Shri Dinesh Nigam, Indore V. Income Tax Officer 2 (3), Indore, Indore

ITA 457/Ind/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5678 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-04-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 19-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: R S TIWARI S; DILIP KSHIRSAGAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Cost of acquisition; Reasonable cause; Condonation of delay; Set aside
• Section: 143(3); 54B; 50C; 54F; 2(14); 54; 12

Judgement Text

[ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.457/IND/2017 ASSESSMENT YEAR: 2013-14 DINESH NIGAM 75, PANJON COLONY INDORE / VS. ITO WARD - 2(3) INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. ACUPN3855C APPELLANT BY SHRI DILIP KSHIRSAGAR & SHRI R.S. TIWARI, ADVOCATES RESPONDENT BY SHRI K.G. GOYAL, SR. D.R. DATE OF HEARING: 10.04.2019 DATE OF PRONOUNCEMENT: 13.05.2019 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE CIT(A)-1, INDORE DATED 18.11.2016 PERTAINING TO THE ASSESSMENT DATED 18.11.2016 PERTAINING TO THE [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 2 ASSESSMENT YEAR 2013-14. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. THAT IN THE LIGHT OF FACT THAT THE TERRITORIAL LIMI T OF INDORE MUNICIPAL CORPORATION, INDORE HAS BEEN EXPANDED BY VIRTUE NOT IFICATION NO.F 1- 3-2012-13-3 DATED 4.3.2014 ERRED IN TREATING THE SU BJECT LAND AS CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(I II) OF INCOME TAX ACT, 1961 AND FURTHER ERRED IN DETERMINING THE LTG C TO THE TUNE OF RS.41,13,018/- THEREFORE THE ORDER PASSED BY THE NO N APPLICANTS IS ILLEGAL, BAD-IN-LAW AND LEVY OF LTGC DESERVES TO BE DELETED. 2. THAT, THE LEARNED ITO AND FIRST APPELLATE AUTHORITY OUGHT NOT TO HAVE CONSIDERED THE REPORT OF PATWARI AS ONE AND ONLY EV IDENCE, WHICH IN ITSELF IS AN ARBITRARY AND A CASUAL REPORT AND IS T OTALLY BASED ON ERRONEOUS FACTS AND MIS CONCEPTION OF LAW. THE AUT HORITIES OUGHT TO HAVE INVITED OBJECTIONS FROM APPELLANT BEFORE USING THE SAME AGAINST HIM. 3. THAT, THE SUBJECT ORDER SUFFERS FROM THE PRINCIPLE OF NATURAL JUSTICE, THE CONTENTS OF REPORT WERE NEITHER SHOWN TO THE AP PELLANT NOR ANY REPLY WAS SOUGHT TO REBUT THE SAME, HENCE THE ORDER PASSED IS ILLEGAL, BAD-IN-LAW AND NON-EST. 4. THAT, THE ORDER IS FURTHER ILLEGAL ON THE GROUND TH AT IT HAS BEEN BASED ON THE MANDATE OF LAW WHICH HAVE BEEN DECLARED ULTR AVIRES TO THE CONSTITUTION. THUS, THE IMPUGNED ORDER HAS BECOME IPSOFACTO NULL AND VOID. 5. THAT, THE ABOVE AUTHORITIES FURTHER ERRED IN NOT GR ANTING THE DEDUCTION U/S 54 B OF THE ACT IN COMMENSURATE WITH THE SHARE OF INVESTMENT OF THE APPELLANT, IN PURCHASING THE AGRI CULTURAL LAND AT VILLAGE GHATIYA. 6. THAT, THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND OR PLEAD THE OTHER GROUNDS AT THE TIME OF HEARING. 7. THAT, THE APPELLANT HAS PAID THE REQUISITE AMOUNT O F FEE AS REQUIRED. 8. THAT, THIS APPEAL HAS BEEN FILED WITH THE APPLICATI ON FOR CONDONATION OF DELAY. 2. THE ASSESSEE HAS ALSO RAISED FOLLOWING ADDITIONAL GROUNDS: [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 3 THAT, THE LEARNED ITO ERRED IN LAW AND ON FACTS IN ADOPTING THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY A T RS.1,00,60,000/- FOR THE CALCULATION OF LTCG WHILE HE OUGHT TO HAVE ADOPTED THE AMOUNT ACTUALLY RECEIVED BY THE APPELLA NT TO THE TUNE OF RS.72,82,000/- TO COMPUTE THE AMOUNT OF LTCG. THE LEARNED AUTHORITY ERRED IN LAW IN APPLYING SECTION 50C WHIC H IS NOT APPLICABLE TO THE APPELLANTS CASE IN THE LIGHT OF ITAT DECISION ITO, AJMER V RAJ KUMAR PARASHAR ITA NO.11/JP/2016 DECIDE D ON 28.9.2017 BY ITAT JAIPUR. 3. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSME NT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS FRAMED VIDE ORDER DATED 9.3.2016. THE A.O. OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAD SOLD AN AGRICULTURAL LAND BEARING KHASRA NO.117/3, PATWARI HALKA NO.38, VILLAGE JAKHYA, TEHSIL SANWER, DIST. INDORE ADMEASURING 0.614 HECTARE ON 11.2.2013AT A SALE CONSIDERATION OF RS.72,82,000/-. THE STAMP VALUATION AUTHORITY HAD ADOPTED MARKET VALUE OF PROPERTY AT RS.1,00,60,000/-. THE A.O. OBSERVED THAT THE ASSESSEE HAS CLAIMED COST OF IMPROVEMENT AS WELL AS THE COST OF ACQUISITION FOR THE PURPOSE OF CAPITAL GAIN. FURTHER, CLAIM U/S 54B OF THE ACT [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 4 WAS MADE WHICH WAS RESTRICTED TO 1/3 RD OF THE CLAIM ON THE BASIS THAT THE NEW ASSET WAS PURCHASED IN JOINT OWNERSHI P WITH THE OTHER BROTHERS OF THE ASSESSEE. HENCE, THE A.O. COMPUTED TAXABLE CAPITAL GAIN AT RS.41,13,018/- AGAINST THE INCOME DISCLOSED BY THE ASSESSEE IN THE RETURN O F INCOME AT RS.1,97,440/-. AGGRIEVED BY THIS, THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING SUBMISSIONS PARTLY ALLOWED THE APPEAL, THER EBY THE CLAIM OF IMPROVEMENT OF ASSET WAS ALLOWED. HENCE, THE ADDITION OF RS.91,280/- WAS ALLOWED. THE OTHER CLAIM OF THE ASSESSEE RELATED TO THE LAND IN QUESTION BEING NOT CAPITAL ASSET AND THE CLAIM OF DEDUCTION U/S 54B OF TH E ACT ON THE ENTIRE SALE CONSIDERATION WAS REJECTED BY THE LD. CIT(A). NOW THE ASSESSEE IS IN THE PRESENT APPEAL. 4. IT WAS NOTICED DURING THE COURSE OF HEARING THAT TH E PRESENT APPEAL FILED WAS BARRED BY 115 DAYS. THE ASSESS EE HAD FILED AN APPLICATION SEEKING CONDONATION OF DELAY. THE [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 5 LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIO NS AS MADE IN THE APPLICATION. THE APPLICATION IS DULY SUPPOR TED BY THE AFFIDAVIT. HOWEVER, THE LD. D.R. OPPOSED THE CONDONATION OF DELAY AND SUBMITTED THAT THERE IS NO REASONABLE CAUSE WHICH PREVENTED THE ASSESSEE FOR FILIN G THE APPEAL IN TIME. LD. COUNSEL FOR THE ASSESSEE HAS T AKEN US THROUGH THE CONTENTS OF THE APPLICATION AND ALSO SUBMITTED THAT THE ASSESSEE SUFFERED FROM TYPHOID AND LIVER INFECTION. ASSESSEE WAS THUS PREVENTED TO FI LE THE PRESENT APPEAL IN TIME. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE CONTENTS OF T HE APPLICATION AS WELL AS THE AFFIDAVIT FILED IN SUPPORT THE REOF. THE ASSESSEE WAS SUFFERING FROM DISEASE AND WAS ADVISED FOR REST. KEEPING THE FACT IN VIEW COUPLED WITH THE FACT THAT REVENUE HAS NOT DEMONSTRATED THAT THIS WAS A TOOL TO EVAD E [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 6 TAX OR TAKE AN UNDUE ADVANTAGE. WE THEREFORE, CONDONE THE DELAY AND TAKE UP THE APPEAL FOR HEARING. 