DCIT, Circle, Sangrur V. Shri Ram Gopal, Sangrur

ITA 397/CHANDI/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0845 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 04-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition
• Section: 54; 28; 154; 54F; 201; 54EC; 64; 48; 73; 13; 22; 20

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ I N T H E I N C O M E T A X A P P E L L A T E T R I B U N A L D I V I S I O N B E N C H , “ B ” , C H A N D I G A R H B E F OR E SH R I N . K . SA I N I , V I C E P R E SI D E N T & S H R I S U D H A N S HU SR I V A S T A V A , J U D I C I A L M E M B E R आयकर अपील सं./ ITA No. 397/C H D / 2 0 1 9 नधा रण वष / Assessment Year : 2 0 1 5 - 1 6 The DCIT, Circle Sangrur बनाम Sh Ram Gopal, Prop. M/s Shri Shakti Packers, Sangrur. थायी लेखा सं./PAN NO: AAPPG5573K अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Sh. Nikhil Goyal, CA and Sh. Deepak Anand, Advocate. राज व क ओर से/ Revenue by : Dr. Ranjeet Kaur, Sr. DR स ु नवाई क तार$ख/Date of Hearing : 02.03.2022 उदघोषणा क तार$ख/Date of Pronouncement : 30. 05.2022 आदेश/Order P er S u d h an sh u S ri va s ta va , J u d i c i a l M e mb e r : T hi s a pp e al ha s be e n p re fe r re d by t h e D ep a r t m e n t a ga i ns t or de r da t ed 2 4 . 01. 2 01 9 pa s se d by t h e Ld. C o mm i s s io ne r o f I nc o m e T a x (A pp e a l s ), P at i al a [h e r e i n a ft e r re fe rr ed t o as ‘ C IT (A ) ’ ] f or a s s es s me n t ye a r 201 5 - 16. 2. 0 T he b ri e f f ac t s o f t h e c as e ar e t ha t t he as s e s see ha d fi l e d hi s r e t ur n o f i nc o m e de c l a ri ng in c o m e o f R s. 3, 55 , 3 2, 2 70 /- un de r L on g T e r m Ca pi t a l G ai n a nd a gr i c ul tu r al i nc o me o f R s . 3 5, 00 0 /- a ft e r c la i mi n g de d uc t i o n o f Rs . 1 , 28, 80 , 0 0 0/ - un d e r Ch a pt e r V IA o f t h e I nc o m e Ta x 2 ITA No. 397-c-2019 – Shri Ram Gopal, Sangrur A ct , 19 6 1 ( h e r ei na ft e r c a l l ed ' t he A c t ') . D ur i n g t h e y e a r t he a s s es s e e de r i v e d i nc o me fr o m ho us e p r o pe rt y, L o ng T e r m C ap i tal G a in , in t e r e s t i nc o me , ma nu fa c t u r i n g o f e gg t r ay s a n d p u r c has e an d s a l e o f f oo d gr a i ns . T he a s s e s s ee ’s c as e w as s e l e c te d fo r s c ru t iny t hr o ug h CA S S un der ‘ Li mi t e d S c r u ti ny ’ . D ur i n g t he cou rs e o f as se s s me nt p r oc e e d i n g s, i t w a s n o ti c e d b y th e A s s e s s in g O ff ic er (A s s e s s in g O ff i c e r ) t ha t t h e l an d in c l u di ng fa c t ory b ui ld i n g o f t he a s s es s e e w a s ac q ui r e d by t h e S ta t e G ovt . a nd t he a s s es s e e h a d re ce i v e d co mp e ns a t i on amou nt o f R s. 6, 27 , 31, 5 81 /- i nc l u di n g i n t e re st . T h e d e t a i l s o f the c o mp e n sa t i on a m o un t re c ei ve d by t h e as s e s s ee w e re a s u nde r: - 1. A mo u nt fr o m c o mp e ns a t io n - Rs . 4, 19 , 10, 48 4/ - 2. In t e r e s t - Rs . 82, 47 , 979/ - 3. A mo u nt o f s ol a t i u m - Rs . 1, 25 , 73. 