ITO WD 1(1), KALYAN V. ARUN BABU SHELAR, BHIWANDI

ITA 94/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1029 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 05-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: MALAY SHAH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Competent authority
• Section: 142(1); 144; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 94 / MUM/20 17 ( ASSESSMENT YEAR : 2011 - 12 ) ITO WD 1(1) 1 ST FLOOR, MOHAN PLAZA WAYALE NAGAR, KHADAKPADA, KALYAN WEST KALYAN 421 301 VS. SHRI ARUN BABU SHELAR VR USHAV BEER SHOP AT VASHERE POST, AMANE BHIWANDI 421 302 PAN/GIR NO. CGSPS0353N APPELLANT ) .. RESPONDENT ) REVENUE BY MS. N. HEMALATHA ASSESSEE BY SHRI MALAY SHAH DATE OF HEARING 05 / 10 /201 7 DATE OF PRONOUNCEME NT 02 / 01 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDER OF CIT(A) - 2, THANE DATED 27/10/2016 FOR A.Y.2011 - 12 IN THE MATTER OF ORDER PASSED U/S.144 OF THE IT ACT. 2. THE ONLY GRIEVANCE OF REVENUE RELAT ES TO TREATING THE PROFIT ON SALE OF LAND AS AGRICULTURAL INCOME RATHER THAN CAPITAL GAIN. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. BRIEFLY STA T ED F ACT S OF THE CASE ARE THAT IN THIS CASE THE RETURN OF INCOME, DECLARING INCOME OF RS 9.43. 400/ - WAS FILED ON 16 / 08 / 2011 AND THE SAME WAS PROCESSED U/S 1 43(L) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS, THEREFORE, THE STATUTORY NOTICES ITA NO. 94/MUM/2017 SHRI ARUN BABA SHELAR 2 U/S 143(2) / 142(1) OF THE ACT, ALONG WITH DETAILED QUESTIONNAIRE, WERE ISSUED A ND SERVE D UPON THE ASSESSEE. THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF TRADING IN LIQUOR. IN RESPONSE TO THE NOTICES, THE ASSESSEE/ LD. AR NEITHER ATTENDED THE PROCEEDINGS NOR FILED THE DETAILS. THE A.O THEREFORE, ON THE BASIS OF MATERIAL A VAILABLE OF RECORD, FINALIZED THE ASSESSMENT ORDER U/S 144 OF THE ACT. ON 06.03.2014 AT TOTAL INCOME OF RS.46,21,270/ - AS AGAINST RETURNED INCOME O F RS 9,43,400/ - , AFTER MAKING THE FOLLOWING ADDITIONS / DISALLOWANCES. SR. NO. PARTICULARS AMOUNT (RS . ) 1 ADDITION UNDER THE HEAD STCG 35,70,000/ - 2 DIFFERENCE IN NP 1,07,872/ - TOTAL 36,77,872 / - 5. BY THE IMPUGNED ORDER CIT(A) DELETED THE ADDITION AFTER OBSERVING AS UNDER: - 6.2 I HAVE CAREFULLY GONE THROUGH T HE FACTS O F THE CASE, FINDINGS OF THE AO IN THE ASSESSMENT ORDER AS WELL AS REMAND REPORT, SUBMISSIONS OF THE LD AR AND MATERIAL PLACED ON RECORD. FROM THE ABOVE FACTS, IT IS NOTICED THAT DURING THE YEAR, THE APPELLANT, ALONG WITH THREE OTHER CO - OWNERS, HAD SOLD IMMOVABLE PROPERTY ON 06.0 7.2010, FOR TOTAL CONSIDERATION OF RS 1,00,55,000 / - . ON VERIFICATION OF CAPITAL ACCOUNT, THE AO NOTICED THAT THE APPELLANT HAD CREDITED AN AMOUNT OF RS35,70,000/ - , BEING HIS SHARE IN SALE CONSIDERATION, TO THE CAPITAL ACCOUNT. SINCE THE INCOME ARISING ON S ALE OF LAND WAS NOT OFFERED FOR TAX, THE AO, THEREFORE, ADDED THE ENTIRE AMOUNT OF RS 35,70,000/ - AS STCG, TO THE INCOME. ON THE OTHER HAND THE APPELLANT DID NOT OFFER ANY INCOME AGAINST SALE OF LAND, WITH THE PLEA THAT THE SAME WAS AGRICULTURAL LAND AND N OT CAPITAL ASSET, AS PER PROVISIONS OF SEC 2( 14) OF THE ACT. ITA NO. 94/MUM/2017 SHRI ARUN BABA SHELAR 3 6.3 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT CLAIMED THAT - 1) LAND IN QUESTION IS AN AGRICULTURAL LAND, HENCE THE SALE PROCEEDS / GAINS, ARISING ON SALE, ARE NOT TAXABLE AND 2) THE LAND IN QUESTION IS SITUATED BEYOND DISTANCE OF 8 KMS FROM LOCAL LIMITS OF MUNICIPAL CORPORATION AND HAVING POPULATION OF LESS THAN 10000. IT WAS FURTHER CLAIMED THAT FAMILY OF ASSESSEE IS BASICALLY FARMER AND CARRYING ON AGRICULTURAL ACTIVITIES SINCE GENERATIONS. THE CROPS SUCH AS BHAT AND GAVAT ARC CULTIVATED ON THE SAID LAND, WHICH IS CLEARLY EVIDENT FROM 7/12 EXTRACTS. 6.4 DURING REMAND PROCEEDINGS, THE ABOVE FACTS WERE EXAMINED BY THE AO BY DEPLOYING INSPECTOR OF THE DEPARTMENT. IN THE REMAND REPO RT, THE AO HAS ACCEPTED THE FACT THAT THE LAND UNDER QUESTION IS SITUATED BEYOND 8KM, FROM THE LIMIT OF THE MUNICIPALITY. AS REGARD CLAIM OF AGRICULTURAL LAND, NOT LIABLE FOR CAPITAL GAIN, THE AO HAS NOT ACCEPTED THE CLAIM OF THE APPELLANT, ON ACCOUNT OF F OLLOWING FACTS: - I) THE AO IN THE REMAND REPORT OBSERVED THAT IN THE RETURN OF INCOME, FILED FOR A.Y.I 1 - 12, THE APPELLANT HAD NOT DECLARED ANY AGRICULTURAL INCOME. IN THE REJOINDER, THE LD. AR STATED THAT THE APPELLANT, BASICALLY BEING AN AGRICULTURIST, H AS HARVESTED SMALL QUANTUM OF AGRICULTURAL PRODUCE, WHICH WAS CONSUMED BY THE FAMILY MEMBERS, HENCE NOT SOLD IN THE MARKET. IT IS FURTHER CONTENDED THAT AFTER CONSIDERING THE COST AND LABOUR DEPLOYED BY THE FAMILY MEMBERS, THERE WAS HARDLY ANY SURPLUS, TO BE OFFERED FOR TAX. II) IN THE SECOND OBJECTION, THE AO STATED THAT THE APPELLANT HAD OBTAINED PERMISSION FROM THE COMPETENT AUTHORITY, VIDE LETTER DATED 22.8.2008. FOR ESTABLISHING INDUSTRIAL ESTATE, FOR SERVICE OF INDUSTRY, I.C.20YEARS BEFORE THE SALE DE ED EXECUTED, CLEARLY ESTABLISH THE INTENTION OF THE APPELLANT TO MAKE THE PROFIT ON SALE OF LAND. FURTHER, STATED THAT THE LAND WAS SOLD TO M/S RENAISSANCE INFRA., NOT AN AGRICULTURIST, FOR CONSTRUCTION OF WAREHOUSE AND NOT FOR AGRICULTURAL ACTIVITIES AND REGISTRATION THEREFORE, WAS DONE AT HIGHER RALE. IN THE REJOINDER, THE LD. AR SLATED THAT I) THE ASSESSEE HAS NOT OBTAINED ANY PERMISSION/ APPLICATION FOR COMMERCIAL USE OF LAND. THE DEVELOPER HAS MADE APPLICATION FOR PURCHASE OF LAND FOR INDUSTRIAL USE HU T TILL DATE THE DEVELOPER HAS NOT MADE A GATT AND THE COLLECTOR HAS NOT ISSUED N.A ORDER THE AGREEMENT ENTERED IS FOR AGRICULTURAL LAND AND CAN HE EVIDENCE THROUGH 7/12 EXTRACTS OR THE REVENUE RECORDS CLEARLY. TILL DATE THE DEVELOPER HAS NOT CONSTRUCTED OR EVEN STARTED ANY CONSTRUCTION ON OUR LAND. / HAVE ALREADY ENCLOSED LATEST 7/12 COPY FOR YOUR REFERENCE THAT THE LAND IS AGRICULTURE EVEN US ON TODAY DATE. THE ASSESSEE HAS SOLD HIS AGRICULTURAL LAND TO M/S RENAISSANCE INFRA. HE HAS ALSO ACTED AS A BROK ER AND FACILITATED LAND DEALINGS OF OTHER FARMERS. THIS ACTIVITY IS ANCILLARY A ND THERE IS NO BROKERAGE INCOME IN ANOTHER YEAR. THE ASSESSEE HAS OFFERED BROKERAGE INCOME IN RESPECTIVE INCOME TAX RETURNS ITA NO. 94/MUM/2017 SHRI ARUN BABA SHELAR 4 II) THE ASSESSEE HAS BEEN SOLD LAND TO PARTNE RSHIP FIRM, BUT THE LAND WHICH IS TRANSFERRED IS A RURAL AGRICULTURAL LAND WHICH IS NOT A CAPITAL ASSET. HI) THE PURCHASER HAS PURCHASED THE LAND WITH INTENTION OF DEVELOPMENT OF INDUSTRIAL COMPLEX, SO THE PURCHASER ADVOCATE LIAS TAKEN HIGHER RATES FOR THE LAND. THE AGRICULTURAL LAND SOLD WAS SOLD FOR CONSIDERATION HIGHER THAN THE STAMP DUTY VALUE. THUS, IT IS CLEARLY EVIDENT THAT AGRICULTURAL ACTIVITIES WERE BEING CARRIED OUT BY SHE ASSESSEE AND HIS BROTHERS AND THEY ARE FARMERS SINCE BIRTH AND HAV E BEEN INDULGED IN AGRICULTURAL ACTIVITIES. THEY HAVE ALSO TAKEN A LOAN FROM AGRICULTURE CREDIT SOCIETY WHICH IS - REFLECTED IN 7/12 RECORDS. THE LAND IS AGRICULTURAL LAND AND FT HAT AND GA VAT HAS BEEN CULTIVATED, THE ENTRY FOR CULTIVATION OF'BHA T AND GA V A T I.S CLEARLY EVIDENT IN 7/12 RECORDS THE ASSESSEE HAVE NOT OBTAINED ANY PERMISSION FROM THE RESPECTIVE AUTHORITY, THE DEVELOPER HAIL APPLIED. BUT TILL DATE THE LAND IS A RURAL AGRICULTURAL LAND AND THE COLLECTOR HAS NOT ISSUED N.A ORDER 6.5 FROM THE ABO VE FACTS, IT IS CLEAR THAT THE AGRICULTURAL PRODUCE WAS JUST SUFFICIENT FOR SELF CONSUMPTION AND HENCE NOT SOLD IN OPEN MARKET. IT IS FURTHER SEEN THAT THE APPELLANT HAD NEVER APPLIED, BEFORE ANY COMPETENT AUTHORITY, FOR CONVERTING THE AGRICULTURAL LAND IN TO N.A. (NON - AGRICULTURAL) NOR OBTAINED ANY PERMISSION FOR COMMERCIAL USE OF LAND, TILL DATE. IT IS M/S RENAISSANCE INFRA., WHO HAD MADE AN APPLICATION, BEFORE THE DEVELOPMENT COMMISSIONER (INDUSTRIES), FOR PURCHASING OF AGRICULTURAL LAND OF 72.96 HECTARE, FROM VARIOUS FARMERS, WHICH WAS GRANTED TO M/S RENAISSANCE INFRA., ON 22.8.2008. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HIMSELF APPEARED AND CLARIFIED THE ABOVE ASPECTS. IT IS SEEN THAT THE APPELLANT AND HIS FAMILY MEMBERS, ARE ENGAGED IN THE AGRICULTURAL ACTIVITIES, SINCE GENERATIONS. THE RELEVANT DOCUMENTS HAVE BEEN VERIFIED AND THE CLAIM OF THE APPELLANT'S APPEARS TO BE IN ORDER THEREFORE, LIABLE TO BE ACCEPTED. THE ABOVE FACTS, PROVE BEYOND DOUBT THAT THE APPELLANT HAD SOLD THE AGRIC ULTURAL LAND, AS SUCH, WITHOUT CHANGING OF ITS LAND USE, HENCE NOT LIABLE FOR CAPITAL GAIN TAX, AS HAS BEEN REPORTED BY THE A O , IN THE REMAND REPORT. ACCORDINGLY, THE AO IS HEREBY DIRECTED TO DELETE THE ADDITION OF KS.35,70,000/ - , ON ACCOUNT OF SHORT TERM CAPITAL GAIN, AGAINST THE SALE OF AGRICULTURAL LAND. THESE GROUNDS OF APPEAL ARC ALLOWED. ' 6 . I FOUND THAT AFTER CONSIDERING THE REMAND REPORT, THE CIT(A) RECORDED FINDING TO THE EFFECT THAT AGRICULTURAL PRODUCE WAS JUST SUFFICIENT FOR SELF - CONSUMPTION, HENCE, NOT SOLD IN THE OPEN MARKET. THE CIT(A) FURTHER OBSERVED THAT ASSESSEE HAD NEVER APPLIED FOR ANY CONVERSION OF ITA NO. 94/MUM/2017 SHRI ARUN BABA SHELAR 5 AGRICULTURAL LAND INTO ANY AGRICULTURE NOR OBTAINED ANY PERMISSION FOR COMMERCIAL USE OF THE LAND TILL DATE. IT WAS ALSO FOUND THAT ASSESS EE AND HIS FAMILY MEMBERS WERE ENGAGED IN THE AGRICULTURAL ACTIVITIES SINCE GENERATION. ACCORDINGLY, AO WAS DIRECTED TO DELETE THE ADDITION MADE ON ACCOUNT OF SHORT TERM CAPITAL GAINS AGAINST THE SALE OF AGRICULTURAL LAND. THE FINDING SO RECORDED BY CIT(A) WAS NOT CONTROVERTED BY LEARNED DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. I ALSO FOUND THAT FOR SIMILAR REASON S PROCEEDING WAS INITIATED U/S.147 AGAINST THE BROTHER OF ASSESSEE WHO WAS ALSO CO - OWNER OF THE LAND, WHICH WAS ALSO DRAFTED BY THE AO . 6. IN VIEW OF THE ABOVE DISCUSSION, I DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 02 / 01 /201 8 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 02 / 01 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//