Manjeet Singh , New Delhi V. ITO, Ward- 43(3), New Delhi

ITA 7828/DEL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6637 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: R C RAI
• Keywords: Capital asset; Cost of acquisition; Fair market value
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.7828/DEL/2017 ASSESSMENT YEAR: 2008-09 MANJEET SINGH, C/O R.C. RAI & ASSOCIATES, 203, 2 ND FLOOR, AKASHDEEP, 26A BARAKHAMBA ROAD, NEW DELHI. V. ITO, WARD-43(3), NEW DELHI. TAN/PAN: BQPPS 5991A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.C. RAI, CA. RESPONDENT BY: SHRI S.L. ANURAGI, SR.D.R. DATE OF HEARING: 13 11 2018 DATE OF PRONOUNCEMENT: 21 01 2019 O R D E R THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 01.09.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-XV, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3)/147 OF THE IT ACT, FOR THE ASSESSMENT YEAR 2008-09. IN VARIOUS GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING U/S.147 AND ADDITION OF RS.23,43,698/- IN RESPECT O F LONG TERM CAPITAL GAIN ARISING ON SALE OF LAND. 2. THE FACTS IN BRIEF ARE THAT A REPORT WAS RECEIVE D FROM ADDITIONAL DIT (INVESTIGATION), UNIT-3, NEW DELHI T HAT ASSESSEE ALONG WITH HIS FOUR BROTHER HAD SOLD A LAND ADMEASU RING 21 BIGHAS 2 BISWAS, I.E., 4.39 ACRES AT VILLAGE CHHAWL A. THE SAID LAND WAS SOLD VIDE SALE DEED DATED 05.07.2007 TO M/ S. FLYING REALTORS PVT. LTD. THE LAND WAS SOLD FOR TOTAL CONS IDERATION OF I.T.A. NO.7828/DEL/2017 2 RS.13,18,50,000/-, AND THE ASSESSEE RECEIVED 1/5 TH SHARE OF THE SALE CONSIDERATION WHICH WAS RS.2,63,70,000/-. AS PER THE DEPARTMENT, THIS WAS NOT AN AGRICULTURAL LAND A LBEIT WAS URBAN LAND AND HENCE SAME FALLS IN THE NATURE OF CA PITAL ASSET CHARGEABLE TO TAX U/S.45. SINCE ASSESSEE HAS NOT FI LED HIS INCOME TAX RETURN, THEREFORE, ASSESSEES CASE WAS R EOPENED VIDE NOTICE DATED 15.01.2015 ISSUED U/S.148. AS PER THE OBSERVATION OF THE ASSESSING OFFICER IN PARAGRAPH 3 OF THE ASSESSMENT ORDER, NONE OF THE NOTICES ISSUED BY THE ASSESSING OFFICER INCLUDING THE NOTICE U/S.148 WAS COMPLIED W ITH BY THE ASSESSEE. IT WAS ONLY AT THE FAG END OF THE LIMITAT ION TO PASS THE ORDER THAT ASSESSEE REPRESENTED HIS CASE THROUG H CHARTERED ACCOUNTANT ON 19.01.2016, AND THEREFORE, PARTICIPATED IN THE PROCEEDINGS. THE ASSESSEE HAD C HALLENGED THE VALIDITY OF REOPENING ON THE GROUND THAT; FIRST LY, ASSESSEE HAS NOT SOLD ANY URBAN LAND AS IT WAS A RURAL AGRIC ULTURAL LAND; AND SECONDLY, LAND IN QUESTION WAS AN ANCESTR AL PROPERTY AND HENCE, THE COST OF ACQUISITION OF THE LAND WAS NIL. HOWEVER, THE SAID OBJECTION WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE LAND SITUA TED IN VILLAGE CHHAWLA WAS WITHIN THE MUNICIPAL LIMIT OF D ELHI AND THE COST OF ACQUISITION OF THE CAPITAL ASSET INHERI TED BY THE ASSESSEE HAS TO BE TAKEN AT THE COST AS ON 01.04.19 81. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ALSO SOUGHT FOR INFORMATION U/S. 133(6) FROM TEHSIL DAR KAPASHERA NAJAFGARH DELHI, WHO VIDE LETTER DATED 21 .03.2016 STATED THAT THE AFORESAID LAND AS WELL AS THE VILLA GE DID NOT FALL WITHIN THE LIMIT OF 8 KM FROM THE VILLAGE BAMNOLI, WHICH IS AN URBANIZED VILLAGE. BASED ON THIS, HE CAME TO THE CO NCLUSION I.T.A. NO.7828/DEL/2017 3 THAT THE LAND IN QUESTION DOES NOT FALL IN THE CATE GORY OF RURAL AGRICULTURAL LAND AS DEFINED IN SECTION 2(14)(III) THE ACT. LD ASSESSING OFFICER ALSO CARRIED OUT SEARCH IN GOOGLE ABOUT THE DISTANCE BY ROAD BETWEEN THE VILLAGE BAMNOLI, WHICH WAS AN URBANIZED VILLAGE AND VILLAGE CHHAWLA AND NOTED OUT THAT IT WAS ONLY 5 KM FROM THAT VILLAGE AND THUS, THE LAND SITUATED IN VILLAGE CHHAWLA IS LESS THAN 8 KMS. IN THE MEANTIME , THE ASSESSING OFFICER HAD ALSO MADE REFERENCE TO THE DV O WHO HAS STATED THAT THE FAIR MARKET VALUE OF PROPERTY A S ON 01.04.1981 WAS RS.14,59,799/- AND RS.3,78,651/- AND BASED ON THIS REPORT, THE ASSESSING OFFICER HAD COMPUTED THE LONG TERM CAPITAL GAIN AND THEREBY MADE AN ADDITION OF RS.23,46,698/- AFTER GIVING BENEFIT OF INDEXATION A ND CLAIM OF EXEMPTION U/S. 54B. 3. LD. CIT(A), NOT ONLY REJECTED THE ASSESSEES CHALLENGE ON THE VALIDITY OF REOPENING U/S.147, BUT ALSO THE OBJECTIONS RAISED BY THE ASSESSEE THAT COST OF ACQUISITION OF THE PROPERTY HAS TO BE SEEN AS ON 01.04.1981 AS PER THE FAIR MAR KET VALUE. ON THE ISSUE, WHETHER THE LAND WAS AGRICULTURE LAND OR NOT, THE ASSESSEE HAD SUBMITTED LETTER OF TEHSILDAR DATE D 29.02.2016, THAT THE LAND IS 9 KM AWAY FROM NAJAFGAR H MUNICIPAL LIMIT AND VILLAGE CHHAWLA WAS DECLARED AS URBAN VILLAGE LAND MUCH LATER ON VIDE NOTIFICATION DATED 16.05.2017 AND SINCE SALE DEED HAD TAKEN PLACE ON 05.07.2007, AND THEREFORE, IT SHOWS THAT IT WAS AN AGRICULTURE LAND AT THE TIME OF SALE. THE ASSESSEE HAS ALSO FILED CERTIFICATE FR OM BLOCK DEVELOPMENT OFFICER, NAJAFGARH DELHI TO SHOW THAT VI LLAGE CHHAWLA WAS COVERED UNDER RURAL AREA. I.T.A. NO.7828/DEL/2017 4 4. LD. CIT (A) REJECTED THE ASSESSEES CONTENT ION THAT NATIONAL CAPITAL TERRITORY OF DELHI COMPRISES OF VA RIOUS MUNICIPALITIES AND UNION TERRITORY OF DELHI COMPRIS ES OF RURAL AND URBAN AREAS. THE LAND UNDER REFERENCE WAS SITUA TED IN CHHAWLA VILLAGE WHICH A RURAL AREA OF MCD AT THE TI ME OF SALE AND VIDE GOVERNMENT NOTIFICATION EVEN THOUGH AT A L ATER DATE, IT HAS BEEN NOTIFIED TO BE AN URBAN AREA. THUS, HE HELD THAT AS PER THE DEFINITION GIVEN IN SUB SECTIONS 61 AND 62 OF DELHI MUNICIPAL ACT, 1957 IT HAS BEEN DEFINED AS AREAS O F DELHI WHICH ARE NOT RURAL AREAS AND FACT THAT VILLAGE CHH AWLA WAS PART OF DELHI MUNICIPAL CORPORATION; THEREFORE, IT CANNOT BE CHARACTERIZED AS AGRICULTURE LAND. THE LAND UNDER R EFERENCE WAS SITUATED IN DELHI MUNICIPAL CORPORATION AND THE POPULATION OF THE VILLAGE WAS MORE THAN TEN THOUSAN D. ACCORDINGLY, HE CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS AS WE LL AS MATERIAL REFERRED TO BEFORE US AT THE TIME OF HEARI NG, I FIND THAT THE ONLY ISSUE ON MERITS IS THAT, WHETHER THE LAND SITUATED IN VILLAGE CHHAWLA SOLD BY THE ASSESSEE WA S AN AGRICULTURAL LAND SITUATED IN RURAL AREA OR IN THE URBAN AREA. ONE VERY IMPORTANT FACT WHICH WAS BROUGHT TO THE NO TICE BEFORE THE LD. CIT(A) BY THE ASSESSEE WAS THAT, THE VILLAGE CHHAWLA WAS NOTIFIED AS URBAN AREA VIDE NOTIFICATIO N DATED 17 TH MAY, 2017 BY GAZETTE NOTIFICATION PASSED BY GOVERN MENT OF NATIONAL CAPITAL TERRITORY OF DELHI. FROM THE PE RUSAL OF THE SAID NOTIFICATION, I FIND THAT VILLAGE CHHAWLA WAS DECLARED AS I.T.A. NO.7828/DEL/2017 5 URBAN LAND ONLY AFTER 16 TH MAY, 2017. OSTENSIBLY, PRIOR TO THIS DATE, LAND IN VILLAGE CHHAWALA FELL IN RURAL AREA A ND WAS RURAL LAND. THE NOTIFICATION CLEARLY STATES THAT IN EXERC ISE OF THE POWERS CONTAINED IN DELHI MUNICIPAL CORPORATION AC T, 1957 THE LIEUTENANT GOVERNOR, GOVERNMENT OF NATIONAL CAP ITAL TERRITORY OF DELHI CAN DECLARE AREA OF VILLAGE FROM RURAL AREAS TO URBAN AREAS, WHICH WAS DECLARED ON 16 TH MAY 2017. WITHOUT GOING INTO VARIOUS CERTIFICATES /LETTERS OF THE LAND REVENUE AUTHORITIES FILED BY THE ASSESSEE OR OBTAIN ED BY THE ASSESSING OFFICER, AS TO WHETHER IT WAS BEYOND THE MUNICIPAL LIMIT OF 8 KMS, I FIND THAT THE DELHI MUNICIPAL CO RPORATION ACT, 1957 VIDE SECTION 507 CLAUSE (A) CLEARLY PROV IDES AS UNDER: 507. SPECIAL PROVISIONS AS TO RURAL AREAS NOTWI THSTANDING ANYTHING CONTAINED IN THE FOREGOING PROVISIONS OF THIS ACT. (A) THE CORPORATION WITH THE PREVIOUS APPROVAL OF THE G OVERNMENT, MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, DECLA RE THAT ANY PORTION OF THE RURAL AREAS SHALL CEASE TO BE INCLUDED THERE IN AND UPON THE ISSUE OF SUCH NOTIFICATION THAT PORTION SHALL BE IN CLUDED IN AND FORM PART OF THE URBAN AREAS. 5 THUS, THE SAID ACT CLEARLY PROVIDES THAT DELHI MU NICIPAL CORPORATION WITH PREVIOUS APPROVAL OF THE GOVERNMEN T BY NOTIFICATION CAN DECLARE ANY PORTION OF THE RURAL A REAS TO FORM PART OF THE URBAN AREA. ERGO, ONCE THE DELHI MUNICI PAL CORPORATION ACT, 1957 PROVIDES POWERS TO THE GOVERN MENT TO NOTIFY AND CONVERT ANY RURAL AREA TO URBAN AREA, TH EN THE ENTIRE OBSERVATION OF THE LD. CIT (A) THAT, SINCE V ILLAGE CHHAWLA IS GOVERNED UNDER DELHI MUNICIPAL ACT, 1957 , AND THEREFORE, IT IS AN URBAN LAND EVEN 10 YEARS PRIOR TO THE I.T.A. NO.7828/DEL/2017 6 NOTIFICATION. SUCH AN INFERENCE IS WHOLLY UNTENABLE . ACCORDINGLY, IN VIEW OF THE GOVERNMENT NOTIFICATION , I HOLD THAT THE SAID LAND WAS SITUATED IN A RURAL AREA, AND THE REFORE, SALE OF SUCH AGRICULTURE LAND FALLS WITHIN THE AMBIT AND SCOPE OF SECTION 2(14)(III) AND HENCE NO CAPITAL GAIN CAN BE CHARGED U/S.45. ACCORDINGLY, THE ADDITION MADE BY THE ASSES SING OFFICER STANDS DELETED. SINCE, I HAVE ALREADY DELET ED THE ADDITION ON MERIT; THEREFORE, THE VALIDITY OF REOPE NING CHALLENGED BEFORE US IS KEPT UPON AS IT HAS BEEN RE NDERED ACADEMIC. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2019. SD/- [AMIT SHUKLA] JUDICIAL MEMBER DATED: 21 ST JANUARY, 2019 PKK