ITO, JODHPUR V. Sh. Chaina Ram Choudhary, JODHPUR

ITA 410/JODH/2013

• Counselvise Citation: 41023314 RSA 2013
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 14-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Capital asset; Additional evidence; Cost of acquisition; Fair market value
• Section: 54B; 54F; 234B; 148; 144

Judgement Text

[1] IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N. K. SAINI, ACCOUNTANT MEMBER I.T.A. NO.410/JODH/2013 ASSESSMENT YEAR:2005-06 THE I.T.O. VS. SHRI CHAINA RAM CHOUDHARY WARD-3(2), THORIYON KI DHAANI JODHPUR. PAL ROAD, JODHPUR. PAN: AIVPC7420M (APPELLANT) (RESPONDENT) C.O. NO.27/JODH/2013 (IN I.T.A. NO.410/JODH/2013) ASSESSMENT YEAR:2005-06 SHRI CHAINA RAM CHOUDHARY VS. THE I.T.O. THORIYON KI DHAANI WARD-3(2), PAL ROAD, JODHPUR. JODHPUR. PAN: AIVPC7420M (OBJECTOR) (RESPONDENT) REVENUE BY : SHRI N.A. JOSHI, D.R. ASSESSEE BY : SHRI MAHESH GEHLOT DATE OF HEARING : 28/11/2013 DATE OF PRONOUNCEMENT : 28/11/2013 O R D E R PER N.K.SAINI, A.M THE APPEAL BY THE DEPARTMENT AND THE CROSS OBJECTI ON BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 19/03 /2013 OF LEARNED CIT(A)- JODHPUR. IN THE DEPARTMENTAL APPEAL, FOLLOWING GRO UNDS HAS BEEN RAISED:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: [2] 1. ALLOWING THE EXEMPTION U/S 54B IGNORING THE FACT THAT LAND SO SOLD IS URBAN LAND, WHICH FALLS UNDER THE JURISDICT ION OF MUNICIPAL CORPORATION JODHPUR, HENCE WAS NOT ELIGIBLE FOR EXE MPTION U/S 54B. 2. ALLOWING THE DEDUCTION AS PER PROVISIONS OF SEC TION 54F OF RS. 18,90,606/- IGNORING THE FACT THAT AFTER GIVING SO MANY OPPORTUNITIES DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT FURNISH ANY DOCUMENTS. IT IS PRAYED THAT ORDER OF THE ASSESSING OFFICER M AY BE RESTORED AND ORDER OF THE LD. CIT(A) MAY BE SET ASIDE. 2. THE ASSESSEE HAS RAISED SOLITARY GROUND IN ITS C ROSS OBJECTION, WHICH IS READ AS UNDER:- UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN, NOT GIVEN THE DEDUCTION FOR AMOUNT GIVEN TO SISTER AS COST OF TRANSFER OF 69,5000/-, WHICH WAS PAID BY ACCOUNT PAYEE CHEQUE. THIS AMOUNT IS ALSO DEDUCTED FROM SAFE CONSIDERATION RECEIVED BY T HE ASSESSEE. 3. FROM THE ABOVE GROUNDS, IT IS GATHERED THAT THE GR IEVANCE OF THE DEPARTMENT RELATES TO EXEMPTION U/S 54B AND 54F OF THE I.T. ACT, 1961 (HEREINAFTER TO BE REFERRED AS THE ACT), WHILE THE ASSESSEE IS AGGRIEVED FOR NOT ALLOWING THE DEDUCTION OF RS. 6,95,000/- ON ACCOUNT OF COST OF TRANSFER. 4. THE FACTS IN BRIEF ARE THAT IN THIS CASE, A NOTI CE U/S 148 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO S THE ACT IN SHORT) W AS ISSUED ON 14/2/2011 TO THE ASSESSEE ON THE BASIS OF INFORMATION THAT THE A SSESSEE SOLD LAND FOR RS. 45 LACS TO M/S NINJA CONSTRUCTION CO. PVT. LTD., 20 4, 2 ND FLOOR, ANUPAM TOWER, SARDARPURA, JODHPUR, BUT HAD NOT FILED RETUR N OF INCOME. SINCE NO RETURN OF INCOME WAS FILED BY THE ASSESSEE, THE ASS ESSING OFFICER FRAMED THE [3] ASSESSMENT U/S 148 READ WITH SECTION 144 OF THE ACT AT AN INCOME OF RS. 45 LACS, WHICH WAS THE AMOUNT RECEIVED BY THE ASSESSEE ON SALE OF LAND. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, PROVISIONS OF SECTION 55 OF THE ACT HAD NOT BEEN CONSIDERED BY TH E ASSESSING OFFICER FOR TAKING FAIR MARKET VALUE OF AGRICULTURAL LAND AS ON 01/4/1981. IT WAS STATED THAT THE SALE REGISTRY REVEALED FROM ITS DRAFTING THAT T HE LAND WAS OWNED BY FOREFATHERS OF THE ASSESSEE AND THAT THE ASSESSING OFFICER FOR CALCULATION OF CAPITAL GAIN PURPOSES, HAD TAKEN SALE VALUE OF RS. 45 LACS AS AN INCOME IN THE FINANCIAL YEAR 2004-05. THE ASSESSEE FURNISHED THE REPORT OF THE APPROVED VALUERS FOR TAKING FAIR MARKET VALUE AS COST OF ACQ UISITION FOR THE PURPOSES OF SECTION 55 OF THE ACT, UNDER RULE 46-A OF THE I.T. RULES AND STATED THAT THE LD. CIT(A) HAS POWERS U/S 250(5) OF THE ACT TO ALLO W THE ADDITIONAL GROUND, WHICH EMPOWERED THE LD. CIT(A), IF HE IS SATISFIED THAT THE OMISSION OF THAT GROUND WAS NOT WILFUL OR UNREASONABLE. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- A. DY.C.I.T. VS. THORESEN CHARTERY SINGAPORE (118 ITD 416). B. INCOME TAX OFFICER VS. JITENDER MEHRA (53 ITD 3 96). C. CIT VS. K. RAVINDRANATHAN NAIR (265 ITR 217). D. INCOME TAX OFFICER VS. INDL. ROADWAYS (305 ITR 219). E. JUTE CORP. OF INDIA LTD. VS. CIT 187 ITR 688 ( SUPREME COURT) F. HEINRICHDE FRICS GMBH VS. JT. CIT *281 ITR 18) G. CIT VS. WESTERN ROLLING MILLS PVT. LTD. 154 IT R 54 (BOM.) [4] 6. IT WAS FURTHER STATED THAT THE AGRICULTURAL LAND WAS OWNED BY THE FOREFATHERS OF THE ASSESSEE BEFORE INDEPENDENCE OF INDIA IN 1947 AND AS PER SECTION 55 OF THE ACT, THE ASSESSEE WAS ELIGIBLE FO R THE COST OF ACQUISITION, WHICH COULD HAVE BEEN COST OF LAND OR FAIR MARKET P RICE, WHICH EVER IS HIGHER. IT WAS STATED THAT A SUM OF RS. 2,59,975/- WAS INVE STED BY THE ASSESSEE IN PURCHASE OF NEW AGRICULTURAL LAND AT RAMPURA ON WHI CH THE DEDUCTION U/S 54B OF THE ACT WAS ELIGIBLE/CLAIMED AND THE AMOUNT OF R S. 13,72,400/- WAS INVESTED IN THE RESIDENTIAL BUILDING WITHIN SIX MON THS ON WHICH DEDUCTION U/S 54F WAS AVAILABLE. THE ASSESSEE FURNISHED THE COMPU TATION OF CAPITAL GAIN AND DETAILS OF THE TAX DEPOSITED ON THE INCOME AS P ER FOLLOWING DETAILS:- COMPUTATION OF CAPITAL GAIN ACCORDING TO ASSESSEE ( WITH SUPPORTING DOCUMENTS AND EVIDENCES) AS UNDER:- 1 SALE CONSIDERATION 45,00,000 2 LESS: COST OF ACQUISITION INDEXATION COST OF ACQUISITION COST OR FAIR MARKET PRICE WHICH EVER IS HIGHER, 398832X480 100 19,14,394 3. LESS: COST OF TRANSFER (SHARE OF SISTER GIVEN BY CHEQUE NO. 221973 6,95,000 4 LESS: COST OF IMPROVEMENT INDEXATION COST OF IMPROVEMENT NIL 5 LESS: INVESTMENT MADE IN AGRICULTURAL LAND U/S 54B 2,59,975 6 LESS: INVESTMENT MADE IN RESIDENTIAL PROPERTY U/S 54F 1890606X1372400 3805000 6,81,910 7 BALANCE LONG TERM CAPITAL GAIN 9,48,721 [5] INCOME TAX COMPUTATION FORM ITNS-150 TOTAL (RS.) 11 ASSESSED INCOME 9,66,521 12 TAX ON ABOVE 1,83,304 13 ADD SURCHARGE @ 10% 18,330 14 ADD EDUCATIONAL CESS @ 3% 4,033 15 GROSS TAX PAYABLE 2,05,667 16 ADD INTEREST PAYABLE BY ASSESSEE U/S 234A 1,74,410 3,64,653 U/S 234B 1,82,634 U/S 234C 7,609 17 TOTAL TAX PAYABLE 5,70,320 17 LESS TAX PAID AS PER 143(1) DATED ADVANCE TAX 0 0 TDS 0 SELF ASSESSMENT TAX 6,70,320 18 NET TAX PAYABLE (REFUNDABLE) 1,00,000 DETAILS OF TAX DEPOSITED BY ASSESSEE ARE AS FOLLOWS : DATE AMOUNT CHALLAN NO. BSR CODE 31/03/2012 2,00,000.00 66152 0004329 29/06/2012 3,00,000.00 00871 0004329 31/12/2012 70,320.00 07252 0004329 02/03/2013 1,00,000.00 05247 0004329 TOTAL 6,70,320.00 [6] THE ASSESSEE ALSO SUBMITTED THAT THE LAND WAS NOT COVERED UNDER DEFINITION OF CAPITAL ASSET U/S 2 (14)(III) IN THE YEAR IN WHICH MUNICIPAL LIMIT WAS INCREASED. 7. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE, OBSERVED THAT THE AGRICULTURAL LAND WAS AN URBAN LA ND AS PER JAMABANDI FOR LAST 45 YEARS AS PER APPENDIX-12 AND ALSO PASSBOOK OF LAND OF RAJASTHAN GOVERNMENT AS ON 17/8/1971 AS PER APPENDIX-20, FURN ISHED BY THE ASSESSEE. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSING OFFICER HAD NOT GIVEN THE DEDUCTION FOR COST OF PURCHASE/MARKET VALUATION AS ON 31/3/1981 AS PROVIDED U/S 55 OF THE ACT. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE FURNISHED COPY OF REPORT OF THE APPROVED VALUER, WHO WAS TECH NICALLY APPROVED BY THE INCOME TAX DEPARTMENT. HE, THEREFORE, ALLOWED THE D EDUCTION OF FAIR MARKET VALUE FOR A SUM OF RS. 3,98,832 AS ON 01/4/1981 (IN DEXED COST OF ACQUISITION RS. 19,14,394/-). HE ALSO OBSERVED THAT THE ASSESSE E PURCHASED THE AGRICULTURAL LAND FOR A SUM OF RS. 2,59,975/- ON 14 /9/2004, WHICH WAS WITHIN PRESCRIBED TIME PERIOD AS PER SECTION 54B OF THE AC T AND INVESTED A SUM OF RS. 18,90,606/- IN THE RESIDENTIAL HOUSE, ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT. HE, THEREFORE, ALLOWED THE DEDUCTIONS U/S 54B AND 54F OF THE ACT. AS REGARDS TO THE COST OF THE TRANSFER AMOUNTING TO RS . 6,95,000/- PAID BY CHEQUE TO THE SISTER BY THE ASSESSEE. THE LD. CIT(A) STATE D THAT COPY OF AGREEMENT WAS NOT FURNISHED. HE THEREFORE, DID NOT ALLOW THE COST OF TRANSFER AND SUSTAINED DISALLOWANCE OF RS. 6,95,000/-. NOW BOTH THE PARTIES ARE IN APPEAL. [7] 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN T HE PRESENT CASE, IT APPEARS THAT THE ASSESSING OFFICER WHILE FRAMING THE ASSESS MENT U/S 144 OF THE ACT, CONSIDERED THE ENTIRE SALE VALUE AS CAPITAL GAIN OF THE ASSESSEE. THE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCES UNDER RULE 46A OF THE I.T. RULES, 1962 AND ASKED THE REMAND REPORT OF THE ASSESSING O FFICER. IN THE PRESENT CASE NOTHING IS BROUGHT ON RECORD THAT THE ASSESSIN G OFFICER DOUBTED THE VERACITY OF THE ADDITIONAL EVIDENCES FURNISHED BY T HE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE PURCHASED THE AGRICULTURA L LAND IN THE PRESCRIBED TIME, THEREFORE, THE DEDUCTION ALLOWED U/S 54B OF T HE ACT WAS IN ORDER AND AS THE ASSESSEE ALSO MADE THE INVESTMENT IN RESIDENTIA L HOUSE WITHIN THE PRESCRIBED TIME LIMIT. THEREFORE, THE DEDUCTION U/S 54F OF THE ACT WAS ALSO RIGHTLY ALLOWED. 9. AS REGARDS TO THE CLAIM OF THE ASSESSEE FOR COS T OF TRANSFER AMOUNTING TO RS. 6,95,000/-, IT APPEARS THAT THE SAME WAS NOT ALLOWED BY THE LD. CIT(A) FOR THE REASON THAT THE ASSESSEE COULD NOT FURNISH THE COPY OF AGREEMENT BETWEEN HIM AND HIS SISTER. HOWEVER, HE IGNORED THI S VITAL FACT THAT THE ASSESSEE PAID THE SAID AMOUNT TO HIS SISTER SMT. CH UKI, W/O- SHRI POONA RAM VIDE CHEQUE NO. 0221973 DATED 16/6/2004. COPY O F WHICH IS PLACED AT PAGE NO. 16 OF THE ASSESSEES PAPER BOOK. THE SAID CHEQUE WAS PAID AS PER INFORMATION DATED 5/11/2012 PROVIDED BY VIJAYA BANK , JODHPUR. COPY OF WHICH IS PLACED AT PAGE NO. 17 OF THE ASSESSEES PAPER BO OK. IT IS ALSO NOTICED THAT [8] SISTER OF THE ASSESSEE FILED A LEGAL SUIT FOR HER S HARE IN THE ANCESTRAL PROPERTY IN THE COURT OF S.D.M., JODHPUR. COPY OF WHICH IS P LACED AT PAGE NO. 19 TO 23 OF THE ASSESSEES PAPER BOOK. IT WAS THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT TO SETTLE THE DISPUTE WITH THE SI STER, WHO IS ALSO THE CO- OWNER OF THE LAND IN QUESTION, WHICH WAS ACQUIRED B Y THE FOREFATHERS OF THE ASSESSEE, THE IMPUGNED AMOUNT WAS PAID TO AVOID THE LITIGATION. THE SAID CONTENTION APPEARS TO BE PLAUSIBLE, THEREFORE, THE CLAIM OF THE ASSESSEE FOR COST OF TRANSFER OF THE LAND DESERVES TO BE ACCEPTE D. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIREC T THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2013) . SD/- SD/- (HARI OM MARATHA) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 28.11.2013 *RANJAN COPY FORWARDED TO: 1. APPELLANT. 2. RESPONDENT 3. CIT(A) 4. CIT 5. D.R. ASSISTANT REGISTRAR JODHPUR