54B. [(1)] [SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHERE THE CAPITAL GAIN ARISES] FROM THE TRANSFER OF A CAPITAL ASSET BEING LAND WHICH, IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE, WAS BEING USED BY THE ASSESSEE OR A PARENT OF HIS FOR AGRICULTURAL PURPOSES [(HEREINAFTER REFERRED TO AS THE ORIGINAL ASSET)], AND THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER THAT DATE, PURCHASED ANY OTHER LAND FOR BEING USED FOR 4 ITA NO.377/NAG/2016 AGRICULTURAL PURPOSES, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME- TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, (I ) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER THAN THE COST OF THE LAND SO PURCHASED (HEREINAFTER REFERRED TO AS THE NEW ASSET), THE DIFFERENCE BETWEEN THE AMOUNT OF THE CAPITAL GAIN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHALL BE NIL; OR (II ) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHALL BE REDUCED, BY THE AMOUNT OF THE CAPITAL GAIN.] 8. FROM THE ABOVE, IT IS EVIDENT THAT THE APPLICABLE PRE-AMENDED LAW TO THE YEAR UNDER CONSIDERATION IS ONLY MEANT FOR THE ASSESSEE IN INDIVIDUAL STATUS. THEREFORE, THE FINDINGS OF THE CIT(A), IN OUR VIEW, IS NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW. AS SUCH, THE CIT(A)S ORDER ON THIS ISSUE IS NOT VERY SPEAKING ONE. CIT(A) HAS NOT GIVEN A REASON FOR MAKING SUCH STATEMENT (SUPRA) THAT THE CORRECT LAW APPLIES TO THE PRESENT ASSESSEE FOR THE ASSESSMENT YEAR 2006-07. IN OUR VIEW, THERE IS AN ERROR IN THE ORDER OF THE CIT(A) AND THE SAME IS NOT IN TUNE WITH THE PROVISIONS OF THE ACT. ON THIS REASONING, WITHOUT GOING INTO THAT ASPECT, WE FIND IT RELEVANT TO ALLOW THE GROUNDS RAISED BY THE REVENUE. IN THE REMAND PROCEEDINGS, THE CIT(A) IS DIRECTED TO WRITE A SPEAKING ORDER AND APPLY THE CORRECT LAW CONSIDERING THE DECISIONS/JUDGEMENTS, IF ANY ON THE DISPUTED SUBJECT. WITH THESE DIRECTIONS, THE GROUNDS RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 5 ITA NO.377/NAG/2016 9. THIS CASE WAS EARLIER DISPOSED OF ON TAX EFFECT GROUND. HOWEVER, ON DEMONSTRATING THAT THE CASE FALLS IN THE EXCEPTIONS, THE SAME WAS RECALLED THROUGH MA PROCEEDINGS DATED 22.01.2020. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 19 TH DAY OF FEBRUARY, 2020. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 19 TH FEBRUARY, 2020. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-1, NAGPUR. 4. THE CIT-I, NAGPUR. 5. , , / DR, ITAT, NAGPUR. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.