ACIT, Jaipur V. SMT. VINITA AGARWAL, Jaipur

ITA 660/JPR/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5101 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S DANGUR
• Assessee Lawyers: S L PODDAR
• Keywords: Capital asset; Cost of acquisition; Fair market value; Benefit of exemption; Revised return
• Section: 2(14); 133(6)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LN L; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA- @ ITA NO. 660/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 THE A.C.I.T. CIRCLE-6, JAIPUR. CUKE VS. SMT. VINITA AGARWAL, PLOT NO. 18, BHARAT MATA PATH, JAMNALAL BAJAJ MARG, C-SCHEME,JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AEZPA 6541 D VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT IZR;K{KSI.K @ C.O. NO. 57/JP/2012 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 660/JP/2012) SMT. VINITA AGARWAL, PLOT NO. 18, BHARAT MATA PATH, JAMNALAL BAJAJ MARG, C-SCHEME, JAIPUR. CUKE VS. THE D.C.I.T. CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA- @ PAN/GIR NO.: AEZPA 6541 D IZR;K{KSID @ OBJECTOR IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.S. DANGUR (JCIT). FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI S.L. PODDAR (ADVOCATE). LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 19/08/2016 MN?KKS'K.KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 19/09/2016 ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 2 VKNS'K @ ORDER PER: LALIET KUMAR, J.M. THE APPEAL BY REVENUE AND CROSS OBJECTION BY ASSESS EE ARISE FROM THE ORDER DATED 12/04/2012 OF LD. CIT (A)-II, JAIPU R. RESPECTIVE GROUNDS OF APPEAL AS WELL AS C.O. ARE AS UNDER:- GROUNDS IN REVENUE APPEAL. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN:- (I) HOLDING THAT THE DATE OF TRANSFER OF IMMOVABLE PROPERTY IN THE CASE OF COMPULSORY ACQUISITION WILL BE THE DATE WHEN FINAL AWARD WAS GIVEN TO THE ASSESSEE AND NOT THE DATE WHEN THE ASSESSEE EXTINGUISHED HER RIGHTS IN THE PROPERTY BY ACCEPTING TERMS OF ACQUIS ITION AND MADE UNCONDITIONAL SURRENDER OF HER RIGHTS IN T HE LAND IN PURSUANCE OF NOTIFICATION FOR ACQUISITION O F LAND. (II) HOLDING THAT IN THE MATTER OF COMPULSORY ACQU ISITION, CAPITAL GAIN PROCESS STARTS WITH NOTIFICATION FOR ACQUISITION AND CULMINATES WITH GRANT OF FINAL AWARD, WHICH IS CONTRARY TO THE LEGAL INTERPRETATION THAT C APITAL GAIN/LOSS WITHIN THE MEANING OF SEC. 2(47) OF THE AC T, ARISES ON THE DATE OF TRANSFER OF ASSET AND IT DOES NOT EXTEND TO THE WHOLE OF THE FINANCIAL YEAR LIKE OTHER HEADS OF INCOME. (III) ALLOWING THE BENEFIT OF EXEMPTION U/S 10(37) OF THE ACT, DESPITE THE FACT THAT ASSESSEE INCURRED NO EXPENDITURE ON AGRICULTURAL OPERATION AND IT WAS NOT POSSIBLE TO CARRY OUT AGRICULTURAL OPERATION WITHOUT ANY EXPENDITURE. (IV) DIRECTING TO APPLY FAIR MARKET VALUE FOR THE COMPUTATION OF CAPITAL GAIN INSTEAD OF RESERVE PRIC E DECLARED BY THE JDA, IGNORING THE FACT THAT ON ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 3 ACQUISITION OF LAND, MANY PRIVILEGES AND AMENITIES ASSOCIATED WITH THE LAND ARE TAKEN AWAY IN THE PROCES S AND THEREFORE, RESERVE PRICE IS FIXED AT MORE AMO UNT THAN FAIR MARKET VALUE TO COMPENSATE THE SAME. (V) ALLOWING THE BENEFIT OF EXEMPTION U/S 10(37) O F THE ACT, WHICH WAS NOT CLAIMED BY THE ASSESSEE IN HER RETURN OF INCOME. GROUNDS IN CROSS OBJECTION 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DISMISSING THE FORTH GROUND OF THE ASSESSEE THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN CONSIDERING SHORT TERM CAPITAL GAIN ON THE ACQUISITION OF LAND ON THE GROUND THAT THE S AME WAS NOT PRESSED BY THE ASSESSEE WHEREAS THE FACT IS THAT THE GROUND WAS NOT PRESSED BECAUSE NO CAPITAL GAINS WERE TAXABLE IN THE CASE U/S 10(37) OF INCOME TAX ACT, 1961. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN NOT ACCEPTING AND DECIDI NG THE FIFTH GROUND OF THE ASSESSEE THAT THE LEARNED ASSESSING OFFICER ERRED IN DETERMINING SHORT TERM CAPITAL GAIN AT RS. 3,00,35,000/- ON THE ACQUISITIO N OF THE LAND NOTWITHSTANDING THE FACT THAT THE LEARNED CIT(A) HAS GIVEN DECISION THAT NO CAPITAL GAINS ARE TAXABLE IN THE CASE OF THE ASSESSEE BEING EXEMPT U/ S 10(37) OF THE INCOME TAX ACT, 1961. 2. ALL THE GROUNDS OF REVENUES APPEAL ARE REVOLVIN G AROUND CAPITAL GAIN DETERMINED BY THE ASSESSING OFFICER, WHICH WAS D ELETED BY THE LEARNED CIT(A). THE LEARNED ASSESSING OFFICER OBSERVE D THAT THE ASSESSEE HAD DECLARED INCOME FROM HOUSE PROPERTY AND LONG TE RM CAPITAL GAIN AND INCOME FROM OTHER SOURCES, WHICH IS REPRODUCED AS UN DER:- A. INCOME FROM HOUSE PROPERTY RS. 27,128/- ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 4 B. INCOME FROM CAPITAL GAIN RS. 29,42,209/- I. LONG TERM CAPITAL GAIN ON SALE OF RESIDENTIAL HOUSE ON 06/10/2008 (1) SALE CONSIDERATION RS. 11,25,000/- LESS-TRANSFER EXPENSES RS. 30,488/- RS. 10,94,512/- LESS: INDEX PURCHASE COST FOR F.Y. 2005-06 109300/497 X 582= RS. 1,27,993/- LONG TERM CAPITAL GAIN RS. 966519/- (2) II. SALE OF COMMERCIAL LAND ON 26/12/2008 SALE CONSIDERATION RS. 22,00,000/- LESS: TRANSFER EXPENSES RS. 19,512/- RS. 21,80,488/- LESS: INDEX PURCHASE COST FOR F.Y. 2005-06 174888/497 X 582= RS. 2,04,798/- LONG TERM CAPITAL GAIN RS. 19,75,690/- C. INCOME FROM OTHER SOURCES RS. 48,641/- GROSS TOTAL INCOME RS. 30,17,978/- THE LEARNED ASSESSING OFFICER GAVE REASONABLE OPPORT UNITY OF BEING HEARD ON VERIFICATION OF THE LONG TERMS CAPITAL GAI N, WHICH WAS REPLIED BY THE ASSESSEE VIDE VARIOUS LETTERS. THE REPLY OF THE ASSESSEE OF PARAGRAPH NOS. 4 TO 9 IS REPRODUCED AS UNDER:- 4. THAT DURING THE YEAR UNDER CONSIDERATION THE ASS ESSEE HAS SOLD FIRST PROPERTY TO M/S AGARWAL MULTITRADE PVT. L TD. ON 24/12/2008 FOR RS. 44,00,000/- OUT OF WHICH THE ASSE SSEE ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 5 SHARE WAS 50% AND SHE RECEIVED RS. 22,00,000/- COPY OF SALE DEED IS ENCLOSED HEREWITH. (PAGE NO. 3 TO 8) 5. THE OTHER PROPERTY SOLD DURING THE YEAR WAS TO SMT . KALPANA JAIN, SMT. MALA GUPTA AND SMT. NIRMALA GUPTA FOR RS . 22,50,000/- OUT OF WHICH THE ASSESSEES SHARE WAS 50 % AND SHE RECEIVED RS. 11,25,000/- FROM HIS PROPERTY. COP Y OF SALE DEED IS ENCLOSED HEREWITH. (PAGE NO. 9 TO 15) 6. FOR SALE OF ABOVE PROPERTIES THE ASSESSEE HAS PA ID BROKERAGE TO M/S GENDI REAL ESTATE PVT. LTD., JAIPUR RS. 50,0 00/- WHICH WAS A PROPORTION BETWEEN BOTH THE PROPERTIES IN THE R ATIO OF AREA SOLD. THE AREA SOLD WAS 625 SQ.MT. RESIDENTIAL A REA FOR RS. 11,25,000/- AND COMMERCIAL AREA 400 SQ.MT. FOR RS. 22,00,000/-. COPY OF RECEIPT OF BROKERAGE PAYMENT I S ENCLOSED HEREWITH (PAGE NO. 16). 7. THE ABOVE BOTH PROPERTIES SOLD BY THE ASSESSEE WER E PURCHASED IN FINANCIAL YEAR 2005-06 ALONGWITH SMT. P USHPA SHARMA. THE ASSESSEE WAS 50% CO-OWNER OF THIS PROPERT Y. THIS PROPERTY WAS PURCHASED FOR RS. 42,00,000/- AND R S. 2,56,000/- WAS INCURRED ON STAMP DUTY AND OTHER MISC . EXPENSES. THE ASSESSEES CONTRIBUTION WAS RS. 22,28,0 00/- FOR PURCHASE OF THIS PROPERTY FOR 50% SHARE. COPY O F PURCHASE DEED IS ENCLOSED HEREWITH. (PAGE NO. 17 TO 23 8. THE ABOVE PROPERTY PURCHASED BY THE ASSESSEE ON 16/05/2005 WAS ACQUIRED BY JAIPUR DEVELOPMENT AUTHOR ITY FOR SPECIAL ECONOMIC ZONE AND IN CONSIDERATION OF T HAT THE ASSESSEE WAS ALLOTTED 15680 SQ.MT. RESIDENTIAL AND 3 920 SQ.MT. COMMERCIAL LAND. THE ASSESSEES SHARE @ 50% WAS ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 6 7840 SQ.MT. RESIDENTIAL AND 1960 SQ.MT. COMMERCIAL LAND. SO FOR TOTAL COST OF RS. 22,28,000/- THE ASSESSEE HAS ALLOTTED 7840 SQ.MT. RESIDENTIAL LAND AND 1960 SQ.MT. COMMER CIAL LAND. THE DETAILS OF ALLOTTED PLOTS ARE MENTIONED IN THE SALE DEED IN PAGE NO. 9 TO 15. THE LETTER OF ALLOTMENT FR OM JDA WILL BE SUBMITTED AT THE TIME OF NEXT HEARING. 9. THE ASSESSEE HAS CALCULATED THE COST OF PROPERTY SOLD BY GIVING WEIGHTAGE IN THE RATIO 100 FOR RESIDENTIAL PR OPERTY AND 250 FOR COMMERCIAL PROPERTY. BASIS TAKEN ON AVERAGE ESTIMATED SALE PRICE. THE CALCULATION OF CAPITAL GAI N WAS MADE AS UNDER:- TOTAL COST OF PROPERTY RS. 22,25,000/- COMMERCIAL AREA ALLOTTED 1960 SQ.MT. X 250 (WEIGHT AVERAGE)= 49000 RESIDENTIAL AREA ALLOTTED 7840 SQ.MT X 100 (WEIGHT AVERAGE)= 78400 TOTAL (WEIGHT AVERAGE AREA) = 127400 WEIGHT AVERAGE PRICE PER METER = RS. 22,28,000 1, 27,400 SQ.MTS. = RS. 17.488 PER MTR. COST OF RESIDENTIAL 7840 SQ. MTR. = 7840 X 100 X 17 .488 = 13,71,050/- COST OF COMMERCIAL 1960 SQ. MTR. = 1960 X 250 X 17. 888 = 8,56,950/- THEREFORE, THE COST OF RESIDENTIAL LAND WAS RS. 174 .88 PER MTR AND COST OF COMMERCIAL AREA WAS RS. 437.22 PER MTR. SO THE PURCHASE COST OF COMMERCIAL LAND WAS TAKEN A T 437.22 X 400 SQ.MTR = 174888/- AND RESIDENTIAL AREA WAS TAKEN AT 174.88 X 625 SQ. MTR.= 109300/-. THE LEARNED A.R. FOR THE ASSESSEE BEFORE THE ASSESSI NG OFFICER HAD AGAIN SUBMITTED REPLY VIDE LETTER DATED 11/11/2011, WHICH IS REPRODUCED AS UNDER:- ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 7 THE PROPERTY IN QUESTION ON WHICH THE ASSESSEE HAS DECLARED CAPITAL GAIN INCOME WAS PURCHASED BY THE ASSESSEE ON 21/4/2005, THE COPY OF PURCHASE DEED IS ENCLOSED HEREWITH. WHIC H WAS CONVERTED IN RESIDENTIAL AND COMMERCIAL PLOT BY JDA BY LOTTERY ON 21/08/2008 AND 22/05/2008. THE ASSESSEE HAS SOLD CO NVERTED PLOTS IN THE SAME FINANCIAL YEAR JUST AFTER TAKING THE POSSESSION AND ALLOTMENT OF THE SAID LAND (WITHIN THE PERIOD OF 4-5 MONTHS). SO THE ASSESSEE HAS CALCULATED THE CAPITAL GAIN ON SOLD PR OPERTY ONLY ON PREVAILING RATE BY MAKING BASIS OF SALE PRICES OF T HE PROPERTY HENCE, NO CAPITAL GAIN TAX IS PAYABLE ON SALE. ON 30/11/2011, THE LEARNED AR AGAIN APPEARED BEFORE THE ASSESSING OFFICER AND SUBMITTED HIS EXPLANATION, WHICH IS ALSO REPRODUCED AS UNDER:- THAT THE PROPERTY IN QUESTION ON WHICH THE ASSESSEE HAS DECLARED CAPITAL GAIN INCOME WAS REPRODUCED BY THE ASSESSEE O N 21/04/2005, THE COPY OF PURCHASE DEED WAS SUBMITTED. THIS LAND WAS AGRICULTURAL LAND AND THE ASSESSEE HAS USED THIS LAND FOR AGRICULTURE PURPOSES IN F.Y. 2005-06, 2006-07 AND 2 007-08. THE JDA HAS ACQUIRED THIS LAND UNDER SECTION 44 OF JDA ACT, 1982 (A LAW CREATED BY RAJASTHAN GOVT.) AND IN CONSIDERATION THEREOF THE ASSESSEE WAS ALLOTTED COMMERCIAL LAND AND RESIDENTIA L PLOTS BY LOTTERY DATED 21/08/2008 AND 22/05/2008. SO THE NEW ASSETS IN THE FORM OF COMMERCIAL PLOTS AND RESIDENTIAL PLOTS CAME INTO THE EXISTENCE AND THE DATE OF ALLOTMENT WAS IN CASE OF C OMMERCIAL PLOTS WAS 22/05/2008 AND SOME PLOTS IN 03/10/2008 ON WHICH THE ASSESSEE HAS DECLARED CAPITAL GAIN INCOME AND PAID CAPITAL GAIN ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 8 TAXES BY ASSUMING THE VALUE OF OLD ASSETS (AGRICULT URE LAND) AS ACQUISITION COST OF PROPERTY SOLD. IN THIS REGARD OUR HUMBLE SUBMISSION IS THAT WE HA VE WRONGLY TAKEN THE COST OF ACQUISITION OF OLD ASSETS WHEREAS THE COST OF ACQUISITION OF THE ASSETS SOLD SHOULD BE TAKEN I N THE FAIR MARKET VALUE ON THE DATE OF