Shrin Rahman Shaik, Visakhapatnam V. THE ITO , WARD - 1(2), Visakhapatnam

ITA 651/VIZ/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5920 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 04-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Keywords: Capital asset
• Section: 54B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI SAKTIJIT DEY, JM ITA NO.651/VIZAG/2013 : ASST.YEAR 2009-2010 SHRIN RAHMAN SHAIK PLOT NO.10, DASPALLA HILLS VISAKHAPATNAM PAN : ABXPS0686C. VS. THE INCOME TAX OFFICER WARD 1(2) VISAKHAPATNAM. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.V.N.HARI RESPONDENT BY : SHRI R.K.SINGH, ADDL.CIT DATE OF HEARING : 24.02.2014 DATE OF PRONOUNCEMENT : 26.02.2014 O R D E R PER J.SUDHAKAR REDDY (AM) : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), VISAKH APATNAM, DATED 27.09.2013. 2. THE FACTS OF THE CASE BROUGHT OUT AT PARA 2 OF T HE ORDER OF THE LEARNED CIT(A) ARE EXTRACTED BELOW:- THE ASSESSEE HAS FILED RETURN OF INCOME FOR ASSESS MENT YEAR 2009-10 DECLARING A TOTAL INCOME OF RS.4,16,10 0/- ON ACCOUNT OF HER PROFESSION AS A DOCTOR. THE CASE WAS SELECTED FOR SCRUTINY FOR CASS. THE ASSESSING OFFIC ER DURING THE SCRUTINY PROCEEDINGS DISALLOWED CERTAIN EXPENSES CLAIMED WITH REGARD TO THE PROFESSIONAL IN COME AND MADE ADDITION OF RS.81,925/-. FURTHER, THE ASSE SSING OFFICER HAS COME TO KNOW THAT THE ASSESSEE POSSESSE D DRY AGRICULTURAL LAND MEASURING 5.30 ACRES IN NIDIGAT TU PANCHAYAT, BHIMUNIPATNAM. IT APPEARS THAT THE ASSES SEE TRIED TO SELL THE ABOVE LAND TO VARIOUS PARTIES THR OUGH REAL ITA NO.651/VIZAG/2013. SHRIN RAHMAN SHAIK. 2 ESTATE AGENT WHICH DID NOT MATERIALIZE. THEREFORE, THE ASSESSEE SOLD AWAY THE LAND TO THE REAL ESTATE AGAI NST M/S.SRI PADMAVATHI REAL ESTATE AND CONSULTANCY, VISAKHAPATNAM FOR A TOTAL CONSIDERATION OF RS.1,30,22,500/- AND THE SALE PROCEEDS WERE RECEIVE D FROM 12.08.2005 TO 4.10.2008. THE ASSESSING OFFICER ALSO ASCERTAINED THAT THE PIECE OF LAND WHICH WAS DISPOS ED OFF WAS A VACANT LAND AND NOT SUITABLE FOR CULTIVATION. HE ALSO RELIED ON THE STATEMENT RECORDED FROM THE WATC HMAN OF THE ASSESSEE, WHO DEPOSED THERE WAS NO AGRICULTU RAL ACTIVITY IN THE LAND SINCE 2005. THE DETAILS OF SAL E OF THE LAND BY THE ASSESSEE WAS GIVEN AS FOLLOWS:- SL. NO. EXTENT OF LAND DATE OF REGISTRATION SALE DEED DOCUMENT NO. SALE CONSIDERATI ON DATE OF PAYMENT 1 AC.2.07 24.12.2007 9623/2008 1,55,000 6,00,000 7,00,000 5,00,000 3,50,000 3,00,000 5,00,000 ------------ 31,05,000 12.08.2005 01.09.2005 11/09.2005 28.09.2005 14.10.2005 21.11.2005 19.01.2006 2 AC.0.86 01.03.2008 829/2008 12,97,500 3 AC.0.43 18.03.2008 996/2008 8,60,000 4 AC.1.68 04.10.2008 3691/2008 67,20,000 5 AC.0.26 04.10.2008 3692/2008 10,40,000 THE ASSESSING OFFICER FOUND THAT THE ENTIRE LAND WA S TRANSFERRED IN 2005 AND THE ASSESSEE HAS NOT CARRIE D OUT ANY AGRICULTURAL ACTIVITY SINCE 2005. THE SUBJECT L AND TRANSFERRED DURING THE ASSESSMENT YEAR ARE REFERRED IN ITEM (4) & (5) OF THE TABLE ABOVE. THE AO TOOK THE VIEW THAT THESE LANDS WERE ALSO HANDED OVER TO THE BUYER IN 2005. IN VIEW OF THESE, THE ASSESSING OFFICER CONCL UDED THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S 54B AND DETERMINED THE CAPITAL GAIN AT RS.69,08,073/-. ITA NO.651/VIZAG/2013. SHRIN RAHMAN SHAIK. 3 3. ON APPEAL, THE FIRST APPELLATE AUTHORITY UPHELD THE ORDER OF THE ASSESSING OFFICER. FURTHER AGGRIEVED THE ASSESSEE I S IN APPEAL ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AND ALSO THE LAW APPLICABLE TO THE FACTS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN SUSTAINING THE ADDITI ON OF RS.69,08,073 TOWARDS LONG TERM CAPITAL GAINS BY HOL DING THAT THE LAND TRANSFERRED IS NOT AN AGRICULTURAL LA ND. 3. THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAVE HELD THAT LONG TERM CAPITAL GAINS ARISING ON T RANSFER OF LAND IS EXEMPT EITHER ON THE GROUND THAT IT IS N OT A CAPITAL ASSET OR ON THE GROUND THAT THE CAPITAL GAI NS IF ANY IS EXEMPT U/S 54B OF THE ACT. 4. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI G.V.N .HARI SUBMITTED THAT THERE IS NO DISPUTE ON THE FACT THAT - (A) THE LAND IS SITUATED BEYOND THE PRESCRIBED LIMIT OF 8 KMS. FROM GREATER VISAKHAPATNAM MUNICIPAL CORPORATION, (B) THAT THE D ESCRIPTION OF THE PROPERTY IN THE REVENUE RECORDS WAS THAT IT WAS A D RY AGRICULTURAL LAND. HE SUBMITTED THAT THE ASSESSING OFFICER COMMITTED A N ERROR BY HOLDING THAT THE ASSESSEE HAS RECEIVED ADVANCES IN 2005 AND THE LAND WAS HANDED OVER TO THE PURCHASER. HE DREW OUR ATTEN TION ON THE TABLE AT PAGE NO.4 OF THE ASSESSMENT ORDER (EXTRACTED BY US IN PARA 2 PAGE 2 OF THIS ORDER) AND ARGUED THAT THE ADVANCES WERE RE CEIVED ON THE LAND MENTIONED AT SR.NO.1 OF THE TABLE AND SUBMITTED THA T THIS LAND IS NOT THE SUBJECT MATTER OF DISPUTE IN THE CASE ON HAND. HE P OINTED OUT THAT THE ITA NO.651/VIZAG/2013. SHRIN RAHMAN SHAIK. 4 SUBJECT MATTER OF DISPUTE IS LAND AT SR.NO.4 MEASUR ING AC.1.68, WHICH WAS SOLD ON 04.10.2008 FOR A CONSIDERATION OF RS.67 ,20,000. HE FURTHER SUBMITTED THAT THE PERUSAL OF THE SALE DEED DEMONSTRATES THAT THE ENTIRE CONSIDERATION OF THIS LAND WAS RECEIVED ONLY ON 04.10.2008 AND THAT NO ADVANCE WAS RECEIVED AND THAT THE LAND WAS HANDED OVER ONLY ON THE DATE OF REGISTRATION TO THE PURCHASER. 5. ON THE ISSUE WHETHER THE SAID LAND WAS AGRICULTU RAL LAND OR NOT, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON - (A ) THE SCHEDULE IN THE REGISTERED SALE DEED, (B) ENTRIES IN THE REVENUE PA SS BOOKS, (C) VILLAGE REVENUE OFFICERS CERTIFICATE, (D) STATEMENT OF ASS ESSEE, AND (E) STATEMENT OF WATCHMAN. 6. REFERRING TO THE OBJECTIONS OF THE ASSESSING OFF ICER, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSI NG OFFICER HAS GIVEN A CONTRARY FINDING THAT THE SALE TOOK PLACE I N THE YEAR 2005- 2006, BUT HE CHOOSES TO TAX THE SAME IN THE ASSESSM ENT YEAR 2009- 2010. HE POINTED OUT THAT THE A.O. WAS WRONG IN REF ERRING THE CLAIM OF EXEMPTION U/S 54B, WHEREAS NO EXEMPTION WAS CLAI MED BY THE ASSESSEE. REFERRING TO THE STATEMENT OF THE WATCHMA N, HE SUBMITTED THAT IT WAS WRONGLY RELIED UPON BY THE REVENUE AUTH ORITIES, AS THE WATCHMAN CANNOT BE EXPECTED TO HAVE REQUISITE KNOWL EDGE OR DETAILS OF THE LAND HOLDING ETC. HE POINTED OUT FROM THE ST ATEMENT OF WATCHMAN THAT THE EXTENT OF LAND WAS MORE THAN 11 A CRES, IN FACT THE ASSESSEE NEVER HELD 11 ACRES OF LAND, SO IT IS NOT CLEAR AS TO WHICH PORTION OF THE LAND THE WATCHMAN WAS REFERRING IN H IS STATEMENT. ITA NO.651/VIZAG/2013. SHRIN RAHMAN SHAIK. 5 REFERRING TO THE ORDER OF THE LEARNED CIT(A), HE SU BMITTED THAT INSPECTORS REPORT WAS REFERRED TO WHEN NO REPORT W AS CONSIDERED BY THE AO AND THAT THE COPY OF THE REPORT WAS NEVER GI VEN TO HIM. HE DISPUTED THE INFERENCE DRAWN BY THE LEARNED CIT(A), THAT THE ASSESSEE HAS PURCHASED LAND FROM THE TRUST AND HENCE IT WAS AN INTENTION TO MAKE PROFIT, AND SUBMITTED THAT NOTHING TURNS ON TH IS. HE RELIED ON THE FOLLOWING CASE LAWS IN SUPPORT OF HIS CONTENTION TH AT THE CHARACTERIZATION OF THE LAND SHOULD BE AGRICULTURAL IN NATURE. (I) TULLA VEERENDRA V. ACIT [(2014) 97 DTR (HYD) (T RIB) 235] (II) CIT V. SMT.DEBBIE ALEMAO [(2011) 331 ITR 59 (B OM.)] (III) ACIT V. N.RAGHU VARMA [(2013) 142 ITD 421] 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND OPPOSED THE CONTENTION OF THE ASSESSEE AND SUBMITTE D THAT NO SPECIFIC GROUND IS RAISED BY THE ASSESSEE FOR THE YEAR OF TA XABILITY EITHER BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE ITAT. H E SUBMITTED THAT FOR THE FIRST TIME THE ASSESSEE IS RAISING THIS CONTENT ION BY WAY OF ARGUMENT AND HENCE IT CANNOT BE ADMITTED. REFERRING TO SECTION 2(1A) OF THE INCOME-TAX ACT, 1961, HE SUBMITTED THAT THE PASS BOOK, SALE DEEDS ETC. ARE NOT CONTEMPLATED AS REQUISITE DOCUME NTS FOR DETERMINING WHETHER THE ASSESSEE HAS AGRICULTURAL I NCOME AND THAT THE CRITERIA LAID DOWN WAS DIFFERENT. HE REFERRED TO TH E ORDER OF THE CIT(A) IN PARA 4.7 PAGE 5 AND SUBMITTED THAT THE PA RAMETERS AS LAID DOWN BY THE COURT HAVE BEEN EXTRACTED BY THE LEARNE D CIT(A). HE ITA NO.651/VIZAG/2013. SHRIN RAHMAN SHAIK. 6 VEHEMENTLY CONTENTS THAT IF THE EVIDENCES ARE PUT T O TEST THEN THE ORDER OF THE FIRST APPELLATE AUTHORITY HAS TO BE UPHELD. REFERRING TO THE STATEMENT OF THE WATCHMAN RELIED UPON BY THE REVENU E AUTHORITIES, THE LEARNED DR SUBMITTED THAT A LAYMAN CAN STATE WHETHE R THERE WERE AGRICULTURAL ACTIVITY OR NOT AND FOR THIS SPECIALIZ ED KNOWLEDGE IS NOT REQUIRED. HE SUPPORTED THE ORDERS OF THE A.O. AS WE LL AS THE CIT(A). 8. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERAT ION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAPERS ON RECORD AND ORDERS OF THE AUTHORITIES BELOW, CASE LAWS CITE D, WE HOLD AS FOLLOWS. THE ASSESSEE IN THIS CASE HAS PRODUCED CO PIES OF SALE DEED, WHICH ARE NUMBERED PAGE 5 TO 15 OF THE PAPER BOOK. SCHEDULE AT PAGE 4 OF THE SALE DEED DESCRIBES THE LAND IN QUESTION A S AGRICULTURAL ZEROYOTHI DRY LAND. THE ADJOINING LANDS ARE ALSO DR Y LAND. THE PATTADAR PASS BOOK, WHICH IS REVENUE RECORD, DESCRI BES THE LAND AS AGRICULTURAL DRY LAND. THE VILLAGE REVENUE OFFICER HAS ISSUED A CERTIFICATE WHICH IS AT PAGE 38 OF THE PAPER BOOK T HAT THE LAND IN QUESTION IS USED FOR CULTIVATION OF DRY CROPS AND C ASHEW TREES AND THAT THE LAND IS 20 KMS. AWAY FROM THE LIMITS OF VISAKHA PATNAM MUNICIPAL CORPORATION. THE LEARNED CIT(A) RECORDS IN HIS ORDE R THAT THERE IS NO DISPUTE THAT THE LAND IS SITUATED BEYOND THE PRESCR IBED LIMIT OF GVMC. HE ALSO RECORDS THAT THE DESCRIPTION OF THE PROPERT Y WAS DRY AGRICULTURAL LAND IN THE SALE DEED EXECUTED BY THE TRUST IN FAVOUR OF THE ASSESSEE BY DOCUMENT NO.4799 OF 2005 AT THE TIME OF PURCHASE OF THIS PROPERTY. ITA NO.651/VIZAG/2013. SHRIN RAHMAN SHAIK. 7 9. NOW WE DISCUSS THE GROUND ON WHICH THE ASSESSING OFFICER AS WELL AS THE CIT(A) HELD THAT THE LAND IN QUESTION I S NOT AGRICULTURAL LAND. THE FIRST GROUND IS THAT THE LAND WAS PURCHAS ED BY REAL ESTATE AGENT. IN OUR VIEW THIS CANNOT BE A GROUND WHICH CH ANGES THE CHARACTER OF THE LAND. THE SECOND GROUND IS THAT AD VANCES WERE RECEIVED BY THE ASSESSEE AND THE LAND WAS TRANSFERR ED FROM THE YEAR 2005-2006. THE ASSESSEE HAS DEMONSTRATED THAT NO AD VANCE WAS RECEIVED FOR THE SALE OF THE SAID LAND. THE SUBJECT MATTER OF LAND IS AT SR.NO.4 OF THE TABULAR DATA MADE BY THE A.O. AT PAG E 4 OF HIS ORDER. ONLY IN CASE OF SR.NO.1 OF THE TABULAR IN QUESTION, CERTAIN ADVANCES WERE RECEIVED, AND THAT HAS NOTHING TO DO WITH THE LAND, WHICH WE ARE DEALING IN THE PRESENT CASE. THE ASSESSEE HAS NOT C LAIMED ANY DEDUCTION U/S 54B. 10. IN OUR VIEW THE ASSESSING OFFICER HAS WRONGLY P LACED RELIANCE ON THE STATEMENT RECORDED FROM A WATCHMAN AS TO THE AGRICULTURAL ACTIVITIES. EVEN IF IT IS TO BE TAKEN THAT THERE WA S NO AGRICULTURAL ACTIVITY FOR A COUPLE OF YEARS, THEN ALSO THE CHARA CTER OF THE LAND DOES NOT CHANGE. AGRICULTURAL LAND REMAINS AGRICULTURAL LAND, UNLESS CONVERTED. LACK OF CARRYING ON AGRICULTURAL OPERATI ONS FOR A YEAR OR SO DOES NOT MAKE AGRICULTURAL LAND AS NON-AGRICULTURAL LAND. 11. THE ISSUE AS TO WHETHER A LAND IS AGRICULTURAL LAND OR NOT DEPENDS ON THE FACTS OF EACH CASE. THE HONBLE GUJARAT HIGH COURT IN CIT V. SIDDHARTH J.DESAI [(1983) 139 ITR 628 (GUJ.)] HAS ON A CONSPECTUS OF VARIOUS JUDGMENTS HAS ENUMERATED 13 FACTORS, WHI CH HAVE A BEARING ITA NO.651/VIZAG/2013. SHRIN RAHMAN SHAIK. 8 ON THE DETERMINATION OF THE QUESTION AS TO WHETHER A LAND IS AGRICULTURAL LAND OR NOT. THE HONBLE IN THE CASE OF SARIFABIBI MOHMED IBRAHIM AND OTHERS V. CIT [(1993) 204 ITR 63 1 (SC)] HAS NOTED WITH APPROVAL THE FACTORS / INDICATORS DETERM INED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SIDDHARTH J.DESAI (SUPRA) AND AT THE SAME TIME STATED AS FOLLOWS : AT THE RISK OF REPETITION, WE MAY MENTION THAT NOT ALL OF THESE FACTORS WOULD BE PRESENT OR ABSENT IN ANY CASE AND THAT IN EACH CASE ONE OR MORE OF TH OSE FACTORS MAY MAKE APPEARANCE AND THAT THE ULTIMATE DECISION WILL HAVE TO BE REACHED ON A BALANCED CONSIDERATION OF THE TOTALITY OF CIRCUMSTANCES. 12. APPLYING THE TEST LAID DOWN BY THE HONBLE SUPR EME COURT TO THE FACTS OF THIS CASE AND THE EVIDENCE ON RECORD, WE UPHOLD THE CONTENTION OF THE ASSESSEE THAT THE CHARACTER OF TH E LAND IS AGRICULTURAL FOR THE REASON THAT (A) IT IS CLASSIFIED AS AGRICUL TURAL LAND IN THE REVENUE RECORDS, (B) ITS ORDINARY USE FOR AGRICULTURAL PURP OSES FOR CULTIVATION OF DRY CROPS AND CASHEW TREES, (C) USE WAS FOR A SUBST ANTIAL PERIOD FOR AGRICULTURAL PURPOSES AND IT WAS NOT A TEMPORARY AR RANGEMENT, (D) THERE IS NO PERMISSION SOUGHT FOR CONVERTING THE AG RICULTURAL LAND INTO NON-AGRICULTURAL LAND, (E) THE SALE DEED, BOTH WHEN THE ASSESSEE PURCHASED THE LAND IN 2005 AND WHEN SOLD THE LAND I N 2008, DESCRIBES THE LAND IN QUESTION AS DRY AGRICULTURAL LAND (F) T HE LAND WAS SOLD IN ACRES. ITA NO.651/VIZAG/2013. SHRIN RAHMAN SHAIK. 9 13. THE REVENUE DOES NOT HAVE ANY OTHER EVIDENCE TH AN THE VAGUE STATEMENT OF A WATCHMAN, WHICH REFERS 11 ACRES OF L AND AND ALSO CONFIRMING THAT THERE WERE CERTAIN AGRICULTURAL OPE RATIONS. THE CIT(A) REFERS THE INSPECTORS REPORT, WHICH WAS NEVER REFE RRED TO BY THE AO NOR HE CONFRONTED THE DOCUMENTS TO THE ASSESSEE. IN VIEW OF ALL THESE REASONS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND UPHOLD THE CONTENTION OF THE ASSESSEE THAT THE LAND IN QUE STION IS AGRICULTURAL LAND. 14. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 26 TH DAY OF FEBRUARY, 2014. SD/- SD/- (SAKTIJIT DEY) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM ; DATED : 26 TH FEBRUARY, 2014. DEVDAS* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, VISAKHAPATNAM. 4. CIT(A) VISAKHAPATNAM. 5. DR, ITAT, VISAKHAPATNAM. 6. GUARD FILE. BY ORDER, //TRUE COPY// (SENIOR PRIVATE SECRETARY) ITAT, VISAKHAPATNAM