RAJENDRA KUMAR AGARWAL, Jaipur V. ITO, Jaipur

ITA 91/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54090 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 02-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Sale consideration of property below Jantri Value
• Section: 54B; 50C; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.91/ JP/2011 ASSESSMENT YEAR 2006-07 PAN: ABSPA 0666 K SHRI RAJENDRA KUMAR AGARWAL VS. THE ITO 50, SANJAY COLONY WARD- 4 (1) NEHRU NAGAR, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI MUKESH KHANDELWAL DEPARTMENT BY : SHRI D.K. MEENA ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)- I1, JAIPUR DATED 16-12-2010 FOR THE ASSESSMENT YEA R 2006-07. 2.1 IN GROUND NO. 1 AND 2, THE ASSESSEE IS AGGRIEVE D AGAINST ADOPTING THE FULL VALUE OF CONSIDERATION OF RS. 12,39,195/- IN R ESPECT OF SALE OF PLOT OF LAND AND ALSO AGGRIEVED AGAINST NOT ALLOWING DEDUCT ION U/S 54B OF THE ACT. 2.2 THE ASSESSEE DERIVES INCOME FROM BUSINESS OF TR ADING OF BRICKS. THE ASSESSEE VIDE SALE DEED DATED 6 TH AUG. 2005 REGISTERED ON 16 TH AUG. 2005 SOLD ONE PLOT OF LAND MEASURING 200 SQ. YARD SITUAT ED AT JAIPUR SIKAR ROAD FOR AN APPARENT CONSIDERATION OF RS. 8.00 LACS AND CLAIMED THE LONG TERM CAPITAL GAIN OF RS. 7,10,641/-. SUCH CAPITAL GAIN W AS CLAIMED AS EXEMPT U/S 2 54B OF THE ACT. ACCORDING TO THE AO, THE PROPERTY S OLD BY THE ASSESSEE WAS NOT AN AGRICULTURAL LAND BUT A RESIDENTIAL PLOT OF 200 SQ. YARD. THE ASSESSEE WAS ALSO ASKED TO INTIMATE THE DLC RATE OF PLOT FOR VALUATION OF SALE CONSIDERATION U/S 50C. BEFORE THE AO, IT WAS SUBMIT TED THAT THE ASSESSEE PURCHASED THE LAND FOR AGRICULTURAL OPERATION AND T HE AGRICULTURAL PRODUCE WAS BEING UTILIZED FOR HIS HOUSE HOLD PURPOSES. THE ASSESSEE WAS NOT ABLE TO FILE ANY GIRDAWARI REPORT. NO EVIDENCE IN RESPECT O F SALE OF AGRICULTURAL PRODUCE WAS FILED. THE SUB-REGISTRAR HAD ADOPTED TH E VALUE AT RS. 12,39,195/- AND THE SAME WAS ADOPTED BY THE AO IN V IEW OF SECTION 50C OF THE ACT. 2.3 BEFORE THE LD. CIT(A), THE ASSESSEE FILED THE R EPORT OF JAMABANDI FOR THE LAND SITUATED AT KHASRA NO. 233, 237, 238 AND 2 39. THE LAND HAS BEEN SHOWN AS BARANI. HENCE IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE LAND WAS HAVING STATUS OF AGRICULTURAL LAND. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE POSSESSION OF THE LAND WAS GIVEN TO THE BUYER ON 04-04- 2005. THE BUYER UNDERTOOK SOME CONSTRUCTION WORK ON THE LAND. THE SALE DEED BETWEEN THE ASSESSEE AND THE BUYER COULD BE EX ECUTED ON 06-08-2005 AND THE SAME WAS REGISTERED ON 16 TH AUG. 205. SINCE AT THE TIME OF REGISTRATION, IT WAS NOTICED BY THE STAMP AUTHORITY THAT THERE HAS BEEN SOME CONSTRUCTION AND THE VALUE OF THE CONSTRUCTION WAS TAKEN AT RS. 5.32 LACS. 3 THE VALUE OF THE LAND WAS TAKEN AT RS. 7.37 LACS. T HE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS NOT FILED ANY EVIDENCE TO SHO W THAT THE LAND WAS USED FOR AGRICULTURAL PURPOSES. THE ASSESSEE HAS NOT DEC LARED ANY AGRICULTURAL INCOME. NO EVIDENCE IN RESPECT OF PURCHASE OF SEEDS AND FERTILIZERS HAS BEEN FILED. THE LAND HAS BEEN SOLD AT A CONSIDERATION OF RS.21.5 PER SQ. YARD AND AGRICULTURAL LAND IS NOT MEASURED IN YARDS. THE LD. CIT(A) FURTHER NOTICED THAT IT CANNOT BE ASCERTAINED AS TO WHO HAS DONE TH E CONSTRUCTION. THE LD. CIT(A) THEREFORE, UPHELD THE ACTION OF THE AO. 2.4 WE HAVE HEARD BOTH THE PARTIES. IN THE SALE DEE D, IT IS MENTIONED THAT THE ASSESSEE HAS SOLD THE PLOT MEASURING 200 SQ. YA RD. THE SALE DEED DOES NOT SHOW THAT THE STAMP DUTY HAS BEEN CHARGED ON TH E BASIS OF THE DLC RATE FOR AGRICULTURAL LAND. IT IS A CORNER PLOT AND IS A DJOINING TO ONE HOUSE. WHEN THE STAMP AUTHORITY MADE THE INSPECTION THEN IT WAS NOTICED THAT UN-BUILT SHOPS HAVE BEEN CONSTRUCTED. THE CONSTRUCTED AREA I S 1330 SQ.FT. THE SHOPS CAN BE USED FOR COMMERCIAL PURPOSES. THE HON'BLE AP EX COURT IN THE CASE OF CIT VS. GEMINI PICTURES CIRCUIT (P) LTD., 220 ITR 4 3 HELD THAT IT MUST BE SEEN WHETHER THE LAND HAS BEEN PUT TO USE FOR AGRIC ULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME PRIOR TO THE DATE OF SALE A ND FURTHER WHETHER ON THE DATE OF SALE OF THE LAND WAS INTENDED TO BE PUT TO USE FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME IN FUTURE. I N THE CASE BEFORE HON'BLE 4 APEX COURT, THE AGREEMENT OF SALE WAS ENTERED INTO BY THE ASSESSEE WITH A HOUSING SOCIETY WAS OF CRUCIAL RELEVANCE SINCE IT S HOWED THAT THE ASSESSEE HAD AGREED TO SELL THE LAND FOR ADMITTEDLY NON-AGRI CULTURAL PURPOSES. NO EVIDENCE HAS BEEN FILED BEFORE THE LOWER AUTHORITIE S TO SHOW THAT THE PLOT SOLD WAS AGRICULTURAL PLOT. HENCE, WE HOLD THAT THE LOWER AUTHORITIES WERE JUSTIFIED IN HOLDING THAT LAND SOLD IS NOT AGRICULT URAL AND THEREFORE, DEDUCTION U/S 54B IS NOT ADMISSIBLE. 2.5 BEFORE THE LD. CIT(A) AS WELL AS BEFORE THE AO, THE ASSESSEE HAS CONTENDED THAT THE POSSESSION OF THE PLOT WAS GIVEN ON 04-04-2005. HENCE FOR INCOME TAX PURPOSES, THE TRANSFER IS TO BE CONS IDERED TO HAVE EFFECTED ON 04-04-2005. AT THAT TIME, THE SALE WAS NOT REGISTER ED AND THEREFORE, SECTION 50C WAS NOT APPLICABLE. BEFORE LOWER AUTHORITIES, I T HAS BEEN SUBMITTED BY THE ASSESSEE THAT CONSTRUCTION HAS BEEN DONE BY THE BUYER. THE POSSESSION WAS GIVEN ON THE BASIS OF THE AGREEMENT OF SALE AND SUCH AGREEMENT IS AVAILABLE AT PAGES 6 AND 9 OF THE PAPER BOOK FILED BY THE LD. LD. AR. THE ITAT JAIPUR BENCH IS HOLDING THAT SECTION 50C IS NO T APPLICABLE IN CASE THE CAPITAL GAIN IS CHARGEABLE ON THE BASIS OF AN AGREE MENT OF SALE. WE REFER TO THE DECISION OF THE TRIBUNAL IN THE CASE OF SHER SI NGH SUNDA (ITA NO. 1125 JP/2010 DATED 28-04-2011). THUS FOR CAPITAL GAIN PU RPOSES, THE AO IS REQUIRED TO ADOPT THE VALUE OF THE LAND AT RS. 8.00 LACS AS PER AGREEMENT 5 3.1 THE THIRD GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN NOT REFERRING THE MATTER OF VALUATION OF T HE PROPERTY SOLD BY THE ASSESSEE TO THE DVO U/S 50C(2). 3.2 WE HAD ALREADY HELD THAT SECTION 50C WILL NOT B E APPLICABLE. HENCE, THERE WAS NO NEED OF REFERRING THE VALUATION TO THE DVO. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05-08 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 05/08/2011 *MISHRA COPY FORWARDED TO :- 1. SHRI RAJENDRA KUMAR AGRWAL, JAIPUR 2. THE ITO WARD- 4 (1), JAIPUR 3 THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5 THE LD.DR 6 THE GUARD FILE (ITA NO.91/JP /11) A.R, ITAT, JAIPUR