Assistant Commissioner of Income Tax , Ratlam V. Smt.Indiradevi Ganediwal, Mandsaur

ITA 560/Ind/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9880 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 13-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: S S DESH
• Keywords: Capital asset; Audit objection; Cost of acquisition; Date of conversion; Fair market value; Tax effect
• Section: 143(3); 2(14)

Judgement Text

INDIRA DEVI GANEDIWAL I.T.A. NO. 559, 560, 500 & 561/IND/17 , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.559, 560, 500 & 561/IND/2017 ASSESSMENT YEARS: 2009-10, 2011-12, 2013-14 & 2014- 15 ACIT, RATLAM / VS. SMT. INDIRA DEVI GANEDIWAL, 1, STATION ROAD, TEXTILE AREA, MANDSAUR (REVENUE) (RESPONDENT ) P.A. NO. AHEPG1089L REVENUE BY SHRI P.K.MI T RA , SR. DR RESPONDENT BY SHRI S.S. DESHPANDE, CA DATE OF HEARING: 24 .09 .201 8 DATE OF PRONOUNCEMENT: 25 .09 .201 8 / O R D E R PER MANISH BORAD, A.M: THESE FOUR APPEALS FILED BY THE REVENUE PERTAINING TO A.Y. 2009-10, 2011-12, 2013-14 AND 2014-15 IN RESPECT OF THE SAME ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CO MMISSIONER OF INCOME TAX(APPEALS), UJJAIN (IN SHORT CIT(A)), VI DE ORDER DATED 13.5.2017 FOR ASSESSMENT YEAR 2009-10-, 2011-12 AND 2014-15 AND ORDER DATED 17.4.2017 IN RESPECT OF ASSESSMENT YEAR 2013-14. INDIRA DEVI GANEDIWAL I.T.A. NO. 559,560,500&561/IND/17 2 2. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE TAX EFFECT IN ALL THESE FOUR APPEALS IS BELOW RS.20 LAK HS AND ARE THEREFORE LIABLE TO BE DISMISSED IN VIEW OF CBDT CI RCULAR NO.3/2018 DATED 11.7.2018. LD. COUNSEL FOR THE ASSESSEE FURTH ER SUBMITTED THAT IN THE REVENUES APPEAL FOR ASSESSMENT YEAR 20 09-10 AND 2011-12 IT IS MENTIONED THAT THE ISSUE ARE COVERED UNDER THE EXCEPTIONS MENTIONED IN PARA 8 (C ) OF CBDT CIRCULA R NO.21/2015 DATED 10.12.2015. HE FURTHER SUBMITTED THAT SIMILA R ISSUE IN ASSESSEES OWN CASE CAME UP BEFORE THE CO-ORDINATE BENCH FOR ASSESSMENT YEAR 2006-07 VIDE ITA NO.699/IND/2015 WH EREIN THE HON'BLE TRIBUNAL DISMISSED THE REVENUES APPEAL. 3. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE SUBM ITTED THAT FOR ASSESSMENT YEAR 2009-10 AND 2011-12 THE ISSUE RAISE D BY THE REVENUE ARE COVERED UNDER THE EXCEPTIONS MENTIONED IN PARA 8(C )OF CIRCULAR NO.21/2015 DUE TO REVENUE AUDIT OBJECTION RELATING TO LONG TERM CAPITAL GAIN FOR ASSESSMENT YEAR 2009-10 AND 2011-12 AND THEREFORE THE ISSUE RAISED BY THE REVENUE FOR T HESE TWO ASSESSMENT YEARS I.E. 2009-10 AND 2011-12 NEEDS TO BE DECIDED ON MERITS. INDIRA DEVI GANEDIWAL I.T.A. NO. 559,560,500&561/IND/17 3 4. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD BEFORE US. 5. AS REGARDS REVENUES APPEAL FOR ASSESSMENT YEAR 2013-14 AND 2014-15 VIDE ITA NO. 500/INDORE/2017 AND 561/INDORE /2016 THERE IS NO DISPUTE TO THE FACT THAT BOTH THESE APPEALS A RE HAVING TAX EFFECT LESS THAN RS. 20 LAKHS AND ON PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES SHOWS THAT THE ISSUE RAISED IN TH ESE APPEALS ARE NOT CROPPING OUT OF ANY REVENUE AUDIT OBJECTION THE REFORE IS NOT COVERED UNDER THE EXCEPTIONS PROVIDED IN PARA 10 OF THE CBDT CIRCULAR NO.3/2018 DATED 11.7.2018. THEREFORE WE A RE OF THE VIEW THAT BOTH THE APPEALS ARE LIABLE TO BE DISMISSED AS NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT. ACCORDINGLY THE REVE NUES APPEAL FOR ASSESSMENT YEAR 2013-14 AND 2014-15 STANDS DISMISSE D. 6. NOW COMING TO ITA NO. 559/17 AND 560/17 FOR ASS ESSMENT YEAR 2009-10 AND 2011-12 WHEREIN THE ASSESSMENTS WERE FR AMED U/S 143(3) R.W.S. 147 OF THE ACT AND 143(3) R.W.S. 263 OF THE ACT ON ACCOUNT OF REVENUE AUDIT OBJECTION RELATING TO TAXA BILITY OF LONG TERM CAPITAL GAIN. INDIRA DEVI GANEDIWAL I.T.A. NO. 559,560,500&561/IND/17 4 7. ON PERUSAL OF RECORDS SHOWS THAT THE ASSESSEE R ECEIVED ANCESTRAL AGRICULTURE LAND ON 7.2.86 WHICH WAS ORIGINALLY PUR CHASED PRIOR TO 1981. THE IMPUGNED AGRICULTURE LAND WAS CONVERTED INTO STOCK-IN TRADE ON 15.3.03 AND 1.4.2005. IT IS NOT DISPUTED THAT ON THE DATE OF CONVERSION OF THE AGRICULTURE LAND INTO THE STOC K-IN-TRADE THE ALLEGED ASSET WAS NOT THE CAPITAL ASSET. IT WAS ON 4.2.2005 THAT THE AREA IN WHICH THE ALLEGED LAND WAS SITUATED WAS INC LUDED BY THE MANDSAUR MUNICIPAL LIMIT BY ISSUING GAZETTE NOTIFIC ATION DATED 4.5.2005. SUBSEQUENTLY ASSESSEE DEVELOPED THE LAND AND SOLD IN PARTS SCATTERED OVER VARIOUS ASSESSMENT YEARS. ASS ESSEE DULY OFFERED THE PROFIT OF SALE OF STOCK IN TRADE AS AND WHEN IT HAPPENED. THE LD. ASSESSING OFFICER WHILE FRAMING THE ASSESSM ENT PURSUANT TO THE REVENUE AUDIT OBJECTION CAME TO THE CONCLUSION THAT ASSESSEE IS LIABLE TO PAY LONG TERM CAPITAL GAIN FOR THE PERIOD FROM THE DATE OF ACQUISITION TO THE DATE OF CONVERSION INTO STOCK IN TRADE AS PER THE PROVISION OF SECTION 45(2). LD. CIT(A) HAS COMMONL Y DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE OBSERVING THAT ON T HE DATE OF CONVERSION FROM AGRICULTURE LAND TO STOCK-IN TRADE THE ASSET WAS NOT FALLING UNDER THE CATEGORY OF CAPITAL ASSET AND THE REFORE THE PORTION INDIRA DEVI GANEDIWAL I.T.A. NO. 559,560,500&561/IND/17 5 OF INCOME ON ACCOUNT OF DIFFERENCE OF FAIR MARKET P RICE ON THE DATE OF CONVERSION LESS ACQUISITION COST IS EXEMPT FROM TAX. 8. WE FURTHER FIND THAT FOR ASSESSMENT YEAR 2006-0 7 VERY SAME ISSUE CAME BEFORE CO-ORDINATE BENCH AND THE FINDING S OF LD.CIT(A) WAS CONFIRMED BY THE TRIBUNAL IN ITA NO.699/IND/201 5 DATED 28.2.2018 OBSERVING AS FOLLOWS; 4. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT SINCE THE ASSET IS NOT CAPITAL ASSET, NO LONG TERM OF CA PITAL GAIN IS CHARGEABLE ON THE CONVERSION OF THIS LAND INTO STOCK-IN-TRADE. THE LD. CIT(A) HAS GIVEN FINDING ON FACT THAT THE LAND HAS BEEN INCLUD ED IN THE MANDSAUR MUNICIPAL LIMIT BY GAZETTE NOTIFICATION DATED 04.04 .2005. THIS FACT IS NOT CONTROVERTED BY THE REVENUE. WE DO NOT SEE ANY INFI RMITY INTO THE ORDER OF THE LD. CIT(A) AS UNDISPUTED FACTS REMAINS THAT THE ASSESSEE HAD CONVERTED THE AGRICULTURAL LAND WHICH WAS NOT A CAP ITAL ASSET. AS PER THE PROVISIONS OF SECTION 2(14) OF THE ACT, AGRICULTURA L LAND IS EXCLUDED FROM THE CATEGORY OF CAPITAL ASSET. FURTHER SECTION 45(2 ) OF THE ACT MANDATES THAT THE PROFIT OR GAINS ARISING FROM THE TRANSFER BY WAY OF CONVERSION OF LAND BY THE OWNER OF CAPITAL ASSET INTO AS ITS TREA TMENT BY HIM AS STOCK- IN-TRADE OF A BUSINESS CARRIED ON BY HIM SHALL BE C HARGEABLE TO INCOME TAX AS ASSESSEES INCOME OF THE PREVIOUS YEAR IN WH ICH SUCH STOCK-IN- TRADE IS SOLD OR OTHERWISE TRANSFERRED BY HIM AND F OR THE PURPOSE OF SECTION 48, THE FAIR MARKET VALUE OF THE ASSET ON T HE DATE OF SUCH CONVERSION OR TREATMENT SHALL BE DEEMED TO BE FULL VALUE OF THE CONSIDERATION RECEIVED AS A RESULT OF TRANSFER OF T HE CAPITAL ASSET. INDIRA DEVI GANEDIWAL I.T.A. NO. 559,560,500&561/IND/17 6 THE ASSESSEE HAS DEMONSTRATED THAT IN THE YEAR OF C ONVERSION INTO STOCK- IN-TRADE, THE AGRICULTURAL LAND DID NOT FALL IN THE MUNICIPAL LIMIT OF MANDSAUR NAGAR PALIKA. AS THE SAME WAS SUBSEQUENTLY , NOTIFIED IN THE GAZETTE NOTIFICATION NO.167 DATED 4 TH APRIL, 2005, THAT IS SUBSEQUENT TO THE CONVERSION INTO STOCK-IN-TRADE OF THE AGRICULTU RAL LAND. HENCE, WE DO NOT SEE ANY INFIRMITY INTO THE ORDER OF LD. CIT(A) SAME IS HEREBY AFFIRMED. 9. WE THEREFORE RESPECTFULLY FOLLOWING THE DECISIO N OF THE TRIBUNAL AND IN THE GIVEN CIRCUMSTANCES OF THE CASE WHICH AR E SIMILAR TO THOSE DEALT BY THE CO-ORDINATE BENCH FOR ASSESSMENT EAR 2006-07 ARE OF THE CONSIDERED VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE FINDINGS OF LD. CIT(A) IN FAVOUR OF ASSESSEE. ACCO RDINGLY APPEALS OF THE REVENUE FOR ASSESSMENT YEAR 2009-10 & 2011-12 S TANDS DISMISSED. 10. IN THE RESULT ALL THE APPEALS OF THE REVENUE ST ANDS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25.09.20 18. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER A CCOUNTANT MEMBER INDORE; DATED : 25/09/2018 /DEV INDIRA DEVI GANEDIWAL I.T.A. NO. 559,560,500&561/IND/17 7 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE