Shri Bheru Lal Sharma, UDAIPUR V. ITO, UDAIPUR

ITA 435/JODH/2013

• Counselvise Citation: 43523314 RSA 2013
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-03-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 22-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.435/JODH/2013 (A.Y. 2005-06) SHRI BHERU LAL SHARMA, VS. ITO, WA RD-2(1), 212, SHANTI NIKETAN, MATRI KRIPA, 6, NEW FAREHPUR A, BADGOAN, UDAIPUR. UDAIPUR PAN NO. AZOPS 1211 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 27/03/2014. DATE OF PRONOUNCEMENT : 28/03/2014. O R D E R PER N.K. SAINI, A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 20/06/2013 OF LD. CIT(A), UDAIPUR. THE FOLLOWING G ROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON T HE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE SALE CO NSIDERATION OF RS. 24,68,889/- ON SALE OF AGRICULTURE LAND OF THE APPE LLANT AS ASSESSED BY THE ASSESSING OFFICER UNDER SECTION 50C OF THE ACT. 2. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITIO N OF LONG TERM 2 CAPITAL GAIN OF RS. 20,65,089/- MADE BY THE ASSESSI NG OFFICER TO THE RETURNED INCOME OF THE APPELLANT. 3. THE LD. CIT(A) HAS ALSO ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THAT THE ASSES SING OFFICER WAS JUSTIFIED IN TAXING THE LONG TERM CAPITAL GAIN OF R S. 20,65,089/- ON SALE OF AGRICULTURE LAND OF THE APPELLANT. 4. THE APPELLANT RESERVES THE RIGHT TO ADD TO THE A BOVE GROUNDS OF APPEAL AND/OR TO AMEND, MODIFY AND TO DELETE ANY OF THEM ON OR BEFORE THE HEARING OF APPEAL. 2 FROM THE ABOVE GROUNDS, IT IS CLEAR THAT ONLY GRIE VANCE OF THE ASSESSEE RELATES TO THE CONFIRMATION OF ADDITION MA DE BY THE ASSESSING OFFICER ON ACCOUNT OF LONG TERM CAPITAL GAIN OF RS . 20,65,089/-. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSE E FILED THE RETURN OF INCOME ON 25/07/2005 DECLARING AN INCOME OF RS. 67, 500/- AND THE AGRICULTURAL INCOME OF RS. 36,000/-. LATER ON, CAS E WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN THE SAL E OF AGRICULTURAL LAND REGISTERED VALUE OF WHICH WAS AT RS. 24,68,889/-. THE SAID PROPERTY WAS PURCHASED IN THE F.Y. 1969-70 AND THE ASSESSEE CLAI MED FAIR MARKET VALUE OF THE PROPERTY AT RS. 5,90,000/- AS ON 01/04/1981 AND INDEXING THE SAME, HE CALCULATED COST OF ACQUISITION AT RS. 28,3 2,000/-, AS SUCH LONG TERM CAPITAL LOSS AMOUNTING TO RS. 3,6 3,111/- (RS. 28,32,000/- - RS. 24,68,889/-) WAS DECLARED. DURING THE COURSE OF 3 ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD TAKEN A ST AND THAT THE LAND WAS SITUATED BEYOND 8 KM. FROM THE MUNICIPAL AREA OF UD AIPUR AS SUCH THE AGRICULTURE LAND WAS NOT COVERED UNDER THE DEFINITI ON OF CAPITAL ASSETS AS PER SECTION 2(14)(III) OF THE I.T. ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT IN SHORT). THE ASSESSEE FURNISHED A COPY OF CERTIFICATE FROM PATWARI OF VILLAGE BADI STATING THEREIN THAT THE LA ND WAS SITUATED 10 KM. AWAY FROM MUNICIPAL LIMIT OF UDAIPUR. THE ASSESSIN G OFFICER ISSUED A LETTER TO THE TEHSILDAR, TEHSIL GIRVA, UDAIPUR REQU ESTING HIM TO CONFIRM WHETHER THE CERTIFICATE ISSUED BY THE PATWARI WAS G ENUINE AND ALSO TO GIVE THE BASIS OF INFORMATION THAT THE LAND WAS SIT UATED MORE THAN 10 KM. FROM THE MUNICIPAL LIMIT OF UDAIPUR CITY. THE TEHS ILDAR INFORMED THE ASSESSING OFFICER VIDE LETTER DATED 06/06/2007 THAT THE PATWARI WAS NOT AUTHORIZED TO ISSUE THE CERTIFICATE IN RESPECT OF D ISTANCE OF LAND FROM MUNICIPAL LIMIT OF UDAIPUR CITY AND, THAT INFORMATI ON MAY BE CALLED FROM MUNICIPALITY OR UIT. THE ASSESSING OFFICER GOT THE INFORMATION FROM THE SECRETARY, UIT THAT THE BADI VILLAGE WAS UNDER THE JURISDICTION OF UIT UDAIPUR AS SUCH IT WAS AN URBAN AREA. THE ASSESSIN G OFFICER ADOPTED THE FAIR MARKET VALUE OF LAND AS ON 01/04/1981 AT RS. 1 2,500/- PER BIGHA AS ADOPTED BY THE REGISTERED VALUER IN THE VALUATION R EPORT. HE ESTIMATED THE VALUE OF THE BOUNDARY WALL AND WELL AS ON 01/04 /1981 AT RS. 10,000/- 4 AND RS. 16,000/- RESPECTIVELY. HE ALSO ADOPTED THE FAIR MARKET VALUE OF THE PROPERTY SOLD AT RS. 24,68,889/- AS ADOPTED BY THE SUB-REGISTRAR-1 AS PER SECTION 50C OF THE ACT. ACCORDINGLY, LONG TERM CAPITAL GAIN WAS DETERMINED AT RS. 20,65,089/- AND THE SAME WAS ADDE D TO THE INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE LAND WAS SITUATED IN THE RUR AL AREA BEYOND 8 KM. FROM THE MUNICIPAL LIMIT OF UDAIPUR AS SUCH THE SAI D AGRICULTURAL LAND WAS NOT COVERED UNDER THE DEFINITION OF CAPITAL ASSET I N TERMS OF SECTION 2(14)(III) OF THE ACT AND THEREFORE, NO CAPITAL GAI N WAS CHARGEABLE. IT WAS ALSO STATED THAT UIT MAY HAVE JURISDICTION OVER BAD I VILLAGE AND MAY NOT HAVE ANY JURISDICTION ON THE SURROUNDING AGRICULTUR E LAND INCLUDING THE LAND OF THE ASSESSEE. IT WAS FURTHER STATED IN THA T THE SARPANCH OF THE GRAM PANCHAYAT, BADI HAD ALSO ISSUED A CERTIFICATE DATED 18/12/2007 THAT THE LAND OF THE ASSESSEE WAS SITUATED IN PATWAR CIR CLE BADI UNDER THE JURISDICTION OF GRAM PANCHAYAT BADI, THEREFORE, THE LAND WAS NOT IN THE URBAN AREA OF THE UIT, UDAIPUR. IT WAS ALSO SUBMIT TED THAT THE FAIR MARKET VALUE OF LAND AND ITS ACCRETIONS AS ON 01/04 /1981 WAS AT RS. 4,82,741/- AS PER THE REGISTERED VALUER AND IND EXED COST OF ACQUISITION CAME TO RS. 23,18,400/- WHILE THE ASSES SEE SOLD THE LAND AT 5 RS. 23,00,000/- ON THE FAIR MARKET VALUE PREVAILING AT THE TIME OF SALE. IT WAS FURTHER STATED THAT THE ASSESSING OFFICER BY DI SBELIEVING THE CERTIFICATE OF DISTANCE ISSUED BY THE EXECUTIVE ENG INEER, PWD, REGIONAL TRANSPORT AUTHORITY AND PATWARI OF THE CONCERNED AR EA, APPOINTED AN INSPECTOR TO VERIFY THE ACTUAL DISTANCE OF THE ASSE SSEES AGRICULTURAL LAND AND THE DISTANCE CAME TO 13.7 KM. WHICH WAS BEYOND 8 KM. 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, CONFIRMED THE ADDITION MADE BY THE ASSESS ING OFFICER. THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 3.4 OF TH E IMPUGNED ORDER WHICH ARE REPRODUCED VERBATIM AS UNDER:- 3.4. I HAVE CONSIDERED THE FINDINGS OF THE A.O. GIV EN IN THE ASSESSMENT ORDER UNDER APPEAL SUBMISSIONS OF THE APPELLANT ALO NGWITH THE REMAND REPORT OF THE A.O. AND THE SUBMISSIONS MADE ON THE REMAND REPORT. IT IS SEEN THAT THE ONLY DISPUTE REQUIRES TO BE DECIDED I S AS TO WHETHER CAPITAL GAIN ON SALE PROCEEDS ON SALE OF AGRICULTURAL LAND OF THE APPELLANT SITUATED AT BADI IS TAXABLE OR NOT. IN MY VIEW, THE A.O. HAS CONDUCTED NECESSARY ENQUIRIES DURING THE ASSESSMENT PROCEEDINGS AS WELL AS IN THE REMAND PROCEEDINGS FROM VARIOUS AUTHORITIES I.E. UIT AND M UNICIPALITY TO ASCERTAIN AS TO WHETHER THE LAND SOLD IN QUESTION IS WITHIN 8 KM FROM THE MUNICIPAL LIMIT. HE HAS ALSO CONDUCTED INDEPENDENT ENQUIRIES THROUGH HIS INSPECTOR ABOUT THE DISTANCE. THE UIT HAS CLEARLY STATED THAT THE BEDI IS UNDER THEIR JURISDICTION AND THEREFORE THE LAND IS URBAN LAND. SIMILARLY, THE MUNICIPAL COMMISSIONER HAS MENTIONED THAT THE MUNICIPAL LIMIT OF UDAIPUR IS UPTO DEWALI. THE BEDI IN WHICH THE LAND SOLD WAS SITUATE D IS HARDLY ABOUT AT 5 K.M. DISTANCE FROM DEWALI I.E. LIMIT OF MUNICIPALIT Y AND THEREFORE IT DEFINITELY FALLS WITHIN EIGHT KM FROM THE MUNICIPAL LIMIT. FURTHER, AS PER THE REPORT OF THE INSPECTOR, HE STARTED BY MOTOR CYCLE TO BEDI FROM THE COLLECTORATE, UDAIPUR IN ORDER TO VERIFY THE CORREC TNESS OF CONTENTION OF THE 6 APPELLANT THAT BEDI IS MORE THAN 8 KMS FROM THE MUN ICIPAL LIMIT OF UDAIPUR AND THEREFORE, NO CAPITAL GAIN IS TAXABLE ON SALE O F AGRICULTURAL LAND AND IT HAS BEEN REPORTED BY THE INSPECTOR THAT THE DISTANC E FROM UDAIPUR TO BEDI FROM SHORTEST ROUTE IS NEAR ABOUT 10.5 KMS THE AS T O DISTANCE THIS IS FURTHER SUPPORTED BY THE CERTIFICATE ISSUED BY THE EXECUTIV E ENGINEER, P.W.D. WHERE IT HAS BEEN CLEARLY MENTIONED THAT THE DISTANCE TO BEDI FROM UDAIPUR IS NEAR ABOUT 10 KMS. THIS IS FROM THE COLLECTORATE WHEREAS THE TAX ON CAPITAL GAIN IS PAYABLE IN RESPECT THE PROPERTY SOLD WITHIN 8 KM S. FROM THE LIMIT OF UDAIPUR MUNICIPAL AREA. THEREFORE, THE CLAIM OF THE APPELLANT THAT THE LAND SOLD WAS BEYOND 8 KMS FROM THE MUNICIPAL LIMIT IS N OT ACCEPTABLE. FURTHER, THE APPELLANT HAS HIMSELF TREATED THE LAND SOLD AS CAPITAL ASSETS AS HE HAS HIMSELF WORKED OUT NEGATIVE CAPITAL GAIN BY INCREASING THE COST OF ACQUISITION WHICH HAS ALSO BEEN PROVED TO BE WRONG. FROM THE ABOVE IT MAY BE SEEN THAT THE A.O. HAS BROUGHT SUFFICIENT MATERI ALS /EVIDENCES IN VIEW OF ABOVE DISCUSSION AND CONSIDERING THE FACTS THAT THE A.O. HAS BROUGHT SUFFICIENT MATERIALS/EVIDENCES ON RECORD BY WAY OF ENQUIRIES CONDUCTED AT HIS OWN LEVEL TO ESTABLISH THAT THE CAPITAL GAIN ON SALE OF LAND OF THE APPELLANT SITUATED AT BEDI IS LIABLE TO BE TAXED AS SHORT TERMS CAPITAL GAIN. THEREFORE, IN MY VIEW, THE A.O. IS JUSTIFIED IN TAX ING LONG TERM CAPITAL GAIN ON SALE OF THE LAND AND NO INTERFERENCE IS CALLED F OR. THE ADDITION MADE ON ACCOUNT OF CAPITAL GAIN IS CONFIRMED. THIS GROUND O F APPEAL IS DISMISSED. NOW THE ASSESSEE IS IN APPEAL. 6 . LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE AGRICULTURAL LAND OF THE ASSESSEE WAS SITUATED BEYOND 8 KM. FROM THE MUNICIPAL LIMIT, THEREFORE, IT WAS NOT AN ASSET AS PER THE DEFINITIO N OF THE CAPITAL ASSET GIVEN IN SECTION 2(14)(III) OF THE ACT AND NO CAPIT AL GAIN WAS CHARGEABLE ON THE SALE OF THE AGRICULTURAL LAND WHICH WAS NOT TO BE INCLUDED IN THE DEFINITION OF CAPITAL ASSET. 7 7 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. REITERATED THE OBSERVATIONS MADE BY THE ASSESSING OFFICER AND THE LD. CIT(A) AN D STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LD. CIT(A) HIMSELF ADM ITTED IN PARA 3.4 OF THE IMPUGNED ORDER THAT AN INSPECTOR WAS DEPUTED BY THE ASSESSING OFFICER, WHO REPORTED THAT THE DISTANCE FROM UDAIPUR TO BADI VILLAGE FROM SHORTEST ROUTE WAS NEAR ABOUT 10.5 KM AND IT WAS SUPPORTED B Y THE CERTIFICATE ISSUED BY THE EXECUTIVE ENGINEER, PWD WHERE IT HAD BEEN CLEARLY MENTIONED THAT THE DISTANCE TO BADI VILLAGE FROM UD AIPUR WAS NEAR ABOUT 10 KM. HOWEVER, HE HAD NOT ACCEPTED THE CLAIM OF T HE ASSESSEE BY STATING THAT THE DISTANCE WAS FROM COLLECTORATE WHE REAS THE LIMIT IS TO BE SEEN FROM MUNICIPAL AREA. ON THE CONTRARY, THE EXE CUTIVE ENGINEER, PWD HAS CLEARLY MENTIONED THAT THE DISTANCE TO BADI VIL LAGE FROM UDAIPUR WAS NEAR ABOUT 10 KM. IN THE PRESENT CASE, NOTHING IS BROUGHT ON RECORD TO SUBSTANTIATE THAT THE DISTANCE MENTIONED BY THE INS PECTOR IN HIS REPORT AND IN THE CERTIFICATE ISSUED BY THE EXECUTIVE ENGI NEER PWD WAS WRONG. THEREFORE, IT APPEARS THAT THE AGRICULTURAL LAND OF THE ASSESSEE FALLS 8 OUTSIDE 8KM. FROM THE MUNICIPALITY LIMIT AND IT WAS NOT AN ASSET IN VIEW OF THE DEFINITION GIVEN IN SECTION 2(14)(III) OF TH E ACT, SO, IT WAS NOT CHARGEABLE TO CAPITAL GAIN. IN THAT VIEW OF THE MA TTER, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRME D BY THE LD. CIT(A). 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 28 TH MARCH, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH MARCH, 2014. VR/- COPY TO: TIDILY 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.