ITO, WARD- 1(4), Nagpur V. MRS. SUMITA PRITINDERSINGH SETHI, Nagpur

ITA 85/NAG/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5402 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 16-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HIMESH DEMBLE
• Assessee Lawyers: R K BARAL
• Keywords: Capital asset; Business income; Cost of acquisition
• Section: 54B; 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 85 /NAG. / 2015 ( ASSESSMENT YEAR : 2011 - 12 ) I.T.O. WARD 1(4), ROOM NO. 504, 5 TH FLOOR, MECL BLDG., SEMINARY HILLS, NAGPUR - 440 006 APPELLANT V/S MRS. SUMITA PRITINDERSINGH SETHI, PLOT NO. 65, SETHI HOUSE, CEMENT ROAD, DHARAMPETH EXTENTION, SHIVAJI NAGAR, NAGPUR - 440 010 PAN ADEPS 5145 H .... RESPONDENT A S SESSEE BY : SHRI R. K. BARAL REVENUE BY : SHRI HIMESH DEMBLE DATE OF HEARING 11.05.2018 DATE OF ORDER 02.07 .2018 O R D E R PER SHAMIM YAHYA , A .M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, NAGPUR DATED 31.12.2014 AND PERTAIN TO THE ASSESSMENT YEAR 2011 - 12. 2. THE GROUND S OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT LAND SOLD BY THE ASSESSEE CANNOT BE REGARDED AS CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE I .T.ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN RELYING ON THE DECISIONS OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASES OF SATINDERPAL SINGH (2010) 229 CTR (P&H) 82 AND LAL SINGH AND OTHERS (2010) 228 CTR 575, IN AS MUCH AS, WITH DUE RESPECT TO THE HON'BLE COURT, THE DECISION HAS TO BE CONSIDERED PER INCARIUM FOR THE REASON THAT THE HON'BLE COURT DID NOT HAVE THE BENEFIT OF GOING THROUGH THE PR OVISIONS OF THE GENERAL CLAUSES 2 ITA NO. 85/NAG./2015 MRS. SUMITA PRITINDERSINGH SETHI ACT, 1897 WHICH STIPULATES THAT FOR THE PURPOSE OF ANY CENTRAL ACT OR REGULATION, DISTANCE SHALL BE MEASURED IN A STRAIGHT LINE ON A HORIZONTAL PLANE UNLESS A DIFFERENT INTENTION APPEARS. 3. ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT THE LAND SOLD BY THE ASSESSEE WAS AN AGRICULTURAL LAND RELYING ON THE DECISIONS OF THE CIT VS. SMT. DEBBIE ALEMAO 331 ITR 59 AND DELHI HIGH COURT'S DECISION IN THE CASE OF D.L.F. UNITED LTD. VS. CIT, THOUGH THESE DECISIONS ARE CLEARLY DISTINGUISHABLE ON FACTS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT DEDUCTION U/S. 54B WAS ALLOWABLE TO THE ASSESSEE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN HIS OBSERVATION THAT POSSESSION OF THE PROPERTY HELD TO BE ELIGIBLE FOR DEDUCTION U/S. 54B VESTED WITH THE ASSESSEE. APROPOS GROUND NO. 1 TREATMENT OF LAND AS CAPITAL ASSET. 3. BRIEF FACTS OF THE CASE ARE AS U NDER: THE ASSESSEE HAS SOLD AN IMMOVABLE PROPERTY BEING AGRICULTURAL LAND FOR RS.1, 27,92,230/ - ON 26.10.2010. THE ASSESSEE COMPUTED THE CAPITAL GAINS AS UNDER: CAPITAL GAIN ON SALE OF AGRICULTURAL LAND S L . NO. PARTICULARS AMOUNT IN RS . 1. SALE PRICE AS ON 26.10.2010 1, 27,92, 230/ - 2. LESS: INDEXED COST OF ACQUISITION (56,00,386 X 711/551) 72,26,632/ - 3. CAPITAL GAIN 55,65,598 / - 4. LESS : EXEMPTION U/S 54B AS RS.56,00,000/ - INVESTED IN AGRICULTURAL LAND 55,65,598/ - 5. LONG TERM CAPITAL GAIN 0 IT WA S SEEN THAT AS AGAINST THE SALE CONSIDERATION OF THE AGRICULTURAL LAND, THE ASSESSEE HAS CLAIMED THE INDEXED COST OF ACQUISITION OF RS. 72,26,632/ - THE EXEMPTION U/S 54B TO THE TUNE OF RS.55,65,598/ - . 4. THE ASSESSING OFFICER IN THE COURSE OF ASSE SSMENT PROCEEDINGS FOUND THAT, AS PER THE NOTIFICATION DATED 31.08.2010 NAGPUR IMPROVEMENT TRUST (NIT) HAS ISSUED A MAP 3 ITA NO. 85/NAG./2015 MRS. SUMITA PRITINDERSINGH SETHI DENOTING THE LOCATION OF LAND WITHIN THE BOUNDARY OF 8 KMS. FROM THE LOCAL LIMITS OF NAGPUR MUNICIPAL CORPORATION. THUS, ACCORDING TO TH E ASSESSING OFFICER AS PER THIS MAP MOUZA - PEOTHA, WHERE THE LAND SOLD WAS LOCATED FALLS WITHIN THE DISTANCE OF 8 KMS. OF NAGPUR MUNICIPAL CORPORATION . THE ASSESSING OFFICER , ACCORDINGLY ISSUED A LETTER DATED 14.10.2013 TO THE ASST. DIRECTOR, TOWN PLANNING, NAGPUR TO ASCERTAIN THE EXACT DISTANCE OF THE AGRICULTURAL LAND SOLD. THE TOWN PLANNING OFFICER, NAGPUR INFORMED THE ASSESSING OFFICER THAT AS PER THE DOCUMENTS AVAILABLE, MOUZA PEOTHA, KH. NO.11/1 FALLS WITHIN THE AERIAL DISTANCE OF 4.50 KMS. FROM THE LO CAL LIMITS OF NAGPUR MUNICIPAL CORPORATION. THE ASSESSING OFFICER , THEREFORE, TREATED THE LAND IN QUESTION AS CAPITAL ASSET IN VIEW OF THE DEFINITION PROVIDED U/S 2(14) OF THE ACT AND CHARGED THE SAME TO CAPITAL GAINS. 5. UPON THE ASSESSEES APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE ASSESSEES COUNSEL HAS RAISED AN OBJECTION TO ADOPT THE AERIAL DISTANCE AS AGAINST THE DISTANCE TO BE MEASURED BY CLOSEST APPROACHABLE ROAD DISTANCE BASIS . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE ASSESSING OFFICER HAS NOT ADDRESSED THIS ISSUE. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE LETTER ISS U ED BY THE ASST. DIRECTOR, TOWN PLANNING, NAGPUR IN OTHER SIMILAR TYPE OF CASES , THE AERIAL DISTANCE HAS BEEN CONSIDERED. HE NOTED THAT THE ASSESSING OFFICER IN HIS ORDER HAS NOT BROUGHT A CASE THAT THE DISTANCES BY THE CLOSEST APPROACHABLE ROAD DISTANCE IS ALSO WITHIN THE RADIATION OF 8 KMS. HE NOTED THAT THE ASSESSEE IN HIS SUBMISSI ONS HAS FILED A CERTIFICATE FROM THE O/O THE GRAM PANCHAYAT , KHARSOLI THAT THE LAND IN QUESTION IS SITUATED APPROXIMATELY 12 KMS FROM THE M UNICIPAL L IMIT S OF NAGPUR MUNICIPAL CORPORATION. HE NOTED THAT THE ASSESSEES COUNSEL HAS ALSO FILED A G OOGLE M AP IND ICATING THE NEAREST APPROPRIATE ROAD DISTANCE O F 9.2 KMS FROM NAGPUR OCTROI LIMIT S . HE NOTED THAT 4 ITA NO. 85/NAG./2015 MRS. SUMITA PRITINDERSINGH SETHI THE LD. COUNSEL OF THE ASSESSEE HAS ALSO FILED 7/12 EXTRACTS IN SUPPORT OF HIS CLAIM THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND. FURTHERMORE, IN THIS R EGARD, THE LD. COUNSEL OF THE ASSESSEE REFERRED TO THE SEVERAL DECISIONS OF THE ITAT ON THE SAME ISSUE WHICH READS AS UNDER: 1. SANJAY NAGRAO PEDLEWAR VS. ACIT, CENTRAL CIRCLE 2(2), NAGPUR (ITA NO.112/NAG./2012); 2. NITISH RAMESHCHANDRA CHORIDA VS. ACIT, CENTRAL CIRCLE 2(2), NAGPUR (ITA NO. 113/NAG/2012); AND 3. SHAISHIR S. DIOTE VS. ACIT, CENTRAL CIRCLE 2(2), NAGPUR (ITA NO. 147/NAG/2012) 6. HE ALSO NOTED THAT THE TRIBUNAL HAS R EFERRED TO THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SATINDER PAL SINGH IN WHICH IT WAS EXPOUNDED THAT THE DISTANCE OF AGRICULTURAL LAND BELONG ING TO THE ASSESSEE WITHIN THE MEANING OF SECTION 2(14)(III)(B) OF THE ACT IS TO BE M EASURED IN TERMS OF APPROACH ABLE ROAD DISTANCE AND NO T BY STRAIGHT LINE METHOD OR CROWS FLIGHT METHOD. T HE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS CONCLUDED AS UNDER: 6.8 THUS, AFTER HAVING ANALYSED THE DECISION OF VARIOUS TRIBUNALS AND HIGH COURT THE HON'BLE ITAT NAGPUR BENCH HAS HELD AS UNDER: 'WE HAVE ALSO TAKEN INT O CONSIDERATION VARIOUS ARGUMENTS OF LEARNED CIT DR AND FOUND THAT SINCE THE ISSUE IS COVERED BY THE DECISION OF THE VARIOUS BENCHES OF THE TRIBUNAL AS WELL BY HON F BLE PUNJAB AND HARYANA HIGH COURT, THEREFORE, IN VIEW OF THE CONSISTENCY THE VIEW TAKEN BY VARIOUS BENCHES HAS TO BE FOLLOWED. THERE IS NO CONTRARY DECISION IS AVAILABLE ON THE SAME FACTS AND, THEREFORE IT CANNOT BE SAID THAT THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT HAS ONLY PERSUASIVE VALUE. IF THERE IS ANY CONTRARY DECISION IS A VAILABLE EITHER BY THE HON'BLE HIGH COURT OR BY ANY OTHER BENCHES OF THE TRIBUNAL, THEN OF COURSE IT CAN BE SAID THAT THE DECISION OF OTHER BENCHES HAVE PERSUASIVE VALUE. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HELD THAT DISTANCE O F 8 KMS. HAS TO BE MEASURED THROUGH APPROACH ROAD AND NOT BY STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE OR CROW'S FLIGHT. HENCE, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE.' 5 ITA NO. 85/NAG./2015 MRS. SUMITA PRITINDERSINGH SETHI 6.9 THE HON'BLE ITAT NAGPUR BENCH (E - COURT) HAS FURTHER HELD THAT ANY CONSID ERATION RECEIVED OUT OF SALE OF AGRICULTURE LAND CANNOT BE TREATED AS BUSINESS INCOME OR FOR CAPITAL GAIN. THE TRIBUNAL HAS HELD AS UNDER: - ' SINCE THIS ISSUE HAS ALREADY BEEN DECIDED BY VARIOUS BENCHES OF THE TRIBUNAL AND THE HON'BLE BOMBAY HIGH COURT AS WELL AS THE HON'BLE DELHI HIGH COURT AND THE DECISION OF THE HON'BLE DELHI HI GH COURT IN THE CASE OF DLF UNI TED LIMITED (SUPRA), WHICH HAS BEEN CONFIRMED BY THE HON 'BLE SUPREME COURT THEREFORE, WE HOLD THAT ANY CONSIDERATION RECEIVED OUT OF SALE OF AGRICU LTURAL LAND, CANNOT BE TREATED AS BUSINESS INCOME FOR THE PURPOSE OF CAPITAL GAIN OR FOR THE PURPOSE OF BUSINESS INCOME, WHATEVER THE CASE MAY BE IN VIEW OF '/ THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE ALLOW THIS GROUND IN FAVOUR OF ALL THE ASS ESSEES. ' 7.0 SINCE, THE LAND IN QUESTION IS AGRICULTURAL LAND SITUATED BEYOND 8 KMS. OF MUNICIPAL LIMITS, THEREFORE, THE TRANSACTIONS OF SALE IN LAND BY THE APPELLANT CANNOT BE REGARDED AS CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14) OF THE ACT. ACCORDINGLY, KEEPING IN VIEW OF THE DECISION OF THE JURISDICTIONAL TRIBUNAL, THE TRANSACTION OF SALE OF LAND IN QUESTION IS HELD TO BE NOT LIABLE FOR CHARGING OF CAPITAL GAINS. THIS GROUND THEREFORE, IS ALLOWED AND THE ADDITION MADE BY THE AO IS DIRECTED T O BE DELETED. 8.0 IN VIEW OF THE ABOVE, IN MY CONSIDERED OPINION THE AO IS NOT JUSTIFIED TO DISALLOW THE CLAIM U/S 2 (14) OF THE ACT AS IT IS CONCLUSIVELY PROVED THAT THE LAND IN QUESTION IS BEYOND 8 KMS. FROM THE MUNICIPAL LIMITS OF NAGPUR MUNICIPAL CORPORATION. THE AO IS THEREFORE DIRECTED TO DELETE THE ADDITIONS. HENCE, THESE GROUNDS ARE ALLOWED. APROPOS DEDUCTION U/S. 54B OF THE ACT: 7. ON THIS ISSUE, THE ASSESSING OFFICER DENIED THE ASSESSEES CLAIM OF S. 54B OF THE ACT ON TWO COUNTS. FIRSTLY, HE HAS MENTIONED THAT THE SAID LAND IS NOT AN AGRI CULTURAL LAND , RATHER IT COMES UNDER THE DEFINITION OF CAPITAL ASSET. SECONDLY, HE MENTIONED THAT THE ASSESSEE H AS SUBMITTED THE AGREEMENT TO SELL ON RS.100/ - STAMP PAPER FROM THE TWO PARTIES FOR PURCHASE OF THE LAND AND NOT THE SA LE DEED. HENCE, HE DENIED THE CLAIM OF DEDUCTION U/S. 54B OF THE ACT. 8. UPON THE ASSESSEES APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT AGREED WITH THE ASSESSING OFFICER. HE HELD AS UNDER: I DECLINE TO AGREE WITH THE VERSION OF THE AO TH AT TO ACQUIRE A CLEAR TITLE, SALE DEED IS MANDATORY. THE APPELLANT HAS ENTERED INTO AN AGREEMENT TO SALE AS PER THE 6 ITA NO. 85/NAG./2015 MRS. SUMITA PRITINDERSINGH SETHI PRESCRIBED PROCEDURE OF LAW WHICH IN MY CONSIDERED OPINION CONFERS ABSOLUTE RIGHT, TILE AND INTEREST ON THE BUYER WITH SUCH BUYER HAS MADE T HE PAYMENT AND TAKEN POSSESSION OF THE PROPERTY PURCHASED IN QUESTION. IT IS NOT A CASE OF AO, THAT THE PAYMENT HAS NOT BEEN MADE BY THE APPELLANT AND POSSESSION NOT OBTAINED. THEREFORE, THE CONTENTION RAISED BY THE AO THAT TO ACQUIRE THE ABSOLUTE INTEREST AND RIGHT TO THE PROPERTY, THE SALE DEEDS ARE MANDATORY IS WITHOUT ANY BASIS. THE AO IS THEREFORE, NOT JUSTIFIED TO DISALLOW THE CLAIM U/S 54B ON THIS TRIVIAL GROUND WITHOUT BRINGING ANYTHING CONTRARY ON RECORD TO PROVE THE TRANSACTIONS OTHERWISE AS ILLEG AL. I, THEREFORE DIRECT THE AO TO ALLOW THE CLAIM U/S 54B AND DELETE THE ADDITIONS MADE. HENCE, THIS GROUND IS ALLOWED. 9. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. D EPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 11. PER CONTRA, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SOLD AN AGRI CUL TURAL LAND. HE SUBMITTED THAT THE SAME IS DULY ESTABLISHED BY THE VARIOUS DOCUMENTS SUBMITTED ON RECORD. HE FURTHER SUBMITTED THAT THE ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE CATENA OF THE DECISIONS MENTIONED HEREIN ABOVE . 12. UPON CAREFUL CONSIDERATION, WE NOTE THAT THE LAND SOLD BY THE ASSESSEE HAS BEEN CLAIMED TO B E AN AGRICULTURAL LAND. THE ASSESSING OFFICER HAS DENIED THE SAME BY REFERRING TO THE AERIAL DISTANCE BETWEEN THE CITY AND THE PLACE WHERE THE LAND IS LOCATED, CLAIMING THE SAME TO BE WITHIN 8 KMS. THERE ARE VARIOUS DECISIONS OF THE HONBLE HIGH COURT AND ITAT IN WHICH IT HAS BEEN MENTIONED THAT IT IS THE APPROACHABLE R OAD DISTANCE THAT HAS TO BE TAKEN INTO ACCOUNT. IT IS NOT THE CASE THAT IT IS THE REVENUES CASE THAT THE ROAD D ISTANCE IS WITHIN 8 KMS. RATHER, THE REVENUE IN THE GROUNDS OF APPEAL ITSELF IS CALLING THE HON'BLE JURISDICTIONAL HIGH COURT DECISION TO BE PER - IN - CURIUM . IN OUR CONSIDERED OPINION, THIS PLEA OF THE REVENUE IS NOT AT ALL SUSTAINABLE. THE CASE LAW S REFERRE D BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND THE LD. COUNSEL OF THE 7 ITA NO. 85/NAG./2015 MRS. SUMITA PRITINDERSINGH SETHI ASSESSEE ARE GERMANE AND SUPPORT THE CASE OF THE ASSESSEE. HENCE , WE CONFIRM THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS ISSUE WHERE HE HAS HELD THE LAND TO BE AGRICULTURAL LAND. 13. AS REGARDS TO THE WITHOUT PREJUDICE CLAIM OF SECTION 54B ALSO, WE FIND THAT THE ASSESSING OFFICER HAS DENIED THE SAME ON THE GROUND THAT THE SALE DEED HAS NOT BEEN PRODUCED. AGAINST THIS, THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS GIVEN A FINDING THAT THERE IS A PROPER AGREEMENT AND THE CONSIDERATION HAS DULY BEEN MADE . THIS IS NOT BEEN DISPUTED BY THE REVENUE AND, ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) O N THIS ISSUE ALSO. 14. IN T HE RESULT, THIS APPEAL BY THE REVENUE STANDS DISMISSED. O RDER PRONOUNCED BY LISTING THE RESULT ON THE NOTICE BOARD OF THE BENCH UNDER RULE 34(4) OF THE APPELLATE TRIBUNAL RULES, 1963. SD/ - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER DATED : 02.07.2018 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR ; (6) GUARD FILE . // TRUE COPY // BY ORDER ROSHANI , SR. PS ( SR. P.S. / P.S. ) ITAT