13 9/ - 2. 1 T he as s e s s ee c la i me d de du ct i o n o f s ol at i u m o f Rs . 1, 25, 73 , 13 9/ - w hi l e c a lc ul a ti ng Lo ng T e r m Cap it a l G ai n a nd t h e A sses s i ng O f fi c e r re q u i r e d t h e as s e s s ee to j us t i fy de duc t i o n cl a i m ed o n ac c o un t o f s ol a t i u m an d a s k e d t he as s e s s e e t o s h ow a s t o w h y the c a p it a l g ai n s ho ul d no t b e c o mp ut e d w i t h re fe r e nc e t o t he e n ti re c o m p e ns a t i o n re c ei ve d b y th e a s s e ss ee . In r es p o ns e t o t he q ue ry ra is e d by t h e A s s es s i ng O f fi c e r, t he a s s e ss e e s ub mi t t e d a d e t a i l ed r ep l y ( re pr od uc e d i n t he as s e s s me nt or d er ). T he su m a nd s u bs t a nc e o f t h e a s s es s e e s ub m i s s io ns w as th at i n c o m p ut in g t h e pe ri od re fe r re d t o i n S e c ti on 23 3 ITA No. 397-c-2019 – Shri Ram Gopal, Sangrur o f t h e La n d A c qu i s i t i on A ct , 1 8 9 4, a n y p er io d or peri ods d u ri ng w h i c h t he p ro ce ed in gs fo r t he ac qu i s i t io n o f la n d w e re h el d up on a c co u n t o f a ny s t a y or i nj un c t i on by th e o rd e r o f a ny o f t h e Co u rt w i ll h av e t o be e xc lu d e d a nd fu r t h er i n a d d i t i o n t o t h e ma r ke t v al ue o f t h e l a n d, t he Co u rt s h a l l b e a w ar d i n g i n e v e r y c a s e a s u m o f 1 5% o f s uc h m ar ke t va l ue i n c o ns i d er at i on o f t he c o m p u l s ory n a t ure o f t h e ac q u is i t i o n. I t w as t he s u b mi s s i on o f t h e a s s es s e e b e fo re t h e A s s e ss in g O f fi c e r t h at t h e a mou nt o f s ol a t i u m w as n o t ta x a b l e a nd sh o ul d b e a ll ow e d a s a de d uc t i o n fro m t h e t o t a l a m ou n t o f c o m p en s a t i on. The A s s es s i ng O ff ic er , h ow ev e r , d i d n o t a g re e w i t h th e s ub m i s si ons o f t h e a s s es s e e a n d w en t on to ho ld t h a t th e a m o un t o f so la t i u m r e c e iv ed i . e . R s. 1, 25 , 73, 1 39 /- w a s t o be t re a t ed a s in c o m e o f t h e a ss e s s e e un d er t h e he a d L o ng T e r m C a p i ta l G a i n s a n d c a pi t a l g a i ns w as w or k ed o ut a t R s . 5, 22 , 85, 7 16 /- as pe r t he f ol l ow in g co m put a t i o n : - Full value consideration (Excluding Solatium & Interest) 5,44,83,623/- Less Cost of acquisition (as per Index cost) 27,69,678/- Less Cost of Improvement 14,46,368/- Long Term Capital Gain 5,02,67,577/- Less exemption U/s 54F 50,00,000/- Less exemption U/s 54EC 55,55,000/- Long Term Capital Gain 3,97,12,577/ Add solatium as per para 2.3 above 1,25,73,139/- Total Long Term Capital Gain 5,22,85,716/- 4 ITA No. 397-c-2019 – Shri Ram Gopal, Sangrur 2. 2 A pa rt fr o m t h i s , th e A s s ess i ng O f fi c e r a l s o he ld th at t h e i n t e re s t re c ei ve d o n c o mpe ns a t i o n w a s t o be t a xe d u n de r t h e he a d ‘ i n c o m e fr o m ot h e r s ou rc e s ’ a n d onl y 5 0% o f t he i nt e r es t a mo u n t re c e i ve d w a s t o b e be c l ai me d as e x e m pt i n t e r ms o f s ec t i o n 5 7( i v ) o f t h e A c t . A cc or di ng l y, t h e a dd i t io n o f R s. 41, 23 , 9 9 0/ - w a s a ls o ma d e un de r i nc o me fro m o t h er s o urc e s. T he t o t al i n c o m e w a s c o mp ut e d a t R s. 5, 65 , 94, 7 29 . / - 2. 3 T he r e a ft e r, th e a s se s s e e fi l ed a n a p pl i ca t i on u/s 154 o f t he A c t be fo r e t he A s s e s s in g O ffi c e r f or r e c t i fi c at i o n o f a mi s ta ke ap p ar en t fr o m t he r e c o r ds , i . e . t h e so la t iu m ha vi ng b e en a d de d tw ic e i n t he a s s es s me n t or d e r an d t h e A s ses s i ng O ff i c e r, vi d e o rd e r d a t ed 1 5 . 0 1. 20 1 8, pa s se d u/ s 1 54 o f t he A c t r e ct i fi e d t h e m is t a ke a nd th e as s es s e d i n c o me w as re d u c e d t o Rs . 4 , 39, 81 , 4 16 / -. 2. 4 A ggr i e v e d, t h e a s s es s e e pr e f er re d a n a p pe a l be for e t h e L d. F ir s t A ppe l la t e A ut h or i t y a n d i t w a s t h e c o n te nt i o n o f t he a s se s s e e be for e t he L d. C I T (A ) t h a t t h e e nt i r e re ce i pt s o f la nd ac qu i s it i on w er e co ve r e d b y t he R i g ht to F a i r C o m pe ns a t i o n a nd T ra ns p ar e n c y i n t h e L a n d A cq ui s i t i on, Re ha bi l i t at i o n a n d R e s et t le me nt A ct 201 3 (h e re i n a f te r re fe rr ed t o as ‘ R F C TL A R R’ ) bu t t h e A s s e ssi ng O ffi cer ha d no t fo l l o w e d t he b i n di ng C ir cu l a r o f t he C BD T a nd ha d n ot g i v e n t he b e n e fi t o f e xe mp t i on t o t h e a s s ess e e. Th e L d. CI T( A ) a c c ep te d t h e c o nt e n ti on o f 5 ITA No. 397-c-2019 – Shri Ram Gopal, Sangrur t he a s se s s e e an d a ll ow e d t he a pp e a l o f t h e as s e s s ee b y di r e c t i n g t h e A s s es s i ng O ff i c e r t o t r e a t t h e e n t i r e c o m pe ns a ti on i n c l u d i ng s o l a t i u m as e xe mp t . 2. 5 A ga in s t t hi s or de r o f t h e L d. F ir s t A pp el l at e Au th or i t y, t h e D ep ar t m en t h as n o w a p pr oa c h e d t h i s Tr i b u na l a nd has r a i s e d t h e fo l l ow i ng g r o un d s o f a p pe al : - 1. Wh e t h e r on t he f a c t s & i n t h e c ir c u m s t anc es o f t he c as e , t h e L d. CIT ( A) h a s e r r ed i n de l e ti ng t h e ad di t i o n of R s . 1, 2 5, 73, 1 3 9 / - u n de r t he h e a d L on g T e rm Ca pi ta l G ai n on a c c o un t of s ol a t iu m . 2. Wh e t h e r on t he f a c t s & i n t he c ir c u m s t anc es o f t he c as e , t h e L d. CIT ( A) h a s e r r ed i n de l e ti ng t h e ad di t i o n o f Rs . 41, 2 3, 99 0/ - o n a c c ou nt of i nt e r es t r e ce i ve d on co m p e ns a ti on i n vi e w o f pr ov i s io n of s e ct i on 5 6 o f t h e In c om e T a x A c t , 196 1 . 3. Wh e t h e r on t he f a c t s & i n t h e c ir c u m s t anc es o f t he c as e , L d. C IT (A ) h as e r r e d d e l e ti n g t h e al l L ong T e rm Ca pi t a l G ai n s how n by a s s es s e e i n i ts r e t ur n of i nc om e i n v ie w o f R F CT L A RR A c t . B ut a s pe r t he aw a r d l e t t e r o f t h e o f fi c e of co m p e t en t a u t h or i t y l an d ac qui s i ti on (S ub D i v is i on a l M ag is t r at e ) Sa ngr ur a l l th e ac q ui s i t i ons b e i ng m ade u n de r Na t i o na l H i g hw a y A c t, 19 56 c om p e ns at i o n an d i nt er e s t i s be p a i d u nd er t h e pr ov i s i on of L an d ac q ui s i ti on A c t, 18 9 4 a nd i t i s ch ar g e ab l e t o L on g T e rm Ca pi ta l G ai n. 4. It i s pr ay e d t h at t h e or de r of L d. CIT ( A) be s e t as i de a nd t ha t of t h e A s s es s i ng O f f ic e r b e r e s to r ed. 6 ITA No. 397-c-2019 – Shri Ram Gopal, Sangrur 5. T he ap p e l l an t cr a v e s le a v e t o a dd o r a m end an y gr o u nds of ap p e a l be f o re th e a pp e al i s h ear d a n d f in al ly d i s pos e d o f . 3. 0 T he L d. S r. D e pa rt me nt a l Re pr e s e nt a t i ve ( S r. D R) s ub mi t te d t ha t s he w a s re l y i n g h e a vi l y o n t he o b s er v at i ons o f th e A s s e ss in g O ff i ce r i n t hi s r eg a rd . I t w a s s ub mi t t ed by L d. S r . D R t ha t t her e w er e n u m e r ous j ud i c ia l p r e c e de nt s s up po r t i n g t h e st a nd o f t he D epa r t me nt t h a t th e c o mp e n sa t io n re c ei ve d w a s ta x a b l e a n d t ha t a l l t h e c o mp one nt s t h er ei n w oul d for m t he p a r t o f in co m e . It w a s a l s o s ub mi t te d t ha t n o w t h e H on' bl e C ou r t s h a ve dr aw n di s t in c t i o n b et w e e n i n t e re s t u/ s 28 o f th e L an d A c q ui s i t i on A ct a n d I nt e re s t u/ s 34 o f t h e s a id A c t. It w as s ub m i tt e d t h a t it h a s b ee n h el d t h a t w her e a s t h e c omp e ns a t i o n gi ve n t o t he a s s e ss e e o f t he la nd a c qu i re d w o ul d b e i nc o me , th e e nh a n c e d c o mp e n sa t io n w o ul d be i nc o m e by v i r t ue o f s e c t i on 45( 5) (b ) o f t h e A c t . S i mi l a r l y, w i t h r e fe re nc e t o t he e x e m p t io n be i ng all o w ed o n i nt e re s t re c ei ve d, t he L d. S r. D R s ub mi t te d th at in t e r ms o f s e ct i on 5 6( 2) ( vi i i ) , t he i nt e re s t w as t a x abl e b u t t he as s e s s ee c a n cl a i m exe mp t i on o n 5 0 % o f t he i nt e re s t a mo un t in t e r ms o f s ec t i o n 57( i v ) o f the A c t . 4. 0 In r es po ns e , t he L d . A R s ub mi tt e d t ha t t he L a nd w as c o m pu ls o r i l y a cq ui r e d by G o v e r n m en t s i t ua te d at N a ti on al H i g hw ay N o. 6 4 o n a s t re t c h o f l a n d fr o m K m 5 0. 7 00 t o K m 2 0 9. 5 0 o n t he P a t i a l a – S a n gr ur - Bh a t i n d a s ec t io n. O ur a t te nt i o n w a s dra w n t o t h e A war d da t ed 15 . 0 1. 2 01 4. O ur a t t e nt i o n w as a ls o dr a w n t o a c o py o f t he le t t e r b y S D E 7 ITA No. 397-c-2019 – Shri Ram Gopal, Sangrur w he re in p r ic e w as fi x e d vi d e me e t i ng he ld o n 2 6. 12 .2 013 . It w as s ub m i tt e d t ha t t h e a mo u nt o f A w a rd w as c a l c u l a t e d on pr es e nt at i on o f t hi s c o p y o f l e t t e r . It w a s s ub mi t t ed t ha t i n te r ms o f ac qui s i ti on l e t te r vi d e dat e d 15. 0 1 . 2 0 14 , t he p ro pr ie t a r y ri g ht s o f t he a c q u i r e d l a n d ve s t e d a bs ol ut el y i n M in i s t ry o f R oa d T r a n s p ort & H i g hw ay f re e fr o m a l l e nc u mb r an ce . O ur a t te nt i o n w as fu rt h e r d ra w n t o th e l e t t e r da te d 11 . 0 1. 2 01 9 be a ri n g N o. 04 /L A C / N H - 64 i s s ue d b y C ol l ect o r, S a ng r u r w hi ch s p e c i fi e d t h a t o ut o f a b ou t 3 0 00 l a n d ow ne rs , a bo u t 6 3 6 la nd ow ne rs w e r e d i s bu r s ed c o mpe ns a t i o n t il l 3 1. 1 2. 2 01 4. It w as s u b mi t te d t ha t, t h us , i t w a s a bu n d a n tl y c le ar t ha t m aj or it y of l a nd ow n e rs w er e gi v e n t h e pa y me n t s a ft e r 3 1 . 12. 2 01 4. It w a s fu r t h e r s u b m it t e d t h at th e da t e o f A w a rd i n th e as s e s s ee ’s ca s e i s 1 5. 01. 20 1 4 an d, t h us , th e a cq ui si t i on o f l a n d fe l l w i t h i n t h e p ur v i ew o f RF CT LA R R A c t a l t h o u gh t he aw a rd o f co m p ul s or y ac qu is i t i o n w a s re c ei ve d by t h e as s e s s ee on 14 . 0 2. 2 01 5. In t hi s re g a rd ou r a t te nt i on w a s al s o dra w n to th e c op y o f t he ch eq u e a n d t h e c op y o f as s e s s ee ’s b an k s ta t e m e nt w h ic h e vi de nc e d t hi s c l a i m o f th e a s s ess e e . It w as a l s o s ub m i tt e d tha t s e ct i on 9 6 o f t h e RF CT LA R R A c t p r ovi de s e x e m p t i on f ro m in co me -t ax, s ta m p du t y a n d fe e s . T he L d. A R a l so d re w ou r at t e n t i on t o Ci r c u lar N o. 36/ 20 1 6 is s ue d by C BD T a nd i t w a s s ub mi t t e d t ha t i n t e r ms o f th is Ci rc ul a r , c o mp e n sa t io n r e ce i ved i n r es p e c t o f A w a rd o r a gr ee me nt w h ic h ha s b ee n e xe mp t fr o m l e v y o f i nc o m e ta x vi de s ec t i o n 9 6 o f th e R F C T L A R R A c t s ha l l a l so no t b e t a xa bl e u n d er t h e p r ov i s io ns o f th e In c o m e T ax A c t , 8 ITA No. 397-c-2019 – Shri Ram Gopal, Sangrur 19 61 A c t e v e n i f t he r e i s no t s pe c i fi c pr o v is i o n of e x e m pt i o n fo r s u ch c o mp e n sa t io n u nd e r th e In co m e T a x A ct , 196 1. The L d. A R s u b mi t t e d t ha t, t hus , in vi e w o f th e fa ct ua l p os i t i o n, t he a ss es s e e ’s ca s e fe l l s qu ar e l y w i t h t h e p ro v is i on s o f R F C T L A R R A ct a n d i n vi e w o f t h e CBD T Ci rc ul a r , a s a fo r e m e nt i on ed , t h e Ld . C IT (A ) ha d r i gh tl y d e le t e d t he a dd it i o n mad e b y t he A s s e s s i ng O ffi c e r . 5. 0 We ha v e h e a r d t he ri va l s ub m is s i on s a nd ha v e a ls o pe r us e d t h e m at er ia l o n r e c or d. I n th is c as e th e f ac t s a re no t i n di s p ut e. F ro m t he re c or ds , i t i s a pp a r en t t h at t h e i mp u gne d t r a ns a c t io n is c o ve re d un de r RF CT LA R R A ct . Eve n th e A s s es s i ng O ffi c e r ha s n ot d is p u t e d t h is po s it i o n t h at t he l a nd for w hi c h co mp e ns a t i o n h as b e en r e c e iv ed h a d be e n a c qu ir e d by t h e N a ti on al H i g hw a y A u t h or it y o f I n di a (N H A I ) a n d i t i s a l s o a ma t t e r o f re c o r d a n d i t al s o re ma i n s und i s pu t e d t h a t N H A I is on e o f t he b od i e s c o ve re d u / s 1 06 o f t h e RF C TL A RR Ac t a n d a l l c o mp e n sa t io n gi ve n b y t he m a r e ex e m p t . F u rt h e r, a s pe r S c he d ul e 1 o f t he RF C T LA R R A c t , co mp e ns a ti o n i ncl ud es a d d i t i o na l co m pe ns a t i o n , s ol a t i u m a n d a n y o t he r re c ei pt w hi c h i mpl i es th a t sol a t i u m a n d i nt e r e s t a re p ar t o f co mp e ns a ti on . W e a ls o n ot e t ha t CB D T Ci r c u l ar N o. 36 /2 01 6 da t ed 2 5 . 1 0. 2 01 6 h as ex te nd ed t he e xe mp t i o n b y i nc lu di n g co mp ul s or il y a cq ui si t i on o f l a n d w i t ho ut an y re st r ic t i on o n a r e a a s w e l l a s a c q ui s it i o n o f l a nd . It i s a ls o s et t le d la w t h a t t he I nc o me - t a x a u t h or i t ie s a r e bo un d by t h e gu id e l i nes l ai d dow n t he C B D T C i r c ul a rs . T he p os i ti on a s i t 9 ITA No. 397-c-2019 – Shri Ram Gopal, Sangrur s t an ds n o w w it h th e pa ss a g e o f t h e RF C T LA R R A c t , i s t ha t a l l c o mp e n sa t io ns re c ei v e d q u a t hi s A c t ar e n o t ta xa bl e. I t ha s be e n c la ri fi e d b y t he C BD T V i de C i rc ul ar N o. 36 / 2 0 16 d a te d 21. 10 . 2 01 6 t h a t e ve n w he re t he r e i s no s e pa ra t e d ed u ct i on a l l o w a b l e un d er t he In c o m e T ax A c t , an y c o m p ens a t i o n c o ve re d by s ec t i o ns 1 05 an d 10 6 o f t h e RF CT LA R R A c t i s ex e m p t fr o m t a x a t i on . We no t e t h a t t he L d . CIT (A ) ha s a l s o g iv e n a d e ta i le d f i n di ngs o n t h e is s ue i n w hi ch t h e Ld . C IT (A ) ha s a l so qu ot e d an d f ol l ow e d ce rt a in j u di ci a l pr e ced e nt s a nd w e a r e i n c o mp l e t e a g re e m en t w i th t h e fi n d i n gs s o ar ri ve d a t b y th e Ld . CI T ( A ) i n t hi s re ga rd. A c co r di n gl y, w e fi nd n o r ea s o n t o i nt er f e re w i t h th e fi n d i n gs o f t he L d . CIT (A ) on t he i s s ue a nd w e up hol d h is fi n di ngs w hi l e d i s mi s s i n g t h e g ro u n d ra i s e d b y th e D e p ar t m ent. 6. 0 In th e fi n a l r es u lt , th e a pp e al o f t h e D epa rt me nt s t an ds di sm i s s ed. O rde r p ro no un c e d o n 30. 05 . 2 0 22 . Sd/- Sd/- ( N. K. SAINI) (SUDHANSHU SRIVASTAVA) Vice President Judicial Member Dated : 30. 05.2022 “आर.के.” आदेशक त+ल,पअ-े,षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु .त/ CIT 4. आयकरआय ु .त (अपील)/ The CIT(A) 5. ,वभागीय त न1ध, आयकरअपील$यआ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File 10 ITA No. 397-c-2019 – Shri Ram Gopal, Sangrur आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar