Mr. D.Arumugam, CHENNAI V. ITO, CHENNAI

ITA 631/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51723 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset
• Section: 54F; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 631/MDS/2011 ASSESSMENT YEAR : 2006-07 SHRI D. ARUMUGAM, 24, BROADWAY, MANNADY, POLICE QUARTERS, CHENNAI-600 001. (PAN : AAAPA8474G) V. THE INCOME-TAX OFFUICER, BUSINESS WARD-VIII(2), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE RESPONDENT BY : SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL DATE OF HEARING : 24-08-2011 DATE OF PRONOUNCEMENT : 24-08-2011 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIO NER OF INCOME-TAX-VIII, CHENNAI IN C.NO. 21(6)/CIT VIII/2010-11 DATED 22-03 -2011 FOR THE ASSESSMENT YEAR 2006-07. 2. SHRI S.SRIDHAR, ADVOCATE REPRESENTED ON BEHALF O F THE ASSESSEE AND SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL REPRESENTED ON BEHALF OF THE REVENUE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT THE ASSESSEE HAD SOLD AGRICULTURAL LAND WITHIN 8 KM FROM THE MUN ICIPAL LIMIT. IT WAS THE I.T.A. NO.631/MDS/2011 2 SUBMISSION THAT IN VIEW OF THE DECISION OF THE HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M.S. SRINIVASA NAICKER, IN THE COURSE O F ASSESSMENT THE ASSESSING OFFICER HAD TREATED THE SALE PROCEEDS AS EXEMPT ON THE GROUND THAT AGRICULTURAL OPERATIONS HAD BEEN CARRIED ON IN THE AGRICULTURAL LAND. IT WAS THE SUBMISSION THAT THE LEARNED CIT INVOKING HIS POWER UNDER SECTI ON 263 OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) HAD HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS PREJUDICIAL AND ERRONEOUS INSOFAR AS THE AGRICU LTURAL LAND SOLD WAS WITHIN 8 KM FROM ALANDUR, ST. THOMAS MOUNT AND TAMBARAM WHIC H ARE THE NOTIFIED AREAS. IT WAS THE FURTHER SUBMISSION THAT THE LEARNED CIT HAD ALSO HELD THAT THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54F IN RESPECT OF THE NEW HOUSE HAD NOT BEEN CONSIDERED BY FOLLOWING THE DECISION OF TH E HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. V. CIT 284 ITR 323. IT WAS THE SUBMISSION THAT IF THE CAPITAL GAINS WAS LIABLE TO BE ASSESSED, THEN T HE CLAIM UNDER SEC. 54F OF THE ACT OUGHT TO HAVE BEEN CONSIDERED. IT WAS THE SU BMISSION THAT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F GOETZE (INDIA) LTD., THE ASSESSING OFFICER MAY BE DIRECTED TO CONSIDER THE C LAIM OF SEC. 54F OF THE ACT . 4. IN REPLY, THE LEARNED DR VEHEMENTLY SUPPORTED TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT TH E OUT SET IT IS NOTICED THAT THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M.S. SRINIVASA NAICKER HAS BEEN REVERSED BY THE HON'BLE SUPREME CO URT. IN SUCH SITUATION, THE I.T.A. NO.631/MDS/2011 3 AGRICULTURAL LAND WHICH HAS BEEN SOLD BY THE ASSESS EE WHICH IS WITHIN THE 8 KM LIMIT FROM THE MUNICIPALITY IS LIABLE TO BE TREATED AS A CAPITAL ASSET AND THE SALE PROCEEDS IS LIABLE FOR ASSESSMENT AS CAPITAL GAINS. TO THIS EXTENT THE ORDER OF THE LEARNED COMMISSIONER, IT IS NOTICED, IS VERY MUCH I N ORDER INSOFAR AS THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 6. HOWEVER, IN REGARD TO THE CLAIM OF SEC. 54F IT I S NOTICED THAT THE ASSESSEE NEVER HAD AN OPPORTUNITY TO MAKE THE CLAIM BEFORE T HE ASSESSING OFFICER AS THE ISSUE WAS NOT BEFORE THE ASSESSING OFFICER. IN THE CIRCUMSTANCES, APPLYING THE PRINCIPLES AS LAID DOWN BY THE HON'BLE SUPREME COUR T IN THE CASE OF GOETZE (INDIA LTD. V. CIT, REFERRED TO SUPRA, WE DIRECT THE ASSES SING OFFICER TO CONSIDER THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT IF ALL TH E CONDITIONS PRESCRIBED THEREIN ARE COMPLIED WITH BY THE ASSESSEE WHILE COMPUTING T HE CAPITAL GAINS, IF ANY, ON THE SALE OF THE AGRICULTURAL LANDS BY THE ASSESSEE. IN THE CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7. THE ORDER WAS PRONOUNCED IN THE COURT ON 24/08/2 011. SD/- SD/- (AABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 24 TH AUGUST, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE