Smt. Madhubala Singh, Bulandshahr V. ITO, Bulandshahr

ITA 5570/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6885 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 17-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 14-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL SENIOR
• Assessee Lawyers: DINESH SINGH
• Keywords: Capital asset; Tax effect
• Section: 2(14); 142(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-I : NEW DELHI) BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.5570/DEL./2014 (ASSESSMENT YEAR : 2007-08) SMT. MADHUBALA SINGH, VS. ITO, WARD 2, W/O DINESH KUMAR, BULANDSHAHR, R/O MIG 706, AWAS VIKAS 1, D.M. ROAD, BULANDSHAHR. (PAN : ATYPS4253J) ITA NO.5571/DEL./2014 (ASSESSMENT YEAR : 2007-08) SMT. KAMLESH, VS. ITO, WARD 2, W/O SINGHRAJ SINGH, BULANDSHAHR, R/O LIG 960, AWAS VIKAS 1, D.M. ROAD, BULANDSHAHR. (PAN : BLMPS8754B) ITA NO.6358/DEL./2014 (ASSESSMENT YEAR : 2007-08) SHRI TEJ PAL SINGH, VS. ITO, WARD 2, S/O SHRI LAJJA RAM, BULANDSHAHR, C/O DINESH KUMAR SINGH, ADVOCATE, CHAMBER NO.32, CIVIL COURT, BULANDSHAHR. (PAN : BLLPS5392E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DINESH SINGH, ADVOCATE REVENUE BY : SHRI ROBIN RAWAL, SENIOR DR ITA NOS.5570, 5571 & 6358/DEL./2014 2 DATE OF HEARING : 17.02.2016 DATE OF PRONOUNCEMENT : 18.02.2016 O R D E R SINCE ALL THESE APPEALS FILED AGAINST THE RESPECTI VE ORDER OF THE CIT (A) INVOLVED THE COMMON ISSUE, THEREFORE, ALL THESE APPEALS ARE DECIDED BY THIS COMMON ORDER. ALL THE PARTIES AGREED THAT ALL THESE CASES BE DECIDED ON THE BASIS OF THE FACTS INVOLVED IN THE CASE OF S MT. KAMLESH, W/O SHRI SINGHRAJ SINGH. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE AO NOTE D THAT THE ASSESSEE ALONG WITH OTHER CO-OWNERS RECEIVED COMPENSATION OF INTEREST AMOUNTING TO RS.1,07,25,394/- AND THE SHARE OF THE ASSESSEE C OMES TO RS.10,72,540/- IN THE IMPUGNED ASSESSMENT YEAR. THE AO, THEREFORE , INITIATED PROCEEDINGS U/S 147 BY ISSUING NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER THE ACT). NOTICE U/S 142(1) DATED 14.12.2010 WAS ISSUED FOR FILING HER RETURN IN RESPONSE THERETO. THE ASSESSEE HAS FILED THE RETURN DECLARING A TOTAL INCOME OF RS.8,650/- FROM THE HOUSE PROPERTY AND OTHER SOURCES AND PUT A NOTE ON THE RETURN THAT, DURING THE YEAR, WE HAVE RECEIVED RS.9,38,737/- I.E. 10% OF THE TOTAL AMOUNT OF RS.93 ,87,365/- AGAINST LAND ACQUISITION OUT OF THAT SOME AMOUNT WAS RECEIVED AG AINST LAND BALANCE AMOUNT WAS RECEIVED AGAINST INTEREST. BUT SINCE TH IS INTEREST DOES NOT RELATE TO THIS YEAR SO THAT INCOME AS WELL AS TDS W AS NOT CLAIMED DURING THE YEAR. WE ARE ATTACHING HEREWITH COPY OF THAT P ROOF. THE AO NOTED ITA NOS.5570, 5571 & 6358/DEL./2014 3 THAT THE ASSESSEE IS NOT THE OWNER OF THE LAND BUT SHE ALONG WITH OTHER 9 CO- OWNERS PURCHASED THE RIGHT TO RECEIVE THE AMOUNT OF COMPENSATION AND INTEREST THEREON FOR THAT ACQUIRED LAND AS PER THE ORDER PASSED BY THE ADDL. DISTRICT JUDGE-I, BULANDSHAHR. THE AO, THEREFORE, TREATED THE SUM OF RS.10,72,540/- AS INCOME FROM OTHER SOURCES. THE A SSESSEE WENT IN APPEAL BEFORE THE CIT (A) AND THE CIT (A) NOTED THAT THE A MOUNT RECEIVED AND RECEIVABLE IN RESPECT OF ACQUISITION OF THE LAND BY THE ASSESSEE AND OTHER CO-OWNERS AS UNDER :- COMPENSATION 10,64,536.55 13,75,207.47 30% SOLATIUM 3,19,360.96 4,12,562.23 12% ADDITIONAL COMPENSATION 86,796.18 1,12,126.50 9% INTEREST 1,24,550.17 1,60,899.27 15% INTEREST 38,73,017.27 50,03,306.05 TOTAL AMOUNT RECEIVABLE 54,68,261.73 70,64,101.00 AMOUNT RECEIVED DURING THE YEAR 52,03,353.00 67,22,041.00 AMOUNT PENDING 2,64,908.00 3,42,060.00 THE CIT (A) NOTED THAT SMT. SUNITA SOLD/TRANSFERRED HER RIGHT TO RECEIVE WHICH WAS AWARDED ON 12.02.2002 THROUGH LA REF.NO.3 64 YEAR 1990 IN RESPECT OF HER LAND FOR A SUM OF RS.3 LAKHS BY VIRT UE OF DECREE ASSIGNMENT LETTER DATED 31.08.2002 TO ASSESSEE AS WELL AS 9 OT HER CO-OWNERS. THE INCOME SO RECEIVED CANNOT BE EXEMPT U/S 10(37) OF T HE ACT. WHAT THE ASSESSEE ACQUIRED CAN BE LAID AS CAPITAL ASSET AND THE INCOME ARISING ON RECEIPT OF COMPENSATION BY THE ASSESSEE FROM THE GO VERNMENT SHALL BE TREATED AS CAPITAL GAIN TO BE COMPUTED AND TAXED IN THE LIGHT OF THE RELEVANT PROVISIONS OF THE ACT. THE CIT (A) DID NOT AGREE W ITH THE ACTION OF THE AO ITA NOS.5570, 5571 & 6358/DEL./2014 4 TAXING THE SAME AS INCOME FROM OTHER SOURCES AND UL TIMATELY, THE CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE. 3. THE ASSESSEE EVEN THOUGH HAS TAKEN AS MANY AS 14 GROUNDS OF APPEAL BUT THE ISSUE INVOLVED BEFORE ME RELATES TO WHETHER COMPENSATION SO RECEIVED BY THE ASSESSEE IS ASSESSABLE AS INCOME FR OM OTHER SOURCES OR ASSESSEE IS ENTITLED FOR EXEMPTION U/S 10(37) OF TH E ACT AND WHETHER THE ACTION TAKEN BY THE AO BY ISSUING THE NOTICE U/S 14 8 IS VALID OR NOT. 4. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. I NOTED THAT THE NOTICE U/S 148 HAS BEEN ISSUED AFTER RECORDING THE REASONS THAT THE ASSESSEE HAS NOT SHOWN THE INCOME IN THE RETURN IN RESPECT OF TH E COMPENSATION RECEIVED AND THEREBY IT HAS RESULTED THE ESCAPEMENT OF ASSES SMENT. IT IS NOT DENIED BEFORE ME BY THE LD. ADVOCATE THAT THE ASSESSEE REC EIVED THE COMPENSATION ALONG WITH THE SOLATIUM AND DEEMED INTEREST DURING THE IMPUGNED ASSESSMENT YEAR. THE ASSESSEE HAS NOT FILED THE IN COME-TAX RETURN AND HAS NOT DECLARED THE SAME IN THE INCOME-TAX RETURN FILE D BY HIM. THE NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 05.04. 2008. THE COMPENSATION BELONGING TO THE ASSESSEE AND RELATED TO THE IMPUGNED ASSESSMENT YEAR, THEREFORE, I CONFIRM THE FINDING O F THE LD. CIT (A) THAT THE PROCEEDINGS INITIATED BY ISSUING OF THE NOTICE U/S 148 ARE VALID. 5. NOW, COMING TO THE OTHER ISSUE TAKEN BY THE ASSE SSEE, THE CIT (A) HAS ERRED IN CONFIRMING THE ORDER OF THE AO WHEREBY HE HAD TREATED THE ITA NOS.5570, 5571 & 6358/DEL./2014 5 AMOUNT OF RS.10,72,540/- AS INCOME FROM OTHER SOURC ES. I NOTED THAT THE SAID AMOUNT HAS BEEN TREATED AS INCOME FROM OTHER S OURCES BY THE AO BUT THE CIT (A) AFTER NOTING THE FACTS FROM PAGES 12 TO 14 OF ITS ORDER TOOK THE VIEW THAT THE SAID INCOME HAS TO BE TREATED AS CAPI TAL GAIN AND DID NOT CONFIRM THE ACTION OF THE AO IN TAXING THE SAME AS INCOME FROM OTHER SOURCES. ON THIS BASIS, THIS GROUND TAKEN BY THE A SSESSEE BECOMES INFRUCTUOUS. I FIND THAT THE ASSESSEE ALONG WITH 9 CO-OWNERS THROUGH A DECREE ASSIGNMENT LETTER DATED 31.08.2002 PURCHASED FROM MS. SUNITA HER RIGHT TO RECEIVE COMPENSATION WHICH WAS AWARDED IN HER FAVOUR ON 12.02.2002 THROUGH LA REF.NO.364 YEAR 1990 VIDE O RDER PASSED BY HONBLE UPPER DISTRICT JUDGE -1, BULANDSHAHR IN RES PECT OF ACQUISITION OF HER LAND BEING KHATA NO.39 AND PLOT NO.161 MEASURIN G 1 BIGHA 4 BISWA 10 BISWANSI SITUATED IN VILLAGE DUDRPUR PARGANA, DE HSIL & DISTRICT BULANDSHAHR FOR A CONSIDERATION OF RS.3 LACS. COPY OF WHICH WAS FILED BEFORE ME ALSO BY THE LD. ADVOCATE IN THE PAPER BOO K. NOW, THE QUESTION ARISES BEFORE ME IS WHETHER THE ASSESSEE CAN BE REG ARDED TO BE THE OWNER OF THE AGRICULTURAL LAND. THE AGRICULTURAL LAND HAS A LREADY BEEN ACQUIRED AND VESTED WITH THE UP GOVERNMENT. THE AWARD IN RESPEC T OF THE SAID LAND HAS ALREADY BEEN GIVEN MS. SUNITA WHO ENTERED INTO AN A SSIGNMENT AGREEMENT WITH THE ASSESSEE AND 9 CO-OWNERS IS NOT THE OWNER OF THE AGRICULTURAL LAND. THEREFORE, SHE CANNOT TRANSFER THE AGRICULTURAL LAN D. SHE TRANSFERRED ONLY HER RIGHT TO RECEIVE COMPENSATION. RIGHT TO COMPEN SATION IS A CAPITAL ASSET ITA NOS.5570, 5571 & 6358/DEL./2014 6 WHICH IS DEFINED U/S 2(14) OF THE ACT AND, THEREFOR E, WHATEVER AMOUNT THE ASSESSEE AND OTHER CO-OWNERS RECEIVED BY WAY OF COM PENSATION ON BEHALF OF MS. SUNITA THAT AMOUNT WILL BE CONSIDERATION REC EIVED AGAINST A CAPITAL ASSET AND, THEREFORE, I DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE FINDING OF THE CIT (A) WHILE HE HOLDS THAT INCOME ARISING O N RECEIPT OF COMPENSATION BY THE ASSESSEE FORM THE GOVERNMENT SH ALL BE TREATED AS CAPITAL GAINS TO BE COMPUTED AND TAXED IN THE LIGHT OF THE RELEVANT PROVISIONS OF THE ACT AND THAT AOS ACTION IN TAXIN G THE SAME AS INCOME FROM OTHER SOURCES IS NOT JUSTIFIED. THERE IS NO I LLEGALITY IN THE DIRECTIONS OF THE CIT (A) TO THE AO TO COMPUTE THE CAPITAL GAI NS IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN CHAPTER IV OF THE ACT D EALING WITH THE CAPITAL GAINS AND ALLOWING THE DEDUCTION TO THE ASSESSEE. I ACCORDINGLY DIRECT THE AO TO COMPUTE THE CAPITAL GAINS BY APPLYING THE PRO