ITO, CHITTORGARH V. Smt. Manju Devi Jagetia, CHITTORGARH

ITA 551/JODH/2013

• Counselvise Citation: 55123314 RSA 2013
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-04-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 09-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: ASHOK KUMAR SOMANI
• Keywords: Opportunity of being heard; Competent authority
• Section: 143(3); 54B; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 551/JU/2013 ASSESSMENT YEAR: 2006-07 THE INCOME-TAX OFFICER VS. SMT. MANJU DEVI JAGETI A WARD 1 W/O YOGESH JAGETIA CHITTORGARH MAHESHWARI MOHALA, GANGRAR DISTT. CHITTORGARH PAN NO. AHLPJ 4616 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHOK KUMAR SOMANI DEPARTMENT BY : SHRI N.A. JOSHI, DR DATE OF HEARING : 24.04.2014 DATE OF PRONOUNCEMENT : 07.05.2014 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE FOR A.Y 2006-2007 AGAINST THE ORDER OF THE CIT(A), UDAIPUR, DATED 04.09.2013. 2 2. THE SOLE ISSUE RAISED IN THIS APPEAL IS REGARDIN G THE DELETION OF ADDITION OF RS. 14,52,473/- MADE BY THE A.O. ON ACC OUNT OF SHORT TERM CAPITAL GAIN [STCG] ARISING DUE TO THE COMPULS ORY ACQUISITION OF LAND. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, AS INDIVIDUAL, FILED HIS RETURN OF INCOME [ROI] IN RES PONSE TO NOTICE ISSUED U/S 148 OF THE INCOME-TAX ACT, 1961 ['THE AC T', FOR SHORT] ON 11.05.2007. EVENTUALLY, THE A.O. HAS ASSESSED HIS INCOME, U/S 147 R.W.S 143(3) OF THE ACT, AT RS. 14,65,340/- VIDE OR DER DATED 17.03.2008. IN FACT, THE ASSESSEE HAD JOINTLY WITH SHRI DHARAM SINGH JAT AND SHRI JAGDISH CHANDRA MUNDRA PURCHASED A PIECE OF LAND ON 25.07.2003 FOR A CONSIDERATION OF RS. 2,67, 000/-. THE LAND IN QUESTION IS SITUATED IN THE REVENUE ESTATE OF TH E VILLAGE MEDIKHEDA TEHSIL GANGAR, DISTT. CHITTORGARH AND MEA SURES 034 HECTARE. THE LAND WAS DESCRIBED AS AN AGRICULTURAL LAND IN THE REVENUE RECORDS. AFTER PURCHASE, ALL THE THREE CO- OWNERS GOT THE NATURE OF THE LAND CONVERTED FROM AGRICULTURAL TO C OMMERCIAL VIDE ORDER DATED 14.8.2003. ON 11.05.2005, THIS LAND WA S ACQUIRED BY THE NATIONAL HIGHWAY AUTHORITY OF INDIA [NHAI]. AL L THE THREE 3 PERSONS WERE PAID ADEQUATE COMPENSATION AS PER LAW AND SIMULTANEOUSLY, THE COMPETENT AUTHORITY OF NHAI ALS O DEDUCTED RS. 1,72,641/- AS A TAX AT SOURCE, U/S 194LA OF THE ACT AND ISSUED FORM NO. 16A TO THEM. WHEN THE ASSESSEE FAILED TO FILE HIS ROI U/S 139(1)/139(4) OF THE ACT, A NOTICE U/S 148 OF THE A CT WAS ISSUED. HOWEVER, THE OTHER TWO PERSONS, NAMELY SHRI DHARAM SINGH JAT AND SHRI JAGDISH CHANDRA MUNDRA FILED THEIR ROI ON 31.1 0.2006 IN THE OFFICE OF THE ITO, WARD-1, CHITTORGARH AND DISCLOSE D STCG ON THE ACQUISITION OF THIS PIECE OF LAND ACCEPTING ITS NAT URE AS COMMERCIAL. WHEN THESE FACTS WERE BROUGHT TO THE NOTICE OF THE ASSESSEE, HE EMPATHETICALLY STATED THAT THIS LAND IS STILL AGRICULTURAL ONE AND HAS NOT BEEN USED AS COMMERCIAL AS NO COM MERCIAL ACTIVITY, WORTH THE NAME, WAS EVER CARRIED ON IN IT . IN SUPPORT, THE ASSESSEE PRODUCED COPIES OF REVENUE RECORDS, INCLUD ING GIRDAWARI FOR THE YEARS 2003-04 TO 2005-06 IN WHICH IT IS MEN TIONED THAT EVEN AFTER ITS CONVERSION, THIS LAND STILL WAS AN AGRICU LTURAL LAND AS NO COMMERCIAL ACTIVITIES HAVE BEEN CARRIED THEREIN. I T WAS ARGUED THAT MERE CONVERSION OF USE OF LAND FROM AGRICULTURAL TO COMMERCIAL DOES NOT CHANGE THE CHARACTER OF LAND UNTIL ACTUAL COMME RCIAL ACTIVITY IS DONE ON IT. IN THIS REGARD, THE ASSESSEE HAS RELIE D ON VARIOUS 4 DECISIONS. IT WAS ALSO PLEADED THAT AS PER LAND CO NVERSION RULES, IF THE LAND IS NOT USED FOR COMMERCIAL PURPOSE WITHIN A PERIOD OF TWO YEARS FROM THE DATE OF ITS CONVERSION ORDER, THE LA ND WOULD REVERT BACK TO PRE-CONVERSION STATUS WHICH IS AGRICULTURAL AND THE GOVERNMENT FORFEITS CONVERSION CHARGES SO PAID. ACC ORDINGLY, IT WAS PRAYED THAT THE LAND IN QUESTION BE TREATED ONLY AS AGRICULTURAL LAND AS DEFINED IN SECTION 2(14(III) OF THE ACT AND HENC E, ANY SURPLUS AMOUNT RECEIVED ON ITS ACQUISITION WILL NOT ATTRACT CAPITAL GAINS. IN THE ALTERNATIVE, IT WAS CONTENDED THAT IF THE NET G AIN IS TREATED AS CAPITAL GAIN, THE ASSESSEE BECOMES ENTITLED TO REBA TE UNDER THE PROVISIONS OF SECTION 54B OF THE ACT BECAUSE THE AS SESSEE HAS UTILIZED THE CAPITAL GAIN IN THE MANNER PRESCRIBED UNDER THIS SECTION. AFTER CONSIDERING THE SUBMISSIONS OF THE A SSESSEE, THE A.O. WAS NOT SATISFIED. HE HAS OBSERVED THAT THE ASSESSE E HAS BEEN GIVEN COMPENSATION AFTER ADOPTING THE NATURE OF LAND AS C OMMERCIAL LAND. HE HAS OBSERVED THAT THE CONVERSION WAS MADE ON 14. 8.2003 AND THE LAND WAS ACQUIRED ON 11.5.2005, WITHIN TWO YEAR S, AS PRESCRIBED UNDER THE RULES, HAD NOT EXPIRED AND THE LAND REMAI NED COMMERCIAL LAND TILL THAT TIME. HE HAS OBSERVED THAT THE ASSE SSEE HAD NOT CLAIMED BENEFIT OF SECTION 54B IN THE RETURN OF INC OME FILED FOR THE 5 RELEVANT YEAR. THUS, HE HAS HELD THAT SECTION 2(14 )(III) IS NOT APPLICABLE TO THE FACTS OF THIS CASE. ACCORDINGLY, HE HAS COMPUTED STCG AT RS. 14,52,473/- AND HAS ADDED THE SAME IN A SSESSEES INCOME OF THE YEAR. AGGRIEVED, THE ASSESSEE WENT I N APPEAL AND THE LD. CIT(A) HAS RELIED ON THE ORDER OF THE TRIBUNAL RENDERED IN THE FIRST ROUND WHEREIN THE APPELLATE TRIBUNAL HAD DIRE CTED TO ASCERTAIN WHETHER ANY COMMERCIAL ACTIVITY WAS CARRIED OUT BY THE ASSESSEE DURING THAT PERIOD AFTER CONVERSION OR NOT; WHETHE R ANY BOUNDARY WALL OR ANY DEVELOPMENTAL WORK, CONSTRUCTION ETC HA D BEEN DONE THEREON OR NOT. THE APPELLATE TRIBUNAL HAS ALSO DI RECTED TO CONDUCT ENQUIRIES FROM NHAI TO ASCERTAIN WHETHER COMPENSATI ON WAS PAID BY TREATING LAND IN QUESTION AS AGRICULTURE AND/OR COM MERCIAL, IN NATURE. HE HAS GIVEN A FINDING THAT MERE CONVERSIO N OF LAND FOR COMMERCIAL PURPOSE ON PAPERS, WILL NOT TANTAMOUNT T O THE LAND BECOME COMMERCIAL FOR THE PURPOSE OF THIS SECTION. REGARDING OTHER CO-OWNERS WHO HAVE DECLARED CAPITAL GAIN ON A CCOUNT OF COMPENSATION RECEIVED ON ACQUISITION OF LAND BY NHA I, IT HAS BEEN MENTIONED THAT ULTIMATELY THE TAX PAYABLE IN THOSE CASES OF CO- OWNERS IS NIL. HE HAS FURTHER MENTIONED THAT EVEN OTHERWISE, IT WOULD NOT BE VERY MUCH RELEVANT EVEN IF THE CO-OWNE RS HAVE 6 TREATED THE LAND AS COMMERCIAL FOR ANY REASON BEST KNOWN TO THEM AND THE CASE OF THE ASSESSEE HAS TO BE DEALT WITH A S PER LAW. AFTER HOLDING THAT CASE OF THE ASSESSEE FALLS U/S 2(14)(I II) OF THE ACT, HE HAS DELETED THE IMPUGNED ADDITION. NOW THE REVENUE HAS COME IN SECOND APPEAL BEFORE THE APPELLATE TRIBUNAL. 3.1 IT WAS ARGUED BY THE LD. D.R. THAT THE PROVISIO NS OF SECTION 2(14(III) OF THE ACT ARE NOT AT ALL APPLICABLE IN T HIS CASE BECAUSE THE LAND ACQUIRED BY NHAI WAS SIMPLY COMMERCIAL LAND AN D NOT AN AGRICULTURAL LAND. HE HAS FURTHER ARGUED THAT THE COMPENSATION PAID BY NHAI @ RS. 500 PER SQ FT IS ON ACCOUNT OF A CQUISITION OF COMMERCIAL LAND AND NOT AGRICULTURAL LAND. HE HAS ALSO DERIVED FORCE FROM THE FACT THAT THE CON-OWNERS HAVE DECLAR ED AND TREATED THE ACQUISITION OF LAND AS ACQUISITION OF COMMERCIA L LAND AND HAVE DECLARED STCG ON THEIR PORTION FOR TAX PURPOSES. T HE LD. SR. D.R. HAS VEHEMENTLY ARGUED THAT THE LD. CIT(A) HAS IGNOR ED ALL THESE IMPORTANT FACTS AND FIGURES OF THIS CASE AND HAS WR ONGLY DELETED THE ADDITION. 7 3.2 ON THE OTHER HAND, THE LD. A.R. HAS SUPPORTED THE FINDING OF THE LD. CIT(A) AND HAS REPEATED THE REASONS GIVEN B Y HIM IN HIS SUPPORT. HE HAS FURTHER DRAWN OUR ATTENTION TOWARD S THE TRIBUNAL ORDER DATED 08.09.2010 IN THE FIRST ROUND, WHEREIN THE MATTER WAS RESTORED TO THE FILE OF THE A.O. COPY OF THIS TRIB UNAL ORDER HAS BEEN PLACED FOR OUR PERUSAL. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, SINCE T HE MATTER HAD COME BEFORE THE APPELLATE TRIBUNAL, WE WOULD LIKE T O REPRODUCE PARA 3 OF THE TRIBUNAL ORDER IN WHICH THE RELEVANT OBSERVATIONS AND DIRECTIONS GIVEN WHILE RESTORING THE ISSUE HAVE BEE N INCORPORATED AT PAGE 2 PARA 3 OF THE TRIBUNAL ORDER IN ITA NO. 10/J U/2010 ORDER DATED 8.9.2010 WHICH IS EXTRACTED AS BELOW: 3. WE HAVE HEARD BOTH PARTIES WITH REFERENCE TO TH E MATERIAL ON RECORD. DURING THE COURSE OF HEARING, T HE HUSBAND OF THE ASSESSEE APPEARING ON HER BEHALF SUBMITTED T HAT THE ALLEGED INSPECTOR'S REPORT WAS NOT CONFRONTED TO TH E ASSESSEE AND THE ASSESSEE, THUS WAS NOT PROVIDED AN OPPORTUN ITY TO REBUT THE SAID REPORT. HE ADMITTED THAT THOUGH THE LAND WAS CONVERTED BEFORE ITS ACQUISITION BY NHAI, BUT SINCE NO COMMERCIAL ACTIVITIES WERE CARRIED OUT ON THIS LAND , THE SAME 8 CANNOT BE TREATED AS A COMMERCIAL LAND, AS INITIALL Y THE LAND WAS RECORDED AS AGRICULTURAL LAND IN THE REVENUE RE CORDS. HE ALSO MADE A STATEMENT OF FACT DURING THE COURSE OF HEARING THAT THE NHAI HAS WITHDRAWN THE EXCESS COMPENSATION GIVEN TO THE ASSESSEE FOR ACQUISITION OF SAID LAND AND TH E MATTER IS SUBJUDICE BEFORE THE COURT. HE ALSO MADE AN ALTERNA TIVE CLAIM THAT EVEN IF THE ASSESSING OFFICER HAS TAXED THE SA ID SURPLUS AS CAPITAL GAIN, HE SHOULD HAVE ALLOWED EXEMPTION U /S 54B OF THE ACT, AS THE ASSESSEE HAS UTILIZED THE CAPITAL G AIN AS CONTEMPLATED UNDER THAT SECTION, THE DETAILS OF WHI CH ARE SAID TO HAVE BEEN FILED BEFORE THE ID. ASSESSING OF FICER. ON PERUSAL OF THE ORDERS OF AUTHORITIES BELOW, WE FIND THAT THE FACTS NARRATED BY THE ASSESSEE HAVE NOT BEEN CONSID ERED IN RIGHT PERSPECTIVE. THE ORDERS OF AUTHORITIES BELOW ARE SILENT ON CONFRONTATION OF INSPECTOR'S REPORT TO THE ASSES SEE BEFORE REACHING A CONCLUSION THAT NO AGRICULTURAL ACTIVITI ES WERE CARRIED OUT BY THE ASSESSEE ON BALANCE LAND. THE MA TTER OF WITHDRAWAL OF EXCESS COMPENSATION TO THE ASSESSEE BY NHAI ALSO NEEDS ENQUIRY AND EXAMINATION AT THE STAGE OF ASSESSING OFFICER. THE QUESTION THAT EMERGES FROM THE ASSESSE E'S CONTENTION WHETHER THE CONVERSION OF AGRICULTURAL L AND INTO COMMERCIAL LAND WITHOUT HAVING ANY COMMERCIAL ACTIV ITIES THEREON WOULD AMOUNT TO TREAT THE LAND AS COMMERCIA L LAND, HAS ALSO TO BE EXAMINED IN THE LIGHT OF STATUTORY P ROVISIONS OF LAW. THE ID. AUTHORITIES BELOW APPEARS TO HAVE NOT SET OUT THE TRUE FACTS BEFORE DECIDING THE ISSUE OF CAPITAL GAIN UNDER 9 CONSIDERATION. WE, THEREFORE, SET ASIDE THE ORDER O F ID. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE ISSUE DE NOVO AFTER SETTING OUT COMPLE TE FACTS AND ALSO EXAMINING THE ALTERNATIVE CLAIM OF ASSESSE E MADE U/S. 54B OF THE ACT AS AFORESAID. NEEDLESS TO ADD, PROPER AND REASONABLE OPPORTUNITY OF BEING HEARD SHALL BE AFFO RDED TO THE ASSESSEE. THE GROUND RAISED, THUS, STANDS ALLOW ED FOR STATISTICAL PURPOSES. 4.1 A PERUSAL OF THE ABOVE PARA OF THE TRIBUNAL ORD ER MAKES IT CLEAR THAT THE ISSUE WAS RESTORED BACK TO THE A.O. WITH THE DIRECTION TO MAKE A DE NOVO COMPUTATION THEREON. HOWEVER, TH E APPELLATE TRIBUNAL HAS ALSO MADE CERTAIN OBSERVATIONS, WHICH ARE CLEARLY MANIFEST IN THE ABOVE EXTRACTED PARA. WE ARE ALSO CONVINCED THAT BOTH THE A.O. AS WELL AS THE LD. CIT(A) HAVE NOT AT ALL CONSIDERED THE PLEA OF EXEMPTION MADE U/S 54B OF THE ACT, REGA RDING CAPITAL GAIN IN QUESTION AND IN ITS CORRECT PERSPECTIVE, A LTHOUGH IT WAS A CLEAR DIRECTION BY THE TRIBUNAL. THE A.O. HAS NOT ADDRESSED THE ISSUE IF ANY COMMERCIAL ACTIVITY WAS CARRIED OUT ON THIS PIECE OF LAND AFTER PURCHASE BY THE ASSESSEE JOINTLY WITH TH E CO-OWNERS BEFORE ITS ACQUISITION BY NHAI. WHEN THE RELEVANT PROVISIONS OF THE ACT ARE DWELT IN DEPTH, IT BECOMES MANIFEST THAT IT IS THE USER OF 10 THE PIECE OF LAND IN QUESTION WHICH COUNTS MORE THA N THE DOCUMENTS PERTAINING THERETO. THE DOCUMENTS DO NOT HELP IN ARRIVING AT A CONCLUSION BUT WHEN THE DOCUMENTS ARE PITTED AGAINST ACTUAL USER OF THE LAND IN THAT CASE, THE OTHER ASP ECT HAS ALSO TO BE CONSIDERED. IT HAS COME FORTH FROM THE RECORDS AVA ILABLE BEFORE US THAT THE ASSESSEE NEVER CARRIED OUT ANY COMMERCIAL ACTIVITY ON THIS PIECE OF LAND AFTER ITS PURCHASE. IN RECORD, THIS LAND USED TO BE AGRICULTURAL LAND BUT IT GOT CONVERTED INTO COMMERC IAL LAND. EVEN IF THE NHAI HAS GIVEN COMPENSATION BY TREATING IT AS C OMMERCIAL LAND, THIS FACT SHOULD BE BROUGHT ON RECORD BY THE REVENU E. DESPITE A CLEAR OPPORTUNITY GIVEN BY THE TRIBUNAL, THE A.O. H AS FAILED IN ITS DUTY TO ASCERTAIN FROM THE NHAI IN THIS REGARD AS T O WHETHER THEY HAVE TREATED THE LAND AS COMMERCIAL IN NATURE OR AG RICULTURE IN NATURE. HAVING SAID THAT NOW, IT IS FOUND FOR A FA CT THAT THE PROVISIONS OF SECTION 2(14)(III) OF THE ACT ARE CLE ARLY ATTRACTED AND THIS LAND HAS TO BE TREATED AS A WHICH WILL NOT INV ITE ANY CAPITAL GAIN TAX. IN ANOTHER CASE, THE ASSESSEE IS ENTITLE D TO BENEFIT OF SECTION 54B OF THE ACT AND IT IS STATED THAT ALL TH E REQUISITE CONDITIONS OF THAT SECTION HAVE BEEN FULFILLED BY H ER. HOWEVER, THE A.O. HAS NOT COMMENTED CLEARLY ON THIS ASPECT WHERE FROM ADVERSE 11 INFERENCE HAS TO BE DRAWN. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE APPELLATE ORDER. THEREFORE, WE HA VE TO CONFIRM IT. ACCORDINGLY, GROUNDS OF APPEAL RAISED BY THE REVENU E ARE DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 07 TH MAY, 2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 07 TH MAY, 2014 VL/- COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR ASSISTANT REGISTRAR ITAT, JODHPUR