Sridhar Varma Rudraraju, Hyd, Hyderabad V. ACIT, Circle-8(1), Hyd, Hyderabad

ITA 491/HYD/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3193 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 29-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Capital asset; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL ME MBER AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.491/HYD/2015 : ASSESSMENT YEARS 2020-1 1 SHRI SRIDHAR VARMA RUD RARAJU, HYDERABAD (PAN ACBPR 3878 A) V/S ASST. COMMISSIONER OF INCOME -TAX CIRCLE 8(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.A.SAIPRASAD RESPONDENT BY : SHRI B.KURMI NAIDU DATE OF HEARING 09.02.2016 DATE OF PRONOUNCEMENT 17.02.2016 O R D E R PER B.RAMAKOTAIAH, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) II , HYDERABAD, DATED 11.2.2015 FOR ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE INVOLVED IN THE PRESENT APPEAL RELATES TO AN ADDITION OF RS.1,70,25,000 MADE BY THE ASSESSING OF FICER, BY REJECTING THE CLAIM OF THE ASSESSEE WITH REGARD TO THE CAPITA L GAINS ARISING OUT OF THE SALE OF AGRICULTURAL LAND. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF CIVIL CONTRA CTS. FOR THE ASSESSMENT YEAR 2010-11, THE ASSESSEE FILED RETURN OF INCOME DECLARING ITA NO.491/HYD/2015 SHRI SRIDHAR VARMA RUDRARAJU, HYDERABAD 2 TOTAL INCOME OF RS.42,84,777. DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS, ASSESSEE PRODUCED COPY OF SALE DEED EX ECUTED ON 17.9.2009, ACCORDING TO WHICH THE ASSESSEE HAS SO LD LAND IN SURVEY NOS. 112/5, 80/3 AND 81/15, SITUATED IN PUDUPAKKAM VILLAGE, CHENGALPATTU TALUKA, KANCHEEPURAM DISTRICT TO M/S. SNIGDA BUILDERS AND CONSTRUCTIONS PVT. LTD. FOR A TOTAL CONSIDERATI ON OF RS.2,20,50,000. IT WAS CLAIMED THAT THE SAID LAND WAS AGRICULTURAL LAND AND WAS PURCHASED IN NOVEMBER, 2006 FOR A TOTAL CONSIDERATI ON OF RS.50,25,000. ASSESSEE CLAIMED EXEMPTION FROM CAPITAL GAINS ON TH E REASON THAT THE LAND IS AGRICULTURAL LAND. FIELD ENQUIRIES WERE GOT CONDUCTED THROUGH THE INCOME-TAX INSPECTOR, WHO REPORTED, AS TAKEN FROM T HE IMPUGNED ASSESSMENT ORDER, AS FOLLOWS- BASED ON THE DIRECTION OF THE DEPUTY DIRECTOR OF I NCOME TAX(INV), UNIT-I(1), CHENNAI FIELD ENQUIRIES WERE CONDUCTED REGARDING THE LOCATION OF PROPERTIES. SUR VEY NUMBER 112/5, 80/3, 81/15 SITUATED IN PUTHUPAKKAM VILLAGE, CHENGALPATTU TALUK, KANCHEEPURAM & THEIR RESPECTIVE AGRICULTURAL LAND USE AND FINDINGS ARE G IVEN BELOW. 1) THE LAND VIDE SURVEY NUMBER-112 IN PUTHUPAKKAM VILLAGE IS SITUATED AT A DISTANCE OF APPROXIMATELY 11 KMS FROM THE MUNICIPAL LIMIT OF KANCHEEPRUAM. THE LANDS VIDE SURVEY NUMBER 80, 81 IN PUTHUPAKKAM VILLAGE IS SITU ATED AT A DISTANCE OF APPROXIMATELY 13 KMS FROM THE MUNI CIPAL LIMIT OF KANCHEEPURAM. THE DISTANCE FROM THE MUNICI PAL LIMITS OF KANCHEEPURAM TO THE RESPECTIVE LANDS OF T HE ABOVE MENTIONED SURVEY NUMBER REFERS TO THE SHORTES T ROAD ROUTE DISTANCE. A MAP IS ALSO ENCLOSED ALONGWI TH THIS REPORT FOR REFERENCE. 2) FILED ENQUIRES WERE ALSO CONDUCTED REGARDING THE AGRICULTURAL LAND USE. (I) ENQUIRIES REVEALED THAT THE LANDS VIDE SURVEY N UMBER 80 AND 81 IN PUTHUPAKKAM VILLAGE WERE NOT USED FOR ANY AGRICULTURAL ACTIVITIES FOR THE PAST 7 TO 8 YEARS ( FROM 2006). ON THE DAY OF FIELD ENQUIRY, ONLY GRASS WE ED (LOCALLY CALLED AS KARAMBU USED AS A CATTLE FEE D) WERE FOUND IN THESE LANDS, ALTHOUGH THE ADJACENT LANDS W ERE CULTIVATED WITH PADDY AND SUGARCANE. ENQUIRIES ALSO REVEALED THAT A LOCAL PERSON NAMED MR.ELUMALAI IS S AID TO ITA NO.491/HYD/2015 SHRI SRIDHAR VARMA RUDRARAJU, HYDERABAD 3 TAKE CARE OF THE ABOVE MENTIONED LANDS. BUT, HE HAS NOT REVEALED THE NAME OF THE OWNER OF THE LAND. THE LAN DS MENTIONED IN THE ABOVE SURVEY NUMBERS 80 TO 81 ARE SITUATED ADJACENT TO A SMALL SHED NAMED AS ARJUN N AICKER SHED. (II) ON ENQUIRY IT REVEALED THAT THE LAND VIDE SURV EY NUMBER 112 IN PUTHUPAKKAM VILLAGE IS USED FOR AGRICULTURAL ACTIVITIES AND ON THE DAY OF FIELD EN QUIRY, PADDY WAS FOUND TO BE GROWN. ENQUIRIES ALSO REVEALE D THAT PADDY, SUGAR CANE AND GROUND NUT ARE ALSO BEING CULTIVATED IN THIS LAND ACCORDING TO THE RESPECTIVE SEASONS. THE LAND MENTIONED IN THE ABOVE SURVEY NUMBER 112 I S SITUATED ADJACENT TO BANK OF A LAKE CALLED PERIAYER I. THE LOCAL PEOPLE CALL THE SAME AS ERIKKARAI. WHEN ASSESSEE WAS CONFRONTED WITH THE SAID REPORT O F THE INCOME-TAX INSPECTOR, ASSESSEE VIDE LETTER DATED 22.2.2013 FUR NISHED A CERTIFICATE IN TAMIL(WITH FREE ENGLISH TRANSLATION) FROM THE VI LLAGE ADMINISTRATIVE OFFICER, PUDUPAKKAM VILLAGE, SATHANKUPPAM VILLAGE, TIRUPORRUR TALUK, TAMIL NADU AND SUBMITTED THAT THE LANDS SOLD WERE A GRICULTURAL LANDS SITUATED BEYOND THE STATUTORY LIMIT OF THE MUNICIPA LITY, AND THEREFORE, THE SAME DO NOT CONSTITUTE A CAPITAL ASSET UNDER T HE PROVISIONS OF THE INCOME TAX ACT,1961. IT WAS, THEREFORE, PLEADED TH AT THE STATUTORY PROVISIONS RELATING TO ASSESSMENT OF CAPITAL GAINS ARE NOT ATTRACTED. 4. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTEN TIONS OF THE ASSESSEE, AND OBSERVING THAT THE REPORT OF THE INCO ME-TAX INSPECTOR REVEALS THAT AGRICULTURAL ACTIVITIES ARE NOT CARRIE D OUT ON THE LANDS SOLD, COMPUTED THE CAPITAL GAINS AT RS.1,70,25,000 BY RED UCING THE COST OF ACQUISITION OF RS.50,25,000 FROM THE SALE PRICE OF RS.2,20,50,000, AND ADDED THE SAME TO THE INCOME RETURNED BY THE ASSESS EE. ON APPEAL, THE CIT(A) CONFIRMED THE SAID ADDITION MADE BY THE ASSE SSING OFFICER. HENCE, ASSESSEE IS IN SECOND APPEAL BEFORE US. ITA NO.491/HYD/2015 SHRI SRIDHAR VARMA RUDRARAJU, HYDERABAD 4 5. WE HEARD BOTH SIDES AND PERUSED THE MATERIAL ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E LANDS SOLD, AS STATED EVEN IN THE REPORT OF THE INSPECTOR, EXTRACTED ABOV E, ARE BEYOND EIGHT KILOMETERS FROM THE NEAREST MUNICIPALITY, AND THE O NLY ISSUE IN DISPUTE IS WITH REGARD TO THE NATURE OF THE LANDS SOLD. T HE BASIS FOR THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS THE R EPORT OF THE INSPECTOR WHO MADE THE FIELD INSPECTION. THE IMPUGN ED ORDER OF THE CIT(A) MERELY ENDORSES THE VIEW TAKEN BY THE ASSESS ING OFFICER, WITH NO DISCUSSION WHATSOEVER. WE FIND THAT OUT OF THE LAN DS IN SURVEY NOS.112/5, 80/3 AN 81/15, EVEN THOUGH THE INSPECTOR REPORTED THAT THE LANDS IN SURVEY NOS.80/3 AND 81/15 ARE NOT USED FOR AGRICULTURAL PURPOSES, HE CLEARLY MENTIONED IN PARA 2(II) THAT T HE LAND IN SURVEY NO.112 IS USED FOR AGRICULTURAL ACTIVITIES AND ON T HE DAY OF FIELD ENQUIRY, PADDY WAS FOUND TO BE GROWN. IN THAT VIEW OF THE M ATTER, BASED ON THE REPORT OF THE INSPECTOR ITSELF, IT CANNOT BE SAID T HAT THE LAND IN SURVEY NO.112 IS NOT AN AGRICULTURAL LAND. EVEN THOUGH THE LANDS IN THE OTHER SURVEY NOS. WERE STATED TO BE WITH NO AGRICULTURAL ACTIVITY, IT WAS GRASS, LOCALLY KNOWN AS KARAMBU WAS REPORTEDLY GROWN. EV EN GROWING OF GRASS AMOUNTS TO CULTIVATION, AND THE LANDS CONTINU E TO BE AGRICULTURAL LANDS. MOREOVER AS STATED BY THE LD. COUNSEL THE E NQUIRY WAS DONE AFTER THREE YEARS FROM THE DATE OF SALE AND THE BUY ER MAY NOT HAVE UNDERTAKEN ANY AGRICULTURAL OPERATIONS ON THE SAID LAND AT THE RELEVANT TIME. THE SALE DEED ASWELL AS THE CERTIFICATE FROM THE VAO ALSO STATES THAT THE LANDS IN QUESTION WERE AGRICULTURAL LANDS. IN THIS VIEW OF THE MATTER, IN THE ABSENCE OF ANY EVIDENCE TO THE CONTR ARY BROUGHT ON RECORD BY THE REVENUE, WE FIND NO JUSTIFICATION FOR THE VIEW TAKEN BY THE REVENUE AUTHORITIES THAT THE LANDS SOLD ARE NOT OF AGRICULTURAL NATURE, SINCE BASED ON THE REPORT OF THE INSPECTOR ITSELF, THE LANDS SOLD ARE OF ITA NO.491/HYD/2015 SHRI SRIDHAR VARMA RUDRARAJU, HYDERABAD 5 AGRICULTURAL NATURE. WE ACCORDINGLY, ALLOWING THE G ROUNDS OF THE ASSESSEE, DELETE THE ADDITION MADE BY THE ASSESSING OFFICER. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 17.02. 2016. SD/- SD/- (P.MADHAVI DEVI) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER. DT/- 17 TH FEBRUARY, 2016 COPY FORWARDED TO: 1. SHRI SRIDHAR VARMA RUDRARAJU, M/S CH. PARTHASARA THY & CO., 1-1- 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOK NAGAR, HYDERABAD. 2. ASST. COMMISSIONER OF INCOME - TAX CIRCLE 8(1), HYDERABAD 3. 4. COMMISSIONER OF INCOME-TAX(APPEALS) II, HYDERABAD PR. COMMISSIONER OF INCOME-TAX-2, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.