VISIONS OF SECTION 45 READ WITH SECTION 48 OF THE ACT. 6. NOW, COMING TO THE QUESTION WHETHER THE AMOUNT R ECEIVED BY THE ASSESSEE FROM THE GOVERNMENT WILL BE EXEMPT U/S 10 (37) OF THE ACT. LD. ADVOCATE BEFORE ME RELIED ON THE ORDER OF THE MAHEN DER SINGH PASSED BY THE CIT (A) DATED 10.12.2012 IN WHICH THE CIT (A) T OOK THE VIEW THAT MAHENDER SINGH, ONE OF THE CO-OWNERS, IS ENTITLED T O GET THE EXEMPTION U/S 10(37) OF THE ACT. THE DECISION OF THE CIT (A) IS NOT BINDING ON ME. NO DOUBT, AN APPEAL HAS BEEN FILED BEFORE THE TRIBUNAL BUT THE TRIBUNAL ITA NOS.5570, 5571 & 6358/DEL./2014 7 DISMISSED THE APPEAL IN VIEW OF THE TAX EFFECT INVO LVED IN THAT CASE. I NOTED THAT THE PROVISION OF SECTION 10 (37) LAYS DOWN AS UNDER :- (37) IN THE CASE OF AN ASSESSEE, BEING AN INDIVID UAL OR A HINDU UNDIVIDED FAMILY, ANY INCOME CHARGEABLE UNDER THE H EAD 'CAPITAL GAINS' ARISING FROM THE TRANSFER OF AGRICULTURAL LAND, WHE RE (I) SUCH LAND IS SITUATE IN ANY AREA REFERRED TO I N ITEM (A) OR ITEM (B) OF SUB-CLAUSE (III) OF CLAUSE (14) OF SECTION 2; (II) SUCH LAND, DURING THE PERIOD OF TWO YEARS IMME DIATELY PRECEDING THE DATE OF TRANSFER, WAS BEING USED FOR AGRICULTURAL P URPOSES BY SUCH HINDU UNDIVIDED FAMILY OR INDIVIDUAL OR A PARENT OF HIS; (III) SUCH TRANSFER IS BY WAY OF COMPULSORY ACQUISI TION UNDER ANY LAW, OR A TRANSFER THE CONSIDERATION FOR WHICH IS DETERMINED OR APPROVED BY THE CENTRAL GOVERNMENT OR THE RESERVE BANK OF INDIA; (IV) SUCH INCOME HAS ARISEN FROM THE COMPENSATION O R CONSIDERATION FOR SUCH TRANSFER RECEIVED BY SUCH ASSESSEE ON OR AFTER THE 1ST DAY OF APRIL, 2004. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, THE E XPRESSION 'COMPENSATION OR CONSIDERATION' INCLUDES THE COMPEN SATION OR CONSIDERATION ENHANCED OR FURTHER ENHANCED BY ANY C OURT, TRIBUNAL OR OTHER AUTHORITY; FROM THE PERUSAL OF THE SAID SECTION, IT IS APPAREN T THAT THE EXEMPTION U/S 10(37) IS AVAILABLE TO AN INDIVIDUAL OR HUF IN RESP ECT OF THE INCOME CHARGEABLE UNDER THE HEAD ARISING FROM THE TRANSFER OF AGRICULTURAL LAND WHERE IT COMPLIED WITH ALL THE FOUR CONDITIONS AS S TIPULATED UNDER THE SAID SECTION. I HAVE ALREADY HELD THAT IN THE CASE OF T HE ASSESSEE, THE COMPENSATION RECEIVED CANNOT BE REGARDED TO HAVE BE EN ARISEN FROM THE TRANSFER OF THE AGRICULTURAL LAND IN HANDS OF THE A SSESSEE. THE ASSESSEE AND ALL OTHER CO-OWNERS HAD BOUGHT THE RIGHT TO RECEIVE THE COMPENSATION FROM MS. SUNITA AND, THEREFORE, WHAT THEY HAVE RECEIVED, IS THE COMPENSATION ITA NOS.5570, 5571 & 6358/DEL./2014 8 FROM THE GOVERNMENT ON BEHALF OF MS. SUNITA AGAINST THE ACQUISITION OF HER RIGHT UNDER THE ASSIGNMENT AGREEMENT. THIS AMOUNT RECEIVED BY THE ASSESSEE AND OTHER CO-OWNERS CANNOT BE REGARDED TO HAVE BEEN RECEIVED AGAINST THE TRANSFER OF THE AGRICULTURAL LAND. THE SECOND CONDITION GIVEN UNDER SECTION CAN ALSO NOT BE COMPLIED WITH AS THE LAND HAS TO BE USED BEFORE ITS TRANSFER DURING THE TWO YEARS BY SUCH IN DIVIDUAL OR HUF, SUCH INDIVIDUAL OR HUF MEANS THE PERSONS WHO OWNED THE L AND. THE ASSESSEE AND OTHER CO-OWNERS DID NOT OWN THE LAND, THEREFORE , THE QUESTION OF COMPLYING WITH THIS CONDITION DOES NOT ARISE. I AM OF THE VIEW THAT THE ASSESSEE DID NOT COMPLY WITH THE CONDITIONS AS STIP ULATED U/S 10(37) AND, THEREFORE, IN MY OPINION, THE CIT (A) HAS RIGHTLY T AKEN A VIEW IN THE IMPUGNED CASE THAT THE INCOME ARISING IN THE HANDS OF THE ASSESSEE IS NOT EXEMPT U/S 10(37) OF THE ACT. I HAVE GONE THROUGH THE DECISION OF THE HONBLE SUPREME COURT, AS RELIED BY THE LD. ADVOCAT E OF THE ASSESSEE, IN THE CASE OF KHORSHED SHAPOOR CHENAI (MRS.) VS. COLL ECTOR OF ESTATE DUTY (ASST.) 122 ITR 21. I NOTED THAT THIS DECISION I S NOT APPLICABLE IN THE FACTS OF THE CASE BEFORE ME. IN THAT CASE, THE QUE STION INVOLVED WAS ENTIRELY DIFFERENT. THE QUESTION RELATES TO THE PA SSING OF THE RIGHT TO RECEIVE THE COMPENSATION ON THE DEATH OF THE DECEASED. THE RE WAS NO QUESTION THAT IF ANYBODY BUYS THE RIGHT TO RECEIVE THE COMPENSATI ON. THESE RIGHTS WILL BE TREATED AS AGRICULTURAL LAND. I HAVE ALSO GONE THR OUGH THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF UP AVAS EVAM VIKAS ITA NOS.5570, 5571 & 6358/DEL./2014 9 PARISHAD VS. KANAK & ORS. 2011 (112) RD 86. IN T HIS CASE ALSO, I NOTED THAT THE QUESTION RELATES TO WHETHER THE TRANSFER O F PROPERTY ACT FORBIDS THE TRANSFER OF THE COMPENSATION RIGHT. THE HONBLE HI GH COURT TOOK THE VIEW THAT SECTION 6 OF THE TRANSFER OF PROPERTY ACT DOES NOT FORBID TRANSFER OF THE COMPENSATION RIGHT. THE LD. AR HAS BY REFERRING TO PAGE NOS.28 & 29 AND 32 & 33 OF THE PAPER BOOK CONTENDED BEFORE ME THAT THE ASSESSEE AND CO- OWNERS HAS PAID A SUM OF RS.5 LAKHS TO MR. VINOD KU MAR AND RS.7 LAKHS TO MR. DHARAMPAL SINGH & JWALA SINGH AS PER THE ORD ER OF THE DISTRICT JUDGE DATED 21.04.2006 OUT OF THE COMPENSATION RECE IVED BY THEM. COPY OF THE ORDER IS AVAILABLE AT PAGES 28 TO 32 OF THE PAPER BOOK. THE AO IS DIRECTED THAT WHILE COMPUTING THE CAPITAL GAIN IN A CCORDANCE WITH THE PROVISIONS OF SECTION 48 SHOULD CONSIDER THESE AMOU NTS AND REDUCE THE SAME OUT OF THE TOTAL AMOUNT RECEIVED BY THE ASSESS EE FROM THE GOVERNMENT ON ACCOUNT OF COMPENSATION, SOLATIUM ON THE ACQUISITION OF THE LAND. IN VIEW OF THE AFORESAID DISCUSSION, I D ISMISS ALL THE THREE APPEALS. 7. IN THE RESULT, ALL THE THREE APPEALS ARE DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON THIS 18 TH DAY OF FEBRUARY, 2016. SD/- (P.K. BANSAL) ACCOUNTANT MEMBER DATED THE 18 TH DAY OF FEBRUARY, 2016 TS ITA NOS.5570, 5571 & 6358/DEL./2014 10 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-17, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.