Vinaykumar Gowardhan HUF, Nagpur V. Asstt.Comissioner of Income-tax Circle-2, Nagpur

ITA 9/NAG/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3211 (ITAT-NAGPUR)
• Duration Of Justice: 6 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 28-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 11-01-2013
• Court: TRIBUNAL
• Department Lawyers: A R NINAVE
• Assessee Lawyers: MUKESH AGARWAL
• Keywords: Capital asset; Set aside
• Section: 143(3); 2(14); 250

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.9/NAG./2013 (ASSESSMENT YEAR : 200910 ) VINAYKUMAR GOWARDHAN (HUF) C/O R.S. BHATTAD & CO. 33, CENTRAL BAZAR ROAD RAMDASPETH, NAGPUR 400 010 PAN AAAHG4780R . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE2, AAYAKAR BHAWAN CIVIL LINE, NAGPUR 400 001 . RESPONDENT ASSESSEE BY : SHRI MUKESH AGARWAL REVENUE BY : SHRI A.R. NINAVE DATE OF HEARING 20.03.2017 DATE OF ORDER 27.03 .2017 O R D E R PER RAM LAL NEGI, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 30 TH NOVEMBER 2012, PASSED BY THE LEARNED COMMISSIONER (APPEALS)1, NAGPUR, PERTAINING TO ASSESSMENT YEAR 200910, WHEREBY, THE LEARNED COMMISSIONER (APPEALS) HAS PAR TLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORD ER DATED 26 TH DECEMBER 2011, PASSED UNDER SECTION 143(3) OF THE I NCOME TAX ACT, 1961 (FOR SHORT THE ACT ). 2. BRIEF FACTS, EMANATING FROM THE RECORD AND PLEADI NGS OF THE PARTIES, WHICH NEED NECESSARY MENTION FOR THE LIMIT ED PURPOSE OF 2 VINAYKUMAR GOWARDHAN (HUF) ADJUDICATING THE ISSUES INVOLVED IN THIS CASE ARE T HAT THE ASSESSEE HUF FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSM ENT YEAR DECLARING TOTAL INCOME OF ` 34,95,680. THE ASSESSMENT WAS PROCESSED AND AFTER SCRUTINY, ASSESSMENT ORDER WAS PASSED DETERMINING T OTAL INCOME OF THE ASSESSEE AT ` 4,66,46,067. DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD SOLD ITS LAND AT SHANKARPUR ON 12 TH AUGUST 2008 AND CLAIMED EXEMPTION OF ` 50 LAKH UNDER SECTION 54EC OF THE ACT, AFTER MAKING INVESTMENT IN RURAL ELECTR IFICATION CORPORATION LTD. (REC) BONDS. IT WAS FURTHER SEEN THAT THE BOND CERTIFICATES WERE ALLOTTED ON 28 TH FEBRUARY 2009. THE ASSESSING OFFICER, HOLDING THAT THE CAPITAL GAIN ARISING FROM THE TRANSFER OF LAND SHO ULD HAVE BEEN INVESTED WITHIN THE PERIOD OF SIX MONTHS, DENIED TH E EXEMPTION UNDER SECTION 54EC AMOUNTING TO ` 50 LAKH AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. SIMILARLY, DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE SOLD ANOTHER PIECE OF LAND SITUATED AT VILLAGE WAKESHWAR FOR ` 68,51,990 AND HAD NOT OFFERED THE GAIN TO TAX ON THE GROUND THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND U/S 2(14)(III). THE ASSESSING OFFICER, HOWEVER , DENIED EXEMPTION HOLDING THAT THE LAND IN QUESTION WAS NOT AN AGRICU LTURAL LAND. FEELING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE CAR RIED THE MATTER BEFORE THE LEARNED COMMISSIONER (APPEALS) IN FIRST APPEAL. 4. THE LEARNED COMMISSIONER (APPEALS) TAKING INTO C ONSIDERATION THE CONTENTION OF THE ASSESSEE DECIDED THE FIRST IS SUE IN FAVOUR OF THE ASSESSEE HOLDING THAT THE ASSESSEE HAS MADE THE INV ESTMENT IN QUESTION WITHIN THE PERIOD OF SIX MONTHS FROM THE D ATE OF SALE OF THE LAND, THEREFORE, THE ASSESSEE IS ENTITLED FOR DEDUC TION UNDER SECTION 54EC, HOWEVER, DECIDED THE SECOND ISSUE REGARDING E XEMPTION U/S 3 VINAYKUMAR GOWARDHAN (HUF) 2(14)(III) AGAINST THE ASSESSEE UPHOLDING THE ACTIO N OF THE ASSESSING OFFICER. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS: 1. THAT THE ORDER U/S 250 PASSED BY THE CIT(A) CONF IRMING THE LEVY OF CAPITAL GAIN ON SALE OF AGRICULTURAL LAND, BEYOND EIGHT KILOMETERS OF NOTIFIED MUNICIPAL CORPORATION, LIMIT IS BAD IN LAW AND LIABLE TO BE SET ASIDE IN TOTO. 2. THAT THE LEARNED ASSESSING OFFICER HAS ERRED IN TAXING THE SURPLUS ON SALE OF AGRICULTURAL LAND AS LONG TERM C APITAL GAIN SINCE THE AGRICULTURAL LAND IS NOT A CAPITAL ASSET U/S 2( 14) OF I.T. ACT AND FURTHER THE LEARNED CIT(A) ERRED IN CONFIRMING THE SAME. 3. THE APPELLATE ORDER CONFIRMING THE LEVY OF CAPIT AL GAINS ON SALE OF AGRICULTURAL LAND IS NOT ONLY BADINLAW BUT ALS O ARBITRARY, UNJUSTIFIED AND CONTRARY TO THE WELL SETTLED LEGAL POSITION. 4. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF A PPEAL, THE COMPUTATION OF CAPITAL GAINS BY ADOPTING SALE PRICE AT ` 66,91,390 AS AGAINST ACTUAL SALE PRICE RECEIVED AT ` 63,51,990 AND WITHOUT ANY BENEFIT OF COST INFLATION INDEX IS ARBITRARY. T HE INCOME SO ASSESSED IS LIABLE TO SCALED DOWN / REDUCED ACCORDI NGLY. 5. BEFORE US, THE LEARNED COUNSEL FOR ASSESSEE SUBMI TTED THAT THE LEARNED COMMISSIONER (APPEALS) HAS WRONGLY CONFIRME D THE FINDINGS OF THE ASSESSING OFFICER AS LAND IN QUESTION WAS PURCH ASED FOR THE PURPOSE OF CULTIVATION AND AGRICULTURAL OPERATION W AS CARRIED OUT FOR NEARLY 15 YEARS FROM THE DATE OF PURCHASE. THE LEAR NED COUNSEL FURTHER SUBMITTED THAT DUE TO OLD AGE OF THE KARTA OF THE H UF AND FOR THE OTHER REASONS SUCH AS SETTLEMENT OF ONE OF THE FAMILY MEM BERS IN ABROAD, 4 VINAYKUMAR GOWARDHAN (HUF) THE LAND REMAINED UNCULTIVATED FOR ABOUT TWO YEARS. THE REVENUE RECORD I.E., EXTRACT OF FORM NO.7/12 CLEARLY INDICA TES THAT THE LAND IN QUESTION WAS AN AGRICULTURAL LAND AT THE TIME OF SA LE. THAT THE ASSESSEE HAD NEVER APPLIED FOR PERMISSION TO USE THE SAID LA ND FOR NON AGRICULTURAL PURPOSES. THE AGRICULTURAL LAND SOLD B Y THE ASSESSEE IS NOT WITHIN THE RADIUS OF 8 KMS. OF ANY MUNICIPAL CORPOR ATION. ACCORDINGLY, THE LAND IN QUESTION IS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT, THEREFORE, GAIN FROM SALE OF THE SAID LAND IS NOT TAXABLE UNDER THE HEAD LONG TERM CAPITAL GAIN. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE TRIBUNAL, NAGPUR BENCH, RENDERED IN ITA NO.239/NAG./2012, DATED 7 TH DECEMBER 2012, AND THE JUDGMENT DELIVERED BY THE HONBLE BOMBAY HIG H COURT IN CIT V/S MINGUEL CHANDRA PAIS & ANR., [2006] 282 ITR 618 (BOM.) TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE. 6. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRE SENTATIVE RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITI ES BELOW SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO PROVE THAT TH E LAND SOLD WAS AGRICULTURAL LAND WITHIN THE AMBIT OF SECTION 2(14) (III) OF THE ACT, THE LEARNED COMMISSIONER (APPEALS) HAS RIGHTLY CONFIRME D THE ACTION OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD IN THE LIGHT OF THE RESPECTIVE CONTENTIONS OF THE PARTIES. THE SOLE ISSUE WHICH IS REQUIRED TO BE ADJ UDICATED BY THE TRIBUNAL IS WHETHER THE LAND SOLD BY THE ASSESSEE W AS AN AGRICULTURAL LAND SO AS TO CLAIM EXEMPTION U/S 2(14)(III) OF THE ACT OR THE SAME WAS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. IN SARIFABIBI MOHMED IBRAHIM VS. CIT (1993)204 ITR 631(SC) THE HONBLE SUPREME COURT HAS INTER ALIA HELD THAT WHETHER A LAND IS AN 5 VINAYKUMAR GOWARDHAN (HUF) AGRICULTURAL LAND OR NOT IS ESSENTIALLY A QUESTION OF FACT. THE SEVERAL TESTS EVOLVED BY THE COURTS ARE MORE IN THE NATURE OF GUIDELINES. THEREFORE, THE QUESTION HAS TO BE ANSWERED ON CONSI DERATION OF ALL OF THEM. 8. AS PER THE DESCRIPTION OF THE LAND MADE IN THE C OPY OF SALE DEED THE LAND IN QUESTION BEARING KHASRA NO 94 (OLD KHAS RA NO7/3) MEASURING ABOUT 1.01 HECTARES SITUATED AT MONZA WAK ESHWAR, TEHSIL AND DISTRICT NAGPUR, WAS CLASS II AGRICULTURAL FIEL D AT THE TIME OF EXECUTION OF THE SALE DEED. THE EXTRACT OF REVENUE RECORD FURTHER CORROBORATES THE SAID FACT. SO, THE PRESUMPTION OF TRUTH IS ATTACHED WITH THE RECORD OF RIGHTS MAINTAINED BY THE REVENUE DEPARTMENT. HOWEVER, THE AO HAS NOT POINTED OUT ANY COGENT AND CONVINCING EVIDENCE TO REBUT THE PRESUMPTION ATTACHED WITH THE REVENUE RECORD. NO EVIDENCE WAS BROUGHT ON RECORD TO ESTABLISH THAT THE LAND WAS USED BY THE ASSESSEE FOR NON AGRICULTURAL PURPOSES. WE F URTHER NOTICE THAT THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME IN ITS R ETURN FOR THE ASSESSMENT YEAR 2004-05. HENCE, WE FIND THAT THE AO HAS DECIDED THE ISSUE INVOLVED IN THIS CASE WITHOUT CONDUCTING ANY VERIFICATION TO REBUT THE DIRECT AND CIRCUMSTANTIAL EVIDENCE ON RECORD IN FAVOUR OF THE ASSESSEE. SIMILARLY, THE LD. CIT(A) HAS CONFIRMED T HE FINDINGS OF AO WITHOUT TAKING INTO CONSIDERATION THE DIRECT AND CI RCUMSTANTIAL EVIDENCE ON RECORD, WHICH SUBSTANTIATE THE ASSESSEES CONTEN TION. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. MINGUEL CHANDRA PAIS AND ANOTHER TAX APPEAL NO 1 OF 2002 AND SMT. MARIA LEILA TOVAR FURTADO AND ANOTHER TAX APPEAL NO 2 OF 2002 ( 282 ITR 618 BOM.) DISMISSE D THE REVENUES APPEAL IN THE LIGHT OF THE TESTS LAID DOW N BY THE HONBLE SUPREME COURT IN SARIFABIBI MOHMED IBRAHIM VS. CIT (SUPRA) HOLDING THAT THE TRIBUNAL WAS RIGHT UPON CONSIDERATION OF A LL THE TESTS OR FACTORS LAID DOWN BY THE HON,BLE SUPREME COURT, IN COMING TO THE CONCLUSION 6 VINAYKUMAR GOWARDHAN (HUF) THAT THE SUBJECT LAND WAS AGRICULTURAL LAND THE SAL E OF THE SAME DID NOT INVITE THE PAYMENT OF CAPITAL GAINS TAX. 9. IN M/S MUTUAL TRUST VS. ACIT NAGPUR ITA NO 46/NA G/2013 FOR THE A.Y.2009-10(SUPRA), M/S MUTUAL TRUST SOLD THE LAND ADJACENT TO THE LAND OF THE PRESENT ASSESSEE TO THE SAME BUYER WHO PURCHASED THE ASSESSEES LAND. THE ASSESSEE CLAIMED EXEMPTION U/S 2(14)(III) OF THE ACT. THE AUTHORITIES BELOW REJECTING THE CONTENTION OF THE ASSESSEE HELD THAT THE LAND IN QUESTION WAS NOT AN AGRICULTURAL L AND SO AS TO CLAIM EXEMPTION. HOWEVER, IN FURTHER APPEAL THE COORDINAT E BENCH OF TRIBUNAL VIDE ORDER DATED31.7.2015, DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE HOLDING THAT THE FACTS OF THE SAID CASE AR E DIFFERENT FROM THE FACTS OF THE CASES RELIED UPON BY THE REVENUE INCL UDING THE CASE OF SH. GOPAL SHARMA DECIDED BY THE HONBLE BOMBAY HIGH COUR T REPORTED IN 209 ITR 946. 10. IN VIEW OF THE ABOVE DISCUSSION, PARTICULARLY I N VIEW OF THE FACT THAT IN SIMILAR SITUATION, THE COORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF M/S MUTUAL TRUST VS. ACIT NAGPUR ITA NO 46/NAG/2013 FOR THE A.Y.2009-10(SUPRA ), WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND DEC IDE GROUND NO 1 TO 3 OF THE APPEAL IN FAVOUR OF THE ASSESSEE AND HO LD THAT THE ASSESSEE HAD SOLD ITS AGRICULTURAL LAND. 11. GROUND NO 4 HAS BEEN RAISED BY THE ASSESSEE WIT HOUT PREJUDICE TO GROUND NO 1 TO 3 OF THE APPEAL. SINCE, WE HAVE D ECIDED GROUND NO 1 TO 3 IN FAVOUR OF THE ASSESSEE, GROUND NO.4 BECOMES ACADEMIC. HENCE, WE DO NOT CONSIDER IT NECESSARY TO ADJUDICATE THE S AID GROUND SEPARATELY. 7 VINAYKUMAR GOWARDHAN (HUF) IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR TH E ASSESSMENT YEAR 2009-10 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MARCH, 2017. SD/ - SHAMIM YAH YA ACCOUNTANT MEMBER SD/ - RAM LAL NEGI JUDICIAL MEMBER NAGPUR, DATED: 27.03.2017 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 PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR