Goverdhanlal Sivri, Ujjain V. Income Tax officer ward-2(2) , Ujjain

ITA 502/Ind/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 5402 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 11-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Capital asset; Benefit of exemption
• Section: 54B; 2(14); 54

Judgement Text

GOVERDHAN LAL SIRVI ITA NO. 502/IND/2017 , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.502/IND/2017 ASSESSMENT YEAR: 2008-09 SHRI GOVERDHAN L AL SIRVI NAYAPURABARNAGAR UJJAIN / VS. ITO 2(2), UJJAIN ( APPELLANT ) ( RE VENUE) P.A. CXZPS8072A APPELLANT BY SHRI S.S. DESHPANDE , CA RESPONDENT BY SHRI P.K. MITRA SR. DR DATE OF HEARING: 03.10.2018 DATE OF PRONOUNCEMENT: 09.10.2018 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL OF ASSESSEE PERTAINING TO A.Y. 2008-09 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- UJJAIN, (IN SHORT CIT(A)), DATED 21.04.2017 WHICH IS ARISING OUT OF THE ORDER U/S 264/143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER CALLED AS THE ACT) FRAMED ON 26.02.2014 BY ITO 2( 2), UJJAIN. 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS; 1. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE IMPUGNE D ADDITION OF RS. 8,90,000/- BEING THE CAPITAL GAINS ON THE SALE OF ANCESTRAL AG RICULTURAL LAND. 2. THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE DED UCTION U/S 54B FOR THE PURCHASE OF THE LAND WHEN FULL PAYMENT WAS MADE AND THE POSSESSION WAS TAKEN. THE DEDUCTION MAY PLEASE BE A LLOWED. 3. THE LD. CIT(A) AND THE LD. AO ERRED IN TAXING THE C APITAL GAIN ON THE SALE OF AGRICULTURE LAND WHICH IS SITUATED BEYOND T HE MUNICIPAL AREA OF BUDNAGAR. SINCE BUDNAGAR IS NOT A SPECIFIED CITY TH E AGRICULTURE LAND DOES NOT CONSTITUTE THE CAPITAL ASSET AND AS SUCH T AXING THE CAPITAL GAINS IS BAD IN LAW AND THE ADDITION MADE ON THIS A CCOUNT MAY PLEASE BE DELETED. 4. THE LD. CIT(A) AND THE LD. AO ERRED IN TAXING THE C APITAL GAIN ON THE SALE OF AGRICULTURE LAND WHICH WAS ANCESTRAL AND CA N NOT BE TAXED IN THE INDIVIDUAL CAPACITY. WITHOUT PREJUDICE TO THIS THE SHARE OF THE MOTHER CAN NOT BE INCLUDED IN THE HANDS OF THE ASSE SSEE. 5. ADDITION OF RS. 8,90,000/-- MAY PLEASE BE DELETED. 6. THE ASSESSEE PRAYS TO ALTER, AMEND, ADD OR DELETE A NY OF THE GROUNDS OF APPEAL. 3. FROM THE PERUSAL OF ABOVE GROUNDS WE INFER TH AT FOLLOWING TWO GROUNDS WHICH NEEDS TO BE ADJUDICATED. (I) WHETHER THE IMPUGNED ANCESTRAL AGRICULTURAL LAN D SOLD BY THE ASSESSEE IS A CAPITAL ASSET? (II) WHETHER THE LEARNED ASSESSING OFFICER (IN SHOR T LD.A.O) WAS JUSTIFIED IN DENYING THE DEDUCTION/EXEMPTION U/ S 54B OF THE ACT FOR PURCHASE OF NEW AGRICULTURAL LAND OUT F ROM THE SALE CONSIDERATION OF SALE OF AGRICULTURE LAND? 3 4. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE W ITH REGARD TO THE FIRST ISSUE, REFERRING TO THE COPY OF NOTIFICAT ION PLACED AT PAGE 23 TO 27 ISSUED BY THE INCOME TAX DEPARTMENT AND ALSO REFERRING TO PAPER BOOK PAGE NO.8 MENTIONING THE DETAIL OF LOCAT ION OF THE IMPUGNED AGRICULTURE LAND SUBMITTED THAT THE ALLEGE D LAND IS NOT A CAPITAL ASSET AS PROVIDED IN SECTION 2(14) OF THE A CT IN VIEW OF ABOVE REFERRED NOTIFICATION AND IT FALLS OUTSIDE THE MUNI CIPAL LIMIT AS PROVIDED IN THIS NOTIFICATION. 5. FURTHER BOTH THE PARTIES HAVE NO OBJECTION IF TH E ISSUE IS SET ASIDE TO THE FILE OF LD.A.O FOR MAKING NECESSARY VE RIFICATION. 6. WE ACCORDINGLY SET ASIDE THE ISSUE TO THE FILE O F LD.A.O AND ALSO DIRECT THE ASSESSEE TO OBTAIN A CERTIFICATE FR OM LOCAL REVENUE OFFICE/PATWARI ABOUT THE LOCATION OF ALLEGED LAND A ND FURTHER TO PROVE THAT THE SAME IS COVERED BY THE NOTIFICATION REFERRED HEREIN ABOVE. IN CASE THE LD.A.O IS SATISFIED WITH THE NE CESSARY DOCUMENTS FURNISHED BY THE ASSESSEE THEN IT CAN BE INFERRED THAT THE ALLEGED LAND BEING NOT A CAPITAL ASSET THEREFOR E NO CAPITAL GAIN IS CHARGEABLE TO TAX. WE ACCORDINGLY ALLOW THE FIRST ISSUE FOR STATISTICAL PURPOSE. 4 7. AS REGARDS THE SECOND ISSUE ABOUT THE QUANTUM OF DEDUCTION U/S 54B OF THE ACT CLAIMED BY THE ASSESSEE, WE ARE OF THE VIEW THAT THIS GROUND WILL BECOME INFRUCTUOUS IF THE ASSESSEE SUCCEEDS IN THE FIRST ISSUE BEFORE THE ASSESSING AUTHORITY. FOR SAK E OF ADJUDICATION, EVEN THOUGH IT IS ACADEMIC IN NATURE, WE OBSERVE TH AT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS CONTENDED T HAT FOR CLAIMING THE BENEFIT U/S 54B OF THE ACT, THE AGRICU LTURE LANDS WERE PURCHASED IN TWO PARTS, FIRSTLY ON 2.6.2008 FOR RS. 5,80,000/- AND SECOND CHUNK OF LAND WAS PURCHASED ON 18.4.2011 FOR RS.8,15,000/-. THE TRANSFER OF LAND SOLD DURING TH E YEAR TOOK PLACE ON 2.6.2008 AND AS PER THE PROVISIONS OF SECTION 54 B(I) OF THE ACT, THE ASSESSEE SHOULD HAVE APPLIED THE NET CAPITAL GA IN FOR PURCHASE OF AGRICULTURE LAND WITHIN TWO YEARS FROM THE DATE OF TRANSFER. 8. THE LD.A.O ALLOWED THE BENEFIT OF EXEMPTION U/S 54B OF THE ACT FOR THE AGRICULTURE LAND PURCHASED ON 2.6.2008 BUT DENIED THE BENEFIT FOR THE SECOND PLOT OF AGRICULTURE LAND PUR CHASED ON 18.4.2011WHICH WAS BEYOND THE PERIOD OF TWO YEARS F ROM THE DATE OF TRANSFER OF ORIGINAL ASSET. THE VIEW OF THE LD. A.O WAS CONFIRMED BY THE LD.CIT(A). IT HAS BEEN CONTENDED BEFORE US BY THE LD. COUNSEL FOR THE ASSESSEE BY MAKING REFERENCE TO THE AFFIDAVIT DATED 5 11.11.2016 GIVEN BY THE SELLER OF THE AGRICULTURE L ANDS WHEREIN IT HAS BEEN MENTIONED THAT THE ASSESSEE PAID RS.14,00, 000/- TO MR. NAGULAL (SELLER) IN MAY, 2008. HE SIGNED THE FIRST SALE DEED ON 2.6.2008 FOR THE LAND VALUING AT RS.5,80,000/- AND AFTER 3 YEARS HE SIGNED ANOTHER SALE DEED FOR THE LAND VALUING AT RS .8,20,000/-. WE ARE OF THE CONSIDERED OPINION THAT THE PURCHASE OF LAND HAS TAKEN PLACE IN TWO PARTS. THE AFFIDAVIT SIGNED BY SHRI NA GULAL HAS BEEN PROCURED BY THE ASSESSEE MUCH AFTER THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. THE ASSESSEE IS ALSO BEEN UNABLE TO PROVE THE SOURCE OF RS.14,00,000/- PAID BY HIM IN MAY, 20 08 NOR ANY JUSTIFICATION HAS BEEN PROVED TO ACCEPT THE IMPUGNE D TRANSACTION OF TRANSFERRING OF AGRICULTURE LAND AFTER A LAPSE OF 3 YEARS EVEN WHEN THE CONSIDERATION WAS ALLEGED TO HAVE BEEN RECEIVED BY THE BUYER. IN THESE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WE FIND NO MERIT IN THE SECOND ISSUE RAISED BY THE ASSESSEE IN GROUN D NO.2 AND ACCORDINGLY DISMISS THE SAME. HOWEVER OUR THIS DEC ISION WILL BE MERELY ACADEMIC IF THE ASSESSEE SUCCEEDS ON MERITS IN THE FIRST ISSUE BEFORE THE LD.A.O AS PER OUR DIRECTION GIVEN HEREIN ABOVE. 6 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 09.10.201 8. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 09/10/2018 /DEV COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSTT. REGISTRAR, I.T.A.T., INDORE