AJAY BHATIA, NEW DELHI V. ITO, WARD- 36(5), NEW DELHI

ITA 7662/DEL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6961 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 21-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Assessee Lawyers: K R MANJANI
• Keywords: Capital asset; Business income
• Section: 54F; 133(6); 54; 6

Judgement Text

ITA NO. 7662/DEL/2017 ASSESSMENT YEAR 2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI G.D.AGRAWAL, HONBLE VICE PRES IDENT & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.7662/DEL/2017 ASSESSMENT YEAR: 2013-14 SHRI AJAY BHATIA, B-205, DERAWAL NAGAR, NEW DELHI-110009 (PAN: AAFPB5063R) VS. ITO WARD 36(5) NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY : SHRI K.R. MANJANI, ADV. REVENUE BY : SHRI G. JOHNSON, SR. DR ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 11.09.2017 OF THE LD. COMMISSIONER OF I NCOME TAX (APPEALS)-12, NEW DELHI PERTAINING TO ASSESSMENT Y EAR 2013-14. 2.0 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 2,70,370/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAD EARNED CAPI TAL GAIN ON THE DATE OF HEARING 10.10.2018 DATE OF PRONOUNCEMENT 08.01.2019 ITA NO. 7662/DEL/2017 ASSESSMENT YEAR 2013-14 2 SALE OF RESIDENTIAL PROPERTY, COMMERCIAL PROPERTY A ND AGRICULTURAL LAND AND HAD CLAIMED DEDUCTION U/S 54 AND 54F OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' ). ON PERUSAL OF THE SALE AGREEMENT, THE ASSESSING OFFICER OBSERVED THAT THE AGREEMENT WAS MADE FOR SALE OF 85 KANALS OF LAND SITUATED AT DHARUHERA WHEREAS IN THE COMPUTATION OF CAPITAL GAI NS, THE ASSESSEE HAD SHOWN THAT ONLY 24 KANALS OF LAND AS HAVING BEEN SOLD OUT OF THE TOTAL 85 KANALS . ON A QUERY FROM THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED BEFORE HIM THAT THE DEED OF REGISTRATION WAS EXECUTED ONLY FOR 24 KANALS AS THE BALANCE LAND WAS ACQUIRED BY THE GOVERNMENT AND THE AMOUNTS RECE IVED FROM THE PURCHASER FOR THE BALANCE LAND HAD BEEN SHOWN A S ADVANCE IN THE BOOKS OF THE ASSESSEE. IT WAS ALSO SUBMITTED B Y THE ASSESSEE THAT POSSESSION OF LAND WAS ONLY GIVEN WITH RESPECT TO 24 KANALS OF LAND AS THE NOTIFICATION UNDER LAND ACQUISITION ACT WAS MADE MUCH BEFORE THE AGREEMENT FOR SALE. THE ASSESSING OFFICER MADE FURTHER INQUIRIES FROM THE PURCHASER M/S VIJAY LOGI STICS PVT. LTD. BY ISSUING NOTICE U/S 133(6) OF THE ACT AND IN RESP ONSE TO THE NOTICE U/S 133(6), THE PURCHASER SUBMITTED THAT ALT HOUGH THE TOTAL AREA OF LAND WAS 85 KANALS , REGISTERED SALE DEED WAS EXECUTED ONLY FOR 24 KANALS BECAUSE THE BALANCE 61 KANALS WAS ITA NO. 7662/DEL/2017 ASSESSMENT YEAR 2013-14 3 AGRICULTURAL LAND. THE ASSESSING OFFICER ALSO OBSE RVED THAT THE COMPENSATION FOR ACQUISITION AMOUNTING TO RS. 5,64, 815,00/- WAS MADE TO M/S VIJAY LOGISTICS PVT. LTD., THUS, UNDER LINING THE FACT THAT THE POSSESSION OF LAND WAS WITH M/S VIJAY LOGI STICS PVT. LTD. THE ASSESSING OFFICER PROCEEDED TO RE-COMPUTE THE C APITAL GAINS BY TAKING INTO ACCOUNT THE SALE CONSIDERATION FOR T HE ENTIRE 85 KANALS OF LAND AND COMPUTED THE TAXABLE CAPITAL GAIN AT R S. 1,69,56,192/-. THE ASSESSEES APPEAL BEFORE THE LD . CIT (APPEALS) WAS DISMISSED. NOW, THE ASSESSEE IS BEFORE THE ITA T AND HAS CHALLENGED THE ACTION OF THE LD. CIT (A) IN UPHOLDI NG THE COMPUTATION OF CAPITAL GAINS AS MADE BY THE ASSESSI NG OFFICERBY RAISING THE FOLLOWING GROUNDS: LEARNED A.O. AS WELL AS CIT(A) HAVE ERRED IN ASSE SSING THE INCOME OF RS. 1,69,56,192 AS LONG TERM CAPITAL GAIN (AS BUSINESS INCOME) AND HAS CONFIRMED THE SAME IN SPITE OF THE FACT THAT THERE WAS NO SALE OR TRANSFE R ETC. OF THE LAND IN QUESTION DURING THE YEAR UNDER CONSIDER ATION, THE LAND HAVING BEEN ACQUIRED BY THE GOVERNMENT BY PASSING NOTIFICATION U/S 4 OF ACQUISITION ACT ON 13/05/2010 AND U/S 6 ON 12/05/2011; COMPENSATION FOR WHICH WAS DECLARED ON 10/05/2013. THE LAND BEING AGRICULTURAL LAND ON WHICH AGRICULTU RAL OPERATIONS AND CROPS USED TO BE GROWN AS PER PATWAR IS CERTIFICATE FARAD GIRDAWARI FOR FINANCIAL YEAR 2008 - 09 & 2009-10. CONSEQUENTLY, IT IS NOT A CAPITAL ASSET AND CAPITAL GAIN ARISING FROM ITS ACQUISITION IS EXEMPT WHICH HAS NOT BEEN ALLOWED BY BOTH THE AUTHORITIES. ITA NO. 7662/DEL/2017 ASSESSMENT YEAR 2013-14 4 LEARNED A.O. AS WELL AS CIT (A) HAVE ERRED ON FACTS AS WELL AS IN LAW IN HOLDING THAT THE POSSESSION OF TH E LAND WENT TO THE PURCHASER WHO HAD PAID THE CONSIDERATIO N FOR SALE DURING THE YEAR UNDER CONSIDERATION BUT WITH PASSING OF NOTIFICATION U/S 6 THE POSSESSION DEJURE PASSED ON TO GOVERNMENT AND THERE CANNOT BE TRANSFE R OF LAND UNDER ACQUISITION TO ANY OTHER PERSON EXCEPT T HE GOVERNMENT. CONSEQUENTLY, THERE IS NO QUESTION OF TAXABILITY OF CAPITAL GAIN IN THE YEAR UNDER CONSID ERATION. LEARNED A.O. AS WELL AS CIT (A) HAVE ERRED IN NOT APPRECIATING IMPLICATION OF ACQUISITION AND NOTIFIC ATION U/S 6 OF ACQUISITION ACT. IT IS, PRAYED THAT IT MAY KINDLY BE ORDERED THAT NO GAIN ON ALLEGED TRANSFER OF AGRICULTURAL LAND ACCRUED IN THE YEAR UNDER CONSIDERATION AND AT ANY RATE IF IT IS H ELD TO HAVE ACCRUED, EVEN THEN IT IS NOT TAXABLE BECAUSE N O CAPITAL GAIN IS CHARGEABLE TO TAX IN RESPECT OF TRA NSFER OF AGRICULTURAL LAND. 3.0 THE LD. AR SUBMITTED THAT THERE WAS NO SALE OR TRANSFER OF THE IMPUGNED 61 KANALS OF LAND AS THE LAND HAD BEEN ALREADY ACQUIRED BY THE GOVERNMENT BY PASSING NOTIFICATION ON 13.5.2010 WHEREAS THE AGREEMENT TO SELL WAS ENTERED INTO ON 1 0.10.2011. IT WAS SUBMITTED AFTER THE NOTIFICATION, THE POSSESSIO N DE JURE PASSED TO THE GOVERNMENT AND THERE COULD NOT HAVE B EEN ANY TRANSFER OF LAND WHICH HAD BEEN ACQUIRED BY ANY OTH ER PERSON EXCEPT BY THE GOVERNMENT AND, THEREFORE, THERE WAS NO CASE OF CAPITAL GAIN ARISING/ACCRUING TO THE ASSESSEE WITH RESPECT TO THE 61 KANALS OF LAND. THE LD. AR ALSO EMPHASIZED THAT THE ITA NO. 7662/DEL/2017 ASSESSMENT YEAR 2013-14 5 AGREEMENT TO SELL DOES NOT MENTION PASSING OF POSSE SSION FROM THE ASSESSEE TO THE BUYER. THE LD. AR ALSO SUBMITTE D THAT THE IMPUGNED 61 KANALS OF LAND WAS AGRICULTURAL LAND AND, THEREFORE, THE SAME WOULD NOT FALL UNDER THE DEFINITION OF CAP ITAL GAINS UNDER THE INCOME TAX ACT FOR THE PURPOSE OF COMPUTI NG THE CAPITAL GAINS. HE DREW OUR ATTENTION TO THE GIRDAWARI PLACED IN THE PAPER BOOK TO SUBSTANTIATE HIS ARGUMENT. 4.0 IN RESPONSE, THE LD. SR. DR PLACED RELIANCE ON THE CONCURRENT FINDINGS OF BOTH THE LOWER AUTHORITIES. THE LD. SR. DR ALSO SUBMITTED THAT A FACT FINDING COMMITTEE HAD BEEN CONSTITUTED TO DETERMINE THE NATURE OF LAND BUT AT THE TIME OF VISIT BY THE FACT FINDING COMMITTEE, THE IMPUGNED LAND WA S FOUND TO BE VACANT AND, THEREFORE, THE ASSESSEES CONTENTION THAT THE IMPUGNED LAND WAS AGRICULTURAL LAND COULD NOT BE SU BSTANTIATED. THE LD. SR. DR ALSO SUBMITTED THAT IT WAS BEYOND ON ES IMAGINATION THAT A PERSON WOULD BE GIVING ADVANCE F OR PURCHASE OF LAND WHICH HAD ALREADY BEEN ACQUIRED BY THE GOVE RNMENT. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE ORD ERS OF BOTH THE LOWER AUTHORITIES SHOWS THAT THE ASSESSEE COULD NOT SUBSTANTIATE WITH COGENT EVIDENCE BEFORE THEM THAT THE IMPUGNED LAND OF 61 ITA NO. 7662/DEL/2017 ASSESSMENT YEAR 2013-14 6 KANALS WAS AGRICULTURAL IN NATURE SO AS TO EXCLUDE THE TR ANSACTION FROM THE PURVIEW OF CAPITAL GAINS. WE ALSO NOTE FR OM THE ORDER OF THE LD. CIT (A) THAT THE ONLY DOCUMENT SUBMITTED BE FORE HIM PERTAINED TO THE CROPS CULTIVATED ON THE IMPUGNED L AND BUT THE ASSESSEE HAD FAILED TO LINK THEM WITH THE PLOT NUMB ERS TRANSFERRED TO THE BUYER. THUS, APPARENTLY, THE AS SESSEE COULD NOT SUBSTANTIATE THE CLAIM WITH COGENT EVIDENCE. O N A QUERY FROM THE BENCH, BOTH THE PARTIES BEFORE US AGREED THAT T HE INTEREST OF JUSTICE WOULD BE SERVED IF THE ISSUE IS RE-EXAMINED BY THE LD. CIT (A). ACCORDINGLY, WE DEEM IT FIT TO RESTORE THIS I SSUE TO THE FILE OF THE LD. CIT (A) WITH THE DIRECTION TO RE-EXAMINE TH E ISSUE AND PASS FRESH ORDERS AFTER GIVING PROPER OPPORTUNITY T O THE ASSESSEE TO SUBSTANTIATE HIS CLAIM REGARDING THE IMPUGNED LA ND BEING AGRICULTURAL IN NATURE. WE ALSO DIRECT THE ASSESSE E TO APPEAR BEFORE THE LD. CIT (A) WHEN HE IS CALLED UPON TO DO SO AND FURNISH ALL THE RELEVANT DOCUMENTS WITHOUT SEEKING ANY UNDU E ADJOURNMENT, FAILING WHICH THE LD. CIT (A) WILL BE AT LIBERTY TO DECIDE THE ISSUE EX PARTE QUA THE ASSESSEE IN ACCORDANCE WITH LAW. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 7662/DEL/2017 ASSESSMENT YEAR 2013-14 7 ORDER PRONOUNCED IN THE OPEN COURT ON 08.01.2019. SD/- SD/- (G.D.AGRAWAL) (SUDHANSHU SRIVASTA VA) VICE PRESIDENT JUDICIAL MEMB ER DATED: 08.01.2019 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER