ACIT, Aluva V. Sri.T.S. Vasudevan Elayath, Cochin

ITA 41/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77423 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-04-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 05-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: S RAJEEV
• Keywords: Capital asset; Fair market value
• Section: 54B

Judgement Text

1 ITA NO. 01 & 41/COCH/2014 CO NO.20/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 01/COCH/2014 (ASSESSMENT YEAR 2005-05) & C.O. NO.20/COCH/2014 (ARISING OUT OF I.T.A NO. 01/COCH/2014) (ASSESSMENT YEAR 2005-05) SHRI T.S. VASUDEVAN ELAYATH VS DY.CIT, CIR.1 THAMARAPPILLY ILLOM ALUVA MANJUMMEL (PO) UDYOGAMANDAL 683 504 PAN : ADWPV4996R (APPELLANT & CROSS OBJECTOR) (RESPONDENT) I.T.A NO. 41/COCH/2014 (ASSESSMENT YEAR 2005-05) A.C.I.T., CIR.1 VS SHRI T.S. VASUEVAN ELAYATH ALUVA UDYOGAMANDAL, COCHIN (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S RAJEEV REVENUE BY : SHRI K.K. JOHN, SR DR DATE OF HEARING : 01-04-2014 DATE OF PRONOUNCEMENT : 01-04-2014 2 ITA NO. 01 & 41/COCH/2014 CO NO.20/COCH/2014 O R D E R PER N.R.S. GANESAN (JM) BOTH THE ASSESSEE AND THE REVENUE HAS FILED THE AP PEAL AGAINST THE VERY SAME ORDER OF THE CIT(A). THE ASSESSEE HAS AL SO FILED THE CROSS OBJECTION SUPPORTING THE ORDER OF THE CIT(A). THER EFORE, WE HEARD BOTH THE APPEALS AND THE CROSS OBJECTION TOGETHER AND DISPOS E THEM OF BY THIS COMMON ORDER. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS EXEM PTION U/S 54B OF THE ACT. THE CLAIM OF THE ASSESSEE IS THAT THE SUBJECT LAND WAS UNDER CULTIVATION TILL THE DATE OF SALE. THE ASSESSEE AL SO CLAIMS THAT THE SALE PROCEEDS ARE INVESTED IN AGRICULTURAL LAND. THE AS SESSING OFFICER FOUND THAT THE ASSESSEE HAS ALREADY CONVERTED THE WET LAN D INTO DRY LAND AND LET OUT THE SAME FOR RUNNING A MOTOR WORKSHOP. THE ASS ESSING OFFICER HAS ALSO OBSERVED THAT THE ASSESSEE HAS DECLARED AGRICU LTURAL INCOME IN THE RETURNS OF INCOME FILED. HOWEVER, THE CIT(A) WITHO UT CONSIDERING THE NATURE OF THE LAND ALLOWED THE CLAIM OF THE ASSESSE E. 3. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 54B OF THE ACT WHICH READS AS BELOW: 3 ITA NO. 01 & 41/COCH/2014 CO NO.20/COCH/2014 54B.(1) SUBJECT TO THE PROVISIONS OF SUB-SECTION ( 2), WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A CAPI TAL ASSET BEING LAND WHICH, IN THE TWO YEARS IMMEDIATELY PREC EDING THE DATE ON WHICH THE TRANSFER TOOK PLACE, WAS BEING US ED BY THE ASSESSEE OR A PARENT OF HIS FOR AGRICULTURAL PURPOS ES (HEREINAFTER REFERRED TO AS THE ORIGINAL ASSET), AN D THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER TH AT DATE, PURCHASED ANY OTHER LAND FOR BEING USED FOR AGRICUL TURAL PURPOSES, THEN, INSTEAD OF THE CAPITAL GAIN BEING C HARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCO RDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS T O SAY,- (I) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER TH AN 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 T HREE 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 SH ALL 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 4 ITA NO. 01 & 41/COCH/2014 CO NO.20/COCH/2014 PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHA LL BE REDUCED, BY THE AMOUNT OF THE CAPITAL GAIN. (2) THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT UTI LIZED BY THE ASSESSEE FOR THE PURCHASE OF THE NEW ASSET BEFO RE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTI ON 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN ( SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE D UE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISHI NG THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139] IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTILIZED IN ACCORDANCE WITH, ANY SCHEME WHICH THE C ENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZ ETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT; AND, FOR THE PURPOSES OF SUB-SECTI ON (1), THE AMOUNT, IF ANY, ALREADY UTILIZED BY THE ASSESSEE FO R THE PURCHASE OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET: PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTIO N IS NOT UTILIZED WHOLLY OR PARTLY FOR THE PURCHASE O F THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1 ), THEN,- (I) THE AMOUNT NOT SO UTILIZED SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF TWO YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND 5 ITA NO. 01 & 41/COCH/2014 CO NO.20/COCH/2014 (II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW SUCH AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. 4. FROM THE ABOVE PROVISIONS, IT IS OBVIOUS THAT FO R THE PURPOSE OF CLAIMING EXEMPTION U/S 54B (I) THERE SHALL BE A C APITAL GAIN ARISING FROM TRANSFER OF A CAPITAL ASSET BEING LAND WHICH, IN TH E TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE , WAS BEING USED BY THE ASSESSEE FOR AGRICULTURAL PURPOSES; AND (II) THE AS SESSEE HAS WITHIN A PERIOD OF TWO YEARS AFTER THE DATE OF SALE, PURCHAS E ANOTHER LAND FOR BEING USED FOR AGRICULTURAL PURPOSES. SUB CLAUSE (2) SAY S THAT IF THE AMOUNT OF CAPITAL GAIN WHICH IS NOT UTILIZED BY THE ASSESSEE FOR PURCHASE OF NEW ASSET BEFORE THE DATE OF FURNISHING OF RETURN OF INCOME U /S 139(1), THE SAME SHALL BE DEPOSIT IN AN ACCOUNT AS MAY BE SPECIFIED IN ACC ORDANCE WITH CAPITAL GAIN SCHEME. THE CIT(A), AFTER EXAMINING THE MATTE R FOUND THAT WHAT WAS TRANSFERRED IS A CAPITAL ASSET SINCE THE LAND IS SI TUATED WITHIN THE MUNICIPAL LIMITS OF COCHIN CORPORATION. HOWEVER, THE CIT(A) FAILED TO EXAMINE WITH REGARD TO ACTUAL USAGE OF THE LAND IMMEDIATELY PREC EDING THE TWO YEARS FROM THE DATE ON WHICH THE TRANSFER TOOK PLACE. TH E CIT(A) HAS NOT RECORDED ANY FINDING WITH REGARD TO PURCHASE OF LAN D FOR AGRICULTURAL PURPOSES. THE CIT(A) SIMPLY OBSERVED THAT THE LAND WHICH WAS SOLD BY ASSESSEE WAS AGRICULTURAL LAND. HE FAILED TO RECOR D ANY FINDING WITH REGARD TO USAGE OF THE LAND FOR TWO IMMEDIATELY PRECEDING YEARS FOR AGRICULTURAL 6 ITA NO. 01 & 41/COCH/2014 CO NO.20/COCH/2014 PURPOSE. THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER TO FIND OUT WHETHER THE LAND WAS AN AGRICULTURAL LAND AND WHETHER IT WAS USED FO R AGRICULTURAL PURPOSE IN THE IMMEDIATELY TWO PRECEDING YEARS FROM THE SALE O F LAND. THE ASSESSING OFFICER HAS ALSO REQUIRED TO FIND OUT WHETHER THE A SSESSEE WITHIN A PERIOD OF TWO YEARS USED THE CAPITAL GAIN FOR PURCHASE OF LAN D FOR BEING USED FOR AGRICULTURAL PURPOSE. SINCE THE LOWER AUTHORITIES HAS NOT RECORDED ANY FINDING WITH REFERENCE TO STATUTORY REQUIREMENT FOR CLAIMING EXEMPTION U/S 54B, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THA T THE ASSESSING OFFICER SHALL RECONSIDER THE MATTER AFRESH. ACCORDINGLY, T HE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXA MINE THE MATTER AND RECORD A CATEGORICAL FINDING WHETHER THE LAND WHICH WAS SOLD BY THE ASSESSEE WAS USED FOR AGRICULTURAL PURPOSE IN THE I MMEDIATELY TWO PRECEDING YEARS FROM THE DATE OF SALE AND WHETHER T HE LAND PURCHASED BY THE ASSESSEE WAS FOR AGRICULTURAL PURPOSE AND THERE AFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. THE ASSESSEE HAS TAKEN ONE MORE GROUND WITH REGA RD TO FAIR MARKET VALUE AS ON 01-04-1981. 7 ITA NO. 01 & 41/COCH/2014 CO NO.20/COCH/2014 6. WE HEARD THE LD.REPRESENTATIVE FOR THE ASSESSEE AND THE LD.DR. SINCE THE MAIN ISSUE WITH REGARD TO EXEMPTION U/S 5 4B IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE FAIR MARKET VALUE ALSO NEEDS TO BE RECONSI DERED BY THE ASSESSING OFFICER AFTER GIVING REASONABLE OPPORTUNITY OF HEAR ING TO THE ASSESSEE. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE ARE ALSO SET ASIDE AND THE ISSUE OF FAIR MARKET VALUE IS ALSO RE MITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE OF FAIR MARKET VALUE AND DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. IN THE RESULT, THE APPEALS AND THE CROSS OBJECTI ON ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01 ST APRIL, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 01 ST APRIL, 2014 PK/- COPY TO: 1. T.S. VASUDEVAN ELAYATH, THAMPARAPPILLY ILLOM, MA NJUMMEL (PO), UDYOGAMANDAL 683 504 2. DY.CIT, CIR.1, ALUVA 3. THE COMMISSIONER OF INCOME-TAX, KOCHI 4. THE COMMISSIONER OF INCOME-TAX(A)-II, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH