Appeal details
Counselvise Citation
43122514 RSA 2013
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 5 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-09-2014
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
B
Assessment Year
2009-2010
Appeal Filed On
01-04-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER SL.NO. ITA NO. AY APPELLANT RESPONDENT 01 431/H/13 2009-10 INCOME-TAX OFFICER, WARD 11(3), HYDERABAD SHRI G. RAGHAVENDRA RAO, HYDERABAD PAN ACWPG4994K 02 432/H/13 2008-09 -DO- SMT. G. RAMA DEVI, HYDERABAD PAN-AEPG 5756 B 03 433/H/13 2009-10 -DO- SMT. G. RAMA DEVI, HYDERABAD PAN AEGPG5756B 04 434/H/13 2008-09 -DO- SHRI G. SIMHA RAO, HYDERABAD PAN AHTPG 7968B 05 435/H/13 2009-10 -DO- -DO- 06 436/H/13 2008-09 -DO- SHRI G. SARVOTHAM RAO, HYDERABAD PAN BGTPS2080L 07 437/H/13 2008-09 -DO- -DO- 08 438/H/13 2008-09 -DO- SHRI G. MAHENDRA RAO, HYDERABAD PAN ANRPM6938K 09 439/H/13 2009-10 -DO- -DO- 10 875/H/13 2008-09 SHRI G. RAGHAVENDRA RAO, HYDERABAD PAN ACWPG4994K INCOME-TAX OFFICER, WARD 11(3), HYDERABAD 11 876/H/13 2009-10 -DO- -DO- 12 877/H/13 2008-09 SMT. G. RAMA DEVI, HYDERABAD PAN-AEPG 5756 B -DO- 13 878/H/13 2009-10 -DO- -DO- 14 879/H/13 2008-09 SHRI G. SIMHA RAO, HYDERABAD PAN AHTPG 7968B -DO- 15 880/H/13 2009-10 -DO- -DO- 16 881/H/13 2008-09 SHRI G. SARVOTHAM RAO, HYDERABAD PAN BGTPS2080L -DO- 17 882/H/13 2009-10 -DO- -DO- 18 883/H/13 2009-10 SHRI G. MAHENDRA RAO, HYDERABAD PAN ANRPM6938K -DO- 19 884/H/13 2008-09 -DO- -DO- 2 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS REVENUE BY SHRI SOLGY JOSE T. KOTTARAM ASSESSEE BY SHRI K.C. DEVDAS DATE OF HEARING 31-07-2014 DATE OF PRONOUNCEMENT 24-09-2014 O R D E R PER BENCH: THESE BUNCH OF 19 APPEALS BOTH BY THE DEPARTMENT AS WELL AS BY DIFFERENT ASSESSEES ARE AGAINST SEPARATE ORDERS OF CIT(A)-VI, HYDERABAD PERTAINING TO AYS. 2008-09 AND 2009-10. S INCE COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS, THEY WERE CLUBBED AND HEARD TOGETHER AND, THEREFORE, WE FIND IT CONVENIENT TO D ISPOSE OF THE SAME BY WAY OF THIS CONSOLIDATED ORDER. 431/HYD/13 BY THE DEPARTMENT IN CASE OF SHRI G. RAG HAVENDRA RAO 2. DEPARTMENT HAS RAISED SEVEN GROUNDS. GROUND NO. 1 & 7 BEING GENERAL IN NATURE ARE NOT REQUIRED TO BE ADJUDICATE D UPON. GROUND NOS. 2 TO 5 ARE IN RESPECT OF ASSESSMENT OF CAPITAL GAIN ON SALE OF LAND AT MAQTA MEHABOOBPET BY AO BUT DELETED BY CIT (A). 3. BRIEFLY THE FACTS RELATING TO THE AFORESAID ISSU E ARE, ASSESSEE IS AN INDIVIDUAL. FOR THE AY UNDER CONSIDERATION, ASSE SSEE FILED HIS RETURN OF INCOME ON 07/05/10 ADMITTING TOTAL INCOME OF RS. 9,82,040 BESIDES AGRICULTURAL INCOME OF RS. 5,25,480. AS APP EARS FROM RECORD, SURVEY OPERATIONS U/S 133A WERE CONDUCTED IN CASE O F ASSESSEE, HIS WIFE SMT. G. RAMA DEVI, SHRI G. SIMHA RAO, SHRI G. MAHENDRA RAO AND SHRI G. SARVOTHAM RAO ON 09/03/10. DURING THE S URVEY OPERATION, AS STATED BY AO, ASSESSEE ADMITTED THAT SIX ACRES O F LAND SITUATED AT MAQTA MEHOOBPET VILLAGE, SERILINGAMPALLI, RR DISTRI CT WAS SOLD TO M/S 3 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS MARLAS DEVELOPERS PVT. LTD. FOR A CONSIDERATION OF RS. 4.5 CRORE PER ACRE BY HIMSELF AND OTHER FAMILY MEMBERS IN THE FYS 2007-08 AND 2008-09. AO ON EXAMINING THE AGREEMENT OF SALE-CUM- IRREVOCABLE POWER OF ATTORNEY EXECUTED BY ASSESSEE AND OTHER FA MILY MEMBERS, NOTED THAT ASSESSEE AND OTHER FAMILY MEMBERS HAVE E NTERED INTO THE FOLLOWING SALE TRANSACTIONS: DATE OF TRANSACTION DEED NO. NAME OF THE SELLER EXTENT/ SURVEY NO. SALE CONSIDERATIO N (IN RS.) 21/01/2008 381/2008 SRI G. RAGHAVENDER RAO 1 ACRE.02 GUNTAS S.NO. 73 & 91 4,72,50,000 21/01/2008 382/2008 SMT. G. RAMA DEVI 0.19 GUNTAS S.NO. 76 2,13,75,000 21/01/2008 594/2008 SRI G. SIMHA RAO 0.16 GUNTAS, 88AA, 112/1, 88/AA 1,85,62,500 21/01/2008 383/2008 SRI G. MAHENDER RAO 0.30 GUNTAS, 87 & 89 3,37,50,000 21/01/2008 380/2008 SRI G. SARVOTHAM RAO 0.24 GUNTAS, 89 & 90 2,70,00,000 31/07/2008 6017/2008 SRI G. RAGHAVENDER RAO 1 ACRE.24 GUNTAS, S.NO. 83 & 84, 91, 94, 95 & 110 7,14,37,500 31/07/2008 6020/2008 SMT. G. RAMA DEVI 0.176 GUNTAS, S.NO. 78 1,91,25,000 31/07/2008 6018/2008 SRI G. SIMHA RAO 0.14 ACRES, S.NO. 82 45,00,000 31/07/2008 6019/2008 SRI G. MAHENDER RAO 0.13 GUNTAS, S.NO. 72 1,46,25,000 31/07/2008 6021/2008 SRI G. SARVOTHAM RAO 0.14 GUNTAS, S. NO. 79 1,91,25,000 4 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS THE AO OBSERVED THAT AS THE LANDS ARE LOCATED IN CL OSE PROXIMITY TO NEAREST MUNICIPALITY, THEY CANNOT BE TREATED AS AGR ICULTURAL LAND AS DEFINED U/S 2(14) OF THE IT ACT. FURTHER, THE AO OB SERVED THAT DURING THE ASSESSMENT PROCEEDING, ASSESSEE HAS STATED THAT PART OF THE TRANSACTIONS ENTERED INTO THROUGH AGREEMENT TO SALE -CUM-GPA WITH M/S MARLAS DEVELOPERS PVT. LTD. WAS SUBSEQUENTLY CA NCELLED AS PER CANCELLATION DEEDS DATED 20/04/10 BECAUSE THAT PART OF THE TRANSACTION DID NOT MATERIALIZE. THE AO, HOWEVER, O BSERVED THAT THE TRANSACTION IN FACT HAS TAKEN PLACE IN TERMS WITH T HE AGREEMENT OF SALE-CUM-GPA AND THERE IS TRANSFER OF CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(47) AS POSSESSION OVER LAND AL SO PASSED DURING THE PREVIOUS YEAR RELEVANT TO AY UNDER CONSI DERATION. AO OBSERVED THAT AS ALL INGREDIENTS OF TRANSFER AS DEF INED IN SECTION 2(47) AS WELL AS SECTION 45 ARE SATISFIED CAPITAL GAIN HA S ACCRUED IN THE AY 2009-10. FURTHER, AO OBSERVED THAT ASSESSEE TRIED T O CHANGE THE ENTIRE CHARACTER OF TRANSACTION BY ENTERING INTO CA NCELLATION OF AGREEMENT OF SALE-CUM-GPA JUST AFTER SURVEY OPERATI ON TO AVOID PAYMENT OF TAX ARISING FROM THE SALE OF LANDS. AO O BSERVED THAT OUT OF THE CONSIDERATION RECEIVED FROM THE SALE OF AFORESA ID CAPITAL ASSET, ASSESSEE HAS INVESTED IN THE CONSTRUCTION OF A COMM ERCIAL BUILDING AT KUKATPALLI GIVEN ON LEASE TO AN EDUCATIONAL INSTITU TION AS WELL AS OTHER PROPERTIES BEING LANDS AND BUILDING ETC. HE FURTHER OBSERVED THAT INVESTMENTS WERE ALSO MADE BY ASSESSEE AND OTHERS I N THE GROUP IN SISTER CONCERNS OF M/S MARLAS DEVELOPERS PVT LTD. I N THE FORM OF SHARE APPLICATION MONEY, AO RELYING UPON A DECISION OF AA R IN CASE OF JASBEER SINGH SARKARIA HELD THAT WHEN THE ENTIRE SA LE CONSIDERATION WAS PAID BY WAY OF CHEQUE AS NOTED IN THE AGREEMENT OF SALE-CUM- GPA AND WHEN THE POSSESSION HAS ALSO BEEN HANDED OV ER THE TRANSFER IS COMPLETE IN ALL RESPECTS. ACCORDINGLY, AO PROCEEDED TO COMPUTE THE CAPITAL GAIN FROM SALE OF LAND AT RS. 7 ,14,37,500. BEING AGGRIEVED OF THE ADDITION MADE BY AO, ASSESSEE PREF ERRED APPEAL BEFORE CIT(A). 5 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 4. IN COURSE OF HEARING OF APPEAL, ASSESSEE SUBMITT ED THAT AS PER THE AGREEMENT OF SALE-CUM-GPA DATED 31/07/08 WITH M /S MARLAS DEVELOPERS P. LTD. (MDPL) THE PROPOSAL WAS FOR SALE OF LAND ADMEASURING ACRES 1.235 GUNTAS IN SURVEY NOS. 83/AA , 84, 91, 94, 95 AND 110 AT MAQTA MEHBOOBPET VILLAGE FOR A CONSIDERA TION OF RS. 7,14,37,500. IT WAS SUBMITTED THAT AS DIFFERENCES C ROPPED UP BETWEEN THE ASSESSEE AND MDPL DUE TO THE FACT THAT MDPL FAI LED TO PAY THE AGREED CONSIDERATION OF RS. 7,14,37,500 THOUGH, MEN TIONED IN THE AGREEMENT OF SALE-CUM-GPA, ASSESSEE DID NOT HANDOVE R THE POSSESSION OF LAND TO MDPL AND BECAUSE OF THE CONTI NUING DISPUTE ULTIMATELY AGREEMENT OF SALE-CUM-GPA WAS CANCELLED VIDE REGISTERED CANCELLATION DEED DATED 20/04/10. REFERRING TO THE CANCELLATION DEED, IT WAS SUBMITTED BY ASSESSEE THAT THE SAID CANCELLA TION DEED CLEARLY MENTIONED THAT THE CONSIDERATION OF RS. 7,14,37,500 WAS NEVER PAID BY THE PURCHASER AND THE SELLER DID NOT DELIVER THE POSSESSION OF LAND. THUS, IT WAS SUBMITTED THAT AS NEITHER CONSIDERATIO N HAS PASSED BETWEEN ASSESSEE AND MDPL NOR ASSESSEE HAS DELIVERE D THE PHYSICAL POSSESSION OF LAND THERE IS NO TRANSFER OF LAND DURING THE YEAR. FURTHER, IT WAS SUBMITTED THAT AS AGREEMENT O F SALE-CUM-GPA WAS ULTIMATELY CANCELLED VIDE CANCELLATION DEED DAT ED 20/04/10, THE POSITION WAS RESTORED BACK AS IT STOOD PRIOR TO ENT ERING INTO AGREEMENT OF SALE-CUM-GPA AND ASSESSEES OWNERSHIP OVER THE LAND REMAIN UNAFFECTED FOR ALL PURPOSES. IN THIS CONTEXT , ASSESSEE ALSO SUBMITTED AN ENCUMBRANCE CERTIFICATE DATED 14/12/11 OBTAINED FROM SRO SHOWING ASSESSEE AS OWNER OF THE PROPERTY. REFE RRING TO SECTION 54 OF TP ACT, ASSESSEE SUBMITTED THAT TRANSFER CAN ONLY TAKE PLACE WHEN THERE IS MONEY CONSIDERATION. IT WAS SUBMITTED THAT ALTHOUGH MONEY CONSIDERATION WAS MENTIONED IN THE AGREEMENT OF SALE-CUM- GPA DATED 31/07/08 BUT ACTUALLY NO CONSIDERATION PA SSED BETWEEN THE PARTIES AS THE CHEQUE FOR RS. 7,14,37,500 MENTI ONED IN AGREEMENT OF SALE-CUM-GPA NEITHER WAS PAID NOR REALIZED AS TH E SAME WAS NEVER PRESENTED IN THE BANK EVEN AFTER LAPSE OF NEA RLY TWO YEARS. IN 6 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS THIS CONTEXT, ASSESSEE SUBMITTED A CONFIRMATION LET TER DATED 06/09/12 OF MDPL CONFIRMING THAT THE CHEQUE WAS NOT HONORED BY THEM. IT WAS SUBMITTED THAT EVEN THOUGH ALL THESE FACTS WERE BRO UGHT TO THE NOTICE OF AO, HOWEVER, AO WITHOUT TAKING COGNIZANCE OF TH EM, HAS ARBITRARILY CONCLUDED THAT THERE IS SALE OF LAND BY ASSESSEE TO MDPL. ASSESSEE SUBMITTED THAT AS PER THE EVIDENCES AVAILA BLE ON RECORD SINCE NO TRANSFER TOOK PLACE BY WAY OF SALE, NO CHA RGE CAN BE CREATED U/S 45. ASSESSEE ANALYZING THE DIFFERENCE BETWEEN S ALE AND AGREEMENT TO SALE SUBMITTED THAT THE TRANSACTION EN TERED INTO BY ASSESSEE BY WAY OF AGREEMENT OF SALE-CUM-GPA HAS UL TIMATELY NOT BEEN CONVERTED TO SALE SO AS TO CONSTITUTE TRANSFER . FURTHER CANCELLATION OF AGREEMENT OF SALE ALSO PUTS AN END TO THE AGREEMENT OF SALE. SO FAR AS THE OBSERVATION OF AO THAT ASSES SEE HAS INVESTED IN CONSTRUCTION OF COMMERCIAL BUILDING AND OTHER ASSET S OUT OF THE SALE CONSIDERATION RECEIVED IT WAS SUBMITTED BY ASSESSEE THAT SUCH INVESTMENTS WERE OUT OF THE SALE PROCEEDS OF LAND I N AY 2008-09. THUS, IN SUM AND SUBSTANCE ASSESSEE SUBMITTED THAT NONE OF THE INGREDIENTS OF TRANSFER AS ENVISAGED U/S 2(47) HAVI NG BEEN SATISFIED NO CAPITAL GAIN ACCRUES TO ASSESSEE. 5. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, VIS- -VIS THE FACTS AND MATERIALS ON RECORD, NOTED THAT THOUGH ASSESSEE HAD ENTERED INTO AGREEMENT OF SALE-CUM-GPA FOR SALE OF LAND TO THE EXTENT OF ACRE 1.235 GUNTAS TO MDPL FOR A CONSIDERA TION OF RS. 7,14,37,500, BUT, ULTIMATELY THE SAID AGREEMENT OF SALE-CUM-GPA WAS CANCELLED VIDE REGISTRATION CANCELLATION DEED DATED 20/04/10. CIT(A) NOTED THAT AO BROUGHT THE ENTIRE SALE CONSIDERATION OF RS. 7,14,37,500 AS CAPITAL GAIN BY INFERRING THAT TRANS ACTION OF SALE WAS COMPLETE BY VIRTUE OF AGREEMENT OF SALE-CUM-GPA 31/ 07/08 NOTWITHSTANDING THE FACT, THE AGREEMENT OF SALE-CUM -GPA WAS FOLLOWED BY A CANCELLATION DEED AND THE PROOF THAT THE SALE CONSIDERATION MENTIONED IN THE AGREEMENT OF SALE-CU M-GPA WAS NOT 7 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS REALIZED. FURTHER, CIT(A) OBSERVED THAT THOUGH AO W ANTED TO PUT THE SAID TRANSACTION THROUGH THE MATRIX OF PROVISIONS O F SECTION 2(47) BY APPLYING THE DOCTRINE OF PART PERFORMANCE HOLDING T HAT THE TRANSACTION WAS COMPLETE VIDE AGREEMENT OF SALE-CUM-GPA DATED 3 1/07/08 WITH THE POSSESSION GIVEN TO THE VENDEE ON RECEIPT OF SA LE CONSIDERATION, HOWEVER, SUCH FACT WAS NOT CONCLUSIVELY PROVED BY A O. CIT(A) NOTED THAT THE PRESUMPTIONS OF AO WAS REBUTTED BY ASSESSE E BY BRINGING EVIDENCE ON RECORD TO INDICATE THAT NEITHER POSSESS ION OVER THE LAND WAS DELIVERED TO VENDEE NOR THE SALE CONSIDERATION ALLEGED TO HAVE BEEN PAID THROUGH CHEQUE WAS ENCASHED BY ASSESSEE. THUS ON CONSIDERATION OF THE AFORESAID FACT, LEARNED CIT(A) CONCLUDED THAT AS THERE IS NO TRANSFER OF CAPITAL ASSET UNDER THE AGR EEMENT OF SALE-CUM- GPA DATED 31/07/08 THERE IS NO SCOPE FOR CHARGING C APITAL BASED ON SUCH AGREEMENT. ACCORDINGLY, HE DELETED THE ADDITIO N OF RS. 7,14,37,500. 6. THE LEARNED DR RELYING UPON THE REASONING OF AO SUBMITTED THAT ASSESSEE HAVING ENTERED INTO AN AGREEMENT OF S ALE-CUM- IRREVOCABLE POWER OF ATTORNEY FOR SALE OF LAND TO T HE EXTENT OF ACRE 1.235 TO MDPL DURING THE PY RELEVANT TO AY UNDER CO NSIDERATION AGAINST CONSIDERATION RECEIVED, AS MENTIONED IN THE SAID AGREEMENT, THERE IS A TRANSFER OF CAPITAL ASSET WITHIN THE MEA NING OF SECTION 2(47) RESULTING IN CAPITAL GAIN. LEARNED DR SUBMITTED THA T THE SUBSEQUENT DEED OF CANCELLATION AFTER THE SURVEY OPERATION IS ONLY AN AFTERTHOUGHT TO ESCAPE FROM CAPITAL GAINS TAX. 7. THE LEARNED AR, ON THE OTHER HAND, STRONGLY SUPP ORTING THE CONCLUSIONS DRAWN BY CIT(A) SUBMITTED THAT NONE OF THE INGREDIENTS OF SALE HAVING BEEN FULFILLED THERE CANNOT BE A TRANSF ER U/S 2(47) OF THE ACT. LEARNED AR SUBMITTED THAT SIMPLY ENTERING INTO AN AGREEMENT OF SALE-CUM-GPA DOES NOT RESULT IN TRANSFER OF CAPITA L ASSET UNTIL THE AGREEMENT OF SALE-CUM-GPA CULMINATES IN A SALE DEED . IT WAS 8 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS SUBMITTED THAT IN THE PRESENT CASE SINCE THERE IS N O SALE DEED EXECUTED BETWEEN THE PARTIES TRANSFERRING THE LAND IN QUESTION NO CAPITAL GAIN ARISES. LEARNED AR SUBMITTED THAT FURT HER SINCE THERE IS NO DELIVERY OF POSSESSION OF THE PROPERTY TO THE VE NDEE NOR ANY CONSIDERATION RECEIVED BY ASSESSEE TOWARDS SALE OF PROPERTY THERE CANNOT BE ANY TRANSFER U/S 54 OF THE TP ACT. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S, PERUSED THE ORDERS OF REVENUE AUTHORITIES AND OTHER MATERIALS O N RECORD. IT IS CLEAR FROM THE ASSESSMENT ORDER THAT AO HAS COME TO A CON CLUSION THAT THERE IS TRANSFER OF CAPITAL ASSET I.E. LAND ADMEAS URING ACRE 1.235 GUNTAS BY ASSESSEE TO MDPL BY SOLELY RELYING UPON T HE AGREEMENT OF SALE-CUM-GPA DATED 31/07/08. HOWEVER, FROM THE FACT S AND MATERIALS ON RECORD, IT BECOMES ABSOLUTELY CLEAR THAT THOUGH ASSESSEE HAD ENTERED INTO AGREEMENT OF SALE-CUM-GPA BUT IT NEVER RECEIVED THE CONSIDERATION OF RS. 7,14,37,500 AS MENTIONED IN TH E AGREEMENT OF SALE-CUM-GPA. NOTHING HAS BEEN BROUGHT ON RECORD BY AO DURING THE ASSESSMENT PROCEEDING OR EVEN BY THE LEARNED DR BEF ORE US TO CONTROVERT THE FACT THAT THE CHEQUE NO. 600873 DATE D 31/07/08 OF HDFC BANK, BANJARA HILLS AS MENTIONED IN THE AGREEM ENT OF SALE- CUM-GPA WAS NEVER HANDED OVER TO ASSESSEE NOR ENCAS HED BY ASSESSEE. THERE IS ALSO NO EVIDENCE BROUGHT ON RECO RD BY AO TO PROVE THAT THE AFORESAID SALE CONSIDERATION WAS PAI D BY THE MPDL TO ASSESSEE THROUGH ANY OTHER MODE. FURTHER, ON A PERU SAL OF THE AGREEMENT OF SALE-CUM-GPA DATED 31/07/08, A COPY OF WHICH IS PLACED AT PAGE 29 OF THE ASSESSEES PAPER BOOK AND MORE PARTICULARLY CLAUSE 3.1 OF THE SAID DOCUMENT, CLEARLY BRINGS OUT THE FACT THAT UNTIL REGISTRATION OF A REGULAR SALE DEED IN FAVOUR OF VE NDEE, THE VENDOR SHALL TAKE CARE OF THE OUTGOINGS OF THE SCHEDULED P ROPERTY BY WAY OF PROPERTY TAX, GROUND RENT, LAND REVENUE, ETC., THIS CLEARLY SHOWS THAT UNTIL REGISTRATION OF SALE DEED THE VENDOR WILL BE IN POSSESSION OF THE PROPERTY. FURTHER, CLAUSE 4.1 OF AGREEMENT OF SALE -CUM-GPA PROVIDES 9 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS THAT THE VENDOR SHALL EXECUTE REGISTERED SALE DEED OR ANY OTHER DEED OF CONVEYANCE IN FAVOUR OF VENDEE CONVEYING THE RIG HT TITLE AND INTEREST IN RESPECT OF THE SCHEDULED PROPERTY. FURT HER, READING OF THE AGREEMENT OF SALE-CUM-GPA AS A WHOLE, NOWHERE INDIC ATES THAT THE POSSESSION OF THE PROPERTY WAS HANDED OVER TO THE V ENDEE I.E. MPDL. THEREFORE, WHEN TWO OF THE MOST IMPORTANT INGREDIEN TS OF SALE/ TRANSFER VIZ., RECEIPT OF SALE CONSIDERATION AND DE LIVERY OF POSSESSION ARE MISSING, THERE CANNOT BE A TRANSFER OF CAPITAL ASSET EITHER UNDER THE TP ACT OR UNDER SECTION 2(47) OF THE IT ACT. F URTHER, AS WOULD BE EVIDENT FROM FACTS ON RECORD THE VENDOR AND VENDEE THROUGH A REGISTERED AGREEMENT DATED 20/04/10 HAVE AGREED TO CANCEL THE AGREEMENT OF SALE-CUM-GPA DATED 31/07/08. THEREFORE , WHEN THE EXISTENCE OF AGREEMENT OF SALE-CUM-GPA DATED 31/07/ 08 HAVE BEEN OBLITERATED BY THE PARTIES THROUGH THE CANCELLATION DEED DATED 20/04/10, WHICH IS ALSO A REGISTERED DOCUMENT, IT C ANNOT BE SAID THAT THERE IS TRANSFER OF CAPITAL IN TERMS WITH THE AGRE EMENT OF SALE-CUM- GPA DATED 31/07/08. ENTERING INTO AN AGREEMENT OF S ALE-CUM-GPA BY ITSELF WILL NOT RESULT IN SALE/TRANSFER UNLESS AND UNTIL A REGISTERED SALE DEED IS EXECUTED AND THERE IS PASSING OF CONSIDERAT ION BETWEEN THE PARTIES AS WELL AS DELIVERY OF POSSESSION OF THE PR OPERTY TO THE VENDEE. BY ENTERING INTO AGREEMENT OF SALE THE VEND EE ONLY ACQUIRES A RIGHT TO SUE THE VENDOR FOR SPECIFIC PERFORMANCE. HOWEVER, IN THE PRESENT CASE, SINCE THE VENDOR AS WELL AS VENDEE H AVE AGREED TO CANCEL THE AGREEMENT OF SALE-CUM-GPA BY ENTERING IN TO A REGISTERED CANCELLATION DEED EVEN THAT SITUATION DOES NOT ARIS E. FURTHER, IT WOULD BE EVIDENT FROM RECORD THAT THERE IS NO OTHER DOCUM ENTARY EVIDENCE BROUGHT ON RECORD WHICH COULD CONCLUSIVELY PROVE TH AT THE PROPERTY IN QUESTION STANDS TRANSFERRED TO THE VENDEE DURING TH E RELEVANT PY. ON THE CONTRARY, AS NOTED BY LEARNED CIT(A) ASSESSEE H AS PRODUCED A ENCUMBRANCE CERTIFICATE FROM SRO, WHICH CLEARLY IND ICATES THAT ASSESSEE IS OWNER OF PROPERTY. IN THESE CIRCUMSTANC ES, THE INFERENCE DRAWN BY AO THAT ASSESSEE HAS SOLD THE PROPERTY RES ULTING IN CAPITAL 10 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS GAIN CANNOT BE UPHELD. ACCORDINGLY, WE UPHOLD THE ORDER OF LEARNED CIT(A) ON THIS ISSUE. IT WILL BE PERTINENT TO MENTI ON HERE THAT THOUGH IN ONE OF THE GROUNDS THE DEPARTMENT HAS RAISED THE IS SUE OF CONSIDERATION OF FRESH EVIDENCE IN VIOLATION OF RUL E 46A BY CIT(A) BUT AT THE TIME OF HEARING NEITHER THE LEARNED DR MADE ANY SUBSTANTIVE ARGUMENT ON THIS ISSUE OR BROUGHT TO OUR NOTICE THE EXACT NATURE OF EVIDENCES CONSIDERED BY CIT(A) IN VIOLATION OF RULE 46A. IN THESE CIRCUMSTANCES, THE CLAIM OF THE DEPARTMENT THAT CIT (A) HAS CONSIDERED FRESH EVIDENCE IN VIOLATION OF RULE 46A CANNOT BE ENTERTAINED. ACCORDINGLY, GROUND 2 TO 5 ARE DISMISS ED. 9. THE NEXT ISSUE AS RAISED IN GROUND NO. 6 IS IN R ESPECT OF DELETION OF ADDITION MADE ON ACCOUNT OF CAPITAL GAI N ON SALE OF LAND AT KISTAREDDYPET. 10. BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PR OCEEDING ON THE BASIS OF INFORMATION AVAILABLE ON RECORD, AO FOUND THAT DURING THE RELEVANT PY ASSESSEE HAS SOLD LAND ADMEASURING ACRE 1.35 GUNTAS IN SURVEY NOS. 51,38 & 354 AT KISTAREDDYPET VILLAGE BU T HAS NOT SHOWN CAPITAL GAIN BY CLAIMING IT AS AGRICULTURAL LAND. AO BY OBSERVING THAT ASSESSEE HAS NOT FURNISHED ANY EVIDENCE WITH REGARD TO DISTANCE FROM THE MUNICIPALITY AS WELL AS COST OF ACQUISITION TR EATED THE ENTIRE SALE CONSIDERATION OF RS. 20,16,400 AS CAPITAL GAIN OF T HE ASSESSEE. BEING AGGRIEVED OF SUCH ADDITION MADE ON ACCOUNT OF CAPIT AL GAIN, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 11. IN COURSE OF HEARING OF APPEAL BEFORE THE FIRS T APPELLATE AUTHORITY, IT WAS SUBMITTED BY ASSESSEE THAT THE SA ID LAND AT KISTAREDDYPET VILLAGE WAS ACQUIRED BY THE OUTER RIN G ROAD AUTHORITIES UNDER THE LAND ACQUISITION ACT AND COMPENSATION OF RS. 20.16,400 WAS PAID TO ASSESSEE VIDE CHEQUE NO. 3645573 DATED 07/05/08. IT WAS SUBMITTED BY ASSESSEE THAT NOT ONLY THE LAND WA S CLASSIFIED AS AN 11 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS AGRICULTURAL LAND IN THE RECORDS MAINTAINED BY THE STATE GOVT. BUT ASSESSEE WAS ALSO CARRYING ON AGRICULTURAL OPERATIO N THEREIN. FURTHER IT WAS SUBMITTED BY ASSESSEE THAT THE LAND ACQUIRED BY THE STATE GOVT. WAS ALSO BEYOND EIGHT KILOMETERS FROM THE LIM ITS OF NEAREST MUNICIPALITY NOTIFIED BY THE CENTRAL GOVT. IN THIS CONTEXT, IT WAS SUBMITTED BY ASSESSEE THAT PATANCHERU MANDAL WHERE THE LANDS WERE SITUATED BECAME PART OF GREATER HYDERABAD MUNICIPAL CORPORATION (GHMC) VIDE NOTIFICATION DATED 16/04/2007. PRIOR TO THAT PATANCHERU WAS AN INDEPENDENT MUNICIPALITY BUT NOT NOTIFIED BY THE CENTRAL GOVT. FURTHER, BY THE TIME GOVERNMENT ISSUED NOTIFICATIO N DATED 18/12/2006 ACQUIRING THE LAND PATANCHERU MANDAL WAS NOT PART O F GHMC. IT WAS SUBMITTED THAT THOUGH KISTAREDDYPET PANCHAYAT WAS L OCATED OUTSIDE THE MUNICIPAL LIMIT EVEN ASSUMING THAT IT IS PART O F PATANCHERU MUNICIPALITY, IT CANNOT BE TREATED AS CAPITAL ASSET AS IT IS NOT A NOTIFIED MUNICIPALITY BY THE CENTRAL GOVT. THE NEAREST NOTIF IED MUNICIPALITY BEING HMC AND THE DISTANCE BETWEEN HMC AND KISTARED DYPET VILLAGE BEING MORE THAN EIGHT KILOMETERS, AGRICULTURAL LAND SOLD BY ASSESSEE CANNOT BE CONSIDERED AS CAPITAL ASSET U/S 2(14) OF THE ACT. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE VIS-A -VIS THE FACTS ON RECORD, OBSERVED THAT IN THE CERTIFICATE ISSUED BY THE LAND ACQUISITION OFFICER WHILE ACQUIRING THE LAND OF THE ASSESSEE IT WAS CLASSIFIED AS AGRICULTURAL LAND AND FOR THAT REASON ALSO SEPARATE RATE OF COMPENSATION WAS AWARDED TO ASSESSEE. FURTHER, THE LEARNED CIT(A) FOUND THAT THE LAND IS SITUATED IN PATANCHERU MANDA L BUT NOT IN PATANCHERU MUNICIPALITY WHICH BECAME PART OF GHMC W .E.F. 16/04/2007. HOWEVER, IT WAS OBSERVED BY CIT(A) NEI THER PATANCHERU MUNICIPALITY NOR NEWLY FORMED GHMC ARE NOTIFIED BY CBDT. THEREFORE, EVEN ASSUMING THAT THE LANDS WERE FALLIN G WITHIN ERSTWHILE PATANCHERU MUNICIPALITY IT CANNOT BE TREATED AS CAP ITAL ASSET AS IT IS NOT WITHIN EIGHT KILOMETERS OF A MUNICIPALITY NOTIF IED BY CENTRAL GOVT. THE CIT(A) NOTED THAT EVEN OTHERWISE ALSO THE MERGE R OF KISTAREDDYPET VILLAGE WITH GHMC BECAME EFFECTIVE FR OM 16/04/2007 12 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS WHEREAS NOTIFICATION FOR ACQUISITION OF LAND WAS I SSUED ON 18/12/2006. HENCE, UNDER ANY CIRCUMSTANCES, THE LA ND IN QUESTION CANNOT BE CONSIDERED TO BE COMING UNDER THE CATEGOR Y OF CAPITAL ASSETS AS NOT ONLY BECAUSE THEY ARE CLASSIFIED AS A GRICULTURAL LAND AND ALSO IT IS SITUATED BEYOND EIGHT KILOMETERS FRO M A NOTIFIED MUNICIPALITY. SO FAR AS CARRYING ON OF AGRICULTURAL OPERATION ON THE SAID LAND IS CONCERNED, LEARNED CIT(A) OBSERVED THA T NOT ONLY THE CERTIFICATE ISSUED BY THE LAND ACQUISITION OFFICER CLASSIFY THE LAND AS AGRICULTURAL LAND BUT THE ASSESSEE WAS ACTUALLY CAR RYING ON AGRICULTURAL OPERATION ON SUCH LAND WHICH IS EVIDEN T FROM THE AGRICULTURAL INCOME SHOWN BY ASSESSEE. ACCORDINGLY, CIT(A) HELD THAT THERE WILL BE NO CAPITAL GAIN ON TRANSFER OF SUCH L AND AS IT IS NOT A CAPITAL ASSET. BEING AGGRIEVED OF THE AFORESAID FIN DING OF CIT(A), THE DEPARTMENT IS IN APPEAL BEFORE US. 12. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. AS CAN BE SEEN FROM THE ASSESSMENT ORDER, AO HAS REJECTED ASSESSEES CLAIM OF EXEMPTION FROM CAPITAL GAIN ON SALE OF LAN D BY SIMPLY OBSERVING THAT ASSESSEE HAS NOT BROUGHT ANY EVIDENC E TO SHOW THAT THE LAND IS SITUATED BEYOND EIGHT KILOMETERS FROM T HE LIMIT OF NEAREST MUNICIPALITY. WHEREAS, CIT(A) HAS GIVEN A CATEGORIC AL FINDING THAT NOT ONLY THE LAND IS CLASSIFIED AS AGRICULTURAL LAN D BUT IT IS BEYOND EIGHT KILOMETERS FROM THE LIMITS OF NEAREST NOTIFIE D MUNICIPALITY. IN THIS CONTEXT, THE LEARNED CIT(A) HAS OBSERVED THAT THE L AND WHICH IS SITUATED IN PATANCHERU MANDAL IS OUTSIDE THE LIMITS OF PATANCHERU MUNICIPALITY WHICH IS ALSO NOT A NOTIFIED MUNICIPAL ITY. FURTHER, THOUGH PATANCHERU MUNICIPALITY BECAME PART OF GHMC VIDE NO TIFICATION DATED 16/04/2007 BUT THE SUBJECT LAND WAS ACQUIRED PRIOR TO THAT DATE AND EVEN GHMC WAS NOT A NOTIFIED MUNICIPALITY. HOWEVER , ON PERUSAL OF GOM NO. 14 DATED 18/12/2006 IT IS NOT CLEAR WHETHER LAND OF ASSESSEE WAS ACTUALLY ACQUIRED ON THAT DATE OR SUBS EQUENTLY. 13 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS READING CLAUSE IV AND V OF PARA 10 OF THE AFORESAID GOM GIVES AN IMPRESSION THAT LAND WAS NOT ACQUIRED ON 18/12/2006 . NOTHING HAS BEEN BROUGHT ON RECORD TO INDICATE THE ACTUAL DATE OF ACQUISITION OF LAND. IN CASE LAND WAS ACQUIRED AFTER 16/04/2007 I. E. FORMATION OF GHMC, THEN, CIT(A)S FINDING TO THE EFFECT THAT ACQ UISITION OF LAND WAS PRIOR TO GHMC WILL BECOME ERRONEOUS. FURTHER, ACTUA L DATE OF ACQUISITION ASSUMES IMPORTANCE CONSIDERING THE FACT THAT ASSESSEE HIMSELF HAS SHOWN THE INCOME IN THE IMPUGNED ASSESS MENT YEAR. FURTHER, NO MATERIAL HAS BEEN BROUGHT EITHER BY THE ASSESSEE OR BY THE DEPARTMENT TO INDICATE THE EXACT DISTANCE OF LA ND FROM THE LIMITS OF A NEAREST NOTIFIED MUNICIPALITY. WITHOUT ASCERTAINI NG THESE FACTS IT CANNOT BE DECIDED WHETHER THE LAND ACQUIRED IS A C APITAL ASSET AS DEFINED U/S 2(14) OF THE ACT. AS NECESSARY FACTS FO R DECIDING THE ISSUE HAS NOT BEEN BROUGHT ON RECORD, WE CONSIDER IT APPR OPRIATE TO REMIT THIS TO THE FILE OF THE AO FOR DECIDING AFRESH AFTE R AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. BEFORE PARTING WE NEED TO MENTION, AS PER SECTION 2(47)(III) COMPU LSORY ACQUISITION IS ONE OF THE MODE OF TRANSFER. THEREFORE, IF THE SUBJ ECT LAND WAS ACQUIRED PRIOR TO FORMATION OF GHMC OR IF ON VERIFI CATION IT IS FOUND THAT LAND IS CLASSIFIED AS AN AGRICULTURAL LAND AND IS SITUATED BEYOND EIGHT KILOMETERS OF NOTIFIED MUNICIPALITY ON THE DA TE OF TRANSFER, IT CANNOT BE CONSIDERED AS A CAPITAL ASSET SO AS TO AT TRACT CAPITAL GAIN. 13. IN THE RESULT, APPEAL IN ITA NO. 431/HYD/13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 433/H/13 IN CASE OF SMT G. RAMA DEVI FOR AY 2009-10 ITA NO. 434 & 435/H/13 IN CASE OF SHRI G. SIMHA RAO FOR AY 2008-09 AND 2009-10 ITA NO. 437/H/13 IN CASE OF SHRI G. SARVOTHAM RAO F OR AY 2009-10 ITA NO. 439/H/13 IN CASE OF SRI G. MAHENDRA RAO FOR AY 2009-10 14 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 14. TWO ISSUES ARISE OUT OF THE GROUNDS RAISED BY T HE DEPARTMENT IN THE AFORESAID APPEALS. THE FIRST ISSUE IS IN RESPEC T OF ASSESSMENT OF CAPITAL GAIN ON SALE OF LAND AT MAQTA MEHABOOBPET M ADE BY AO BUT DELETED BY CIT(A) AND SECOND ISSUE IS IN RESPECT OF ASSESSMENT OF CAPITAL GAIN ON SALE OF LAND AT KISTAREDDYPET MADE BY AO BUT DELETED BY CIT(A). 15. THESE ISSUES ARE MATERIALLY IDENTICAL TO THE IS SUES RAISED IN ITA NO. 431/HYD/13 IN CASE OF SHRI G. RAGHAVENDRA RAO. THEREFORE, FOLLOWING THE CONCLUSIONS DRAWN IN THAT APPEAL VIDE PARA NO. 8 IN ITA NO. 431/H/13 (SUPRA), THE ISSUE IN RESPECT OF ASSES SMENT OF CAPITAL GAIN ON SALE OF LAND AT MAQTA MEHABOOBPET RAISED BY DEPARTMENT, IS DISMISSED BY UPHOLDING THE ORDERS OF CIT(A) IN ALL THE APPEALS OF THE REVENUE. SIMILARLY, THE ISSUE IN RESPECT OF DELETIO N OF ADDITION MADE ON ACCOUNT OF CAPITAL GAIN ON SALE OF LAND AT KISTA REDDYPET IS CONCERNED, FOLLOWING THE CONCLUSIONS DRAWN IN ITA N O. 431/HYD/13 VIDE PARA NO. 12, WE RESTORE IT BACK TO THE AO FOR DECIDING IN ACCORDANCE WITH OUR DIRECTION THEREIN. 16. IN THE RESULT, APPEALS BY THE DEPARTMENT IN ITA NOS. 433, 434, 435, 437 & 439/H/13 ARE PARTLY ALLOWED FOR STATISTI CAL PURPOSES. ITA NO. 432/HYD/13 BY THE DEPARTMENT IN CASE OF SM T. G. RAMA DEVI 17. THE DEPARTMENT HAS RAISED FOUR GROUNDS. GROUND NO. 1 & 4 BEING GENERAL IN NATURE ARE NOT REQUIRED TO BE ADJU DICATED. 18. GROUND NO. 2 WITH ITS SUB-GROUNDS ARE IN RESPEC T OF ALLOWANCE OF ASSESSEES CLAIM U/S 54F BY THE LEARNED CIT(A). 19. BRIEFLY THE FACTS ARE, ASSESSEE IS AN INDIVIDUA L. FOR THE AY UNDER CONSIDERATION ASSESSEE FILED HER RETURN OF IN COME 0N 07/05/10 15 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS DECLARING INCOME OF RS. 33,30,970 BESIDES AGRICULTU RAL INCOME OF RS. 4,91,260. DURING THE ASSESSMENT PROCEEDING, AO NOTI CED THAT DURING THE RELEVANT PY ASSESSEE HAS SOLD LAND ADMEASURING 0.19 GUNTAS IN SURVEY NO. 76 SITUATED AT MAQTA MEHOOB PET VILLAGE, SERILINGAMPALLI, RR DIST. TO M/S MARLAS DEVELOPERS PVT. LTD. (MDPL) FOR A CONSIDERATION OF RS. 2,13,75,000 UNDER REGISTERED S ALE DEED NO. 382/2008 DATED 21/01/2008. HOWEVER, IN THE COMPUTAT ION OF INCOME FILED ALONG WITH RETURN OF INCOME, ASSESSEE ADMITTE D CAPITAL GAIN OF RS. 33,30,970 AFTER CLAIMING EXEMPTION OF AN AMOUNT OF RS. 1,73,01,173 U/S 54F. WHEN THE AO CALLED UPON ASSES SEE TO SUBSTANTIATE HER CLAIM U/S 54F, ASSESSEE STATED THA T SHE HAS INVESTED THE AMOUNT OF RS. 1,73,01,173 IN CONSTRUCTION OF A RESIDENTIAL BUILDING AT PLOT NO. 312 AND 313, VV NAGAR, KUKATPALLI. IN S UPPORT OF SUCH CLAIM, ASSESSEE SUBMITTED A REPORT FROM A REGISTERE D VALUER AND COPY OF THE MUNICIPAL ASSESSMENT/NOTICE DEMANDING RS. 17 ,300 TOWARDS ARREAR AND CURRENT TAX. AO OBSERVED THAT THOUGH ASS ESSEE HAD STATED THAT THE CONSTRUCTION OF NEW RESIDENTIAL HOUSE WAS MADE BETWEEN MARCH 2007 TO JUNE 2008, BUT, THE ASSESSEE HAS NOT PROVIDED ANY OTHER INFORMATION TO SUBSTANTIATE SUCH CLAIM. IT WA S NOTED BY AO THAT THE ORIGINAL ASSET WAS SOLD BY ASSESSEE ON 21/01/08 AND THE SALE CONSIDERATION WAS RECEIVED BY ASSESSEE THROUGH TWO CHEQUES OF HDFC BANK, BANJARA HILLS BOTH DATED 18/01/08 FOR RS . 1,00,00,000 AND RS. 1,13,75,000. AO FURTHER OBSERVED THAT FROM THE ACCOUNT MAINTAINED BY ASSESSEE IN DHANLAXMI BANK IT WAS FOU ND THAT THE CHEQUE OF RS. 1,13,75,000 WAS ENCASHED ON 28/02/08 WHEREAS NO DETAILS WITH REGARD TO ENCASHMENT OF OTHER CHEQUE W AS NOT FURNISHED BY ASSESSEE. FROM THE AFORESAID FACT, AO CONCLUDED THAT ASSESSEE HAS NOT UTILIZED THE SALE CONSIDERATION OF THE ORIG INAL ASSET FOR CONSTRUCTION OF THE NEW ASSET. ACCORDINGLY, HE CONC LUDED THAT ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 54F OF T HE ACT. BEING AGGRIEVED OF THE REJECTION OF CLAIM U/S 54F ASSESSE E PREFERRED APPEAL BEFORE CIT(A). 16 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 20. BEFORE THE CIT(A), ASSESSEE CHALLENGING THE FIN DING OF AO ON THE FOLLOWING ISSUES: A) THE AO DID NOT DENY THAT THE CONSTRUCTION PERIOD OF BUILDING WAS BETWEEN MARCH, 2007 AND JUNE, 2008 B) THE AO DID NOT REJECT THE CLAIM OF INVESTMENT OF RS. 1,75,00,000 C) THE AO DID NOT DENY THE SALE OF LAND AND RECEIPT OF SALE CONSIDERATION IN JANUARY, 2008. D) THE AO DID NOT PROVE THAT THE INVESTMENTS MADE A RE EXCLUSIVELY OUT OF OTHER FUNDS. E) THE AO DID NOT DENY THE INVESTMENTS IN HOUSE PRO PERTY WHICH IS SUPPORTED BY AN APPROVED VALUERS REPORT F) AS HELD BY VARIOUS JUDICIAL DECISIONS, IT IS NOT A RELEVANT FACTOR WHETHER THE ASSESSEE UTILIZES THE SALE PROCEEDS OR OTHER OWN FUNDS FOR CONSTRUCTION OF HOUSE PROPERTY, FOR THE P URPOSE OF CLAIMING DEDUCTION U/S 54F OF IT ACT. 21. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND EXAMINING THE MATERIALS ON RECORD FOUND THAT THE IN VESTMENT IN CONSTRUCTION OF NEW ASSET AS PER THE VALUATION REPO RT WAS MADE BY ASSESSEE DURING THE PERIOD MARCH 2007 TO JUNE 2008. FURTHER, THE BANK ACCOUNT OF ASSESSEE INDICATES THAT THE AMOUNT AVAILABLE FROM SALE CONSIDERATION DEPOSITED THEREIN WAS UTILIZED B Y ASSESSEE IN CONSTRUCTION OF NEW ASSET. THEREFORE, THE OBSERVATI ON BY THE AO THAT INVESTMENTS IN NEW HOUSE WAS MADE BEFORE THE SALE O F ORIGINAL ASSET IS MERELY ON PRESUMPTION WITHOUT HAVING ANY BASIS. IT WAS ALSO OBSERVED BY LEARNED CIT(A) THAT EVEN THE MUNICIPAL RECEIPT RELIED UPON BY AO RELATE TO THE OLD STRUCTURE STANDING ON THE EXISTING PLOT WHICH WAS SUBSEQUENTLY DEMOLISHED BY ASSESSEE BEFOR E STARTING CONSTRUCTION OF NEW HOUSE. THE CIT(A) THEREFORE HEL D, AS THE ASSESSEE HAS INVESTED THE GAIN FROM THE SALE OF ORI GINAL ASSET IN CONSTRUCTION OF A NEW RESIDENTIAL HOUSE WITHIN THE PRESCRIBED TIME LIMIT, ASSESSEE WILL BE ELIGIBLE FOR CLAIM U/S 54F. HOWEVER, CIT(A) NOTED THAT AS PER THE VALUATION REPORT OF THE REGIS TERED VALUER, THE COST OF CONSTRUCTION IS RS. 1,62,28,600. HE, THEREF ORE, DIRECTED THE AO TO RESTRICT THE CLAIM U/S 54F TO RS. 1,62,28,600. 17 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 22. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OT HER MATERIALS ON RECORD. ON A PERUSAL OF THE ASSESSMENT ORDER, IT IS APPARENT THAT AO HAS DENIED CLAIM OF EXEMPTION U/S 54F FOR TWO REASO NS I.E., CONSTRUCTION OF THE NEW PROPERTY WAS PRIOR TO THE D ATE OF SALE OF ORIGINAL ASSET AND SECONDLY, THE SALE CONSIDERATION RECEIVED BY ASSESSEE WAS NOT UTILIZED FOR CONSTRUCTION OF THE N EW ASSET. FROM THE AFORESAID FINDING OF THE AO, IT IS CLEAR THAT HE HA S NO DISPUTE WITH REGARD TO THE NATURE OF THE NEW ASSET I.E. A RESIDE NTIAL HOUSE. NOW REVERTING BACK TO THE OBSERVATIONS MADE BY AO, AS C AN BE SEEN FROM THE FACTS AND MATERIALS ON RECORD, ASSESSEE HAS NOT ONLY CLAIMED THAT THE CONSTRUCTION OF THE NEW RESIDENTIAL HOUSE WAS S TARTED IN MARCH 2007 AND CONTINUED UP TO JUNE 2008 BUT HAS ALSO SUB MITTED A REPORT FROM REGISTERED VALUER IN SUPPORT OF SUCH CLAIM. TH E BANK STATEMENT ALSO INDICATE THE FACT THAT NOT ONLY THE SALE CONSI DERATION OF THE ORIGINAL ASSET WAS DEPOSITED IN BANK ACCOUNT BUT TH ERE ARE SUBSTANTIAL WITHDRAWALS FROM THE BANK ACCOUNT THEREAFTER WHICH GIVES CREDENCE TO THE ASSESSEES CLAIM THAT THE SALE CONSIDERATION WA S UTILIZED FOR CONSTRUCTION OF THE NEW ASSET. FURTHER, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS INVESTED IN CONSTRUCTION OF T HE NEW ASSET WITHIN THE TIME LIMIT PRESCRIBED U/S 54F OF THE ACT. THERE FORE, IN ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD BY AO TO CONTRADICT ASSESSEES CLAIM OF INVESTMENT IN CONSTRUCTION OF NEW HOUSE BY UTILI ZING THE SALE PROCEEDS OF THE ORIGINAL ASSET THE ADDITION MADE ON THE BASIS OF PRESUMPTIONS AND SURMISES CANNOT BE SUSTAINED. IN O UR VIEW, FOR THE AFORESAID REASONS THE CIT(A) WAS JUSTIFIED IN ALLO WING THE CLAIM OF ASSESSEE U/S 54F. GROUND RAISED BY THE DEPARTMENT I S DISMISSED. 23. THE NEXT ISSUE AS RAISED IN GROUND NO. 3 IS IN RESPECT OF ALLOWANCE OF COST OF ACQUISITION CLAIMED BY ASSESSE E AT RS. 2,42,853 BY THE CIT(A). 18 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 24. DURING THE ASSESSMENT PROCEEDING, AO NOTICED TH AT ASSESSEE WHILE COMPUTING CAPITAL GAIN HAS REDUCED AN AMOUNT OF RS. 2,42,853 TOWARDS COST OF ACQUISITION. AO HOWEVER DISALLOWED THE CLAIM OF ASSESSEE BY OBSERVING THAT ASSESSEE HAS NOT FURNISH ED PROOF OF COST OF ACQUISITION OF THE ASSET SOLD. CIT(A), HOWEVER, ALLOWED ASSESSEES CLAIM HAVING VERIFIED THE SALE DEED AND FOUND THAT ASSESSEE HAS INCURRED THE EXPENSES OF RS. 2,42,853. 25. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS MA TERIAL ON RECORD. AS CAN BE SEEN FROM THE FINDING OF THE CIT(A) IN PARA 6.3 OF HIS ORDER, ON VERIFYING THE SALE DEED HE FOUND THAT ASSESSEE HAS INCURRED EXPENSES OF RS. 2,42,853 TOWARDS COST OF ACQUISITION OF PROP ERTY IN THE YEAR 2004. THAT BEING THE CASE, THE FINDING OF CIT(A) CA NNOT BE DISTURBED. THE CLAIM OF THE DEPARTMENT THAT THE CIT(A) HAS ALL OWED THE BENEFIT BY CONSIDERING INFORMATION WHICH WAS NOT FILED BEFO RE THE AO IS DEVOID OF MERIT. WHEN THERE IS DOCUMENTARY EVIDENCE WHICH CLEARLY ESTABLISH THE CLAIM OF ASSESSEE THE CIT(A) WAS JUST IFIED IN ALLOWING SUCH CLAIM ON THE BASIS OF MATERIAL ON RECORD. THE GROUND RAISED IS THEREFORE DISMISSED. 26. IN THE RESULT, APPEAL IN ITA NO. 432/H/13 IS DI SMISSED. ITA NO. 436/H/13 BY THE REVENUE IN CASE OF SHRI G. SARVOTHAM RAO 27. DEPARTMENT HAS RAISED SIX GROUNDS. GROUND NO. 1 & 6 ARE GENERAL GROUNDS, HENCE, NOT REQUIRED TO BE ADJUDICA TED. 28. GROUND NO. 2 TO 4 RELATES TO THE COMMON ISSUE O F ACCEPTANCE OF ASSESSEES CLAIM OF EXEMPTION U/S 54F BY THE CIT(A) . 19 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 29. BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PR OCEEDING, AO NOTICED THAT WHILE COMPUTING CAPITAL GAIN ARISING O UT OF SALE OF LAND AT MQTA MEHBOOBPET VILLAGE FOR A TOTAL CONSIDERATION O F RS. 2,70,00,000, ASSESSEE HAS CLAIMED DEDUCTION OF RS. 98,83,399 U/S 54F OF THE ACT, TOWARDS INVESTMENT IN CONSTRUCTION OF THE PROPERTY AT PLOT NO. 161 & 162, KUKATPALLY ALONG WITH HIS BROTHER. AO WHILE CO MPLETING ASSESSMENT HOWEVER DISALLOWED THE CLAIM OF EXEMPTIO N U/S 54F FOR THE FOLLOWING REASONS: A. THE PROPERTY WHERE THE REINVESTMENT OF CAPITAL G AINS WAS MADE, CANNOT BE CONSIDERED AS RESIDENTIAL PROPERTY SINCE THE SAME HAS BEEN PUT TO USE FOR THE PURPOSE OF OTHER T HAN RESIDENTIAL I.E. AS HOSTEL ACCOMMODATION, AS SUCH T HE PROPERTY SO CONSTRUCTED IS NOT FALLING UNDER CATEGORY OF THE PROPERTY TERMED AS RESIDENTIAL IN COMMON USAGE. B. ASSESSEE FAILED TO FURNISH ANY SUPPORTING EVIDEN CE ON MUNICIPAL ASSESSMENT, SHOWING IT AS RESIDENTIAL PRO PERTY, IN FACT SUCH PROPERTY WAS NOT ASSESSED TO PROPERTY TAX, EVE N AS PER THE INFORMATION IN THE FY 2008-09. C. ASSESSEE FAILED TO FURNISH THE INFORMATION TO SH OW WHETHER HE OWNED ANY OTHER RESIDENTIAL PROPERTY AT THE TIME OF TRANSFER OF PROPERTY AND FULFILLMENT OF OTHER CONDITIONS AS REG ARD TO THE CLAIM OF DEDUCTION U/S 54F. D. WITH THE PROPERTY OF THE DIMENSIONS OF THE ORDER OF 23000 SFT. HAD BEEN LET OUT TO A COLLEGE, THE ASSESSEE HAS CON STRUCTED BUILDING WITH AN INTENT TO PUT TO USE THE SAME IN C OMMERCIAL WAY. E. RELEVANT EVIDENCE/INFORMATION, ON THE TIME PERIO D OF COMPLETION OF CONSTRUCTION OF PROPERTY NOT PROVDED. 30. BEING AGGRIEVED OF DISALLOWANCE OF CLAIM OF EXE MPTION U/S 54F, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 31. BEFORE THE CIT(A), ASSESSEE CONTESTING THE FIND INGS OF AO SUBMITTED THAT THE TERM RESIDENTIAL HOUSE IS NOT DEFINED IN THE ACT. HENCE, IT IS TO BE UNDERSTOOD, IN THE PARLANCE OF C OMMON USAGE. IT WAS SUBMITTED GENERALLY A DWELLING UNIT IS A PLACE WHERE A PERSON CAN STAY AND CARRY ON HIS DAY TODAY ACTIVITIES LIKE SLE EPING, COOKING, DINING ETC. IT WAS SUBMITTED THAT THE PROPERTY IN Q UESTION/INVESTMENT IN WHICH CLAIMED AS DEDUCTION U/S 54F IS A RESIDENT IAL HOUSE LET OUT TO 20 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS NARAYANA JUNIOR COLLEGE FOR USE AS A HOSTEL WHERE A CTIVITIES LIKE SLEEPING, COOKING ETC. IS CARRIED OUT. IT WAS SUBMI TTED THAT A COMMERCIAL SPACE WOULD NOT HAVE NORMAL FACILITIES F OR SLEEPING, COOKING, DINING ETC. AND CANNOT BE USED AS A DWELLI NG UNIT. IT WAS SUBMITTED BY THE ASSESSEE THAT FOR CLAIMING EXEMPTI ON U/S 54F, THE TWO CONDITIONS WHICH ARE REQUIRED TO BE FULFILLED A RE, 1) THE BUILDING MUST BE A RESIDENTIAL ONE NOT ONLY AT THE TIME OF C ONSTRUCTION BUT ALSO SUBSEQUENT TO THE CONSTRUCTION. 2) IT IS NOT AT ALL NECESSARY TO WHAT USE ULTIMATELY THE BUILDING IS PUT TO TILL THE NATU RE AND CHARACTER OF THE BUILDING REMAINS AS RESIDENTIAL. IT WAS SUBMITTED T HAT IF THE BUILDING IS CONSTRUCTED AS A RESIDENTIAL UNIT, SUBSEQUENT USE O F THE BUILDING FOR NON-RESIDENTIAL PURPOSES WOULD NOT DISENTITLE THE A SSESSEE FROM CLAIMING DEDUCTION U/S 54F. IN THIS CONTEXT, ASSESS EE RELIED UPON A DECISION OF DELHI BENCH IN CASE OF MAHAVIR PRASAD G UPTA VS. JCIT, ITA NO. 1822/DEL/01. WITH REGARD TO AOS OBSERVATIO N THAT ASSESSEE COULD NOT PRODUCE PROOF FOR MUNICIPAL ASSESSMENT OF PROPERTY AS A RESIDENTIAL HOUSE, IT WAS SUBMITTED THAT AS THE ASS ESSEE HAS NOT OBTAINED ANY SUCH CERTIFICATE FROM MUNICIPAL AUTHOR ITY, THE SAME COULD NOT BE PRODUCED BEFORE THE AO. HOWEVER, THAT ITSELF , WOULD NOT BE A CRITERIA FOR DETERMINING THE CLAIM U/S 54F. SO FAR AS THE OBSERVATION OF THE AO THAT THE SIZE OF THE STRUCTURE AND DIMENSION S OF THE BUILDING WOULD NOT MAKE IT A RESIDENTIAL BUILDING, ASSESSEE SUBMITTED THAT SIZE OF STRUCTURES WILL HAVE NO IMPACT ON THE ISSUE WHET HER A PROPERTY IS RESIDENTIAL OR COMMERCIAL. AS LONG AS THE STRUCTURE IS USED AS DWELLING UNIT SIZE AND DIMENSIONS WILL HAVE NO IMPACT ON THE NATURE OF BUILDING. RESPONDING TO THE ALLEGATION MADE BY AO T HAT RELEVANT INFORMATION WITH REGARD TO DATE OF COMMENCEMENT AND COMPLETION OF BUILDING AND INVESTMENT ACCOUNT WAS NOT FURNISHED, ASSESSEE SUBMITTED THAT AS NO REGULAR BOOKS OF ACCOUNT WERE MAINTAINED, ASSESSEE COULD NOT FURNISH THE DETAILS. HOWEVER, AS SESSEE GOT THE PROPERTY VALUED THROUGH AN APPROVED VALUER WHEREIN DETAILS OF COST AND PERIOD OF CONSTRUCTION HAS BEEN MENTIONED. SO F AR AS SOURCE OF 21 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS INVESTMENT IS CONCERNED, IT WAS SUBMITTED THAT AO N EVER SUSPECTED THE GENUINENESS AND ADEQUACY OF SOURCE FOR INVESTME NT, HENCE, IT WILL NOT HAVE A VITAL ROLE IN DECIDING ASSESSEES ELIGIB ILITY U/S 54F. SO FAR AS AOS ALLEGATION REGARDING LACK OF INFORMATION ON POSSESSION OF OTHER RESIDENTIAL HOUSE AT THE TIME OF TRANSFER OF THE CAPITAL ASSET, IT WAS SUBMITTED AS THE RELEVANT INFORMATION COULD NOT BE FURNISHED AT THE TIME OF ASSESSMENT PROCEEDING, IT IS BEING PROD UCED BEFORE THE FIRST APPELLATE AUTHORITY. FURTHER, ASSESSEE SUBMIT TED THAT THE RESIDENTIAL BUILDING IS CONSTRUCTED ON A LAND ADMEA SURING 598 SQ.YDS. HAVING FOUR FLOORS AND PENT HOUSE WHICH HAS BEEN VA LUED BY THE APPROVED VALUER AT RS. 1,70,41,001 AND OUT OF THE T OTAL INVESTMENT, ASSESSEE HAS INVESTED RS. 1 CRORE AND BALANCE INVES TMENT WAS MADE BY HIS BROTHER MR. MAHENDRA RAO. 32. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD OBSERVED T HAT AS RESIDENTIAL HOUSE HAS NOT BEEN DEFINED UNDER THE INCOME-TAX AC T, THE NATURE OF THE PROPERTY HAS TO BE DECIDED AS PER THE USE OF TH E PROPERTY. CIT(A) OBSERVED THAT AS THE BUILDING WAS USED FOR A HOSTEL OF A COLLEGE AS DWELLING UNIT FOR STUDENTS, IT CAN BE CONSIDERED AS A RESIDENTIAL PROPERTY, BUT, CERTAINLY CANNOT BE A COMMERCIAL PR OPERTY. CIT(A) OBSERVED THAT AS THE PROPERTY IN QUESTION CAN NEITH ER BE CONSIDERED AS A RESIDENTIAL PROPERTY OR A COMMERCIAL PROPERTY AS PER THE RECORDS OF THE MUNICIPAL AUTHORITIES, SINCE NO PERMISSIONS WERE OBTAINED BY ASSESSEE, THE TEST FOR TREATING THE SAME AS RESIDEN TIAL PROPERTY CAN BE DECIDED BY ITS USAGE ALONE. THEREFORE, IT WAS OB SERVED BY CIT(A) THAT AS THE PROPERTY IS USED AS DWELLING UNIT FOR S TUDENTS, IT MAY BE TERMED AS RESIDENTIAL HOUSE SINCE A COMMERCIAL PROP ERTY MAY NOT HAVE THE CHARACTERISTICS OF A DWELLING UNIT HAVING PROVISIONS SUCH AS KITCHEN, DINING, SLEEPING FACILITIES ETC. THE CIT( A) ON AN ANALYSIS OF THE PROVISION CONTAINED U/S 54F, OBSERVED THAT THE ADMISSIBILITY OF BENEFIT U/S 54F WOULD DEPEND UPON THE FACTUAL ASPEC T AS TO WHETHER 22 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS THE NEW ASSET CAN BE CONSIDERED AS A RESIDENTIAL HO USE. THE CIT(A) OBSERVED THAT THE BUILDING CONSTRUCTED BY ASSESSEE HAS FOUR FLOORS WITH A PENT HOUSE AND EACH OF THE FLOOR COMPRISED O F LIVING ROOMS, PROVISION FOR COTS TO THE STUDENTS ALONG WITH PROVI SIONS FOR DINING, BATHING, ETC. WHICH ARE THE NORMAL FACILITIES REQUI RED FOR A RESIDENTIAL BUILDING WHEREAS A COMMERCIAL BUILDING WILL NOT HAV E ALL THESE FACILITIES. RELYING UPON DECISION OF ITAT AS REFER RED TO IN PARA 7.5 OF HIS ORDER, CIT(A) INFERRED THAT THE ACTUAL USE OF T HE BUILDING BY ASSESSEE MAY BE A DETERMINING FACTOR TO DECIDE WHET HER A BUILDING IS A RESIDENTIAL UNIT OR NOT. CIT(A) OBSERVED THAT ONL Y BECAUSE THE BUILDING IS USED AS HOSTEL BY SOME EDUCATIONAL INST ITUTE BENEFIT U/S 54F CANNOT BE DENIED TO ASSESSEE SOLELY ON THAT GRO UND. FURTHER, IT WAS OBSERVED THAT IF THE BUILDING AS PER ITS DESIGN AND CONSTRUCTION IS MADE AND IF IT IS CAPABLE OF BEING PUT TO USE AS RE SIDENTIAL UNIT OR DWELLING UNIT BY THE OWNER OR TENANT IT CAN BE CONS IDERED AS A RESIDENTIAL UNIT. CIT(A) OPINED THAT AS SECTION 54F HAS BEEN ENACTED FOR GIVING INCENTIVE FOR DEVELOPMENT OF THE HOUSING INDUSTRY IT REQUIRES LIBERAL INTERPRETATION. ON THE BASIS OF THE AFORESA ID FACTS, CIT(A) ULTIMATELY CONCLUDED THAT THE BUILDING CONSTRUCTED BY ASSESSEE BEING USED AS A DWELLING UNIT EVEN THOUGH IT MAY NOT HAVE CONSTRUCTED AS RESIDENTIAL HOUSE AS PER THE NORMS OF THE MUNICIPAL AUTHORITIES IT CANNOT BE CONSIDERED AS A COMMERCIAL PROPERTY AND A S SUCH IT HAS TO BE TREATED AS RESIDENTIAL PROPERTY FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 54F. HAVING HELD SO, CIT OBSERVED THA T THOUGH ASSESSEE HAS CLAIMED DEDUCTION OF RS. 98,83,299, HO WEVER, THE PROPERTY BEING A JOINT PROPERTY WITH EQUAL SHARE BE TWEEN THE TWO BROTHERS AND THE VALUE OF THE PROPERTY HAVING BEEN DETERMINED BY THE APPROVED VALUER AT RS. 1,70,41,000, ASSESSEE WOULD BE ENTITLED FOR DEDUCTION OF AN AMOUNT OF RS. 85,20,500 U/S 54F. 33. THE LEARNED DR SUBMITTED BEFORE US THAT THERE I S NO DISPUTE TO THE FACT THAT THE ENTIRE BUILDING HAS BEEN LET OUT TO AN EDUCATIONAL 23 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS INSTITUTION TO BE USED AS A HOSTEL. HENCE, IT CANNO T BE CONSIDERED AS A RESIDENTIAL UNIT AS IT IS NOT ONLY CONSTRUCTED FOR A COMMERCIAL PURPOSE OF BEING USED AS A HOSTEL BUT ACTUALLY IT IS USED A S A HOSTEL OF A EDUCATIONAL INSTITUTION. THEREFORE, IT CANNOT BE CO NSIDERED AS A RESIDENTIAL HOUSE AND CONSEQUENTIALLY BENEFIT U/S 5 4F CANNOT BE GRANTED. IT WAS SUBMITTED BY THE LEARNED DR THAT I F CIT(A)S LOGIC THAT A BUILDING HAVING FACILITY FOR SLEEPING, DINING AND COOKING CAN BE CONSIDERED AS A RESIDENTIAL HOUSE IS ACCEPTED, THEN , EVERY HOTEL/RESORTS CAN ALSO BE TERMED AS RESIDENTIAL HOU SE AS THEY PROVIDE SUCH FACILITIES. 34. LEARNED AR, ON THE OTHER HAND, STRONGLY SUPPORT ING THE FINDING OF CIT(A) SUBMITTED THAT THE ASSESSEE HAS CONSTRUCT ED THE BUILDING AS A DWELLING UNIT WITH ALL THE FACILITIES OF BEING US ED AS SUCH. FURTHER, AS THE BUILDING IS USED AS A HOSTEL FOR STUDENTS HA VING FACILITY FOR COOKING, DINING, SLEEPING ETC., IT IS NOTHING BUT A RESIDENTIAL HOUSE AS A COMMERCIAL PROPERTY WILL NOT HAVE ALL THESE FACIL ITIES. IT WAS, THEREFORE, SUBMITTED THAT THE CIT(A) WAS JUSTIFIED IN ALLOWING ASSESSEES CLAIM U/S 54F. IN SUPPORT OF SUCH CONTE NTION, LEARNED AR RELIED UPON A DECISION IN CASE OF DR. J.V. DESAI V S. CIT, [1985] 154 ITR 828 (A.P.). 35. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OT HER MATERIAL ON RECORD. WHILE THE AO HAS REJECTED ASSESSEES CLAIM U/S 54F FOR THE REASON THAT THE BUILDING HAVING BEEN LET OUT TO AN EDUCATIONAL INSTITUTION FOR USE AS A STUDENTS HOSTEL, HENCE, IS A COMMERCIAL PROPERTY. CIT(A) HAS OBSERVED THAT AS THE BUILDING IS USED AS A DWELLING UNIT FOR STUDENTS AND IS HAVING FACILITIES FOR SLEEPING, COOKING, DINING ETC., IT IS A RESIDENTIAL HOUSE AND AS SUCH ASSESSEE IS ENTITLED FOR DEDUCTION U/S 54F. IN OUR VIEW, NEITHE R AO NOR CIT(A) HAVE EXAMINED THE PRIMARY FACTS BEFORE COMING TO TH EIR CONCLUSION. 24 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS AO WAS NOT JUSTIFIED IN REJECTING ASSESSEES CLAIM BY SIMPLY OBSERVING THAT AS THE BUILDING IS USED AS A HOSTEL IT IS COMM ERCIAL PROPERTY. ONLY BECAUSE THE PROPERTY IS LET OUT TO A EDUCATIONAL IN STITUTION FOR BEING USED AS A STUDENTS HOSTEL THAT BY ITSELF WILL NOT B E A REASON TO HOLD THAT IT IS NOT A RESIDENTIAL BUILDING. SIMILARLY, T HE FINDING OF CIT(A) IS ALSO CONFLICTING AND CONTRADICTORY. WHILE IN ONE BR EATH, LEARNED CIT(A) OBSERVES THAT DUAL TEST FOR USE OF THE PROPERTY AT THE TIME OF CONSTRUCTION AS WELL AS SUBSEQUENT PERIOD CANNOT BE APPLIED, HOWEVER, IN THE SAME BREATH HE OBSERVES THAT AS THE PROPERTY CAN NEITHER BE TAKEN AS RESIDENTIAL OR COMMERCIAL USER TEST HAS TO BE APPLIED. IN OUR VIEW, THE NATURE OF A PROPERTY WHET HER RESIDENTIAL OR COMMERCIAL CANNOT BE DETERMINED BY SOLELY APPLYING THE USER TEST. IN MANY INSTANCES, A PURELY RESIDENTIAL HOUSE IS USED FOR COMMERCIAL PURPOSE, LIKE SCHOOL, OFFICE, ETC. HOWEVER, FOR TH AT REASON ALONE THE PROPERTY CANNOT LOSE ITS CHARACTER OF A RESIDENTIAL HOUSE. FURTHER, IT IS NOT UNDERSTOOD HOW SUCH A BIG BUILDING HAVING FOUR FLOORS AND PENT HOUSE COULD BE CONSTRUCTED WITHOUT AN APPROVED PLAN AND PERMISSION FROM THE MUNICIPAL AUTHORITIES. NO ATTEMPT HAS BEEN MADE EITHER BY AO OR BY CIT(A) TO ASCERTAIN THE TRUE NATURE OF THE PROPERTY BY EXAMINING THE CONSTRUCTION PLAN OR APPROVAL GIVEN B Y MUNICIPAL AUTHORITIES, OR THROUGH PHYSICAL VERIFICATION. IN A BSENCE OF THESE BASIC FACTS, THE EXACT NATURE OF PROPERTY CONSTRUCTED AND ASSESSEES ELIGIBILITY TO SECTION 54F CANNOT BE DECIDED CONCLU SIVELY ON PRESUMPTIONS. IN THE AFORESAID VIEW OF THE MATTER, WE ARE INCLINED TO REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR DECI DING AFRESH AFTER CONDUCTING NECESSARY ENQUIRY. AO MUST AFFORD REASON ABLE OPPORTUNITY TO ASSESSEE TO ESTABLISH HIS CLAIM BY PRODUCING NEC ESSARY EVIDENCE TO SHOW THAT THE PROPERTY CONSTRUCTED IS A RESIDENT IAL HOUSE. THE GROUND RAISED IS ALLOWED FOR STATISTICAL PURPOSES. 36. THE NEXT ISSUE AS RAISED IN GROUND NO. 5 IS IN RESPECT OF ALLOWANCE OF ASSESSEES CLAIM OF EXEMPTION U/S 54B BY THE CIT(A). 25 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 37. BRIEFLY THE FACTS ARE WHILE COMPUTING HIS INCOM E FOR THE IMPUGNED ASSESSMENT YEAR, ASSESSEE CLAIMED EXEMPTIO N U/S 54B OF THE ACT IN RESPECT OF GAIN ARISING FROM SALE OF AGR ICULTURAL LAND DURING THE RELEVANT PY. DURING THE ASSESSMENT PROCEEDING, AO NOTICED THAT DURING THE YEAR ASSESSEE HAS SOLD CERTAIN ASSETS IN THE NATURE OF AGRICULTURAL LAND AND CLAIMED EXEMPTION OF THE GAIN DERIVED THEREFROM ON THE PLEA THAT HE HAS INVESTED THE SALE PROCEEDS IN PURCHASE OF AGRICULTURAL LAND. AO REJECTED ASSESSEES CLAIM ON THE FOLLOWING REASONS: II) PROOF OF AGRICULTURAL ACTIVITY WAS NOT FURNISHE D AS DEFINED U/S 2 OF THE IT ACT, 1961. III) THE DETAILS OF PAYMENTS AND THE INVESTMENTS RO UTED TO THE RESPECTIVE BANK A/C AND THE FLOW OF THE FUNDS FROM THE SALE CONSIDERATION TO THE APPLICATION OF THE FUNDS IN TH E SO CALLED AGRICULTURAL LAND. THE DATE OF SALE IS 21/01/2008 A ND THE DATES OF ACQUISITION OF THE NEW ASSET IS SHOWN AS 06/08/2 007 AND 08/05/2008. THE RELEVANT PROOF WAS NOT ALSO FILED A S DISCUSSED. IV) FURTHER, THE SAID LANDS PURCHASED BY THE ASSESS EE ARE PROXIMATE TO THE NEAREST MUNICIPALITY WITHIN URBAN LIMIT. ASSESSEE CHALLENGED THE AFORESAID FINDING OF AO IN APPEAL BEFORE THE CIT(A). 38. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE VIS--VIS THE FACTS AND MATERIALS AVAILABLE ON RECO RD, ALLOWED ASSESSEES CLAIM WITH THE FOLLOWING OBSERVATIONS: 8.3 PERUSED THE SUBMISSIONS OF THE APPELLANT ALONGW ITH THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER. AS PER THE INFOR MATION BROUGHT ON THE RECORD, THE APPELLANT INVESTED THE FOLLOWING AMOUNT S IN AGRICULTURAL LANDS, BY PURCHASING THE SAME: DATE OF DOCUMENT EXTENT AND LOCATION OF LAND AMOUNT OF CONSIDERATION 1.30.11.2007 ACRES 0.05 GUNTAS AT KISTAREDDYPET RS. 82,125/- 2.1.02.2008 ACRE 0.17 GUNTAS AT SULTANPUR RS.6,98,165/ - 3. 12.2.2008 ACRE 0.15 GUNTAS AT SULTANPUR RS 4,10,825/- 26 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 4. 18.3.2008 ACRE 0.12 QUNTAS AT KISTAREDDYPET RS.1,98,100/ - 5.7.5.2008 ACRE 1.25 GUNTAS AT SULTANPUR RS. 17,75,575/ - TOTAL RS.31,68,790/- THE DOCUMENTS ASSOCIATED WITH SUCH TRANSACTIONS IND ICATE THAT THE SAME ARE DRY LANDS AND MEASURED IN TERMS OF ACRES FOR STAMP DUTY PURPOSE, WITH THE NATURE OF THE LANDS CLEARLY INDICATED AS AGRICULTUR AL LANDS. THE CERTIFICATE ISSUED BY THEREVENUE AUTHORITIES IN THIS REGARD ALS O CLEARLY INDICATE THAT THE AGRICULTURAL ACTIVITIES ARE CARRIED ON SUCH LANDS A ND THE SAID LANDS ARE AGRICULTURAL LANDS IN NATURE. FURTHER, AGRICULTURAL INCOME WAS SHOWN TO HAVE RAISED ON SUCH LANDS WHICH HAS BEEN OFFERED FO R INCOME-TAX AS PER THE RETURN OF INCOME. BASED ON THE FACTS AND THE SUPPOR TIVE DOCUMENTS, IT MAKES AMPLY CLEAR THAT THE LANDS UNDER REFERENCE ARE AGRI CULTURAL LANDS IRRESPECTIVE OF THE FACT THAT THE SAME ARE LOCATED WITHIN THE PROXIMITY OF MUNICIPALITY OR URBAN LIMITS. FURTHER, AS LONG AS T HE PURCHASES ARE SUPPORTED BY A VALID DOCUMENT WHEREIN THE PAYMENT O F SALE CONSIDERATION IS INDICATED, IT MAY NOT BE RELEVANT TO REFER TO THE S OURCE OF SUCH ACQUISITION AS OBSERVED BY THE AO. FURTHER, AS CONTENDED BY THE AP PELLANT THIS QUESTIONS WERE NEVER RAISED DURING THE ASSESSMENT PROCEEDINGS AS SUCH THE SAID GROUND CANNOT BE CONSIDERED AS A GROUND FOR MAKING THE DISALLOWANCE UNDER SECTION 54B. REGARDING THE REASONS FOR NOT CO NSIDERING THE LANDS AS . AGRICULTURAL LANDS BY VIRTUE OF THEIR LOCATION IN T HE PROXIMITY OF MUNICIPALITY OR URBAN LIMITS THE ARGUMENT OF THE AP PELLANT WAS THAT WHAT IS REQUIRED TO BE CONSIDERED IS THE NATURE OF THE LAND S AND THEIR USAGE BUT NOT THE PROXIMITY TO THE MUNICIPALITY OR THE URBAN AREA AND THIS ARGUMENT OF THE APPELLANT APPEARS REASONABLE AND SUPPORTED BY THE J UDICIAL DECISIONS AS RELIED UPON BY THE APPELLANT (SUPRA) IN THIS REGARD . IT IS ALSO RELEVANT TO MENTION THAT SUCH LANDS WERE ALREADY CERTIFIED BY T HE REVENUE AUTHORITIES AS AGRICULTURAL LANDS INDICATING FURTHER THAT AGRICULT URAL ACTIVITIES WERE CARRIED ON SUCH LANDS. FURTHER, AS PER THE RATIOS O F THE JUDICIAL DECISIONS, THE NATURE OF THE LAND IS DETERMINED BY THE NATURE OF USAGE AND NATURE OF ACTIVITIES CARRIED ON SUCH LAND IRRESPECTIVE OF THE IR LOCATION. FOR THE SAID REASONS I HAVE NO HESITATION IN ACCEPTING THE SUBMISSIONS OF THE APPELLANT THAT THE LANDS UNDER REFERENCE ARE AGRICULTURAL LAN DS AS SUPPORTED BY THE FACTS OF THE CASE, AS WELL AS THE JUDICIA I DECISIONS. FURTHER THE ACQUISITION OF THE LANDS WERE EXPLAINED BY THE DOCUMENTS WHEREIN T HE NATURE OF THE LANDS WERE CLEARLY INDICATED AND SUPPORTED BY THE CERTIFI CATES ISSUED BY THE REVENUE AUTHORITIES. IT IS ALSO A FACT THAT THE AGR ICULTURAL INCOMES RAISED ON SUCH LANDS WERE NOT DISPUTED BY THE ASSESSING OFFIC ER EXCEPT DISBELIEVING THE QUANTUM OF INCOME RAISED ON THEM. UNDER THE CIRCUMS TANCES, I AM OF THE CONSIDERED VIEW THAT THE LANDS UNDER REFERENCE ARE QUALIFIED AS AGRICULTURAL LANDS AND THE. INVESTMENT THEREIN WOULD ENTITLE THE ASSESSEE FOR CLAIMING DEDUCTION U/S. 54B OF THE INCOME-TAX ACT. ACCORDINGLY, THE AD IS DIRECTED TO ALLOW THE DEDUCTION CLAIMED U/S. 548. THIS GROUN D OF APPEAL IS 27 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS TREATED AS ALLOWED. 39. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OT HER MATERIALS ON RECORD. AS CAN BE SEEN FROM THE FACTS ON RECORD, AS SESSEE DERIVED GAIN FROM SALE OF AGRICULTURAL LAND TO THE TUNE OF RS. 31,68,790 WHICH WAS CLAIMED AS EXEMPT HAVING BEEN INVESTED IN PURCH ASE OF AGRICULTURAL LAND. ON A PERUSAL OF THE FINDING OF T HE CIT(A) EXTRACTED HEREINABOVE, IT IS ABSOLUTELY CLEAR THAT THE LAND P URCHASED AT KISTAREDDYPET AND SULTANPUR VILLAGE IN PATANCHERU M ANDAL ARE CLASSIFIED AS AGRICULTURAL LAND NOT ONLY AS PER THE REGISTRATION DEED, PATTADAR PASS BOOK, ETC., BUT, HAS ALSO BEEN CERTIF IED BY REVENUE AUTHORITIES AS AGRICULTURAL LAND. ON CAREFUL READIN G OF SECTION 54B OF THE ACT, IT BECOMES CLEAR THAT THE ONLY REQUIREMENT FOR CLAIMING DEDUCTION IS THE CAPITAL GAIN ARISING FROM TRANSFER OF AGRICULTURAL LAND IF IS INVESTED IN PURCHASE OF ANY OTHER LAND FOR BE ING USED FOR AGRICULTURAL PURPOSES, THEN, ASSESSEE WOULD BE ELIG IBLE FOR DEDUCTION. IN THE FACTS OF THE PRESENT CASE, THE DOCUMENTARY E VIDENCES SUBMITTED BY ASSESSEE CLEARLY PROVE THAT THE LAND P URCHASED ARE IN THE NATURE OF AGRICULTURAL LAND. THEREFORE, THE IN TENTION OF ASSESSEE IN PURCHASING THE LAND FOR BEING USED FOR AGRICULTU RAL PURPOSES IS EVIDENT. THERE IS NO RESTRICTION U/S 54B REGARDING THE PROXIMITY OF THE LAND TO URBAN AREA. ONLY REQUIREMENT AS PER SECTION 54B IS THE LAND PURCHASED IS FOR THE PURPOSE OF BEING USED AS AGRIC ULTURAL LAND. AS IN CASE OF THE ASSESSEE, THE AFORESAID CONDITION IS SA TISFIED, THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S 54B OF THE ACT. EVEN OTHERWISE ALSO DEPARTMENT HAS NOT BROUGHT ANY MATER IAL TO SHOW THAT LAND IS ESTIMATED WITHIN THE PRESCRIBED LIMITS OF A NY NOTIFIED MUNICIPALITY. THEREFORE, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF CIT(A) WHICH IS ACCORDINGLY UPHELD. GROUND RAISED BY DEPARTMENT IS DISMISSED. 28 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 40. IN THE RESULT, APPEAL IN ITA NO. 436/H/13 IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 438/HYD/2013 BY THE DEPARTMENT IN CASE OF S HRI G. MAHENDER RAO 41. DEPARTMENT HAS RAISED SIX GROUNDS. GROUND NO. 1 & 6 ARE GENERAL GROUNDS, HENCE, NOT REQUIRED TO BE ADJUDICA TED. 42. GROUND NO. 2 TO 4 RELATES TO THE COMMON ISSUE O F ACCEPTANCE OF ASSESSEES CLAIM OF EXEMPTION U/S 54F BY THE CIT(A) . 43. SIMILAR ISSUE HAS BEEN DECIDED BY US IN ITA NO. 436/HYD/13 VIDE PARAS 28 TO 35 OF THIS ORDER (SUPRA). AS THE I SSUE UNDER CONSIDERATION IS MATERIALLY IDENTICAL TO THE ISSUE RAISED IN ITA NO. 436/HYD/13, FOLLOWING OUR DECISION THEREIN, WE REMI T THIS ISSUE TO THE FILE OF AO FOR DECIDING AFRESH. THIS GROUND IS ALLO WED FOR STATISTICAL PURPOSES. 44. THE NEXT ISSUE AS RAISED IN GROUND NO. 5 IS IN RESPECT OF ALLOWANCE OF ASSESSEES CLAIM OF EXEMPTION U/S 54B BY THE CIT(A). AS THE ISSUE IS ALSO MATERIALLY IDENTICAL TO THE ISSUE RAISED IN ITA NO. 436/HYD/13, FOLLOWING OUR DECISION VIDE PARA 39 (SU PRA), THIS GROUND IS DISMISSED. 45. IN THE RESULT, APPEAL IN ITA NO. 438/H/13 IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. NOW WE WILL DEAL WITH ASSESSEES APPEALS IN ITA NOS. 875 TO 884/HYD/2013. 46. THE EFFECTIVE GROUNDS RAISED BY THE ASSESSEES WHICH ARE COMMON IN ALL THE APPEALS ARE AS UNDER: 29 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 2. THE HONBLE CIT(A) OUGHT NOT TO HAVE UPHELD THE DECISION OF THE AO IN TREATING PART OF AGRICULTURE INCOME AS INCOME FROM OTHER SOURCES WITHOUT BRINGING ANY MATERIAL ON RECO RD. 3. THE HONBLE CIT(A) OUGHT TO HAVE OBSERVED THAT T HE ACTION OF THE AO IN TREATING PART OF AGRICULTURE INCOME AS IN COME FROM OTHER SOURCES IS ERRONEOUS IN LAW AND THEREFORE THE ADDITION UNDER THE HEAD INCOME FROM OTHER SOURCES IS LIABLE TO BE DELETED. 47. BRIEFLY THE FACTS ARE, IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 ASSESSEES DIS CLOSED CERTAIN AGRICULTURAL INCOME. DURING THE ASSESSMENT PROCEEDI NG, AO AFTER EXAMINING THE CLAIM OF ASSESSEE, THOUGH, ACCEPTED T HE EXTENT OF AGRICULTURAL LAND OWNED BY ASSESSEE, BUT, HE WAS OF THE VIEW THAT ASSESSEE HAS SHOWN THE INCOME FROM AGRICULTURE ON T HE HIGHER SIDE. ACCORDINGLY, AO RESTRICTED THE INCOME FROM AGRICULT URE TO RS. 20,000 PER ACRE AND IN THIS PROCESS WHILE ALLOWING PART OF THE AGRICULTURAL INCOME SHOWN BY ASSESSEE TREATED THE OTHER PART AS INCOME FROM OTHER SOURCES. THE CIT(A) ALSO APPROVED THE VIEW O F THE AO BY SUSTAINING THE ADDITION MADE TOWARDS INCOME FROM O THER SOURCES. 48. THE LEARNED AR SUBMITTED BEFORE US THAT THE AO NEITHER DISPUTED THE EXTENT OF AGRICULTURAL LAND OWNED BY E ACH OF THE ASSESSEES NOR HAS DISBELIEVED THE EARNING OF AGRICU LTURAL INCOME. HOWEVER, WITHOUT ANY BASIS AO HAS RESTRICTED THE AG RICULTURAL INCOME BY APPLYING THE RATE OF RS. 20,000 PER ACRE. THE LE ARNED AR SUBMITTED THAT FROM THE PRECEDING ASSESSMENT YEARS ASSESSEES ARE SHOWING AGRICULTURAL INCOME FROM THE AGRICULTURAL A CTIVITIES, WHICH IS ACCEPTED BY THE DEPARTMENT. THEREFORE, THERE IS NO REASON TO DISALLOW PART OF THE AGRICULTURAL INCOME IN THESE ASSESSMENT YEARS. 49. THE LEARNED DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 30 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 50. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OT HER MATERIALS ON RECORD. IT IS EVIDENT FROM RECORD, THE AO DOES NOT DISPUTE THE FACT THAT ASSESSEES HAVE SUBSTANTIAL AGRICULTURAL LAND H OLDING. AS PER THE DETAILS SUBMITTED BEFORE THE REVENUE AUTHORITIES AN D WHICH IS PART OF THE RECORD, AGRICULTURAL LAND HOLDING OF THE ASSESS EES ARE AS UNDER: S.NO. NAME OF THE ASSESSEE AGRICULTURAL LAND HOLDING 1. G. RAGHAVENDER RAO 2008-09 2009-10 ACRE 13 AND 24 GUNTAS 2 G. SIMHA RAO 2008-09 2009-10 ACRES 13 AND 11 GUNTAS 3. G. RAMA DEVI 2008-09 2009-10 ACRES 6 AND 12 GUNTAS 4. G. MAHENDER RAO 2008-09 2009-10 ACRES 11 AND 33 GUNTAS 5. G. SARVOTHAM RAO 2008-09 2009-10 ACRES 8 AND 7 GUNTAS THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEES FROM SUCH LAND HOLDING DURING THE ASSESSMENT YEARS 2008-09 AND 200 9-10 ARE AS UNDER: S.NO. NAME OF THE ASSESSEE AGRICULTURAL INCOME DISCLOSED 1. G. RAGHAVENDER RAO 2008-09 5,04,580 2009-10 4,73,400 2 G. SIMHA RAO 2008-09 5,12,450 2009-10 5,78,400 3. G. RAMA DEVI 2008-09 4,91,260 2009-10 - 4,73,400 4. G. MAHENDER RAO 2008-09 4,21,300 2009-10 4,73,400 5. G. SARVOTHAM RAO 2008-09 3,41,200 2009-10 3,41,200 FURTHER, IT IS ALSO SEEN FROM RECORD THAT IN THE PR ECEDING ASSESSMENT YEARS AGRICULTURAL INCOME SHOWN BY ASSESSEES ARE AS UNDER: 31 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS S.NO. NAME OF ASSESSEE AGRICULTURE INCOME DISCLOSED FOR PAST ASSESSMENT YEARS 2005-06 2006-07 2007-08 1 G. RAGHAVENDER RAO 3,85,800 - 4,92,300 2. G. SIMHA RAO 3,55,650 4,23,900 4,76,000 3. G. SARVOTHAM RAO - 2,34,650 2,86,400 4. G. MAHENDER RAO 2,42,500 3,24,800 3,65,750 5. G. RAMA DEVI 2,07,600 3,53,500 4,23,540 51. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE A GRICULTURAL INCOME SHOWN BY ASSESSEES IN THE PRECEDING ASSESSMENT YEAR S HAVE BEEN ACCEPTED BY THE DEPARTMENT. ON COMPARATIVE ANALYSIS OF THE AGRICULTURAL INCOME SHOWN IN THE PRECEDING ASSESSME NT YEARS WITH THE AGRICULTURAL INCOME SHOWN IN THE IMPUGNED ASSESSMEN T YEARS IT APPEARS THERE IS NO ABNORMAL INCREASE IN THE AGRICU LTURAL INCOME SHOWN BY ASSESSEES. IN THE AFORESAID FACTS AND CIRC UMSTANCES, AGRICULTURAL INCOME SHOWN BY ASSESSEES IN THE IMPUG NED ASSESSMENT YEARS CANNOT BE CONSIDERED TO BE HIGH OR UNREASONAB LE. FURTHER, THERE IS ABSOLUTELY NO BASIS FOR ESTIMATING THE AGR ICULTURAL INCOME AT RS. 20,000 PER ACRE. AO HAS NOT GIVEN ANY REASONS H OW HE HAS ADOPTED THIS FIGURE. ON THE CONTRARY, ASSESSEES HAV E PRODUCED BEFORE THE REVENUE AUTHORITIES CERTIFICATE FROM VRO CERTIF YING THE AGRICULTURAL INCOME EARNED BY THEM. IN THE AFORESAID FACTS AND C IRCUMSTANCES, WHEN THE AGRICULTURAL INCOME DISCLOSED BY THE ASSES SEES ARE COMMENSURATE WITH THE EXTENT OF LAND HOLDING AND SI MILAR INCOME DECLARED IN THE PRECEDING ASSESSMENT YEARS, THE AGR ICULTURAL INCOME SHOWN BY ASSESSEE HAS TO BE ACCEPTED, MORE SO, WHEN THERE IS NO BASIS SHOWN BY AO FOR RESTRICTING IT TO RS. 20,000 PER ACRE. WE, THEREFORE, DIRECT THE AO TO ACCEPT THE AGRICULTURAL INCOME SHOWN BY ASSESSEES IN THE RESPECTIVE ASSESSMENT YEARS VI.Z., 2008-09 AND 32 ITA NOS. 431 TO 439/HYD/2013 & ITA NOS. 875 TO 884/HYD/2013 SHRI G. RAGHAVENDRA RAO AND OTHERS 2009-10 AND DELETE THE ADDITIONS MADE UNDER THE HEA D INCOME FROM OTHER SOURCES. 52. IN THE RESULT, ALL THE APPEALS FILED BY ASSESSE ES ARE ALLOWED. 53. TO SUM UP DEPARTMENTAL APPEALS IN ITA NOS.431, 433, 434, 435, 436, 437, 438 & 439/HYD/2013 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ITA NO. 432/HYD/2013 IS DISMISSED. ASS ESSEES APPEALS IN ITA NOS. 875 TO 884/HYD/2013 ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24/09/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 24 TH SEPTEMBER, 2014 KV COPY TO:- 19 COPIES OF XEROX TO BE TAKEN 1.SHRI G. RAGHAVENDRA RAO, HYDERABAD B. NARSING RAO & CO., CAS., PLOT NO. 554, ROAD NO. 92, JUBILEE HILLS, HYDERABAD 500 096 2. SMT. G. RAMA DEVI, HYDERABAD 3. SMT. G. RAMA DEVI, HYDERABAD 4. SHRI G. SIMHA RAO, HYDERABA 5. SHRI G. SARVOTHAM RAO, HYDERABA 6. SHRI G. MAHENDRA RAO, HYDERABAD 7. ITO, WARD 11 (3), HYDERABAD 8. CIT(A)-VI, HYDERABAD 9. CIT-V, HYDERABAD 10. THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYD ERABAD.
