MADHUKAR YESHWANT KAMAT, MUMBAI V. ITO 18(3)(3), MUMBAI

ITA 5733/MUM/2013

• Counselvise Citation: 573319914 RSA 2013
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 19-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD RIZWAN
• Keywords: Capital asset; Opportunity of being heard; Valuation report
• Section: 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 5733/MUM/2013 (ASSESSMENT YEAR: 2008-09) SHRI MADHUKUMAR YESHWANT KAMAT INCOME TAX OFFICER - 18(3)(3) FLAT NO. 5, PLOT 506 2ND FLOOR, PIRAMAL CHAMBERS MEGH MALHAR, GABRIEL ROAD VS. LALBAUG, MUMBAI 400012 MAHIM, MUMBAI 400016 PAN - AAGPK5170M APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI MOHD. RIZWAN DATE OF HEARING: 08.01.2014 DATE OF PRONOUNCEMENT: 24.01.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 03.06.2013 PASSED BY CIT(A)-16, MUMBAI AND IT PERTAINS TO A.Y. 2008-09. 2. THE FOLLOWING GROUNDS WERE URGED BY THE ASSESSEE: - 1. TREATING THE AGRICULTURAL LAND AS CAPITAL ASSE T AND COMPUTING THE CAPITAL GAIN/LOSS ON THE SAME. 2. CONSIDERING THE SANGUEM MUNICIPAL COUNCIL AS NOT IFIED MUNICIPALITY AS PER INCOME TAX ACT. 3. REMANDING THE MATTER TO THE ASSESSING OFFICER TO VERIFY ASSESSEES SHARE IN THE PROPERTIES ON THE BASIS OF ANY FORMAL SETTLEMENT DEED, IF ANY, WITHOUT CONSIDERING THE FA CT THAT THE ASSESSEE WAS GOVERNED BY PORTUGUESE CIVIL CODE OF 1 986 & ACCORDINGLY, INCOME OF THE ASSESSEE HAD TO BE COMPU TED IN TERMS OF S. 5A OF I.T. ACT, 1961. 3. AT THE OUTSET IT MAY NOT NOTICED THAT THIS APPEAL I S BARRED BY LIMITATION BY ONE DAY. THE ASSESSEE FILED AN AFFIDA VIT ALONGWITH REASONS FOR THE DELAY IN FILING THE APPEAL. SINCE THE ASSESSEE HAS SUFFICIENT CAUSE, THE DELAY OF ONE DAY IS CONDONED AND THE APPEAL IS ADMI TTED. ITA NO. 5733/MUM/2013 SHRI MADHUKUMAR YESHWANT KAMAT 2 4. THOUGH NOTICE WAS SENT TO THE ASSESSEE BY REGISTERE D POST, AT THE ADDRESS GIVEN IN FORM NO. 36, THE SAME WAS RETURNED UNSERVED WITH THE POSTAL REMARKS OUT OF MUMBAI. I, THEREFORE, PROCE ED TO DISPOSE OF THE APPEAL EXPARTE, QUA ASSESSEE, ON MERITS. 5. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE DECLA RED TOTAL INCOME OF ` 2,55,758/- WHEREAS THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF ` 4,80,620/- WHEREIN THE AO COMPUTED THE LONG TERM CA PITAL LOSS OF THE ASSESSEE FOR A.Y. 2008-09 ON SALE OF LAND AT ` 27,921/- AS AGAINST THE LOSS OF ` 28,02,087/- DECLARED BY THE ASSESSEE. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT THE IMPUGNE D LAND WAS AGRICULTURAL LAND FALLING OUTSIDE THE MUNICIPAL LIM ITS AND HENCE IT CANNOT BE TREATED AS CAPITAL ASSET WITHIN THE MEANING OF SECT ION 2(14) OF THE INCOME TAX ACT. HENCE THE SALE PROCEEDS FROM THE SALE OF T HIS LAND ARE NOT ASSESSABLE TO TAX. ON THE OTHER HAND, THE CASE OF T HE AO WAS THAT THE ASSESSEE ADMITTED THAT THE SAID PLOT IS WITHIN THE LIMITS OF SANGUEM MUNICIPAL COUNCIL, DISTRICT OF SOUTH GOA AND IF IT IS NOT COVERED UNDER SECTION 2(14) OF THE INCOME TAX ACT THE ASSESSEE WO ULD NOT HAVE OBTAINED VALUATION REPORT ON ITS OWN. HE ALSO OBSERVED THAT THE ASSESSEE SOLD THE IMPUGNED PROPERTY BY WAY OF AN UNREGISTERED DEED AN D THE RATE AS ON 01.04.1981 DECLARED BY THE ASSESSEE WAS HIGHER FOR WHICH THE AO OBTAINED DEPARTMENTAL VALUERS OPINION. 6. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T HE SOLD SOME PIECES OF AGRICULTURAL LAND OF GOA WHICH DOES NOT H AVE A FULL-FLEDGED MUNICIPALITY. THE PLOTS ARE WITHIN THE LIMITS OF SA NGUEM MUNICIPAL COUNCIL, WHICH IS CLASSIFIED AS C CLASS MUNICIPAL AREA UNDER THE GOAN LAW AND THE SAID VILLAGE HAS A POPULATION OF LESS THAN 10000 AND IT IS 25 KMS AWAY FROM THE BOUNDARY OF MADGAON MUNICIPALITY, WHI CH IS A NOTIFIED MUNICIPALITY UNDER SECTION 2(14) OF THE INCOME TAX ACT. IN OTHER WORDS, THE SAID PLOTS OF LAND ARE NOT COVERED BY MUNICIPAL ARE A AND HENCE THEY CANNOT BE TREATED AS CAPITAL ASSETS. ACCORDINGLY ANY GAI N UPON TRANSFER OF THE SAID LAND IS EXEMPT AS THE SAID GAIN FROM THE AGRIC ULTURAL LAND IS NOT TAXABLE. IT IS ALSO SUBMITTED THAT THOUGH THE ASSES SEE, THROUGH OVERSIGHT, ITA NO. 5733/MUM/2013 SHRI MADHUKUMAR YESHWANT KAMAT 3 DECLARED IT AS CAPITAL GAIN/LOSS IN THE INCOME TAX RETURN, IT WAS EXPLAINED BEFORE THE AO THAT THE SAME ARE PIECES OF AGRICULTU RAL LAND AND AS SUCH NOT ASSESSABLE TO CAPITAL GAIN TAX. WITH REGARD TO THE RATE ADOPTED BY THE VALUATION OFFICER IT WAS CONTENDED THAT THE DVO HAS NOT COMPARED THE PRICE WITH SIMILAR COMPARABLES. HE ALSO OBJECTED TO THE C ONCLUSION OF THE AO THAT THE SALE DEEDS ARE NOT REGISTERED. FURTHER, AS PER THE PECULIAR LAWS OF GOA, PIECES OF AGRICULTURAL LAND ARE SOLD TO THE TENANTS , I.E., WHOSOEVER IS USING LAND FOR AGRICULTURAL PURPOSES. THEY ARE KNOWN AS T ENANTS ((COOLAS) AND IT HAS TO BE SOLD AT THE GOVERNMENT RATE BY GIVING FIR ST PREFERENCE TO THEM. A DETAILED CHART WAS ALSO FURNISHED TO SHOW ASSESSEE S SHARE OF LAND AND HOW THE INVESTMENTS ORIGINATED TO SUBMIT THAT EVEN IF I T HAS TO BE BROUGHT TO TAX THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 54EC OF THE ACT. 7. THOUGH THE LEARNED CIT(A) EXTRACTED THE ARGUMENTS O F THE ASSESSEE HE MERELY PROCEEDED ON THE FOOTING THAT THE ASSESSEE H AVING DECLARED THE INCOME AS CAPITAL GAIN/LOSS AND THE APPELLANTS OWN VALUER HAS DESCRIBED THE PROPERTIES AS SITUATED WITHIN THE LIMITS OF THE SANGUEM MUNICIPAL COUNCIL, THE PLEA OF THE ASSESSEE THAT THE LAND IS NOT CAPITAL ASSET IS NOT ACCEPTABLE. HE HAS ALSO REFERRED TO SEVERAL DECISIO NS IN SUPPORT OF HIS CONCLUSION THAT IT WAS NOT USED FOR AGRICULTURAL PU RPOSES. 8. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THOUGH NOTICE WAS SENT TO THE ASSESSEE NONE APPEARED ON BE HALF OF THE ASSESSEE. THE LEARNED D.R. WAS CALLED UPON TO FURNISH THE DOC UMENTS TO SUPPORT THE STAND TAKEN BY THE AO AS WELL AS THE CIT(A) AND ALS O DIRECTED HIM TO FURNISH WRITTEN SUBMISSIONS BUT THE LEARNED D.R. HAS FURNIS HED NO WRITTEN SUBMISSIONS TILL DATE. HE, HOWEVER, RELIED UPON THE ORDERS PASSED BY THE TAX AUTHORITIES. 9. AT THE TIME OF HEARING THE BENCH WANTED CERTAIN CLA RIFICATIONS WITH REGARD TO THE FACT AS TO WHETHER THE SANGUEM MUNICI PAL COUNCIL IS A NOTIFIED MUNICIPAL AREA OR NOT SINCE MUCH EMPHASIS WAS LAID BY THE CIT(A) ON THAT ASPECT. THE CLAIM OF THE ASSESSEE THAT THE POPULATION THEREIN IS LESS THAN 10000 AND IT IS BEYOND 25 KMS FROM THE NOTIFIE D AREA WAS NOT CONTROVERTED BY THE LEARNED D.R. BY PLACING ANY MAT ERIAL ON RECORD. THE ITA NO. 5733/MUM/2013 SHRI MADHUKUMAR YESHWANT KAMAT 4 CASE OF THE ASSESSEE WAS THAT AS PER THE PECULIAR L AWS OF GOA, PIECES OF AGRICULTURAL LAND ARE SOLD TO THE TENANTS AND THESE LANDS IN TURN WERE CULTIVATED BY THEM OVER A NUMBER OF YEARS. THE LEAR NED CIT(A), HOWEVER, APPEARS TO HAVE BEEN LED BY THE STATEMENT OF THE AO , OVERLOOKING THAT THE ASSESSEE HAS OBTAINED VALUATION REPORT WHICH PRESUP POSES THAT IT WAS AGRICULTURAL LAND. AS PER THE EXTRACT OF FORM NO. I AND XIV OBTAINED FROM THE OFFICE OF THE TALATHI OF THE SAID VILLAGE THE L AND IS SHOWN AS CULTIVABLE AGRICULTURAL LAND. THE CLAIM OF THE ASSESSEE THAT I N THE EARLIER YEARS AGRICULTURAL INCOME WAS EARNED FROM THE SAID LAND A ND DECLARED TO THE TAX AUTHORITIES WAS NOT GIVEN DUE WEIGHTAGE AND IT IS N OT BROUGHT TO THE NOTICE OF THE BENCH AS TO WHETHER THE ASSESSEE HAS IN FACT FILED RETURNS OF INCOME IN THE EARLIER YEARS DECLARING AGRICULTURAL INCOME FROM THE SAID LAND. OVERALL, THE ORDER OF THE CIT(A) IS MERELY BASED UP ON THE FINDINGS OF THE AO WITHOUT VERIFYING THE CLAIMS MADE BEFORE HIM IN THE STATEMENT OF FACTS ANNEXED TO FORM NO. 36. UNDER THESE CIRCUMSTANCES, IN THE INTEREST OF JUSTICE, I HEREBY SET ASIDE THE MATTER TO THE FILE OF THE CIT(A), WHO IS DIRECTED TO OBTAIN A REPORT FROM THE AO WITH REGARD TO THE CLAIMS MADE BY THE ASSESSEE, I.E.: (A) WHETHER THE IMPUGNED LAND W AS USED FOR AGRICULTURAL PURPOSE BY THE TENANTS, (B) WHETHER THE ASSESSEE HA S EARNED AGRICULTURAL INCOME AND OFFERED TO TAX IN THE EARLIER YEARS, (C) WHETHER THE POPULATION IN THE SAID AREA IS LESS THAN 10000, (D) WHETHER THE L AND IS SITUATED IN NOTIFIED MUNICIPAL AREA (MERELY BECAUSE IN GOA IT IS KNOWN A S C TYPE MUNICIPALITY, IT CANNOT BE A BASIS TO COME TO THE CONCLUSION THAT THE LAND IS SITUATED WITHIN THE MUNICIPAL LIMIT UNDER SECTION 2(14) OF T HE ACT), (E) WHAT IS THE SHARE OF THE ASSESSEE OUT OF THE LAND SOLD, AND (F) WHETHER THE COMPARABLE CASES MENTIONED BY THE VALUATION OFFICER, WHICH THE AO HAS REFERRED TO, WERE COMPARABLE TO THE LANDS IN DISPUTE. HE MAY ALS O OBTAIN INFORMATION WITH REGARD TO THE BONDS PURCHASED BY THE ASSESSEE TO VERIFY AS TO WHAT EXTENT THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 54EC OF THE ACT, IN THE ALTERNATIVE. WITH THESE OBSERVATIONS THE APP EAL IS HEREBY SET ASIDE TO THE FILE OF THE CIT(A), WHO IS DIRECTED TO GIVE THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. ITA NO. 5733/MUM/2013 SHRI MADHUKUMAR YESHWANT KAMAT 5 10. IN THE RESULT, FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 24 TH JANUARY, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 16, MUMBAI 4. THE CIT 18, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.