DIPTI GARG, TONK V. ITO WD, TONK

ITA 633/JPR/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7528 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 26-03-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 18-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Salary income; Additional evidence; Fair market value
• Section: 148; 56; 143(3); 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, JAIPUR Before Dr. Manish Borad, Accountant Member & Dr. S Seethalakshmi, Judicial Member I.T.A. No.633/JPR/2023 Assessment Year: 2014-15 Dipti Garg .......... Appellant (PAN: AOJPM6258D) Vs. Income Tax Officer, Ward-TONK ............. Respondent Appearances by: Shri Nikhelesh Kataria, CA appeared for Appellant Sm. Monish Chaudhary, Addl. CIT appeared for Respondent . Date of hearing : 27.03.2024 Date of pronouncing the order : 30.04.2024 ORDER Per Manish Borad, Accountant Member: This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2014-15 is directed against the order passed u/s 250 of the Income Tax Act, 1961 in short the “Act”) by Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short ld. “CIT(A)”] dated 21.08.2023 arising out of the Assessment order u/s 143(3) r.w.s. 147 of the Act by ITO, Wd-TONK dated 25.12.2018. 2. Though the assessee has raised as many as five grounds of appeal but the sole grievance is against the addition of Rs.38,25,073/- made u/s. 56(2)(viib) of the Act. 3. Facts in brief are that the assessee is an individual earning income from salary and tuition. She filed her original return of income I.T.A. No. 633/JPR/2023 A Y: 2014-15, Dipti Garg Page 2 of 11 on 15.09.2014 declaring income at Rs.2,32,350/-. Thereafter, for the purpose of reopening notice u/s. 148 of the Act was issued after recording the reasons. After carrying out necessary exercise of replying to the objections raised by the assessee, Ld. AO carried out the reassessment proceeding. The facts relating to issue in challenge before us emanates from the transaction of sale of agricultural land during the year. The Sub-Registrar valued the property at Rs.54,50,145/- out of which assessee’s share @ 50% comes to Rs.42,25,073/-. However, the sale consideration shown by the assessee is only Rs. 8 lacs of which assessee’s share is Rs. 4 lacs. Considering this fact, Ld. AO invoked the provisions of section 56(2)(viib) of the Act and the difference between the consideration as per the stamp value authority and the sale consideration disclosed by the assessee i.e. Rs.38,25,073/- (Rs.42,25,073 – Rs.4,00,000/- was added in the hands of assessee u/s. 56(2)(viib) of the Act. Income assessed at Rs.40,57,420/-. Aggrieved, assessee preferred appeal before the Ld. CIT(A) but failed to succeed. Aggrieved, assessee is now appeal before the Tribunal. 4. Ld. Counsel for the assessee referring to the documents placed at pages 95 to 97 of the paper book containing certificate of population by Municipal Board, Deoli, certificate of distance from land to Municipal Borders by Municipal Board, Deoli and certificate of population of Gram Panchayat stated that the agricultural land in question is not a capital asset. He admitted the fact that these documents were not filed before the lower authorities but the claim has always been made that the land sold is an agricultural land. He prayed for admission of the additional evidence and take the same into consideration for the purpose of adjudication. He further submitted that in view of the decision rendered by various Coordinate Benches, if an asset is not a capital asset then it does not fall under the definition I.T.A. No. 633/JPR/2023 A Y: 2014-15, Dipti Garg Page 3 of 11 of property mentioned in its explanation (b) to section 56(2)(vii) of the Act and, therefore, the impugned addition is uncalled for. Ld. Counsel placed reliance on the following decisions: i) ITAT order in case of Sh. Prem Chand Jain Vs. ACIT in ITA No.98/JP/2019 dated 08.06.2020 (Jaipure ITAT); ii) ITAT order in case of Shri Yogesh Maheswari Vs. DCIT in ITA No. 300/JP/2019 dated 18.01.2021 (Jaipur ITAT); iii) ITAT order in case of Toyota Kirloskar Auto Parts Pvt. ltd. Vs. ACIT in ITA No. 1358/Bang/2008 dated 05.01.2012 (Bang ITAT) and iv) ITAT order in case of American Express Services India Pvt. ltd. Vs. DCIT in ITA No. 3524/Del/2014 dated 30.11.2023 (Del ITAT). 5. On the other hand, Ld. DR opposed the admission of additional evidence and also supported the orders of both the lower authorities, placing reliance on the decision of this Tribunal in the case of ITO Vs. Shri Trilok Chand Sain, ITA No. 449/JP/2018 dated 07.01.2019 and that of Coordinate Bench, Ahmedabad in the case of Pavan Anil Bakeri Vs. DCIT in ITA No. 1659/Ahd/2019 dated 26.08.2022. 6. We have heard rival contentions and perused the records placed before us. Though the assessee has raised the legal ground challenging the validity of reopening proceeding but in the course of hearing failed to bring any substantial information to rebut the legality of reassessment proceeding. We, therefore, considering that Ld. AO having relevant information indicating escapement of income, was well within his jurisdiction to issue notice u/s. 148 of the Act and carry out the reassessment proceedings. Thus, the legal issue raised in ground nos. 1 and 2 are hereby dismissed. 7. Now coming to the merits of the case raised in the ground nos. 3 and 4, the grievance of the assessee is against the finding of the Ld. CIT(A) confirming the addition made by the AO u/s. 56(2)(viib) of the I.T.A. No. 633/JPR/2023 A Y: 2014-15, Dipti Garg Page 4 of 11 Act. For the sake of repetition, we note that assessee is the 50% owner of agricultural land situated at Tehsil Jahanpur, District Bhilwara which was sold for a consideration of Rs. 8 lakh. Assessee’s share is Rs. 4 lakh. However, the property was valued by sub-Registrar at Rs.84,50,145/-. Assessee’s share comes to Rs.42,25,073/-. So, the difference is Rs.38,25,073/- which has been charged to tax u/s. 56(2)(viib) of the Act. Before us, the contention of the assessee is that the land in question is agricultural land and not falling in the category of capital asset. In support, fresh evidence have been found placed at pages 95 to 97 of the paper book and the same are as under: (i) Copy of Certificates of Population by Municipal Board, Deoli (Tonk), Rajasthan dated 18.11.2023. (ii) Copy of Certificates of Distance from land to municipal boarders by Municipal Board, Deoli (Tonk), Rajasthan dated 18.11.2023. (iii) Copy of certificates of Population by Gram Panchayat office, Kuchalwara Kalan dated 18.11.2023. 8. Though these evidences have been filed for the first timed but these are the certificates issued by the Municipal Authority and Gram Panchayat and goes to the root of the impugned addition and sending them back to the lower authorities would unnecessarily prolong the litigation and considering the ratio laid down by this Tribunal in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. ACIT in ITA No. 1358/Bang/2008 dated 05.01.2012 and in the case of American Express Services India Pvt. Ltd. Vs. DCIT in ITA No. 3524/Del/2014 dated 30.11.2023, we admit the additional evidence finding them to be of vital importance for disposing of the issue raised before us. Capital asset is defined u/s. 2(14) of the Act and the same reads as under: “(14) [“capital asset” means— I.T.A. No. 633/JPR/2023 A Y: 2014-15, Dipti Garg Page 5 of 11 (a) property of any kind held by an assessee, whether or not connected with his business or profession; (b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), (c) any unit linked insurance policy to which exemption under clause (10D) of section 10 does not apply on account of the applicability of the fourth and fifth provisions thereof. But does not include - (i) any stock-in-trade [other than the securities referred to in sub-clause (b)]], consumable stores or raw materials held for the purposes of his business or profession; (ii) [(ii) personal effects, that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependant on him, but excludes - (a) jewellery; (b) archaeological collections; (c) drawings; (d) paintings; (e) sculptures; or (f) any work of art. Explanation [1].—For the purposes of this sub-clause, “jewellery” includes— (a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel; (b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel.] [Explanation 2.—For the purposes of this clause— (a) the expression “Foreign Institutional Investor” shall have the meaning assigned to it in clause (a) of the Explanation to section 115AD; (b) the expression “securities” shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);] [(iii) agricultural land in India, not being land situate— (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or (b) in any area within the distance, measured aerially, - (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) I.T.A. No. 633/JPR/2023 A Y: 2014-15, Dipti Garg Page 6 of 11 and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation.—For the purposes of this sub-clause, “population” means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year; (iv) 6½ per cent.. Gold Bonds, 1977, or 7 per cent.. Gold Bonds, 1980], [or National Defence Gold Bonds, 1980], issued by the Central Government;] [(v) Special Bearer Bonds, 1991, issued by the Central Government;] (vi) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 7 [or deposit certificates issued under the Gold Monetisation Scheme, 2015] notified by the Central Government.] [Explanation.—For the removal of doubts, it is hereby clarified that “property” includes and shall be deemed to have always included any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever;]” 9. Now, examining the definition of agricultural land mentioned in the above section 2(14) of the Act in light of the certificates of the Municipal Board, certificate of distance from land to Municipal Board and certificate of population by Gram Panchayat office, we find that agricultural land in question do not fall in the category of capital asset. These additional evidence were also made available to the Ld. DR and she also failed to point out any specific discrepancies in the said documents which have been filed under the certificate of the Ld. AR of the assessee. We are, thus, of the considered view that agricultural land in question is not a capital asset and is not falling under the provisions of section 2(14) of the Act. 10. Now, moving to the second contention of ld. Counsel for the assessee that if an asset is not falling in the category of capital asset then the provisions of section 56(2)(viib) of the Act are not attracted I.T.A. No. 633/JPR/2023 A Y: 2014-15, Dipti Garg Page 7 of 11 because the property defined in clause (d) to explanation refers to only capital asset. Sec. 56(2)(viib) of the Act reads as under: “(viib) where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for which shares as exceeds the fair market value of the shares.” Clause (d) to Explanation to sec. 56(2)(vii) reads as follows: “(d) “property” (means the following capital asset of the assessee, namely : - (i) Immovable property being land or building or both; (ii) Shares and securities; (iii) Jewellery; (iv) archaeological collections; (v) drawings; (vi) paintings; (vii) sculptures; (viii) any work of art or (ix) bullion.” From perusal of above provisions, we note that since the agricultural land in question is not a capital asset, section 56(2)(viib) of the Act cannot be invoked. Reliance has been placed on various decision referred (supra). So far as the reliance placed by the ld. DR are concerned, the first decision i.e. Pavan Anil Bakeri (supra), we find that the similar issue has been raised but there is no specific finding of this Tribunal as the details needed to adjudicate the issue were absent thus, the same cannot be relied. So far as the second decision in the case of Shri Trilok Chand Sain (supra), we find that the said decision dated 07.01.2019 and subsequently adjudicating similar issue and recording the applicability of section 56(2)(viib) of the Act vis-à-vis the capital asset, this Tribunal in the case of Shri Yogesh Maheswari Vs. DCIT in ITA No. 300/JP/2019 dated 18.01.2021 has examined the I.T.A. No. 633/JPR/2023 A Y: 2014-15, Dipti Garg Page 8 of 11 same after considering the decision in the case of Trilok Chand Jain (supra). Relevant finding of the Tribunal is as under: “8. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. We observe from perusal of the record that the only ground raised by the assessee before us is challenging the order of the ld. CIT(A) in confirming the findings of the A.O. to the effect that the provisions of Section 56(2)(viib) of the Act are applicable to the purchase of agricultural land situated outside 8 KM of municipal area. As per the facts of the case, the assessee alongwith Shri Anil Parwal purchased a land at village Jatwara, Tehsil Bassi, Jaipur on 08.09.2014. It was also observed that while the DLC value of the said property was Rs. 23,02,400/-, it was purchased for only Rs. 13,10,000/-. Since, the assessee and Sh. Anil Parwal have jointly purchased this property, the share of the assessee comes out as Rs. 6,55,000/-. Similarly, the assessee along with Smt. Nirmala Maheshwari purchased a land at village Bagru Kalan, Tehsil Sanganer, Ajmer Road, Jaipur on 28.04.2014. It was also observed that while the DLC value of the said property was Rs. 48,00,679/-, it was ITA 300 to 302/JP/2019_ Sh. Yogesh Maheshwari Vs. DCIT & 2 Ors. 10 purchased for only Rs. 29,90,000/-. Since, the assessee and Smt. Nirmala Maheshwari have jointly purchased this property, the share of the assessee comes out as Rs. 14,95,000/-. Consequent thereupon, the A.O. during the assessment proceedings, after issuing statutory notices and seeking reply of the assessee, relied upon Section 56(2)(viib) of the Act and held that it applies to any immovable property and thus includes agricultural land beyond specified limit of urban area also and the A.O. also derived support from Section 194-IA of the Act which specifically excludes agricultural land from its purview while mentioning transfer of any immovable property. In order to decide this controversy, it is necessary and imperative to evaluate provisions of definition of income as is given in sub-section (24) of Section 2 of the Act. The sub-section (24) (xv) of Section 2 of the Act includes in income “any sum of money or value of property referred to in clause (vii) or clause (viia) of sub- section (2) of Section 56”. Section 56 (2) (vii) (a) of the Act applies to any sum of money while Section 56 (2) (vii) (b) of the Act applies to value of property and meaning of property is given in explanation (d) to Section 56 (2) (vii) of the Act. The A.O. thereafter relied on provisions of Section 56 (2) (vii) (b) of the Act in respect to property acquired by assessee and reproduced the same in assessment order and only picked the word immovable property from Section 56 (2) (vii) (b) of the Act but the immovable property being also ITA 300 to 302/JP/2019_ Sh. Yogesh Maheshwari Vs. DCIT & 2 Ors. 11 property read with definition of income in Section 2 (24) (xv) of the Act. Therefore, in our view, Section 56 (2) (vii) (b) of the Act is to be read with explanation (d) wherein mentioning of immovable property in clause 56 (2) (vii) (b) is within the meaning of said explanation (d) to sub-section 56 (2) (vii) of the Act. 9. After having gone through the explanation (d) to Section 56 (2) (vii) (b), which read as under: (d) Property” [means the following capital asset of the assessee, namely: -] I.T.A. No. 633/JPR/2023 A Y: 2014-15, Dipti Garg Page 9 of 11 (i) immovable property being land or building or both; (ii) shares and securities; (iii)jewellery; (iv) archaeological collections; (v) drawings; (vi) paintings; (vii) sculptures, [***] (viii) any work of art; [or] (ix) bullion;] 10. From the said explanation, it is abundantly clear that immovable property being land or building or both should be capital assets for applying section 56 (2) (vii) (b) of the Act. However, the definition of capital asset is given in Section 2 (14) of the Act. The clause (iii) of Section 2 (14) specifically excludes agricultural land of the description given therein from capital asset which means that agricultural land which are outside 8 KM of the municipal limits are not held to be capital asset and as per the facts of the present case, the agricultural land purchased by the assessee falls in the definition of agricultural land as is given in Section 2 (14) (iii) of the Act, so the same cannot be termed as capital asset. Since the agricultural land purchased by the assessee is not a capital asset, therefore, provisions of Section 56 (2) (vii) (b) of the Act are not applicable as the agricultural land which are not capital asset and are outside the ambit/purview of capital asset. In other words, provisions of Section 56 (2) (vii) (b) of the Act applies only to those immovable properties being land or building or both if it falls within the definition of capital asset. While reaching to this conclusion, we draw strength from the decision of Coordinate Bench of Pune Benches, Pune in the case of Mubark Gafur Korabu Vs ITO, Ward-2, Pune (117 Taxmann.Com 828) dated 05-04-2019 after considering the decision of Coordinate Bench of Jurisdictional ITAT, Jaipur Benches, Jaipur in case of ITO Vs Trilok Chand Jain (449/JP/2018) has held that: - 11. Now, coming to the decision of Jaipur Bench of Tribunal in Trilok Chand Sain (supra), wherein provisions of clause (b) of section 56(2)(vii) of the Act were considered. However, they have failed to take into cognizance the provisions of clause (c) of said section, which talks of property other than immovable property. The Tribunal in para 6 refers only to the definition of 'immovable property' and hold that it is not circumscribed or limited to any particular nature of property. However, clause (c) very clearly talks of property other than immovable property and the word 'property' has further been defined under clause (d) of Explanation thereunder. In the totality of the above said facts and circumstances, there is no merit in reliance placed upon by the learned Departmental Representative for the Revenue on the ratio laid down by Jaipur Bench of Tribunal in ITO v. Trilok Chand Sain (supra). In view of clear- cut provisions of the Act, we find no merit in the orders of authorities below in making the aforesaid addition in the hands of assessee. The ground of appeal No. 1 raised by assessee is thus, allowed.” I.T.A. No. 633/JPR/2023 A Y: 2014-15, Dipti Garg Page 10 of 11 The Coordinate Bench of ITAT, Jaipur Benches, Jaipur in case of Prem Chand Jain Vs. ACIT, ITA No. 98/JP/2019 dated 08-06-2020 has held that :- “On reading of provisions of 56(2)(viib), we find that it refers to any immoveable property. Further, provisions of section 56(2)(vii)(c) refers to any property, other than an immovable property. The meaning of the term "property" has been provided in Explanation (d) to section 56(2)(vii) where the term "property" has been defined to mean capital asset of the assessee namely immovable property being land or building or both. It has been contended by the ld AR that all immovable properties of any nature are not covered in the definition of property. Only those immovable properties which are held as capital assets and is in nature of land or building or both are only covered u/s 56(2)(vii). We agree with the contention of the ld AR that where the term "property" has been defined to mean a capital asset as so specified and where an immovable property as so ITA 300 to 302/JP/2019_ Sh. Yogesh Maheshwari Vs. DCIT & 2 Ors. 14 specified being land, building or both is not held as an capital asset, it will not be subject to the provisions of section 56(2)(viib) of the Act. In the instant case, therefore, where the agricultural land doesn't qualify as falling in the definition of capital asset, provisions of section 56(2)(viib) cannot be invoked.” It is undisputed fact that there is no dispute to the fact that the land purchased by the assessee is an agricultural land outside 8 Km of municipal limits. Therefore, keeping in view the facts and circumstances of the case, we are of the view that the agricultural land purchased by the assessee is not a capital asset, therefore, provisions of Section 56(2)(viib) of the Act are not applicable in the present case. Therefore, we direct the A.O. to delete the addition so made.” 11. On perusal of the above decision and on examination of the facts of the instant case, we find that the same is squarely applicable so much so that in the instant case also the asset in question is an agricultural land not falling in the category of capital asset defined in clause (d) to Explanation to sec. 56(2)(viib) of the Act and, therefore, section 56(2)(viib) of the Act cannot be invoked. Thus, respectfully following the Coordinate bench decision cited supra and taking consistent view, we delete the addition of Rs.38,25,073/- made u/s 56(2)(viib) of the Act by setting aside the finding of lower authorities and allow ground nos. 3 and 4 raised by the assessee. I.T.A. No. 633/JPR/2023 A Y: 2014-15, Dipti Garg Page 11 of 11 12. Ground no. 5 is general in nature and needs no adjudication. Hence, dismissed. 13. In the result, appeal of the assessee is partly allowed. Order is pronounced in the open court on 30 th April, 2024. Sd- Sd/- (Dr. S. Seethalakshmi) (Dr. Manish Borad) Judicial Member Accountant Member Dated: 30 th April, 2024 J.D. Sr. PS. Copy of the order forwarded to: 1. Appellant – Smt. Dipti Garg, W/o Shelendra Garg, Civil Lines, Vivekanand Colony, Rajasthan-304001. 2. Respondent – ITO, Ward-TONK 3. CIT(A), NFAC, Delhi 4. CIT 5. Departmental Representative 6. Guard File. True copy By order Assistant Registrar ITAT, Jaipur Bench, Jaipur 1. Date of dictation- 15/04/2024 2. Date on which the typed draft order is placed before the Dictating Member and Other member 17/04/2024 3. Date on which the approved order comes to the Sr. P.S./P.S. - 30/04/2024 4. Date on which the file goes to the Bench Clerk 30/04/2024 5. Date on which the file goes to the O.S. .................................. 6. Date of Dispatch of the Order......................