6. GROUND NOS.1 TO 4 ARE INTER-CONNECTED AND ARE AGAINST TREATING THE AGRICULTURAL LAND AS CAPITAL ASSET. LD. COUNSE L FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE I N THE STATEMENT OF FACTS. THE SUBMISSION OF LD. COUNSEL I N THE STATEMENT OF FACTS ARE AS UNDER: 1. THE APPELLANT IS BASICALLY A FARMER, IN ADDITION T O IT, HE UNDERTAKES THE JOB OF ELECTRICAL FITTINGS. THE APP ELLANT SOLD HIS ANCESTRAL AGRICULTURAL LAND ADMESURING 0.614 HECTAR E ON 11.2.2013 LOCATED AT VILLAGE JAKHYA, TEHSIL SANWER, DIST. INDORE FOR RS.72,82,000/- VALUED FOR LTCG PURPOSES AT RS.1 ,00,60,000/- U/S 50C OF THE INCOME TAX ACT, 1961. THE LEARNED I TO TREATING THE LAND AS CAPITAL ASSET DETERMINED NET LTCG TO THE TU NE OF RS.41,13,018/- AND OVER RULED THE CONTENTION OF APP ELLANT THAT THE SUBJECT LAND IS NOT A CAPITAL ASSET WITHIN THE MEAN ING OF SECTION 2(14)(III) OF THE INCOME TAX ACT. 2. THUS, THE WHOLE CONTROVERSY CENTERS ROUND THE QUEST ION, WHETHER IN THE LIGHT OF FACTS, CIRCUMSTANCES OF THE CASE AN D SECTION 405 OF MP MUNICIPAL CORPORATION ACT, 1956 SUMMARISED ABOVE AND BELOW, THE SUBJECT LAND IS CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III) OF INCOME TAX ACT? 3. NOW, IN ORDER TO SUBSTANTIATE THE ISSUE INVOLVED, T HE HUMBLE SUBMISSIONS OF THE APPELLANT ARE AS UNDER:- (A) THAT, THE MUNICIPAL CORPORATION, INDORE IN EXERCISE OF POWERS CONFERRED U/S 405 OF M.P. MUNICIPAL CORPORATION ACT , 1956 GOT ISSUED TWO NOTIFICATIONS U/S 405 DATED 5.2.2013 AND 4.3.2014 THROUGH STATE GOVERNMENT OF MADHYA PRADESH TO EXPAND THE TERRITORIAL LIMIT OF INDORE MUNICIPAL CO RPORATION, INDORE. THESE NOTIFICATIONS WERE QUASHED BY THE HO N'BLE [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 7 HIGH COURT OF M.P. ON 3.2.2014 AND 11.11.2014 RESPECTIVELY. THUS, THESE NOTIFICATIONS LOST ITS E FFICACY, COROLLARY, THEREFORE, FOLLOWS THAT THE DIRECTIVES O F THESE NOTIFICATIONS CANNOT BE USED TO MEASURE THE DISTANC E OF SUBJECT LAND, SINCE AT THE POINT OF TIME OF SALE OF LAND, THE TERRITORIAL LIMIT WAS NOT EXTENDED BY WAY OF EMERGI NG ADDITIONAL 29 VILLAGES AS INTENDED IN THE ABOVE NOT IFICATIONS. THUS, THE ONLY EXISTING NOTIFICATION WAS DATED 12.8 .1994 FOR MEASUREMENT OF TERRITORIAL LIMIT. IT IS, THEREFORE , SUBMITTED THAT THE DISTANCE OUGHT TO HAVE BEEN MEASURED FROM THE LIMIT OF INDORE MUNICIPAL, INDORE AS LAID DOWN IN T HE NOTIFICATION DATED 12.8.1994. THUS, THE CRUX OF SU BMISSION IS THAT THE DISTANCE OF SUBJECT LAND OUGHT TO HAVE BEEN CALCULATED FROM THE LIMITS PROVIDED IN NOTIFICATION ISSUED ON 12.8.1994. (B) THAT, HOWEVER, THE ITO GOT MEASURED THE DISTANCE OF SUBJECT LAND BY ISSUANCE OF A STATUTORY NOTICE TO TEHASILDA R, SANWER, DIST. INDORE WHOSE REPORT REVEAL, THAT THE DISTANCE OF SUBJECT LAND IS 4 KM. THIS REPORT, ON WHICH THE ENTIRE CONTROVERSY AROSE IS, PRIMA FACIE INCORRECT AND ILL EGAL. IT DOES NOT DISCLOSE THE STARTING AND ENDING POINT OF MEASUREMENT OF LAND AND ALSO DOES NOT DISCLOSE THE METHOD OF MEASUREMENT. ON THE CONTRARY, THE APPELLANT AT HIS OWN, MEASURED THE DISTANCE OF LAND IS ARRIVED MORE THAN 8 KMS FROM BANGANGA RAILWAY STATION, INDORE. THE APPELLA NT SOUGHT THE HELP OF GOODLE SEARCH ENGINE, WHICH TOO REPORTS THE DISTANCE OF LAND IS MORE THAN 8 KMS FROM THE PR ECINCTS GIVEN IN NOTIFICATION, 1994 THUS, IT IS CRYSTAL CLE AR THAT THE LAND OF APPELLANT IS NOT CAPITAL ASSET WITHIN THE M EANING OF SECTION 2(14)(III) OF THE ACT. 7. LD. COUNSEL FOR THE ASSESSEE HAS ALSO TAKEN US THROUGH THE M.P. MUNICIPAL CORPORATION ACT, 1956. TH E LD. COUNSEL HAS DREW OUR ATTENTION TO SECTION 405 OF THE M.P. MUNICIPAL CORPORATION ACT. IN THE LIGHT OF THE PROVISIONS OF SECTION 405 OF THE MUNICIPAL CORPORATIO N ACT, [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 8 LD. COUNSEL VEHEMENTLY ARGUED THAT THE NOTIFICATION WH ICH HAS BEEN RELIED BY THE LD. CIT(A) TAKING THE MUNICIPAL LIMIT OF THE INDORE MUNICIPALITY BEING EXTENDED IS FACTUALLY INCORRECT. LD. COUNSEL SUBMITTED THAT THE NOTIFICATI ON DATED 5.2.2013 AND 4.3.2014 TO EXTEND THE TERRITORIAL LIMIT OF INDORE MUNICIPAL CORPORATION WAS QUASHED BY THE HON'BLE HIGH COURT ON 3.2.2014 AND 11.11.2014. LD. COUNSEL HAS TAKEN US THROUGH THE JUDGEMENT OF THE HON'BLE M.P. HIGH COURT TO BUTTRESS HIS ARGUMENT. L D. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE L D. CIT(A) HAS RELIED UPON THE NOTIFICATION DATED 17.2.20 12. HE CONTENDED THAT LD. CIT(DR) GROSSLY ERRED IN CONSI DERING THE NOTIFICATION DATED 17.2.2012 AS IF THIS NOTIFICATIO N WAS ISSUED U/S 405 SUB SECTION (3). IN FACT THIS NOTIFI CATION ISSUED U/S SUB SECTION (1) OF THE SECTION 405. HE SUBMITTED THAT THIS NOTIFICATION WAS MADE TO CALL FOR OBJECTIONS FROM THE PUBLIC AT LARGE IN RESPECT OF EXT ENSION [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 9 OF TERRITORY OF MUNICIPAL CORPORATION OF INDORE. LD. COUNSEL SUBMITTED THAT THERE WAS NO NOTIFICATION U/S 405(3) CONFIRMING NOTIFICATION U/S 405(1) AT THE TIME OF SALE OF THE LAND IN QUESTION. THEREFORE, THE AUTHORITIES BELOW GR OSSLY MISDIRECTED THEMSELVES BY ADOPTING THE DISTANCE, WHIC H WAS PROPOSED IN THE NOTIFICATION ISSUED U/S 405(1) OF THE MUNICIPAL CORPORATION ACT, 1956. 8. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSIO NS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY RELIED UPON THE NOTIFICATION ISSUED IN THE YEAR 2012. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE, WHICH REQUIRES ADJUDICATION IS THAT WHETHER THERE WAS A VALID NOTIFICATIO N ISSUED FOR EXTENSION OF TERRITORY OF INDORE MUNICIP AL CORPORATION AT THE TIME OF TRANSFER OF LAND IN QUESTION? FOR [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 10 THE SAKE OF CLARITY, PROVISIONS OF SECTION 405 OF THE MUNICIPAL CORPORATION ACT WHICH IS REPRODUCED AS UNDER : [405. POWER OF GOVERNOR TO INCLUDE OR EXCLUDE CERTA IN AREA (1) THE GOVERNOR MAY BY NOTIFICATION IN THE GAZETTE DECLARE THE INTENTION TO INCLUDE WITHIN OR EXCLUDE FROM THE LIMITS OF THE CI TY ANY SPECIFIED AREA. (2) IF THE LOCAL AUTHORITY HAVING JURISDICTION IN THE SAID AREA OR ANY PERSON RESIDENT THEREIN, OBJECTS TO SUCH DEC LARATION SUCH AUTHORITY OR PERSON MAY SUBMIT AN OBJECTION IN WRIT ING TO THE COLLECTOR WITHIN A PRESCRIBED PERIOD AND THE GOVERN OR SHALL TAKE SUCH OBJECTION INTO CONSIDERATION. (3) WHEN THE SAID PERIOD HAS EXPIRED AND THE GOVE RNOR HAS CONSIDERED THE OBJECTION UNDER SUB-SECTION (2), THE GOVERNOR MAY BY NOTIFICATION, INCLUDE WITHIN OR EXCLUDE FROM THE LI MITS OF THE CITY ANY SPECIFIED AREA. PROVIDED THAT WHEN AN AREA IS EXCLUDED FROM THE LI MITS OF ANY MUNICIPAL AREA, SUCH AREA NOTWITHSTANDING SUCH EXCL USION SHALL CONTINUE TO BE WITHIN THE LIMITS OF THE MUNICIPAL A REA UNTIL THE AREA SO EXCLUDED IS INCLUDED IN A DULY CONSTITUTED PANCH AYAT AREA. 10. FROM THE AFORESAID PROVISION, IT IS CLEAR THAT GOVE RNOR IS EMPOWERED TO ISSUE NOTIFICATION TO INCLUDE OR EXC LUDE FROM THE LIMITS OF THE CITY ANY SPECIFIED AREA. FOR THIS PURPOSE, 1 ST NOTIFICATION U/S 405(1) OF THE MUNICIPAL CORPORATION ACT IS TO BE ISSUED NOTIFYING THE DECLARAT ION TO INCLUDE OR EXCLUDE FROM THE LIMITS OF CITY ANY SPECI FIED AREA ONCE IT IS NOTIFIED, SUB-SECTION (2) OF SECTION 405 ENTITLES [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 11 ANY PERSON RESIDING THEREIN FOR OBJECTING TO SUCH DECLARATION, SUCH OBJECTIONS ARE REQUIRED TO BE SUBMITT ED TO THE COLLECTOR WITHIN A PRESCRIBED PERIOD AND THEN THE GOVERNOR WOULD TAKE SUCH OBJECTION INTO CONSIDERATIO N AND AS PER SUB-SECTION (3) OF SECTION 405, WHEN THE PRES CRIBED PERIOD HAD EXPIRED AND THE GOVERNOR HAS CONSIDERED TH E OBJECTION UNDER SUB-SECTION (2), THE GOVERNOR MAY B Y NOTIFICATION INCLUDE WITHIN OR EXCLUDE FROM THE LIMI TS OF THE CITY ANY SPECIFIED AREA. NOW IT IS TO BE SEEN WHICH NOTIFICATION DULY NOTIFIED UNDER SECTION 405(3) OF T HE M.P. MUNICIPAL CORPORATION ACT WAS IN VOGUE AT THE TIME OF TRANSFER OF AGRICULTURAL LAND IN QUESTION. IT IS TO BE BORNE IN MIND THAT TRANSFER OF AGRICULTURAL LAND WOULD NOT IPS O FACTO BE TAXABLE UNLESS IT FALLS UNDER THE CATEGORY OF CAPITAL ASSET. FOR THE SAKE OF CLARITY, SECTION 2(14) OF THE ACT, WHICH DEFINES CAPITAL ASSET IS REPRODUCED AS UNDER: [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 12 SECTION 2(14) CAPITAL ASSET MEANS:- (A) PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETH ER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION; (B) ANY SECURITIES HELD BY A FOREIGN INSTITUTIONAL INVESTOR WHICH HAS INVESTED IN SUCH SECURITIES IN ACCORDANCE WITH THE REGULATIONS MADE UNDER THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 199 2; BUT DOES NOT INCLUDE: (I) ANY STOCK-IN-TRADE, OTHER THAN THE SECURITIES R EFERRED TO IN SUB-CLAUSE (B), CONSUMABLE STORES OR RAW MATERIALS HELD FOR TH E PURPOSES OF HIS BUSINESS OR PROFESSION; (II) PERSONAL EFFECTS, THAT IS TO SAY, MOVABLE PROP ERTY (INCLUDING WEARING APPAREL AND FURNITURE) HELD FOR PERSONAL USE BY THE ASSESSEE OR ANY MEMBER OF HIS FAMILY DEPENDENT ON HIM, BUT EXCLUDES : (A) JEWELLERY; (B) ARCHAEOLOGICAL COLLECTIONS; (C) DRAWINGS; (D) PAINTINGS; (E) SCULPTURES; OR (F) ANY WORK OF ART. EXPLANATIONS: 1. FOR THE PURPOSES OF THIS SUB-CLAUSE, JEWELLERY INCLUDES: (A) ORNAMENTS MADE OF GOLD, SILVER, PLATINUM OR ANY OTHER PRECIOUS METAL OR ANY ALLOY CONTAINING ONE OR MORE OF SUCH PRECIOU S METALS, WHETHER OR NOT CONTAINING ANY PRECIOUS OR SEMI-PRECIOUS STONE, AND WHETHER OR NOT WORKED OR SEWN INTO ANY WEARING APPAREL; (B) PRECIOUS OR SEMI-PRECIOUS STONES, WHETHER OR NO T SET IN ANY FURNITURE, UTENSIL OR OTHER ARTICLE OR WORKED OR SEWN INTO ANY WEARING APPAREL. 2. FOR THE PURPOSES OF THIS CLAUSE: [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 13 (A) THE EXPRESSION FOREIGN INSTITUTIONAL INVESTOR SHALL HAVE THE MEANING ASSIGNED TO IT IN CLAUSE (A) OF THE EXPLANATION TO SECTION 115AD; (B) THE EXPRESSION SECURITIES SHALL HAVE THE MEAN ING ASSIGNED TO IT IN CLAUSE (H) OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956; (III) AGRICULTURAL LAND IN INDIA, NOT BEING LAND SI TUATE: (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURIS DICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORA TION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND; OR (B) IN ANY AREA WITHIN THE DISTANCE, MEASURED AERIA LLY: (I) NOT BEING MORE THAN TWO KILOMETRES, FROM THE LO CAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITE M (A) AND WHICH HAS A POPULATION OF MORE THAN TEN THOUSAND BUT NOT EXCEED ING ONE LAKH; OR (II) NOT BEING MORE THAN SIX KILOMETRES, FROM THE L OCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITE M (A) AND WHICH HAS A POPULATION OF MORE THAN ONE LAKH BUT NOT EXCEEDING TEN LAKH; OR (III) NOT BEING MORE THAN EIGHT KILOMETRES, FROM TH E LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITE M (A) AND WHICH HAS A POPULATION OF MORE THAN TEN LAKH. EXPLANATION: FOR THE PURPOSES OF THIS SUB-CLAUSE, POPULATION MEANS THE POPULATION ACCORDING TO THE LAST PRECEDING CENSUS O F WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR. (IV) 6 PER CENT GOLD BONDS, 1977, OR 7 PER CENT GO LD BONDS, 1980, OR NATIONAL DEFENCE GOLD BONDS, 1980, ISSUED BY THE CE NTRAL GOVERNMENT; (V) SPECIAL BEARER BONDS, 1991, ISSUED BY THE CENTR AL GOVERNMENT; (VI) GOLD DEPOSIT BONDS ISSUED UNDER THE GOLD DEPOS IT SCHEME, 1999 OR DEPOSIT CERTIFICATES ISSUED UNDER THE GOLD MONETISA TION SCHEME, 2015 NOTIFIED BY THE CENTRAL GOVERNMENT. 11. HENCE, AGRICULTURAL LAND IS EXCLUDED FROM THE CATE GORY OF CAPITAL ASSET SUBJECT TO ITS LOCATION BEING BEYOND THE [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 14 DISTANCE AS PRESCRIBED BY LAW. IN THE GIVEN CASE THE AGRICULTURAL LAND SHOULD BE BEYOND 8 KM. FROM THE IND ORE MUNICIPAL CORPORATION FOR ALLOWING THE CLAIMED DEDUCTIO N. 12. THE LD. CIT(A) REJECTED THE PLEA OF THE ASSESSEE BY OBSERVING AS UNDER: [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 15 13. FROM THE ABOVE ORDER, IT IS CLEAR THAT LD. CIT(A) HAS RELIED UPON NOTIFICATION DATED 17.2.2012. AS PER LD. CIT(A), THIS NOTIFICATION HAD EXTENDED THE BOUNDARY O F INDORE MUNICIPAL CORPORATION. HOWEVER, THE A.O. IN P ARA- 3.1 OF THE ASSESSMENT ORDER HAS OBSERVED AS UNDER: [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 16 14. WE FIND THAT REPORT OF THE TAHSILDAR IS NOT ENCLOS ED IN THE PAPER BOOK. THE ASSESSEE HAS PLACED ON RECORD ORDER OF THE HON'BLE HIGH COURT OF MADHYA PRADESH, INDORE BEN CH DATED 11.11.2014 PASSED IN WRIT PETITION NO.3538 OF 2 014 IN THE CASE OF ANIL TRIVEDI AND ANOTHER VS. STATE OF M. P. AND OTHERS. THE HON'BLE HIGH COURT HAS OBSERVED THAT THE PETITION WAS DIRECTED AGAINST THE NOTIFICATION DATED 17.2.2012 ISSUED U/S 405(1) OF THE M.P. MUNICIPAL CORPORATION ACT, 1956 AS ALSO THE NOTIFICATION DATED 4.3.2014 ISSUED U/S 405(3) OF THE ACT. HENCE, IT I S CLEAR THAT LD. CIT(A) UNDISPUTEDLY RELIED UPON NOTIFICATION DATED 17.2.2012 WHICH WAS ISSUED U/S 405(1) OF THE M.P. MUNICIPAL CORPORATION ACT, THEREFORE, IN OUR CONSIDER ED VIEW, THE LD. CIT(A) ERRED IN FOLLOWING THE NOTIFIC ATION ISSUED U/S 405(1) OF THE M.P. MUNICIPAL CORPORATION A CT. [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 17 15. AS DISCUSSED HEREINABOVE, THE NOTIFICATION U/S 40 5(1) OF THE ACT IN ITSELF WOULD NOT EXTEND THE BOUNDARY O F ANY MUNICIPALITY UNLESS IT IS CONFIRMED BY THE ANOTHER NOTIFICATION U/S 405(3) OF THE M.P. MUNICIPAL CORPORAT ION ACT. FROM THE RECORDS, IT IS TRANSPIRED THAT THE A.O . HAS REPORTED THAT AS PER TAHSILDAR REPORT THE LAND IN QUEST ION WAS WITHIN 8 KMS. OF THE LIMIT OF INDORE MUNICIPAL CORPORATION. IT IS NOT CLEAR AS TO WHAT WAS THE BASIS O F REPORTING THE DISTANCE BEING WITHIN 8 KMS. OF THE IN DORE MUNICIPAL CORPORATION. WE THEREFORE, SET ASIDE THE OR DER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT HIM TO DECID E IT AFRESH. THE LD. CIT(A) WOULD VERIFY THE STATUS OF LAN D IN QUESTION AS ON THE DATE WHEN SALE DEED WAS EXECUTED BY THE ASSESSEE AND WOULD ALSO VERIFY THE NOTIFICATION WHI CH WAS IN FORCE AS ISSUED U/S 405(3) OF THE M.P. MUNICIP AL CORPORATION ACT. NEEDLESS TO SAY, LD. CIT(A) WOULD AFFORD [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 18 THE REASONABLE OPPORTUNITY TO THE ASSESSEE. HENCE, GR OUND NOS.1 TO 4 ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. 16. COMING TO GROUND NO.5, WHICH IS AGAINST NOT ALLOWI NG THE DEDUCTION U/S 54B OF THE ACT AS CLAIMED BY THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD. CIT(A). IT IS CON TENDED THAT THE NEW ASSET WAS PURCHASED BY THE SALE CONSIDERATI ON OF THE CAPITAL ASSET IN QUESTION. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE FACTS IN RIGHT PERSPECTIVE. IT IS CONTENDED THAT WHERE IMMOVABLE PROPERTY TRANSFERRED FO R CONSIDERATION, TWO OR MORE PERSONS AND SUCH CONSIDERAT ION IS PAID OUT OF FUND BELONGING TO THEM IN COMMON THEY ARE IN ABSENCE OF A CONTRACT TO THE CONTRARY RESPECTIVELY ENTITLED TO INTEREST IN SUCH PROPERTY IDENTICAL AS NE ARLY AS MAY BE WITH THE INTEREST TO WHICH THEY WERE RESPECT IVELY ENTITLED IN THE FUND. THE RELIANCE IS PLACED UPON TH E [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 19 SECTION 45 OF THE TRANSFER OF PROPERTY ACT IN SUPPO RT OF THIS CONTENTION. IT IS STATED THAT THE ASSESSEE HAD INVESTE D ENTIRE SALE PROCEEDS AND PURCHASED ANOTHER AGRICULTURAL LAND ALONG WITH HIS TWO BROTHERS AT RS.1,72,01,945/0 INCLUDING COST OF STAMPS AND REGISTRATION FEES. HE SUBMITTED THAT SINCE THE ASSESSEE HAD INVESTED THE ENT IRE SALE PROCEEDS AGAINST THE ACQUISITION OF NEW AGRICULTURAL LAND, THEREFORE, HE IS ENTITLED TO GET BENEFIT OF DE DUCTION ON ENTIRE SALE PROCEEDS U/S 54B OF THE ACT. AS HIS RIG HT UNTO THE PROPERTY WOULD BE NEARLY THE SAME RATIO IN WHICH F UND WAS CONTRIBUTED BY THE JOINT OWNERS. 17. PER CONTRA, LD. CIT(DR) OPPOSED THESE SUBMISSION S AND SUBMITTED THAT THE LAW IS VERY CLEAR ON THIS ISSU E. THERE IS NO AMBIGUITY UNDER THE LAW. THE ASSESSEE I S REQUIRED TO INVEST THE SALE PROCEEDS OF CAPITAL ASSET I N NEW ASSET IN ACCORDANCE WITH THE PROVISIONS OF SECTION 54B OF THE ACT FOR BECOMING ENTITLED FOR THE BENEFIT U/S 5 4B OF THE [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 20 ACT. HE DREW OUR ATTENTION TO THE PROVISIONS OF SEC TION 54B OF THE ACT. HE CONTENDED THAT NOWHERE LAW PERMITS T HAT THE INVESTMENT CAN ALSO BE MADE IN THE NAME OF BROTHER S OF THE ASSESSEE FOR CLAIMING THE DEDUCTION. HE SUBMITTE D THAT THE ASSESSEE FAILED TO PRODUCE ANY MATERIAL RELATED TO TH E INVESTMENT MADE BY OTHER BROTHERS OUT OF THEIR OWN SOURCES. HE SUBMITTED THAT THEREFORE, UNDER THESE F ACTS, LD. AUTHORITIES BELOW WERE JUSTIFIED IN DECLINING C LAIM OF DEDUCTION U/S 54B OF THE ACT. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE TO BE DECIDED I S WHETHER THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION U/S 54F OF THE ACT, EVEN IF THE INVESTMENTS HAVE BEEN M ADE JOINTLY WITH OTHER BROTHERS? ALTERNATIVELY, WHETHER THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION U/S 54B OF THE ACT IN RESPECT OF THE ENTIRE SALE PROCEEDS INVESTED JOIN TLY WITH [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 21 OTHER BROTHERS? FOR THE SAKE OF CLARITY, SECTION 54B OF THE ACT IS REPRODUCED AS UNDER: 54B [(1)] [SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHERE THE CAPITAL GAIN ARISES] FROM THE TRANSFER OF A CAPITAL ASSET BEING LAND WHICH, IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFE R TOOK PLACE, WAS BEING USED BY [THE ASSESSEE BEING AN INDIVIDUAL OR HIS PARENT, OR A HINDU UNDIVIDED FAMILY] FOR AGRICULTURAL PURPOSES [(HEREINAFTER REFERRED TO AS THE ORIGINAL ASSET)], AND THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER TH AT DATE, PURCHASED ANY OTHER LAND FOR BEING USED FOR AGRICULTURAL PURPOSES, THEN , INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME TAX AS INCOME OF THE PREVIO US YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WI TH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY (I) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER THAN T HE COST OF THE LAND SO PURCHASED (HEREINAFTER REFERRED TO AS THE NEW AS SET), THE DIFFERENCE BETWEEN THE AMOUNT OF THE CAPITAL GAIN A ND 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 TRANSFE R WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHALL BE N IL; OR (II) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LE SS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT BE CHARGE D UNDER SECTION 45; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PER IOD OF THREE YEARS OF ITS PURCHASE, THE COST SHALL BE REDUCED, BY THE AMO UNT OF THE CAPITAL GAIN.] [(2) THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT UT ILISED BY THE ASSESSEE FOR THE PURCHASE OF THE NEW ASSET BEFORE THE DATE OF FURNIS HING THE RETURN OF INCOME UNDER SECTION 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 FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139] IN AN ACCOUNT IN ANY SUCH BANK OR INST ITUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH T HE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, FRAME IN T HIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT; AND, FOR T HE PURPOSES OF SUB-SECTION (1), THE AMOUNT, IF ANY, ALREADY UTILISED BY THE ASSESSE E FOR THE PURCHASE OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL B E DEEMED TO BE THE COST OF THE NEW ASSET; PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTION IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1), THEN [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 22 (I) THE AMOUNT NOT SO UTILISED SHALL BE CHARGED UNDER S ECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF TWO YEARS FROM TH DATE OF TRANSFER OF THE ORIGINAL ASSET EXPIRES, AND (II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW SUCH AMO UNT IN ACCORDANCE WITH THE SHEME AFORESAID. 19. LD. CIT(A) DECLINED TO ALLOW DEDUCTION U/S 54B O F THE ACT BY OBSERVING AS UNDER: [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 23 20. LD. CIT(A) DENIED DEDUCTION ON THE GROUND THAT REQUISITE DETAILS RELATED TO INVESTMENT OF SALE PROCEED S WERE NOT FILED. HOWEVER, THE ISSUE WHETHER ASSESSEE WOUL D BE ENTITLED TO CLAIM DEDUCTION OF THE ENTIRE FUND INVES TED JOINTLY ALONG WITH OTHER BROTHERS IS NOT ADJUDICATED. WE THEREFORE SET ASIDE THE ORDER OF LD. CIT(A) TO DECID E IT AFRESH AFTER CONSIDERING THE SUBMISSIONS THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 54B OF THE ACT IN RESPEC T OF ENTIRE SALE PROCEEDS INVESTED BY HIM ALONG WITH HIS O THER BROTHERS IN NEW ASSET. THE LD. CIT(A) WOULD VERIFY THE DETAILS, IF ANY SUPPORTING THE INVESTMENT OF FUND IN NEW [ITA NO.457/IND/2017] [MR. DINESH NIGAM, INDORE] 24 ASSET. THIS GROUND OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 21. GROUND NOS.5 & 6 ARE GENERAL IN NATURE AND NEEDS NO SEPARATE ADJUDICATION. 22. GROUND NO.7 IS A PRAYER FOR CONDONATION OF DELAY . THE DELAY HAS ALREADY BEEN ALLOWED, THEREFORE, THIS GRO UND OF THE ASSESSEES APPEAL IS ALLOWED. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOV E. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 . 05.2019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMB ER JUDICIALMEMBER INDORE; DATED : 13/05/2019 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE