ITO, Alwar V. SHRI JAGMAL SINGH C/O SH. MATADEEN, Alwar

ITA 946/JPR/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74828 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: KRANTI MEHTA; K L GUPTA
• Keywords: Capital asset
• Section: 54B; 2(14); 148

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 946/JP/2011 (A.Y. 2007-08) PAN NO. AIMPJ 5691 G ITO, WARD-2(2), VS. SHRI JAGMAL SINGH, S/O SHR I ALWAR. MATADEEN, VILLAGE KHANPUR, TEHSIL TIJARA, ALWAR. (APPELLANT) (RESPONDENT) ITA NO. 947/JP/2011 (A.Y. 2007-08) PAN NO. ABKPY 1042 P ITO, WARD-2(2), VS. SHRI HAZARI LAL, S/O SHRI ALWAR. MATADEEN, VILLAGE KHANPUR, TEHSIL TIJARA, ALWAR (APPELLANT) (RESPONDENT) ITA NO. 948/JP/2011 (A.Y. 2007-08) PAN NO. BJBPM 8061 L ITO, WARD-2(2), VS. SHRI MAHENDRA KUMAR, ALWAR. S/O SHRI MATADEEN, VILLAGE KHANPUR, TEHSIL TIJARA, ALWAR. (APPELLANT) (RESPONDENT) 2 ASSESSEE BY : SHRI KRANTI MEHTA & SHRI K.L. GUPTA. DEPARTMENT BY : SHRI D.C. SHARMA - D.R. DATE OF HEARING : 30/01/2014. DATE OF PRONOUNCEMENT : 31/01/2014. O R D E R PER N.K.SAINI, A.M THESE THREE APPEALS BY THE DEPARTMENT ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DATED 30/08/2011 OF LD. CI T(A), ALWAR. SINCE THE ISSUE INVOLVED IS COMMON, HAVING IDENTICA L FACTS IN ALL THESE APPEALS, WHICH WERE HEARD TOGETHER, SO, THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. 2 FIRST WE WILL DEAL WITH THE APPEAL IN I.T.A.NO. 94 6/JP/2011. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPE AL:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 68,86,844/- ON A/C OF LONG TERM CAPITA GAIN ON SALE OF LAND AS MADE BY THE AO. 2. DEPARTMENT RESERVES ITS RIGHT TO ADD, ALTER, MOD IFY, DELETE OR AMEND ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSES SEE SOLD AGRICULTURAL LAND SITUATED AT VILLAGE KHANPUR ON 26 /06/2006 IN JOINT OWNERSHIP WITH HIS BROTHERS NAMELY SHRI HAZAR I LAL AND SHRI 3 MAHENDRA KUMAR, FOR A SALE CONSIDERATION OF RS. 2,24 ,49,300/-. THE ASSESSEE HAD NEITHER INVESTED THE SALE CONSIDER ATION IN PURCHASE OF AGRICULTURAL LAND NOR CONSTRUCTION OF R ESIDENTIAL BUILDING AND HAD NOT FILED ANY RETURN OF INCOME. T HEREFORE, THE AO ISSUED NOTICE UNDER SECTION 148 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS ACT, IN SHORT). THE ASSESSEE SUBMITTED THAT HE HAD FILED RETURN OF INCOME ON 01/ 12/2008 DECLARING AN INCOME OF RS. 50,000/- AND AGRICULTURAL INCOME OF RS. 25,000/-. IT WAS ALSO STATED THAT THE LAND SOLD WAS SITUATED IN VILLAGE KHANPUR, WHICH WAS NOT COVERED WITHIN THE D EFINITION OF ASSET UNDER SECTION 2(14)(III)(A) OF THE ACT, HENCE , CAPITAL GAIN WAS NOT CHARGEABLE. THE AO MADE ENQUIRY REGARDING LOCA TION AND DISTANCE OF AGRICULTURAL LAND WITH NAGAR PALIKA TIJ ARA WHICH WAS INTIMATED BY THE SUB-REGISTRAR THAT THE VILLAGE KHAN PUR IS SITUATED AT 4KM FROM BHIWADI NAGAR PALIKA AND 30 KM FROM TIJ ARA NAGAR PALIKA. THE COUNCILOR NAGAR PALIKA, WARD NO.3 HAD INFORMED THAT NAGAR PALIKA BHIWADI HAD CAME INTO EXISTENCE IN NO VEMBER, 2009 AND PRIOR TO THIS, VILLAGE KHANPUR WAS IN KHIJURIBA S PANCHAYAT SAMITI. IT WAS ALSO CONFIRMED THAT AGRICULTURAL CR OPS WERE BEING CULTIVATED PRIOR TO THE SALE OF AGRICULTURAL LAND I N QUESTION. THE AO CONCLUDED THAT THIS LAND WAS PART OF MUNICIPALITY B HIWADI, ON THE BASIS OF LETTER RECEIVED FROM SECRETARY BHIWADI, PA TWARI KHANPUR 4 AND NOTIFICATION ISSUED BY THE DEPUTY SECRETARY OF GOVERNMENT OF RAJASTHAN. HE ALSO OBSERVED THAT THE VILLAGE KHANPU R WAS SITUATED AT A DISTANCE OF 1.5 KM FROM VILLAGE DHARUHERA (HAR YANA) WHICH WAS NOTIFIED AREA BY THE CENTRAL GOVERNMENT FOR THE PURPOSE OF CAPITAL GAIN AND THE CENTRAL GOVERNMENT HAD DECLARE D DHARUHERA AS NOTIFIED AREA FOR 5 KM FROM ALL THE DIRECTIONS. THE AO WORKED OUT LONG TERM CAPITAL GAIN AT RS. 84,18,918/- AND AF TER ALLOWING DEDUCTION UNDER SECTION 54B, THE NET LONG TERM CAPI TAL GAIN CHARGEABLE TO TAX WAS WORKED OUT AT RS. 68,86,844/-. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE FILED REPLY IN RESPONSE TO THE QUERY RAISED BY THE AO AND ALSO FILED EVIDENCES OF INVESTMENT MADE IN AGRICULTURAL LAND AND THE RESIDENTIAL HOUSE . IT WAS FURTHER STATED THAT THE LAND WAS CAPITAL ASSET UNDER TOWN C OMMITTEE BY NOTIFICATION DATED 19/09/2003. IT WAS STATED THAT THE NOTIFICATION ISSUED BY THE RAJASTHAN GOVERNMENT, BHIWADI WAS DEC LARED MUNICIPALITY ON 13/10/2009 AFTER 28 MONTHS OF THE T RANSACTION. IT WAS FURTHER STATED THAT THE AREA SHOULD BE WITHIN T HE LIMIT OF 8 KM FROM THE LOCAL LIMITS OF THE MUNICIPALITY, WHICH WA S THE MUNICIPALITY OF TIJARA AND THE VILLAGE KHANPUR IS 3 0 KM FROM THE SAID MUNICIPALITY AND THAT DHARUHRA WHICH IS SITUAT ED IN OTHER 5 STATE I.E. HARYANA WAS NOT MUNICIPALITY FOR THE F.Y . 2006-07 AND IT WAS DECLARED AS MUNICIPALITY IN THE MONTH OF 2007 I .E. DURING THE ACCOUNTING YEAR 2007-08. 5. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE, DELETED THE ADDITION MADE BY THE AO BY OBSERVING IN PARA 4.3 OF THE IMPUGNED ORDER, WHICH READS AS UNDER:- I HAVE PERUSED THE ASSESSMENT ORDER AS WELL AS SU BMISSION OF THE ASSESSEE AND CASES RELIED UPON AND NOTIFICAT IONS, IT IS FOUND THAT DHARUHERA MUNICIPALITY CAME IN EXISTENCE IN JU LY 2007 AND BHIWADI IN NOVEMBER 2009. IT MEANS THE LANDS SOLD WAS NOT PART OF ANY MUNICIPALITY AREA FOR CAPITAL ASSETS DEFINE U/S 2(14) OF IT ACT. THE NOTIFICATION NO. 10(30)/2000 DATED 25/08/2000 W AS REFERRED BY THE AO IS FOR FUTURE PLAN OF THAT AREA FOR 2021 WHI CH DOES NOT DECLARE THIS LAND IN MUNICIPALITY AREA. THE AO HAD WRONGLY ASSUMED THE JURISDICTION ON THIS CASE WITHOUT VERIF YING THE FACTS AND ALSO SUFFICIENT TIME HAS NOT BEEN GIVEN TO THE ASSE SSEE TO REBUT THE FINDINGS GIVEN IN THE ASSESSMENT ORDER. WHEN THE L AND SOLD WAS NOT PART OF THE MUNICIPAL AREA, IT DOES NOT COME UNDER SECTION 2(14) OF THE IT ACT AS CAPITAL ASSETS. IT IS ACADEMIC TO GI VE THE FINDINGS ON INVESTMENT MADE BY THE ASSESSEE IN PURCHASE OF LAND AND CONSTRUCTION OF HOUSES FOR CLAIMING OF DEDUCTION SE CTION 54B OF THE IT ACT. THE ADDITION MADE BY THE AO IS DELETED. NOW THE DEPARTMENT IS IN APPEAL. 6 . LD. D.R. ALTHOUGH SUPPORTED THE ORDER OF THE AO, BUT FAILED TO REBUT THE FINDINGS GIVEN BY THE LD. CIT(A). 7. IN HIS RIVAL SUBMISSIONS, THE LEARNED COUNSEL FO R THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). 6 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH T HE PARTIES AND GONE THROUGH THE MATERIAL ON RECORD, IT IS NOTI CED THAT THE LD. CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT AT THE TIME OF TRANSACTION OF SALE OF LAND IN QUESTION NEITHER DHA RUHERA MUNICIPALITY CAME INTO EXISTENCE NOR THE BHIWADI MU NICIPALITY AND THE LAND SOLD WAS NOT PART OF ANY MUNICIPALITY AREA FOR THE PURPOSES OF CAPITAL ASSET AS DEFINED UNDER SECTION 2(14) OF THE ACT. WE, THEREFORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS GIVEN BY THE LD. CIT(A). ACCORDINGLY, DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 8 . IN OTHER APPEALS I.E. I.T.A.NO. 947 & 948/JP/2011 , THE FACTS ARE IDENTICAL AS WERE INVOLVED IN THE CASE OF ITO V S. SHRI JAGMAL SINGH IN I.T.NO. 946/JP/2011, THEREFORE, OUR FINDIN GS GIVEN IN THE FORMER PART OF THIS ORDER SHALL APPLY MUTATIS MUTANDIS FOR THESE TWO APPEALS ALSO. 9. IN THE RESULT, APPEALS OF THE DEPARTMENT ARE DIS MISSED. (ORDER PRONOUNCED IN THE COURT ON 31 ST JANUARY, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST JANUARY, 2014. 7 VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R BY ORDER ASSISTANT REGISTRAR, ITAT, JAIPUR.