ALLOTMENT BY THE JDA WHICH IS 2 2/05/2008 IN CASE OF COMMERCIAL PLOTS AND 21/08/2008 IN CASE OF RESIDENTIAL PLOTS AND SHORT TERM CAPITAL GAIN SHOULD BE COMPUTE D ON SALES PRICE AND THERE IS NO CHANGE IN FAIR MARKET VALUE A ND SALE PRICE AS THE ASSESSEE HAS SOLD THE PROPERTY IMMEDIATELY AFTE R ALLOTMENT FROM JDA. THEREFORE, THE ASSESSEE HAS NOT EARNED ANY CAPITAL GAIN INCOME. BUT WE HAVE PAID LONG TERM CAPITAL GAIN BY A SSUMING THE COST OF ACQUISITION OF OLD CAPITAL ASSETS FOR THE A SSETS SOLD WHICH WAS RECEIVED IN CONSIDERATION OF OLD ASSETS AND THE CAPITAL GAIN INCOME ON WHICH IS EXEMPT U/S 10(37) OF THE INCOME TA X ACT, 1961. AS PER ASSESSEES SUBMISSION, THE LAND WAS AGRICULTU RAL LAND AND WAS PURCHASED ON 21/04/2005, WHICH WAS ACQUIRED BY THE J DA AND IN LIEU OF IT, RESIDENTIAL AND COMMERCIAL PLOTS WERE ALLOTTED O N 22/05/2008, THUS PERIOD OF HOLDING WAS MORE THAN THREE YEARS. IT IS F URTHER SUBMITTED THAT DURING THIS PERIOD, THE ASSESSEE WAS CARRYING AGRICU LTURAL OPERATION, HENCE NO CAPITAL GAIN COULD ARISE AS PER PROVISIONS OF SECTION 10(37) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). PART OF THE ALLOTTED PROPERTY ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 9 (RESIDENTIAL AND COMMERCIAL) WAS SOLD ON 24/12/2008 AND 03/10/2008. THUS, NO TAX LIABILITY WOULD ARISE IN THE CASE OF THE ASSESSEE. THE DETAILS SUBMITTED BY THE AR BEFORE THE ASSESSING OFFICER, H E CONCLUDED THAT THE ASSESSEE PURCHASED THE PROPERTY ON 21/4/2005 VIDE N OTIFICATION DATED 27/10/2005, THE PROPERTY WAS ACQUIRED BY THE JDA, IN LIEU OF THE ACQUISITION OF LAND, RESERVATION LETTER WAS ISSUED O N 3/11/2006 TO THE ASSESSEE FOR THE ALLOTMENT OF CERTAIN AREA OF RESID ENTIAL AND COMMERCIAL PLOTS AND BY LOTTERY DATED 21/7/2008 ASCERTAINED TH E RESIDENTIAL AND COMMERCIAL PLOT IN VILLAGE KHATWADA, TEHSIL SANGANER , DISTRICT-JAIPUR WAS ALLOTTED TO THE ASSESSEE. THE LEARNED ASSESSING OF FICER GATHERED INFORMATION U/S 133(6) FROM THE JDA, THE FACTS WERE EMERGED THAT THE ASSESSEE SMT. VINITA AGARWAL WIFE OF SHRI UMESH AGARWA L AND SMT. PUSHPA SHARMA WIFE OF SHRI VINOD SHARMA PURCHASED TH E AGRICULTURAL LAND LOCATED IN VILLAGE KHATWARA, TEHSIL SANGANER, DISTT. JAIPUR BEARING KHASARA NO. 410 AREA 3.72 HECTARE, KHASARA NO. 433 AREA 0.0 4 HECTARE, KHASARA NO. 434 AREA 0.91 HECTARE AND KHASARA NO. 436 AREA 1.73 HECTARE. LAND BARANI-1 ST BEARING KHASARA NO. 437 AREA 0.22 HECTARE, 432/287 3 AREA 0.12 HECTARE AND KHASARA NO. 432, 436/2871, 433/287 2 IN TOTAL 7.84 HECTARE LAND WAS PURCHASED FOR RS. 42 LACS AND REGIS TRATION COST RS. 2,55,200/-. ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 10 2.1 THE JDA VIDE NOTIFICATION NO. P.6(29)NAVI/3/2004 DATED 27/10/2005 SIGNED BY THE PRINCIPAL SECRETARY OF THE STATE WAS ISSUED FOR ACQUISITION OF LAND AND IN LIEU OF SURRENDER WITHOUT ANY CONSIDERATION, COMPENSATION WOULD BE ISSUED TO THE EXTENT OF 20% OF RESIDENTIAL AND 5% COMMERCIAL LAND. ON 30/5/2006, THE JOINT OWNER OF THIS LAND I.E. SMT. PUSHPA SHARMA AND ASSESSEE VINITA AGARWAL SURRENDERE D THE LAND BEFORE THE LAND ACQUISITION OFFICER. THE CONTENT OF THE LET TER IS REPRODUCED AS UNDER:- LSOK ESA] JHEKU~ HKWFE VOKFIR VF/KDKJH] UXJ FODKL ;KSTUK,SA] T;IQJA DEJK UA- ,U&204] R`RH; EAFTY T;IQJ FODKL IZKF/KDJ.K HKOU T;IQJA FO'K;%& LISKY BDKSUKWFED TKSU LST GSRQ XZKE DYOK MK] RGLHY LKAXKUSJ] FTYK&T;IQJ GSRQ VOKIR HKWFE [KLJK UACJ 410] 433] 434]436]437]432@28 73 DQY FDRK 6 DQY JDCK 6- 74 GSDVS;J LAIW.KZ HKWFE DKS FUKQYD LEFIZR DJUS DS CNYS FODFLR HKW[K.M DS VKOAVU I= TKJH DJUS CKCRA EGKSN;] MIJKSDR FO'K;KURXZR IZKFKHZ] }KJK VIUH HKWFE DKS F UKQYD LEFIZR DJUS DS LACA/K ESA BDJKJUKEK@?KKS'K.KK&I=] 'KIFK&I=] {KFRIWFRZ VUQCA/K I= O TEKCANH UOHURE DH IZFR I= DS LKFK IZLRQR DJ FUOSNU GS FD MIJKSDR VOKIR HKWFE DS CNYS JKT; LJDKJ DH IFJI= O T;IQJ FODKL IZKF/KDJ.K DS FU.KZ; VUQLKJ 25 IZFR'KR 20 IZFR'KR VKOKLH; O 5 IZFR'KR O;KOLKF;D FODFLR HKW[K.M DS VKOAVU I= IZKFKHZX.K D S UKE LS TKJH DJUS DK JE DJSA A IZKFKHZ] IQ'IK 'KEKZ FOFURK VXZOKY LAYXU 1- BDJKJUKEK@?KKS'K.KK I= ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 11 2- 'KIFK I= 3- {KFRIWFRZ VUQCA/K I= 4 TEKCANH DH UHOURE IZFR 5 IGPKU LACAF/KR NLRKOST E; QKSVKS] IGPKU I=@MKBZF OAX YKBZLSAL@JK'KU DKMZ DH IZFR ON 02/11/2006, THE AMIN OF JDA OFFICE HAD REPORTED AS UNDER:- DK;KZY; FVII.KH T;IQJ FODKL IZKF/KDJ.K FO'K;&LISKY BDKSUKSFED TKSU ESA VOKIR HKWFE LEFIZR DH ,SOT ESA VKJ{K.K I= NSUS CKCR~ A 1- HKWFE VOKFIR VF/KDKJH DS EKAD MH&257 FNUKAD 23- 5-2006 LS IZKIR I=KOYH ESA [KKRSNKJU IQ'IK 'KEKZ IRUH FOUKSN 'KEKZ O FOFURK VX ZOKY IRUH MESK VXZOKY DS }KJK LISKY BDKSUKSFED TKSU GSRQ XZKE DYOKM RGLHY LKAXKUSJ TKSU &11 DH VOKIRK/KHU HKWFE [KLJK UA- 410]433]434]436]437]432@2873 DQY FDRK 6 DQY JDCK 6- 74 GSDVS;J LAIW.KZ DS CKCR EQVKOTS :I;S ESA 20 IZFRKR VKOKLH; O 5 IZFRKR O;KOLKF;D H KW[KAM YSUS GSRQ IZKFKZUK I= E; OKAFNR LEIZ.K NLRKOSTKR VKT FNUKAD 25-5-06 DKS ISK FD;S A 2- HKWFE VOKFIR VF/KDKJH LS IZKIR I=KOYH ESA RGLHYN KJ DH FJIKSVZ VUQLKJ LEFIZR HKWFE DS CNYS 20 IZFRKR VKOKLH; {KS= IJ 13480 OXZ EHVJ O IKAP IZFRKR O;KOLKF;D {KS=QY 3370 OXZEHVJ GKSRK GSA A 3- VUQ- 1@,U O 2@,U DS VUQLKJ NLRKOSTKSA DH TKAP DH X;H ,OA MDR RF; LGH IK;S X;S A GLRK----- VEHU FNUKAD 2-11-2006 RGLHYNKJ FMLISP FYFID VKJ{K.K I= FMLISP EKAD 91 FNUKAD 3-11-2006 LS TKJ H FD;K X;K A VR% I=KOYH VKO;D DK;ZOKGH GSRQ HKWFE VOKFIR VF/KDKJH DKS FHKT OK;S TKUS GSRQ VKNSKKFKZ IZLRQR GSA A MIK;QDR TKSU FNUKAD 3-11-2006 ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 12 ON 03/11/2006, RESERVATION LETTER ISSUED IN FURTHER ANCE OF ALLOTMENT LETTER TO BE ISSUED IN PURSUANCE TO NOTIFICATION ORDER NO. P.6(29)NAVI/3/2004 DATED 27/10/2005. ACCORDING TO RESERVATION LETTER, THE ASSESSEE WAS ALLOTTED 20% RESIDENTIAL AND 5% COMMERCIAL LAND AS COMPENSATION OF SURRENDER OF LAND WITHOUT ANY CONSIDERATION FOLLOWING THE ABOVE NOTIFICATION OF ACQUISITION BY THE JDA. ON 30/12/20 06 SUBSEQUENT TO THE ISSUE OF RESERVATION LETTER, ACCORDING TO SECTION 4 (1) OF NOTIFICATION/CIRCULAR NO. P.6(29)NAVI/3/2006 DATED 30/12/2006, IT WAS NOTIFIED THAT NOW LEGALLY THE SELLERS WERE PREVENTED FROM MAKING ANY LEGAL DISPUTE ABOUT THE SALE OF THE LAND. ON 21/08/ 2008 VIDE LOTTERY SPECIFIC RESIDENTIAL PLOT NO. 15680 SQ.MT. AND COMM ERCIAL PLOT OF 3920 SQ.MT. WAS ALLOTTED AT VILLAGE KHATGWADA, TEHSIL SANGA NER, DISTRICT- JAIPUR JOINTLY TO THE ASSESSEE AND HER CO-OWNER. ON 03/10/2 008 RESIDENTIAL PLOT NO. 624 AREA 1250 SQ.MT IN SPECIAL ECONOMIC SCHEME VILLAGE KHATWADA WAS JOINTLY SOLD BY THE ASSESSEE AND CO-OWNER FOR RS. 22,50,000/-. ON 24/12/2008 THE ASSESSEE AND CO-OWNER SOLD COMMERCIAL PLOT NO. 169 OF AREA 800 SQ.MT FOR RS. 44 LACS. IT HAS BEEN OBSERVE D BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD SURRENDERED HER RIGHT IN THE PROPERTY ON 30/5/2006 THAT TOO, WITHOUT ANY CONSIDERATION IN PUR SUANCE OF NOTIFICATION OF ACQUISITION DATED 27/10/2005. IT MEANS THAT FOR ALL PRACTICAL PURPOSES ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 13 THE ASSESSEE HAD SURRENDERED/RELINQUISHED/EXTINGUIS HED HER RIGHTS IN THE PROPERTY PURCHASED ON 21/4/2005 (WHICH HAD BEEN ACQU IRED BY THE JDA BY THE NOTIFICATION DATED 27/10/2005). THE INTENTION OF THE ASSESSEE ABOUT RELINQUISHMENT AND EXTINGUISHMENT OF HER RIGH TS IN THE PROPERTY IN EXCHANGE OF 20% RESIDENTIAL AND 5% COMMERCIAL LAND WAS VERY MUCH OBVIOUS FROM HER SURRENDER LETTER DATED 30/5/2006. THE RESERVATION LETTER WAS ISSUED ON 3/11/2006 BY THE JDA AND BY NOTIFICATI ON DATED 30/12/2006, THE ASSESSEES RIGHT IN PROPERTY WERE RE STRICTED FROM MAKING ANY LEGAL DISPUTE ABOUT SALE OF THE LAND. ACCORDING TO THE ASSESSING OFFICER, THE TRANSFER WAS COMPLETED ON 30/5/2006. THE LEARNED ASSESSING OFFICER FURTHER HELD THAT THE ASSESSEE RECEIVED THE COMPENSATION FOR ACQUISITION OF LAND THROUGH LOTTERY ON 21/8/2008 AS PER SECTION 45(5)(A) OF THE ACT, THE CONSIDERATION RECEIVED ON TRANSFER OF A CAPITAL ASSETS ON TRANSFER BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW SHALL BE CHARGEABLE AS INCOME UNDER THE HEAD CAPITAL GAIN OF THE PREVIOUS YEAR IN WHICH SUCH COMPENSATION OR PART THEREOF OR SUCH CONS IDERATION OR PART THEREOF WAS FIRST RECEIVED. FOR THE SPECIAL ECONOMIC ZONE, THE JDA HAS ACQUIRED THE LAND OF VILLAGE JHAI, KHATWADA, BAGRU K HURD, PALDI, BHABHORIA ETC. AND RESERVE RATE FIXED FOR THE RESID ENTIAL PLOT WAS RS. 2800/- PER SQ.MT. AND RS. 5600/- PER SQ.MT. FOR THE COMMERCIAL PLOTS. ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 14 THUS, THE COMPENSATION/CONSIDERATION RECEIVED ON COM PULSORY ACQUISITION OF THE LAND OF THE ASSESSEE BY THE JDA AND SHORT TE RM CAPITAL GAIN WAS WORKED OUT BY THE ASSESSING OFFICER AS UNDER:- A. COST OF ACQUISITION RS. 44,56,000/- SHARE OF THE ASSESSEE RS. 22,28,000/- SALE CONSIDERATION VALUE OF COMPENSATION- RESIDENTIAL AREA 7840 SQ.MT.X2800 (RESERVE RATE) = RS. 2,19,52,000/- COMMERCIAL AREA 1960 SQ.MT. X 5600 (RESERVE RATE) = RS. 1,09,76,000/- TOTAL AMOUNT OF COMPENSATION RS. 3,29,28,000/- SHORT TERM CAPITAL GAIN RS. 3,07,00,000/- B. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE AND HER CO-OWNER SOLD 1250 SQ.MT. OF RESIDENTIAL PLOT NO. 624 FOR RS. 22,50,00 0/- ON 03/10/2008 AND 800 SQ.MT. OF COMMERCIAL PLOT NO. 169 ON 24/12/2008 FOR RS. 44,00 ,000/-. THUS, THE TOTAL SHARE OF THE ASSESSEE BECOMES RS. 33,25,000/- (1125000 + 220 0000). SHORT TERM CAPITAL GAIN/LOSS ON THE SALE OF THE AB OVE PLOT IS WORKED OUT AS UNDER:- TOTAL SALE CONSIDERATION RS. 33,25,000/- COST OF ACQUISITION OF RESIDENTIAL PLOT OF 625 SQ.MT. X 2800 = RS. 17, 50,000/- OF COMMERCIAL PLOT OF 400 SQ.MT. X 5600 = RS. 22,4 0,000/- TOTAL COST OF ACQUISITION RS. 39,90,000/- SHORT TERM CAPITAL LOSS RS. 6,65,000/- NET SHORT TERM CAPITAL GAIN ON ACQUISITION OF LAND BY JDA RS. 3,07,00,000/- LOSS ON SALE OF PLOTS RS. 6,65,000/- RS. 3,00,35,000/- THE LEARNED ASSESSING OFFICER ALSO FOUND THAT THE RE SERVE RATE APPLIED FOR COMPENSATION FOR COMPUTATION OF CAPITAL GAIN WAS MOR E THAT THE DLC RATE, THEREFORE, ON SUBSEQUENT SALE, THERE WAS LOSS. THE ASSESSEE HAD NOT CLAIMED ANY EXEMPTION U/S 10(37) OF THE ACT. IN CAS E OF THE ASSESSEE, THE PROPERTY HAD BEEN TRANSFERRED IN TERMS OF SECTI ON 2(47) OF THE ACT, ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 15 ON 30/05/2006 AFTER THAT DATE, HER RIGHTS HAD EXTIN GUISHED AND THE PROPERTY HAD BEEN TREATED AS TRANSFERRED. HAD THE A SSESSEE BEEN IN THE POSSESSION OF LAND THAT WAS ILLEGAL POSSESSION OR EN CROACHMENT OR TRESPASS BECAUSE SHE HAD NO RIGHT OVER THE PROPERTY ? THUS, SHE DOES NOT FULFILL THE CONDITION OF CARRYING AGRICULTURAL OPER ATIONS FOR TWO YEARS PRECEDING THE DATE OF TRANSFER OF THE LAND BY WAY OF COMPULSORY ACQUISITION BY THE JDA. THE ASSESSEE HAD ALSO NOT SU BMITTED ANY EVIDENCE REGARDING EXPENDITURE INCURRED IN CARRYING OUT THE AGRICULTURAL OPERATIONS ON THE IMPUGNED LAND. THE ASSESSEE HAS SU BMITTED BEFORE THE ASSESSING OFFICER A GIRDAWARI ACCORDING TO WHICH THE ASSESSEE WAS IN POSSESSION OF THAT LAND TILL 21/8/2008 BUT THESE FA CTS WERE ALSO NOT FOUND CORRECT BY THE ASSESSING OFFICER ON THE BASIS OF JD A RECORD ON 03/01/2008 VIDE COURT ORDER DATED 29/12/2007. THUS, THE GIRDAWARI SUBMITTED BY THE ASSESSEE WAS TOTALLY FALSE AND CARR IED NO EVIDENTIARY VALUE. ACCORDINGLY, SHE WAS NOT ENTITLED FOR CLAIM O F EXEMPTION U/S 10(37) OF THE ACT. FURTHER THE HON'BLE SUPREME COUR T HAS HELD IN CASE OF GOETZE (INDIA) LTD. VS. COMMISSIONER OF INCOME TAX 2 84 ITR 323 (SC), A.O. CANNOT ENTERTAIN CLAIM OF DEDUCTION OTHERWISE T HAN BY FILING A REVISED RETURN. THE ASSESSEE HAD NOT MADE CLAIM U/S 10(37) IN HER RETURN OF INCOME THEREFORE, IT CANNOT BE ALLOWED MERE ON TH E BASIS OF REPLY ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 16 MADE BY THE ASSESSEE. THE ASSESSING OFFICER FINALLY ASSESSED SHORT TERM CAPITAL GAIN AT RS. 3,00,35,000/-. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A), WHO HAD ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE BY OBSERVING THAT BASICALLY ISSUE PERTAINED TO THE COMPLETION OF THE ACQUISITION PROC EEDINGS. THE NOTIFICATION WAS ISSUED ON 27/10/2005 TO ACQUIRE THE LAND BY THE JDA FOR DEVELOPMENT OF SEZ. HOWEVER, THIS NOTIFICATION WAS NO T AN ORDER OF ACQUISITION. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE APPELLANT HAD SURRENDERED HER RIGHTS IN THE SAID LAND VIDE LE TTER DATED 30/05/2006 TO THE LAND ACQUISITION OFFICER. HOWEVER, HE FOUND T HAT IT WAS A SIMPLY AN UNCONDITIONAL OFFER FOR SURRENDER OF LAND AND IN AB SENCE OF CLEAR TITLE OR DEFECTS IN THE TITLE OF THE PROPERTY, THIS OFFER WAS LIABLE TO BE REJECTED BY THE STATE GOVERNMENT. MANY A TIMES, THE LAND REQUIS ITIONED U/S 3 IS NOT ACQUIRED BY THE STATE GOVT. AND IT IS RELEASED FROM ACQUISITION AND THE POSSESSION IS ALSO RETURNED TO THE OWNER. THE REQUIS ITION OF THE LAND IS NOT A TRANSFER BECAUSE THE OWNERSHIP REMAINS WITH TH E OWNER. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE TRANSF ER WAS COMPLETE WHEN ALL THE RIGHTS IN THE SAID LAND HAD BEEN RELINQUISH ED. FURTHER RESERVATION LETTER HAD BEEN ISSUED TO THE ASSESSEE ON 3/11/2006 (WITHIN 11 MONTHS ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 17 FROM THE DATE OF NOTIFICATION). HOWEVER, HE FOUND TH AT IN THE PRESENT CASE, THE PROCESS OF ACQUISITION WAS COMPLETED ON 29 /12/2007 THROUGH COURT ORDER NO. 643 DATED 29/12/2007 AND MUTATION WA S MADE ON 3/10/2008. THE APPELLANT WAS AWARDED 15680 SQ.MT. OF R ESIDENTIAL PLOT AND 3920 SQ.MT OF COMMERCIAL PLOT AT VILLAGE KHATWAD A, TEHSIL SANGANER ON 21/8/2008. ACCORDINGLY, HE TREATED TRANSFER OF L AND WAS COMPLETED ON 29/12/2007 AND NOT ON 30/05/2006 AS ALLEGED BY THE ASSESSING OFFICER. THOUGH, THE ASSESSING OFFICER HAS ALLEGED THAT THE A PPELLANT WAS DISPOSED FROM THE LAND W.E.F. 30/5/2006. HOWEVER, THE RE IS NO EVIDENCE TO THIS EFFECT BROUGHT ON RECORD BY THE ASSESSING O FFICER. SINCE THE ORDER OF THE COURT FOR ACQUISITION OF LAND WAS PASSED ON 29/12/2007, THE APPELLANT CONTINUED TO BE IN THE POSSESSION OF LAND FOR ALL PRACTICAL PURPOSES. THE RESERVATION LETTER DATED 3/11/2006 WAS ONLY A PART OF THE ENTIRE PROCESS OF ACQUISITION AND IT NOWHERE INDICA TED THAT THE LAND WAS TAKEN INTO POSSESSION BY THE JDA ON 3/11/2006. THIS LETTER ENUMERATED ONLY THE TERMS AND CONDITIONS FOR ACQUISITION OF LA ND AND THE APPELLANT REMAINED IN THE POSSESSION OF LAND TILL 29/12/2007. ON PERUSAL OF THE DOCUMENTS FILED BY THE APPELLANT, IT WAS NOTICED BY THE LEARNED CIT(A) THAT THE LAO HAD PASSED AN AWARD U/S 12(1) ON 22/06/ 2007 IN CONSEQUENCE OF NOTIFICATION DATED 27/10/2005 AND LE TTER DATED ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 18 23/12/2006, WHICH WAS FORWARDED TO THE STATE GOVT. FOR APPROVAL. THE SAME WAS APPROVED BY THE STATE GOVT. ON 2/07/2007 AN D THE NOTICE U/S 12(2) WAS ISSUED TO THE VARIOUS OWNERS. IT WAS FURTHER MENTIONED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) THAT DUE TO NON- AVAILABILITY OF LAND AS PROPOSED BY THE JDA, THE AREA ACQUIRED WAS ONE STEP DOWN. THE LAND WAS FINALLY TRANSFERRED IN THE NAME OF JDA. THUS, GOI NG BY THE DATE OF AWARD (02/07/2007) OR TRANSFER OF LAND IN THE NAME O F JDA BY 29/12/2007, THE ACQUISITION PROCEEDINGS STOOD COMPL ETED ON 02/7/2007 OR 29/12/2007 WHEREAS DATE OF PURCHASE OF LAND WAS 21 /4/2005. THEREFORE, THE LEARNED CIT(A) FOUND THAT THE APPELLA NT HAD SATISFIED THE CONDITIONS AS LAID DOWN IN SECTION 10(37) OF THE ACT . HE RELIED ON THE FOLLOWING CASE LAWS:- (I) FOR A.Y. 1972-73, CIT VS. PURSHOTTAMBHAI MAGANB HAI HATHEESING (HUF) (156 ITR 150), FOR ACCESSIBILITY OF CAPITAL GAIN AND TRANSFER WAS AFFECTED WHEN POSSESSION WAS TAKEN OVER P URSUANT TO AN AWARD UNDER THE PROVISIONS OF LAND ACQUISITION ACT. (II) FOR A.Y. 1982-83, CIT VS. SMT. SHEGGY ABDULLA (243 ITR 792), FOR ACCESSIBILITY OF CAPITAL GAIN IN ASSESSME NT YEAR AND MADE AWARD BY THE COLLECTOR AND TOOK THE POSSESSION OF LAND. ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 19 (III) FOR A.Y. 1970-71, APPALA NARSAMMA VS. CIT (1 68 ITR 17), FOR ACCEPTABILITY OF CAPITAL GAIN. (IV) FOR A.Y. 1978-79, CIT VS. PANDARI LAXMIAH (223 ITR 671), FOR VESTING OF LAND TOOK PLACE ON THE DATE OF AWARD. (V) FOR A.Y. 1971-72, CIT VS. CACHAR NATIVE JOINT S TOCK CO. LTD. (223 ITR 754), FOR DETERMINATION OF COMPENSATION AMO UNT, THE QUESTION OF DETERMINATION OF CAPITAL GAIN DID NOT ARISE. (VI) FOR, A.Y. 1974-75, CIT VS. SUBODH KUMAR JAIN ( 221 ITR 802) FOR COMPUTATION OF CAPITAL GAIN AND AWARDING OF COMP ENSATION AND TAKING POSSESSION OF LAND BY THE SANCHALAK. THE LEARNED CIT(A) FURTHER HELD THAT THE ASSESSEE FIL ED THE COPY OF KHASRA GIRDAWARI FOR AGRICULTURAL OPERATION TO SHOW THAT THE CROPS OF CHOLA AND BAZRA WERE GROWN IN THE SAID LAND AS PER REVENUE RECO RD. IT WAS ARGUED BY THE ASSESSEE BEFORE HIM THAT OTHER CO-OWNER NAMEL Y SMT. PUSHPA SHARMA WAS MAINLY HANDLING THE AGRICULTURAL OPERATIO NS ON THE LAND JOINTLY OWNED. THE ASSESSEE ALSO SUBMITTED THAT MERE INCLUSION OF LANDS IN INDUSTRIAL ZONE WITHOUT ANY INFRASTRUCTURE DEVEL OPMENT DID NOT AND COULD NOT CONVERT THE AGRICULTURAL LANDS INTO NON-A GRICULTURAL LANDS. HE RELIED UPON THE HONBLE ITAT PUNE BENCHS DECISION I N THE CASE OF HARESH V MILANI VS. JCIT (111 TTJ 310) AND HELD THAT MERELY THE LAND IN QUESTION ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 20 WAS BROUGHT IN INDUSTRIAL ZONE, COULD NOT BE A DETER MINING FACTOR BY ITSELF TO SAY THAT THE LAND WAS CONVERTED INTO USE FOR NON- AGRICULTURAL PURPOSES. HE FURTHER HELD THAT EXTRACTS OF 7/12 INDICATED THA T THESE LANDS WERE SUBJECTED TO LAND REVENUE. THE ASSESSEE HAS SUBMITTE D EXTRACTS OF RECORDS MAINTAINED BY THE LAND REVENUE AUTHORITY WHE REIN THE LAND WAS CLASSIFIED AS AGRICULTURAL LAND AND THE NATURE OF T HE CROP AND THE PERSONS, WHO CULTIVATED THE LAND AT THE RELEVANT POINT OF TIM E. WHEN THE LANDS WERE SOLD BY THE ASSESSEE WERE DULY MENTIONED AND NOT HING WAS BROUGHT ON RECORD TO SHOW THAT THE LAND WAS PUT IN USE FOR NO N-AGRICULTURAL PURPOSES BY THE ASSESSEE. THE NATURE OF CROP PRODUCE D WAS MENTIONED RICE AND JAWAR. IT WAS ALSO EQUALLY TRUE THAT THE AS SESSEE HAD NOT GIVEN ANY EVIDENCE OF INCURRING ANY EXPENDITURE ON AGRICU LTURAL OPERATIONS CARRIED OUT ON THE SAID LAND. NO DIRECT EVIDENCE HA D BEEN PRODUCED BY THE ASSESSEE TO SHOW AND ESTABLISH THAT THE AGRICULT URAL PRODUCE IN THE NATURE OF RICE, JAWAR AND ANIMAL FEED GRASS WERE PROD UCED FROM THE SAID LAND. ON THE OTHER HAND, NO EVIDENCE HAD ALSO BEEN PRODUCED BY THE REVENUE TO SHOW AND ESTABLISH THAT THE LAND WAS USED FOR SOME OTHER PURPOSES OTHER THAN AGRICULTURAL PURPOSES. IT WAS NO BODYS CASE THAT THE ASSESSEE HAD USED THE LAND FOR NON-AGRICULTURAL PUR POSES BEFORE SELLING THE SAME. THE EVIDENCE IN THE FORM OF EXTRACTS CLEA RLY SHOWED THAT ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 21 AGRICULTURAL OPERATIONS WERE CARRIED OUT ON THE LAND IN QUESTION. MERELY BECAUSE THE ASSESSEE HAD NOT GIVEN ANY DIRECT EVIDE NCE OF SALE OF AGRICULTURAL PRODUCES, WHICH WERE STATED TO HAVE BEEN CONSUMED BY THE ASSESSEE FOR OWN PURPOSES, WAS NOT SUFFICIENT TO SAY THAT THE LAND IN QUESTION WAS NOT AGRICULTURAL LAND WHEN IT WAS, THEREF ORE, HE TREATED ANY CAPITAL GAIN ARISE FROM SALE OF AGRICULTURAL LAND WA S EXEMPTED FROM TAX. ACCORDINGLY, THE ADDITION WAS DELETED. HE FURTHER RE LIED UPON THE DECISION PASSED BY THE HONBLE DELHI ITAT IN THE CASE OF LAVL EEN SINGHAL VS. DCIT (111 TTJ 326). HE FURTHER DECIDED THE ASSESSEES CLA IM MADE BEFORE THE LEARNED CIT(A) U/S 10(37) OF THE ACT BY CONSIDERING THE VARIOUS CASE LAWS, WHICH HAS ALSO BEEN CHALLENGED BY THE REVENUE I N GROUND NO. (V) AND DECIDED IN FAVOUR OF THE ASSESSEE. FURTHER, HE ALSO HELD THAT IT IS THE AGRICULTURAL LAND AND IS NOT A CAPITAL ASSETS AS PE R PROVISIONS OF SECTION 2(14) OF THE ACT. FURTHER CALCULATION OF THE CAPITA L GAIN OF RESIDENTIAL PLOT AND COMMERCIAL PLOT ALLOTTED TO THE ASSESSEE ON THE BASIS OF RESERVE RATE ON THE BASIS OF LAND ACQUISITION AT VILLAGE JHAI, K HATWADA, BAGRU, KHURD, PALRI AND BHAMBHORIA WHEREAS THE ASSESSEES LAND WAS SITUATED IN VILLAGE KALWAD, TEHSIL- SANGANER, THEREFORE, IT HAS BEEN HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADOPTING THE RESERVED P RICE OF OTHER VILLAGES TO CASE OF ASSESSEE. THEREFORE, HE ACCEPTED THE CONSIDE RATION SHOWN BY THE ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 22 ASSESSEE AS ON SELLING OF THE PART OF BOTH LANDS I. E. RESIDENTIAL AND COMMERCIAL PLOTS. THEREFORE, HE ALSO DELETED THE AD DITION, WHICH WAS DIFFERENCE BETWEEN THE PRICE CALCULATED BY THE ASSES SING OFFICER AND ON WHICH PART LAND HAS BEEN SOLD BY THE ASSESSEE. 4. NOW THE REVENUE IS IN APPEAL AS WELL THE ASSESSEE IS IN C.O. BEFORE US. THE LEARNED SR. D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT THE LEARNED CIT(A) HAS NOT APPLIED THE CORRECT LAW IN DECIDING THE ISSUE BEFORE HIM. AS PER SECTION 2(47) OF THE ACT, THE DEFINITION OF TRANSFER HAS BEEN AMENDED W.E.F. 1/4/1 988. AS PER THIS DEFINITION, THE ASSESSEE HAS RELEASED/RELINQUISHED IMMOVABLE PROPERTY TO THE JDA ON 30/5/2006. THE ASSESSEE ACQUIRED AGRICULT URAL LAND ON 21/4/2005, THE ASSESSEE DID NOT CARRY OUT ANY AGRIC ULTURAL ACTIVITY AS NO EVIDENCE HAS BEEN SUBMITTED BEFORE THE ASSESSING OF FICER, EVEN TWO YEARS AS PRESCRIBED U/S 10(37) OF THE ACT HAS NOT B EEN COMPLETED. WHATEVER THE CASE LAWS RELIED UPON BY THE LEARNED CI T(A) ARE RELEVANT TO OLD LAW AND HAS NOT CONSIDERED THE DEFINITION OF TRA NSFER WHICH CAME IN THE EFFECT FROM 01/4/1985. SHE PARTICULARLY DRAWN OU R ATTENTION ON DEFINITION OF TRANSFER I.E. EXCHANGE, RELINQUISHMEN T, EXTINGUISHMENT OF ANY RIGHT, WHICH HAS BEEN PERFECTLY ANALYSED BY THE LEARNED ASSESSING ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 23 OFFICER TO DECIDE THE CASE. THEREFORE, SHE PRAYED TO CONFIRM THE ORDER OF THE LEARNED ASSESSING OFFICER. 5. AT THE OUTSET, THE LEARNED A.R. FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A) AND REITERATED THE ARGU MENTS MADE BEFORE THE LEARNED CIT(A) UNDER THE HEADS CLAIM WRONGLY NO T ALLOWED BY THE LEARNED ASSESSING OFFICER, CLAIM OF EXEMPTION U/S 10(37) OF THE ACT, DATE OF TRANSFER OF LAND, POSSESSION OF LAND, EVIDENCE O F EXPENSES REGARDING AGRICULTURAL ACTIVITIES AND LEGAL POSITION ON THIS ISSUE. HE FURTHER ARGUED THAT THE CONDITION OF SECTION 10(37) OF THE ACT HAS BEEN FULLY MET BY THE ASSESSEE AS THE LAND ACQUISITION PROCEEDINGS REACHE D ITS FINALITY ONLY ON 29/12/2007. THE ASSESSEE WAS IN COMPLETE POSSESSION OF AGRICULTURAL LAND FROM THE DATE OF PURCHASE I.E. 15/5/2005 TO 29 /12/2007 AND DURING THIS PERIOD, THE ASSESSEE CARRIED OUT AGRICULTURAL OPERATION FOR WHICH KHASRA GIRDAWARI FURNISHED FROM THE CONCERNED PATWARI . THE ASSESSEE HAD CARRIED OUT AGRICULTURAL OPERATION FOR A PERIOD OF TWO YEARS IMMEDIATELY BEFORE THE DATE OF ACQUISITION I.E. 29/ 12/2007. HE FURTHER ARGUED THAT FOR CALCULATION OF COMPENSATION, THE LE ARNED ASSESSING OFFICER HAS TAKEN THE RESERVE RATE OF JDA INSTEAD O F FAIR MARKET VALUE, WHICH IS VERY LOWER. EVEN RESERVE RATE APPLIED BY THE LEARNED ASSESSING OFFICER OF JHAI, KHATWADA VILLAGES, WHEREAS THE ASSES SEES LAND WAS ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 24 SITUATED IN KALWAD, TEHSIL- SANGANER, AS PER HIS CALC ULATION, THIS AMOUNT SHOULD NOT BE MORE THAN RS. 2,48,92,000/- AND SHORT TERM CAPITAL GAIN WOULD WORK OUT TO RS. 2,26,64,000/-. THE LEARNED CIT(A ) IS EMPOWERED BY LAW TO ENTERTAIN THE DEDUCTION U/S 10(37) OF THE ACT EVEN WHICH HAS NOT BEEN CLAIMED THROUGH THE REVISED RETURN. THEREFO RE, HE PRAYED TO CONFIRM THE ORDER OF THE LEARNED CIT(A). THE LEARNED A.R. HAS NOT PRESSED THE CROSS OBJECTION FILED BY THE APPELLANT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS FACT THAT THE ASSESSEE PURCHASED AGRICULTURAL LAND ON 15/5/2005, WHICH WAS ACQUIRED B Y THE JDA IN PURSUANT TO NOTIFICATION DATED 25/10/2005. IN LIEU OF THE ACQUISITION OF LAND, RESERVATION LETTER WAS ISSUED ON 3/11/2006 TO THE ASSESSEE FOR THE ALLOTMENT OF CERTAIN AREA OF RESIDENTIAL AND COMMER CIAL PLOTS. VIDE LETTER DATED 30/5/2006 BOTH THE CO-OWNERS HAD SURRENDERED T HE AGRICULTURAL LAND BEFORE THE LAND ACQUISITION OFFICER AND REQUES TED TO ALLOT 25% OF LAND ACQUIRED (20% RESIDENTIAL AND 5% COMMERCIAL) D EVELOPED PLOT AS PER JDA RULE. THE AMIN ON 2/11/2006 ON ORDERSHEET RE COMMENDED COMPENSATION TO THE TEHSILDAR. ON 3/11/2006, RESERVA TION LETTER WAS ISSUED IN PURSUANT TO NOTIFICATION ORDER DATED 27/1 0/2005 AND THE ASSESSEE WAS ALLOTTED 20% RESIDENTIAL AND 5% COMMERC IAL LAND IN ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 25 COMPENSATION OF SURRENDER OF LAND ON 29.12.2007 THE LAC PASSED AWARD VIDE ORDER NO 643. THEREAFTER THE POSSESSION OF THE LAND WAS TAKEN BY THE LAC IN ACCORDANCE WITH LA ACT. ON 21/8/2008, THE SPECIFIC RESIDENTIAL PLOT OF 15 680 SQ.MTS. AND COMMERCIAL PLOTS 3920 SQ.MTS. WERE ALLOTTED AT VILLA GE KHATWADA, TEHSIL- SANGANER, JOINTLY TO THE ASSESSEE AND HER CO-OWNER. RESIDENTIAL PLOT NO. 624 AREA 1250 SQ.MTS. WAS SOLD ON 3/10/2008 AND COMM ERCIAL PLOT NO. 169 OF AREA 800 SQ. MTS. WAS SOLD ON 24/12/2008. AS PER SECTION 2(47) OF THE ACT HAS BEEN INSERTED U NDER THE LAW W.E.F. 01/4/1985, WHICH IS REPRODUCED AS UNDER:- 2(47) [TRANSFER, IN TO A CAPITAL ASSET, INCLUDES,- (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE A SSET; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER AN Y LAW; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE O WNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN-TRA DE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT;][OR] [(IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON BOND; OR] [(V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882); OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 26 SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. [EXPLANATION 1] FOR THE PURPOSES OF SUB-CLAUSE (V) AND (VI), IMMOVABLE PROPERTY SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA.] [EXPLANATION 2.- FOR THE REMOVAL OF DOUBTS, IT IS H EREBY CLARIFIED THAT TRANSFER INCLUDES AND SHALL BE DEE MED TO HAVE ALWAYS INCLUDED DISPOSING OF OR PARTING WITHI N AN ASSET OR ANY INTEREST THEREIN, OR CREATING ANY INTEREST IN ANY ASSET IN ANY MANNER WHATSOEVER, DIRECTLY OR INDIRECTLY, ABSOLUTELY OR CONDITIONALLY , VOLUNTARILY OR INVOLUNTARILY, BY WAY OF AN AGREEMENT (WHETHER ENTERED INTO IN INDIA OR OUTSIDE INDIA) OR OTHERWISE, NOTWITHSTANDING THAT SUCH TRANSFER OF RIGHTS HAS BEEN CHARACTERIZED AS BEING EFFECTED OR DEPENDENT UPON OR FLOWING FROM THE TRANSFER OF A SHARE OR SHARES OF A COMPANY REGISTERED OR INCORPORATED OUTSIDE INDIA;] IT IS A FACT THAT THE ASSESSEE HAS MADE AN APPLICAT ION FOR ALLOTMENT OF ALTERNATIVE PLOT VIDE LETTER DATED 30/05/2006 TO TH E JDA, IN LIEU OF LAND SUBJECT MATTER OF ACQUISITION. IN OUR VIEW POSSESSIO N OF THE SUBJECT LAND IS REQUIRED TO BE TAKEN BY THE LAC UNDER SECTION 16 OF THE LA ACT, 1894 AFTER PASSING THE AWARD. ON THE PLAIN READING OF SE CTION 16 OF LA ACT, IT IS CLEAR THAT IN THE ABSENCE OF POSSESSION OF THE SUBJ ECT PROPERTY BEING ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 27 TAKEN OVER BY THE LAC, THE ASSESSEE CANNOT BE DIVES TED OF HIS RIGHT, TITLE OR INTEREST IN THE PROPERTY. FOR THIS WE RELY UPON T HE JUDGMENT OF HONBLE SUPREME COURT IN THE MATTER OF SHEELA JAWARLA NAGORI VS KANTILAL NATHMAL BALBOTA 2014(11)SCC 376 (PARA12) THE LEARNED CIT(A) HAS CONSIDERED SECTION 2(47) WHE REIN OTHER MODE OF TRANSFER HAS BEEN PRESCRIBED UNDER THE INCO ME TAX LAW. ACCORDING TO IT, THE EXCHANGE/RELINQUISHMENT OF ASS ETS OR THE EXTINGUISHMENT OF ANY RIGHT THEREIN HAS BEEN PROVID ED A MODE OF TRANSFER. IN OUR VIEW THERE WAS NEITHER EXCHANGE NOR RELINQUISHMENT OF ANY RIGHT ON 30.5.2006. IN OUR VIEW THE RELINQUISH/ EXCHANGE OF IMMOVEABLE PROPERTY CAN TAKE PLACE BY REGISTERED DO CUMENT TRANSFERRING THE TITLE IN FAVOUR OF THE BENEFICIARY ALONG WITH TR ANSFER OF POSSESSION. TRANSFER OF PROPERTY ACT HAS DEFINED EXCHANGE AND SA LE AS: 118. 'EXCHANGE' DEFINED WHEN TWO PERSONS MUTUALLY TRANSFER THE OWNERSHIP OF ONE THING FOR THE OWNERSHIP OF ANOTHER, NEITHER THING OR BOTH THINGS BEING MONEY ONLY, THE TRANSACTION IS CALLED AN 'EXCHANGE'. A TRANSFER OF PROPERTY IN COMPLETION OF AN EXCHANGE CAN BE MADE ONLY IN MANNER PROVIDED FOR THE TRANSFER OF SUCH PROPERTY BY SALE. AND SALE HAS BEEN DEFINED AS 54. 'SALE' DEFINED 'SALE' IS A TRANSFER OF OWNERSHIP IN EXCHANGE FOR A PRICE PAID OR PROMISED OR PART-PAID AND PART- PROMISED. ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 28 SALE HOW MADE: SUCH TRANSFER, IN THE CASE OF TANGIB LE IMMOVABLE PROPERTY OF THE VALUE OF ONE HUNDRED RUPEES AND UPWARDS, OR IN THE CASE OF A REV ERSION OR OTHER INTANGIBLE THING, CAN BE MADE ONLY BY A REGISTERED INSTRUMENT. IN THE CASE OF TANGIBLE IMMOVABLE PROPERTY OF A VAL UE LESS THAN ONE HUNDRED RUPEES, SUCH TRANSFER MAY BE MADE EITHER BY A REGISTERED INSTRUM ENT OR BY DELIVERY OF THE PROPERTY. DELIVERY OF TANGIBLE IMMOVABLE PROPERTY TAKES PLACE WHEN THE SELLER PLACES THE BUYER, OR SUCH PERSON AS HE DIRECTS, IN POSSESSION OF THE PRO PERTY. FROM THE BARE PERUSAL OF DEFINITION IT IS CLEAR THA T FOR THE EXCHANGE/ RELINQUISHMENT OF PROPERTY, REGISTRATION OF INSTRUM ENT AND TRANSFER OF POSSESSION IS NECESSARY. THEREFORE IN OUR VIEW CIT(A) WAS RIGHT IN HOLDING THAT THERE WAS NO RELINQUISHMENT /EXCHANGE OF LAND BY VIRTUE OF LETTER DATE 30.5.2006. FURTHER THERE WAS NO TRANSFER OF POSSESSION FROM THE ASSESSEE TO THE LAC ON 30.5.2006, THE POSSESSIO N OF PROPERTY WAS TAKEN OVER BY THE LAC AFTER PASSING OF THE AWARD. TH E CASE LAW APPLIED BY THE LEARNED CIT(A) ON THE ASSESSEE CASE WERE SQUA RELY APPLICABLE. FOR DETERMINING WHETHER THE ASSESSEE WAS USING THE AGRIC ULTURAL LAND FOR AGRICULTURE PURPOSES DURING THE PERIOD OF TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER, THE DATE OF TRANSFE R HAS A MATERIAL EFFECT. IT IS A FACT THAT THE COMPULSORY ACQUISITION PROCEE DINGS WERE COMPLETED ON 29/12/2007 AND WHEN AWARD WAS PASSED BY THE LAND AC QUISITION OFFICER U/S 12(2) OF THE ACT AND THEREAFTER THE POS SESSION WAS TAKEN BY THE LAC. AFTER ELABORATE DISCUSSION LEARNED CIT(A) HAD HELD THAT THE LAND OF THE ASSESSEE WAS AN AGRICULTURAL LAND AND WAS NOT A CAPITAL ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 29 ASSET, THIS HE HAS HELD ON THE BASIS OF CERTIFICATE ISSUED BY THE TEHSILDAR, TEHSIL- SANGANER, THAT LAND WAS SITUATED IN VILLAGE K HATWADA, WHICH WAS BEYOND 8 K.M. FROM THE MUNICIPAL LIMIT. HENCE, THE AGRICULTURAL LAND IN QUESTION WAS NOT A CAPITAL ASSET AS PER PROVISION OF SECTION 2(14) OF THE ACT. THIS FINDING RECORDED BY THE LD CIT (A) HAS NOT BEEN CHALLENGED BY THE REVENUE IN THE PRESENT PROCEEDING, THEREFORE TH IS FINDING HAS ATTAINED FINALITY IN THE PRESENT PROCEEDINGS AND BI NDS THE REVENUE. IN OUR VIEW, THE ASSESSEE WAS ALLOTTED RESIDENTIAL AND COMMERCIAL PLOT ON 21/8/2008 AT VILLAGE KHATWADA, TEHSIL- SANGAN ER, DISTRICT- JAIPUR. THE ASSESSEE RECEIVED THE COMPENSATION ON 21/8/2008. THE LEARNED ASSESSING OFFICER HAS ADOPTED THE RESERVE RATE FIXE D FOR RESIDENTIAL PLOT @ 2800 PER SQ. MT AND RS. 5600 PER SQ.MT FOR COMMERCI AL PLOT ON THE BASIS OF RESERVE RATE FIXED BY THE JDA FOR VILLAGES JHAI, KHATWADA, BAGRU, KHURD, PALRI AND BHAMBHORIA. THE RESIDENTIAL AND COM MERCIAL PLOTS ALLOTTED TO THE APPELLANT IN THE AREA OF KHATWARA. I N OUR VIEW ONCE IT HAS BEEN AGREED BETWEEN THE PARTIES ON ACCOUNT OF THE FA CT THAT THE LAND WAS NOT THE CAPITAL ASSET, THE CONCLUSION OF THE ASSESS ING OFFICER TO CALCULATE THE SHORT-TERM GAIN WAS UNWARRANTED, AS THE LAND WAS N OT A CAPITAL ASSET. THE ORDER OF THE LD CIT, HOLDING THE AGRICULTURE LAN D AS NON-CAPITAL ASSET CLEARLY GOES AGAINST THE REVENUE THEREFORE, THE ASSE SSING OFFICER ITA 660/JP/2012 & C.O. 57/JP/2012_ ACIT VS SMT. VINITA AGARWAL 30 CONCLUSION THAT SHORT TERM CAPITAL GAIN AROSE ON TH E BASIS OF RESERVE RATE WAS UNJUSTIFIED, AS IT CANNOT APPLIED TO A NON CAPIT AL ASSET. SINCE WE ARE DISMISSING THE APPEAL OF THE REVENUE, WE DO NOT DEEM IT APPROPRIATE TO DECIDE THE CROSS OBJECTION OF THE AS SESSEE IN THE LIGHT OF THE FINDING RECORDED BY US WHILE DECIDING THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED AND C.O. OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/09/2016. SD/- SD/- HKKXPAN YFYR DQEKJ (BHAGCHAND) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19 TH SEPTEMBER, 2016 *RANJAN. VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-6, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- SMT. VINITA AGARWAL, JAIPUR. 3. VK;DJ VK;QDR @ THE CIT 4. VK;DJ VK;QDRVIHY @ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 660/JP/2012 & CO 57/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR