MADHUBALA INDRAKUMAR PARMAR,PALI V. ITO, WARD 4, PANVEL, PANVEL

ITA 2532/PUN/2024

AI Insights

The case revolves around an appeal by Madhubala Indrakumar Parmar against the order of the Commissioner of Income Tax (Appeals) which upheld an addition to her income under Section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961. The addition was based on the difference between the actual purchase consideration of agricultural land and its stamp duty valuation. The assessee argued that the land, being agricultural and outside the municipal limits, did not qualify as a capital asset, and thus the provisions of Section 56(2)(vii)(b)(ii) were not applicable. The Tribunal, referencing decisions from similar cases, agreed with the assessee, leading to the allowance of her appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29509 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Other Referred Cases: Mubarak Gafur Korabu vs. ITO, Dipti Garg vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MISS INDIRA R ADAKIL
• Assessee Lawyers: SUBHODH RATNAPARKHI
• Keywords: Capital asset; Additional evidence; Sale consideration of property below Jantri Value; Valuation report
• Section: 56(2); 2(14)

Judgement Text

" आयकर अपीलीय अिधकरण ”एस एम सी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC” :: PUNE BEFORE MS.ASTHA CHANDRA, JUDICIAL MEMBER AND DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकरअपीलसं. / ITA No.2532/PUN/2024 िनधाᭅरणवषᭅ / Assessment Year: 2014-15 Madhubala Indrakumar Parmar, Bazar Peth, At Post Pali,Taluka Sudhagad, District Raigad, Maharashtra – 410205. PAN: AATPP5508P V s The Income Tax Officer, Ward-4, Panvel. Appellant/ Assessee Respondent / Revenue Assessee by Shri Subhodh Ratnaparkhi – AR Revenue by Miss Indira R Adakil – Addl.CIT(DR) Date of hearing 28/01/2025 Date of pronouncement 29/01/2025 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal is filed by the assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC] under section 250 of the Income Tax Act, 1961 for the A.Y.2014-15 dated 10.10.2024 emanating from the Assessment Order . The Assessee has raised the following grounds of appeal : “1. The Hon. CIT(A) erred in upholding addition to the extent of Rs.8,50,834/- u/s 56(2)(vii)(b)(ii) of the I.T.Act 1961, on account of difference between the actual purchase consideration of agricultural land at Pali, Taluka Sudhagad, Dist. Raigad and the value as per ITA No.2532/PUN/2024[A] 2 stamp valuation authorities, not appreciating that the land purchased was agricultural land and not being a capital asset, the provisions of section 56(2)(vii)(b)(ii) were not attracted and that all evidences relied upon were before the ld AO and no additional evidences were filed before Hon CIT(A) and therefore dismissal of this ground by the Hon CIT(A) was not justified and consequent addition be kindly deleted. 2. The appellant craves leave to add, alter, amend and or vary the grounds of appeal at any time before the decision of the appeal.” Submission of ld.AR : 2. The ld.Authorised Representative(ld.AR)’s written submissions as under : “The appellant is an individual having income from partnership firm and other sources. The return of income for the year under appeal was filed on 30.09.2014 declaring total income of Rs. 6,88,508/-. In the year under appeal, the appellant alongwith two other co- owners vide agreement dt. 31.05.2013 purchased agricultural land bearing survey no.8/3,8/5,9/5 and 16/8 at Mauje Pali, Taluka Sudhagad, Dist. Raigad for the total consideration of Rs. 16,00,000/- with the assessee contributing for her 1/3rd share being Rs.5,33,333/- for purchase of the said land. The valuation of the said land as per stamp valuation authority as on the date of purchase was Rs.77,63,000/-. Copy of agricultural land purchase agreement dt. 31.05.2013 is enclosed at pg nos. 05 to 34 with English translation thereof at pg no. 35 to 44 of the paperbook. In the course of asst. proceedings, the assessee explained to the Id AO that the value adopted by stamp valuation authority was highly excessive as compared to the actual market value of the said agricultural land and requested for valuation by the DVO. On reference, the DVO valued the share of the appellant at Rs.13,84,167/- (in place of Rs.25.87,667/- considered in the asst. order). Consequent relief of Rs. 12,03,500/- was granted by the Hon. CIT(A). Copy of valuation report is enclosed at pg no. 45 to 54 of the paperbook. The department is not disputing this aspect of the relief granted. The main ground in appeal before the Hon. CIT(A) was that addition by relying upon the provisions of section 56(2)(vii)(b)(ii) of the I. T. ITA No.2532/PUN/2024[A] 3 Act 1961 was not attracted to the transaction of purchase of agricultural land, as the same was not a \"capital asset\" It was pointed out in appeal that the deeming provisions of sec. 56(2)(vii)(b)(ii) were attracted only in respect of capital assets. Attention was drawn to the definition of the term \"property\" given in para (d) of Explanation to sec. 56(2) of the 1. T. Act 1961 The term \"property\" referred to in section 56(2)(vii)(b)(ii) of the I. T. Act, 1961 necessarily has to be a capital asset. If the property acquired is not a capital asset, then the deeming provisions are not attracted. This view finds support by the decision of the jurisdictional Pune tribunal in the case of Mubarak Gafur Korabu-vs-ITO, 117 taxmann.com 828 (Pune) [2020]/Hon. Jaipur Tribunal in the case of Dipti Garg-vs-ITO, 162 taxmann.com 347 (Jaipur Trib.) [2024]. In the present case, the land purchased is rural agricultural land covered exception contained in section 2(14)(iii) of the Act and thus not a capital asset. The Hon. CIT(A) however dismissed the ground by stating that \"As this issue was not raised during asst. proceeding, submission and documents submitted during appellate proceedings comes under additional evidence. However, the appellant has not submitted any submission to intimate that these are additional evidences and has not sought permission for submission of the same. Therefore, these additional evinces are not admitted\". The Hon. CIT(A) thereafter went on to state that even if admitted, the document fails to show the land was agricultural land. On this reasoning, Ground no. 1 of the appellant before the Ho. CIT(A) was dismissed. The agreement which is basis of the addition u/s 56(2)(vii)(b)(ii) was undisputedly before the Id AO. Reference to this can be found that pg no. 1 and 2 of the asst. order. In fact, the addition in the hands of the appellant has been made on the basis of the agreement itself. Therefore, no additional evidence was placed before the Hon. CIT(A). Accordingly, there was no cause to make any application seeking permission to produce the said document as per Rule 46A of the I. T. Rules. As far as a legal argument is concerned, the appellant is entitled to raise the same at any stage before the appellate authorities. Reliance in this regard is placed on NTPC-vs-CIT, 229 ITR 383 (SC) (1999) CIT-vs-Pruthvi Brokers & Shareholders, 349 ITR 336 (Bombay) [2012] ITA No.2532/PUN/2024[A] 4 As far as the issue of agricultural land is concerned, the same is categorically identified in the registered document at pg no. 10 of the paperbook (translated pg no. 36 of the paperbook) as well as by the 7/12 Extracts of the agricultural land forming part of the registered purchase agreement. This fact is also admitted by the DVO at para 3.4 of the valuation report (kindly refer to pg no. 49 of the paperbook). The appellant submits that the Hon. CIT(A) is in error in dismissing the ground and therefore the appeal may kindly be allowed.” Submission of ld.DR : 3. The ld.Departmental Representative(ld.DR) for the Revenue relied on the order of the Assessing Officer. Findings & Analysis : 4. We have heard both the parties and perused the records. Assessee has filed Return of Income electronically on 30.09.2014 declaring total income at Rs.6,88,508/-. Assessee’s case was selected for scrutiny. The Authorised Representative for the Assessee attended before the Assessing Officer and submitted Copy of Return of Income, Copies of Purchase Deed, Bank Account Statement etc. The Assessee vide purchase deed dated 31.05.2013, purchased property at Survey No.8/3, 8/5, 9/8 and 16/8 mauje Pali, Tq: Sudhagad Dist: Raigad for consideration of Rs.16,00,000/- along with 2 other persons. The Assessing Officer noted on studying the purchase deed that the Market Value of the ITA No.2532/PUN/2024[A] 5 impugned land as determined by Stamp Duty Valuation Authority is Rs.77,63,000/-, whereas Assessee purchased it only for Rs.16,00,000/-. Therefore, Assessing Officer issued a show-cause notice to the Assessee that why as per section 56(2)(vii)(b)(ii) of the Act, difference shall not be added to total income of the Assessee! The Assessing Officer also referred the issue to the Departmental Valuation Officer(DVO), however, since the case was getting time barred, Assessing Officer made an addition of Rs.20,54,333/- which under section 56(2)(vii)(b)(ii) of the Act. Aggrieved by the Assessment Order, Assessee filed an appeal before the ld.CIT(A). The Assessee pleaded before ld.CIT(A) that the land is an Agricultural Land as clearly mentioned in the purchase deed and the 7/12 extract, hence Section 56(2)(vii)(b)(ii) is not applicable. However, ld.CIT(A) dismissed the appeal of the Assessee on the ground that Assessee has raised additional ground which was not raised before the Assessing Officer. Aggrieved by the ld.CIT(A)’s order, Assessee filed appeal before this Tribunal. We have perused the copy of the purchase deed which is at page no.5 to 34 of the paper book. In the purchase deed, it is categorically mentioned that the Land is Agricultural Land. The ITA No.2532/PUN/2024[A] 6 7/12 extract enclosed with the registered purchase deed also describes land as Agricultural Land. Before us, during the hearing ld.AR filed copies of 7/12 Extract to demonstrate the Land is Agricultural Land. Ld.AR also filed current 7/12 Extract to demonstrate that even today the Land is Agricultural Land. Ld.AR also took us through the Valuation Report which has categorically mentioned that the Land is at a distance of 40 Kms from the nearest Municipal Limits. Even the Valuation Officer has mentioned that the Land is Agricultural Land. The relevant part of the Valuation Report is reproduced here as under : 4.1 Section 56(2)(vii)(b)(ii) of the Act is reproduced here as under : “56. (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head \"Income from other sources\", if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head \"Income from other sources\", namely :— …………………. ITA No.2532/PUN/2024[A] 7 (vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,— (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; 8[(b) any immovable property,— (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: ………………………….. (d) \"property\" means the following capital asset of the assessee, namely:— (i) immovable property being land or building or both;” 4.2 Section 2(14) of the Act is reproduced here as under: (14) 8[\"capital asset\" means— ………………………….. (iii) agricultural land in India, not being land situate— (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand 11[***] ; or (b) in any area within the distance, measured aerially,— (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or ITA No.2532/PUN/2024[A] 8 (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation.—For the purposes of this sub-clause, \"population\" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;] 4.3 The ld.AR pleaded that reading of Section 56(2) explains that property means Capital Assets of the Assessee, namely Immovable Property. Ld.AR further submitted that the Word “Capital Asset” has been defined in Section 2(14) of the Act. The Section 2(14) of the Act has specifically excluded Agricultural Land which is situated at a distance of more than 8 kms from the limits of Municipality. Ld.AR submitted that Land is admittedly situated at a distance of 40 kms from the Municipality Limits, hence it is not a Capital Asset. 4.4 Section 56(2)(vii)(b)(ii) has defined Immovable Property means Capital Asset for the purpose of Section 56(2)(vii)(b)(ii) of the Act. Further, the Definition of Capital Asset is given in Section 2(14) of the Act. Section 2(14) of the Act has excluded Agricultural Land which is outside the specific limits given in the ITA No.2532/PUN/2024[A] 9 Section from Municipality. Admittedly, the land is outside the specific limits given in the Section 2(14) of the Act. Admittedly, the Land is Agricultural Land as per 7/12 Extracts and Purchase Deed. Therefore, the impugned land is not a Capital Asset for the purpose of Section 2(14) of the Act. Therefore, the issue before us is whether the Assessing Officer can make an addition of the difference between Stamp Duty Value and Actual Price invoking Section 56(2)(vii)(b)(ii) of the Act. The Co-ordinate Bench of ITAT Pune in the case of Mubarak Gafur Korabu vs. ITO in ITA No.752/PUN/2018 has held that Agricultural Land purchased by the Assessee is not governed by the provision of Section 56(2)(vii)(b)(ii) of the Act, not being capital asset. Similarly, the Co-ordinate Bench ITAT in ITA No.633/JPR/2023 of Dipti Garg vs. ITO has held that Agricultural Land is outside the purview of Section 56(2)(vii)(b)(ii) of the Act, not being the Capital Asset. 4.5 The facts in the case of Assessee and decisions referred above are identical, therefore, respectfully following the Co- ordinate Bench Decisions(supra), we hold that the Agricultural Land of the Assessee which is outside 8 Kms of Municipal Limits is not a Capital Asset and hence, it is outside the purview of ITA No.2532/PUN/2024[A] 10 Section 56(2)(vii)(b)(ii) of the Act. Accordingly, the Assessing Officer is directed to delete the addition of Rs.20,54,333/-. Accordingly, the grounds of appeal raised by the Assessee are allowed. 5. In the result, appeal of the Assessee is allowed. Order pronounced in the open Court on 29th January, 2025. Sd/- Sd/- (ASTHA CHANDRA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 29th Jan, 2024/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “एस एम सी” बᱶच, पुणे / DR, ITAT, “SMC” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. "