ITO WD 1, PALGHAR V. RAMESHCHANDRA, ACHUT AJGAONKAR, THANE

ITA 6024/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1149 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 11-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-10-2013
• Court: TRIBUNAL
• Assessee Lawyers: VIKASH KUMAR AGARWAL
• Keywords: Capital asset; Cost of acquisition; Reasonable cause; Valuation report; Revised return
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SAKTIJIT DEY , JM ITA NO. 60 2 4 / MUM/20 1 3 ( ASSESSMENT YEAR : 2009 - 10 ) ITO WD - 3, PALGHAR VS. SHRI RAMESHCHANDRA ACHUT AJGAONKAR, AJGAONKAR WADI, TEMBHODE ROAD, NEAR YAMAHA SHOWROOM, TAL - PALGHAR, DIST: THANE - 401 404 PAN/GIR NO. ACQPA0973Q APPELLANT ) .. RESPONDENT ) CO NO. 103/ MUM/20 15 ( ASSESSMENT YEAR : 2009 - 10 ) SHRI RAMESHCHANDRA ACHUT AJGAONKAR, AJGAONKAR WADI, TEMBHODE ROAD, NEAR YA MAHA SHOWROOM, TAL - PALGHAR, DIST: THANE 401 404 VS. JT CIT, PALGHAR PAN/GIR NO. ACQPA0973Q APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI VIKASH KUMAR AGARWAL REVENUE BY SHRI ADITYA AJGAONKAR DATE OF HEARING 13 / 04/ 201 7 DATE OF PRONOUNCEME NT 27 / 04 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY ASSESSEE AGAINST THE ORDER OF CIT(A) - II, THANE DATED 19/07/2013 FOR THE A.Y. 2009 - 10, IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. RIVAL C ONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THERE IS A DELAY IN FILING THE APPEAL BY REVENUE AS WELL AS CROSS OBJECTION. ITA NO. 6024/MUM/2013 CO NO.103/MUM/2015 SHRI RAMESH CHANDRA ACHUT AJGAONKAR 2 CONSIDERING THE REASONS ADVANCED FOR DELAY IN FILING, WE ARE SATISFIED THAT THERE WAS A REASONABLE CAUSE FOR DELAY IN FILING. IN THE SUBSTANTIAL INTEREST OF JUSTICE, WE CONDONE THE DELAY AND APPEALS ARE HEARD ON MERIT. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME SHOWING TOTAL INCOME OF RS.18,58,555/ - WHICH INCLUDED LONG TERM CAPITAL GAIN OF RS. 71,710/ - ON SALE O F LAND. THE A.O. EXAMINED THE RETURN OF INCOME AND DETAILS FURNISHED AND OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD 27.8 ACRES OF LAND SITUATED AT DHANSAR FOR RS. 1,45,00,000/ - AND ANOTHER LAND ADMEASURING 28.36 ACRES SITUATED AT PADGHA FOR RS. 31,00,000/ - . IN THE COMPUTATION OF CAPITAL GAIN, THE ASSESSEE HAS CLAIMED COMPENSATORY EXPENSES AT RS. 90,00,000/ - ALONG WITH COST OF ACQUISITION AS ON 01/04/1981. THEREFORE, THE A.O. REQUIRED THE ASSESSEE TO FURNISH DETAIL OF COMPENSATO RY EXPENSES OF RS. 90,00,000/ - AND ALSO TO JUSTIFY THE COST OF ACQUISITION AS ON 01/04/1981. CONSIDERING THE REPLY OF ASSESSEE, THE A.O. DISALLOWED COMPENSATORY EXPENSES OF RS. 90,00,000/ - ON THE GROUND THAT IT PERTAINED TO THE IMMEDIA TELY PRECEDING ASSESSMENT YEAR I.E. A.Y. 2008 - 09. SHE ALSO DECLINED TO REDUCE THE COST OF ACQUISITION AS ON 01/04/1981 OF BOTH THE LANDS. 4. BEFORE THE AO, CONTENTION OF LEARNED AR WAS THAT CAPITAL GAIN AROSE IN THE EARLIER ASSESSMENT YEAR 2008 - 09 IN SO FA R AS SALE DEED WAS EXECUTED ON 15/03/2008 AND POSSESSION OF THE LAND WAS ALSO GIVEN. HOWEVER, AO DID NOT ACCEPT ASSESSEES CONTENTION AND TAXED UNDER CAPITAL GAIN DURING THE YEAR WITHOUT ALLOWING COMPENSATORY EXPENSES OF RS.90,00,000/ - AND ITA NO. 6024/MUM/2013 CO NO.103/MUM/2015 SHRI RAMESH CHANDRA ACHUT AJGAONKAR 3 ALSO DISR EGARDIN G V ALUATION REPORTS FILED BY THE ASSESSEE INDICATING VALUE OF LAND AS OF 01/04/1981 . 5. BY THE IMPUGNED ORDER, CIT(A) ALLOWED COMPENSATORY EXPENDITURE OF RS.90 LAKHS, HOWEVER, HE DID NOT ACCEPT ASSESSEES CONTENTION FOR TAXING THE CAPITAL GAIN IN THE A.Y. 2008 - 09 FOR WHICH REASSESSMENT HAVE ALREADY BEEN STARTED. CIT(A) ALSO DID NOT ACCEPT ASSESSEES CONTENTION REGARDING VALUATION OF LAND AS OF 01/04/1981. 6. AGAINST THIS ORDER OF CIT(A), REVENUE IS IN FURTHER APPEAL BEFORE US AND ASSESSEE HAS ALSO FILED CRO SS OBJECTION. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAD SOLD 10.88 HECTARES OF AGRICULTURAL LAND AT VILLAGE DHANSAR TO SHRI. DEEPAK HARISHCHNADRA THAKUR AND RAKESH R. AGARWAL FOR THE CONSIDERATION OF RS.1,45,00,000/ - UNDER SALE DEED DT. 15.03.2008. THE POSSESSION OF THE SAID LAND WAS HANDED OVER TO THE PURCHASERS ON THE DATE OF THE AGREEMENT ITSELF I.E. ON 15.03.2008. THIS FACT IS NOTED IN PARA 6/PG NO. 3 OF THE SALE AGREEMENT DT. 15.03.2008. IT IS THUS THE CASE THAT THE 'TRANSFER' OF THE SAID LAND AS PROVIDED U/S 2(47)(V) TOOK PLACE ON 15.03.2008 FALLING IN THE PREVIOUS YEAR RELEVANT TO A.Y. 08 - 09 AND NOT IN THE YEAR UNDER APPEAL. THE ENTIRE CONSIDE RATION FOR SALE OF THE SAID AGRICULTURAL LAND WAS ALSO RECEIVED ON OR BEFORE THE DATE OF THE AGREEMENT AS PER PARA 5 / PAGE NO. 3 OF THE SALE AGREEMENT AND THEREFORE THE GAINS ARISING FROM SALE OF THE SAID AGRICULTURAL LAND DOES NOT ARISE IN THE YEAR UNDER APPEAL. THE SALE AGREEMENT DATED 15/03/2008 WAS REGISTERED WITH ITA NO. 6024/MUM/2013 CO NO.103/MUM/2015 SHRI RAMESH CHANDRA ACHUT AJGAONKAR 4 THE SUB - REGISTRAR, PALGHAR ON 02.06.2008 FALLING IN THE PREVIOUS YEAR RELEVANT TO THE ASST. YR. 2009 - 10. THIS IS THE FACTUAL POSITION OF THE TRANSACTION. THE REGISTERED SALE AGREEMENT DT. 15. 03.2008, THE FACTUM OF RECEIPT OF ENTIRE SALE CONSIDERATION BY 15.03.2008 AND THE HANDING OVER OF POSSESSION OF THE AGRICULTURAL LAND TO THE PURCHASERS ON 15.03.2008 SQUARELY PLACES THE GAINS ARISING ON SALE OF THE SAID LAND TO FALL IN PREVIOUS YEAR RELEVA NT TO ASST. YR. 2008 - 09 AND NOT IN THE YEAR UNDER APPEAL. THE SALE AGREEMENT DT. 15.03.2008 HAS BEEN PLACED ON THE RECORD OF THE ID AO IN THE COURSE OF ASST. PROCEEDINGS. UNDER THESE FACTS AND CIRCUMSTANCES THE LD. AO SHOULD HAVE CONSIDERED THE INCOME FRO M SALE OF THE AGRICULTURAL LAND IN THE CORRECT ASST. YR. I.E. A. Y. 2008 - 09 AND NOT IN THE YEAR UNDER APPEAL. 8. WE ALSO FOUND THAT THE LD. A.O HAD EXAMINED THE PAYMENT OF RS.90,00,000/ - MADE TO SHRI. BABULAL KHIMJI SHAH PURSUANT TO CONSENT TERMS FILED IN SETTLEMENT OF SUIT NO.608 OF 1981 IN THE HIGH COURT OF JUDICATURE AT BOMBAY. SHRI. BABULAL KHIMJI SHAH HAD UNDER AGREEMENT FOR SALE DT. 20.11.1979 AGREED TO PURCHASE THE AGRICULTURAL LAND OF THE APPELLANT SITUATED AT VILLAGE DHANSAR, TALUKA PALGHAR, DIST. THANE. HOWEVER, FOR CERTAIN REASONS DISPUTES AROSE BETWEEN THE PARTIES AND THE TRANSACTION OF SALE WAS NOT COMPLETED. SUBSEQUENTLY, VIDE CONSENT TERMS DT. 15.01.2008, THE DISPUTES WERE SETTLED WITH THE APPELLANT AGREEING TO PAY RS. 90,00,000/ - TO THE SAID SHRI. BABULAL KHIMJI SHAH AND IN TURN THE SAID SHRI. BABULAL KHIMJI SHAH GIVING UP ALL HIS RIGHT, TITLE AND INTEREST IN ITA NO. 6024/MUM/2013 CO NO.103/MUM/2015 SHRI RAMESH CHANDRA ACHUT AJGAONKAR 5 THE DHANSAR LAND. COPY OF THE CONSENT TERMS FILED IN HIGH COURT BOMBAY IN RESPECT OF SUIT NO. 608 OF 1981 ARE PLACED ON RECORD. 9. THE LD. A.O IN THE COURSE OF ASST. PROCEEDINGS SATISFIED HERSELF ABOUT THE GENUINENESS OF THE SAID PAYMENT BY WAY OF INDEPENDENT VERIFICATION OF THE IT RECORDS OF LATE SHRI. BABULAL KHIMJI SHAH AS PROVIDED BY HIS LEGAL HEIR IN RESPONSE TO NOTICE U/S 133(6). TH E NECESSARY DOCUMENTS RELATING TO THE SAID PAYMENT IN THE FORM OF HIGH COURT CONSENT TERMS WERE ALSO EXAMINED AND KEPT ON RECORD BY THE ID AO. HOWEVER, THE ID. A.O IN COMPUTING THE LONG TERM CAPITAL GAINS ON SALE OF DHANSAR LAND DENIED THE DEDUCTION OF RS. 90,00,000/ - PAID TO SHRI. BABULAL KHIMJI SHAH FOR THE ONLY REASON THAT THE SAID PAYMENT WAS MADE IN THE EARLIER YEAR TOWARDS COST OF IMPROVEMENT OF THE CAPITAL ASSET AND COULD NOT BE ALLOWED IN THE YEAR UNDER APPEAL WHILE WORKING OF THE CAPITAL GAINS. THE REASON FOR DENIAL OF THE DEDUCTION AS GIVEN BY THE ID AO AT PARA 8/PG NO. 3 OF THE ASST. ORDER WAS THAT THE ASSESSEE FOLLOWED CASH SYSTEM OF ACCOUNTING FOR HIS BUSINESS AND THE PAYMENT TO SHRI. BEBULAL KHIMJI SHAH WAS MADE IN A.Y. 2008 - 09 AND THE REFORE WOULD NOT BE DEDUCTIBLE FOR DETERMINING CAPITAL GAINS COMPUTED IN THE SUBSEQUENT ASST. YEAR. 10. IT IS CLEAR FROM THE ABOVE FACTS THAT DURING THE YEAR THE A SSESSEE HAD INADVERTENTLY IN THE RETURN OF INCOME OFFERED SALE OF AGRICULTURAL LAND AT DHANSA R FOR RS.1,45,00,000/ - TO TAX AS LONG TERM CAPITAL GAINS. PROCEEDINGS U/S 147 WERE INITIATED BY THE DEPARTMENT FOR AY 2008 - 09 WHEREIN IT WAS HELD THAT THE LAND OFFERED TO TAX IN A.Y 2009 - 2010 WAS ACTUALLY TO BE TAXED IN AY 2008 - 09. ITA NO. 6024/MUM/2013 CO NO.103/MUM/2015 SHRI RAMESH CHANDRA ACHUT AJGAONKAR 6 11. HOWEVER, THE CIT(A) DID NOT ACCEPT ASSESSEES CONTENTION REGARDING TAXING OF THE CAPITAL GAIN IN ASSESSMENT YEAR 2008 - 09 ON THE PLEA THAT ANY VARIATION FAVORABLE TO THE ASSESSEE IN PARTICULARS OF INCOME CAN ONLY BE DONE BY REVISED RETURN OF INCOME AND HENCE REFUSED TO ADJUDI CATE IF TRANSFER OF LAND HAPPENED IN AY 2008 - 09 AND IF THE SAID LAND WAS AGRICULTURAL LAND. HOWEVER, CIT(A) ALLOWED DEDUCTION OF RS. 90 LAKHS BUT DID NOT ACCEPT COST OF LAND AS OF 01/04/1981 AND AS PER VALUATION REPORT OF CHARTERED ENGINE ERING SUBMITTED BY THE ASSESSEE . A S PER OUR CONSIDERED VIEW, SINCE NOT ONLY SALE DEED WAS EXECUTED IN THE A.Y. 2008 - 09 BUT ALSO POSSESSION WAS GIVEN IN THE A.Y. 2008 - 09 , C APITAL GAIN WAS LIABLE TO BE TAXED IN THE A.Y. 2008 - 09 AND NOT IN THE A.Y. 2009 - 10, MERELY BECAUSE SALE DEED WAS GOT REGISTERED IN THE A.Y. 2009 - 10. WE ALSO FOUND THAT THE SAME LAND OF RS. 1,45,00,000/ - HAS ALSO BEEN ASSESSED IN AY 2008 - 09. IT IS THE CASE OF THE DEPARTMENT THAT SALE OF LAND SHOULD BE ACCESSED TO TAX IN AY 2008 - 09. THIS FINDING OF FACT WAS N OT CONTESTED BY THE ASSESSEE OR THE DEPAR T MENT DURING BOTH ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDINGS. WE ALSO FOUND THAT THE ASSESSEE HAS GONE IN FOR DISPUTE RESOLUTION SCHEME AND HENCE THE ENTIRE AMOUNT IN ACCORDANCE WITH THE SCHEME WAS STATED TO HAVE PAID. 12. AS PER OUR CONSIDERED VIEW SINCE, THE CAPITAL GAINS ON SALE OF LAND IS LIABLE TO BE TAXED IN AY 2008 - 09 AND TAX HAS ALREADY BEEN PAID IN ITA NO. 6024/MUM/2013 CO NO.103/MUM/2015 SHRI RAMESH CHANDRA ACHUT AJGAONKAR 7 ACCORDANCE TO THE INCOME DECLARATION SCHEME, THE SAID LONG TERM CAPITAL GAIN IS TAXABLE IN AY 2008 - 09 AND NOT IN THE' CURRENT AY 2009 - 10, IF THE CAPITAL GAIN ON LONG TERM CAPITAL GAIN ON SALE OF LAND IS ALSO TAXED IN 2009 - 10, THEN IT SHALL RESULT IN DOUBLE TAXATION OF THE SAID CAPITAL GAINS. SO FAR AS DEDUCTION OF RS. 90 LAKHS IS TO BE ALLOW ED AS THE COST OF IMPROVEMENT SINCE THE SAME HAS BEEN PAID BEFORE 31/03/2008, THE SAME IS LIABLE TO BE ALLOWED WHILE COMPUTING THE CAPITAL GAIN. WE DIRECT ACCORDINGLY. 13. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND DIRECT THE AO TO ASSESS THE CAPITAL GAIN IN THE A.Y. 2008 - 09. AO IS FURTHER DIRECTED TO ALLOW CLAIM OF DEDUCTION OF RS.90 LAKHS ON ACCOUNT OF COST OF IMPROVEMENT. THE REGISTERED VALUE REPORT IN RESPECT OF PRICE OF LAND AS OF 01/04/1981 IS A LSO TO BE SEEN BY THE AO AFRESH IN TERMS OF OUR ABOVE OBSERVATION. 14. IN THE RESULT, AP PEAL OF THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DISPOSED OFF IN TERMS INDICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27 / 04 /2017 SD/ - ( SAKTIJIT DEY ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 27 / 04 /201 7 KARUNA SR. PS 7 COPY OF THE ORDER FORWARDED TO : ITA NO. 6024/MUM/2013 CO NO.103/MUM/2015 SHRI RAMESH CHANDRA ACHUT AJGAONKAR 8 BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//