LATE SHRI RAMESH B. PATIL, THROUGH LEGAL HEIRS, MALKAPUR V. WELTH TAX OFFICER, Khamgaon

WTA 3/NAG/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3230 (ITAT-NAGPUR)
• Duration Of Justice: 5 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 29-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALLIK
• Assessee Lawyers: C J THAKKAR; S C THAKKAR S
• Keywords: Gift; Principle of natural justice; Retrospective amendment; Additional evidence; Fair market value
• Section: 205

Judgement Text

1 WTA NO. 03 /NA G/20 13 IN TH E INCOME TAX APPELLATE TRIBUNAL: NAGPUR BENCH: NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. W .T.A. NO. 03/NAG/2013 ASSESSMENT YEAR: 2006 - 07 LATE SHRI RAMESH B. PATIL, THROUGH LEGAL HEIRS: SHRI DEVE NDRA R. PATIL & OTHERS, NEAR BUS STAND, BULDHANA ROAD, MALKAPUR 443101 PAN: BIOPP6385C VS THE INCOME TAX OFFICER, KHAMGAON 444303 (APPELLANT) (RESPONDENT) APPELLANT BY SHRI C. J. THAKKAR AND SHRI S. C. THAKKAR, ADVOCATES RESPONDENT BY SMT. SUMAN MALLIK (JCIT) DATE OF HEARING: 17 - 11 - 2015 DATE OF PRONOUNCEMENT: 24 - 11 - 2015 O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF THE COMMISSIONER OF WEALTH TAX (APPEALS) - 16, MUMBAI (CAMP AT NA GPUR) DATED 05 TH AUGUST, 2013. GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE AS FOLLOWS: - 1 ] LEARNED WEALTH TAX OFFICER ERRED IN NOT ALLOWING EXEMPTION U/ S.2 ( EA) EXPLANATION 1(B) IN RESPECT OF AGRICULTURE LAND. 2] LEARNED COMMISSIONER OF WEALTH TAX (APPEALS) - 16, MUMBAI, CAMP AT NAGPUR ERRED IN CONFIRMING THE ORDER OF WEALTH TAX OFFICER, WITHOUT APPRECIATING THE FACT AND MATERIAL ON RECORD. 3] LEARNED C. W. T. (APPEAL) ERRED IN CONFIRMING THE ADDITION MADE BY WEALTH TAX OFFICER AMOUNTING TO RS.1,27,4 4,567/ - . 4] LEARNED C. W. T. (APPEAL) ERRED IN NOT CONSIDER ASSESSEES ALTERNATIVE PLEA TAKEN BEFORE HER. 2 WTA NO. 03 /NA G/20 13 5] LEARNED C. W. T. (APPEAL) ERRED IN REJECTING THE DEDUCTION OF DEBT LIABILITY OF RS.25,75,743/ - WITHOUT APPRECIATING THE FACT AND MATERIAL ON RECO RD FILED BY THE ASSESSEE. 2 . FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 16 (3) READ WITH SECTION 17 OF THE WEALTH TAX ACT ,1957 DATED 30 TH DECEMBER, 2010 WERE THAT THE RETURN OF WEALTH WAS FILED IN RESPONSE TO A NOTICE U/S 17 OF THE WT ACT DECLARING NET WEALTH AT RS.50,940/ - . FACTS OF THE CASE, AS DISCUSSED BY THE AO WERE THAT THE ASSESSEE WAS IN POSSESSION O F AGRICULTURE LAND. A PART OF T HE AGRICULTURE LAND WAS GIFTED TO SHRI DUTTA MEGHE BAL KALYAN SHIKSHAN SANSTHA ON 06 - 09 - 2005. THE ASSESSEE CLAIMED THE LAND IN QUESTION EXEMPTED U/S 2 (EA), EXPLANATION 1 (B) OF THE WT ACT. THE EXPLANATION OF THE ASSESSEE WAS THAT ALTHOUGH THE LAND IN QUESTION WAS AN URBAN LAND BUT, DUE TO THE PRESENCE OF HIGH TENSION ELECTRIC LINE, THE ASSE S SEE WAS NOT PERMITTED FOR CONSTRUCTION ON THE LAND. ACCORDING TO THE ASSESSEE, THE LAND IN QUESTION WAS EXEMPT BECAUSE THE LAND COULD NOT BE USED FOR CONSTRUCTION. THE AO REJECTED THE SAID EXPLANATION OF THE ASSESSEE AND HELD AS UNDER: - 5.4 FURTHERANCE, THE ASSESSEE HAS SUBMITTED THE REGISTERED VALUER CERTIFICATE ACCORDING TO WHICH HE HAS VALUED THE ABOVE PROPERTY 8,00,000/ - PER HECTARE. THE ASSESSEE VIDE ORDER SHEET DATED 20 - 12 - 2010 WAS ASKED THAT WHY THE VALUATION OF THE URBAN LAND IS NOT COMPUTED AS PE R THE FAIR MARKET VALUE AS ON DATE. THE ASSESSEE REPLIED THAT THE VALUATION RATE CONSIDERED BY THE SUB - REGISTRAR, STAMP VALUATION OFFICER IS NOT ACCEPTABLE TO HIM. THE SAY OF THE ASSESSEE IS PERUSED AND IS NOT ACCEPTABLE AND DEALT AS FOLLOWS: - THE AGRICUL TURE LAND (URBAN LAND) SITUATED AT S. NO.17/2 PART, MUKTAINAGAR ROAD, MALKAPUR IS NOT EXEMPT U/S 2 EA) EXP 1(B) OF THE W. T. ACT AS THE ASSESSEE HAS NOT PROVED HIS ONUS ALONG WITH SUPPORTING DOCUMENT TO TREAT THE URBAN LAND AS EXEMPT U/S 2(EA) EXP 1(B) OF THE W. T. ACT. THE REPLY OF THE ASSESSEE IS VERY VAGUE AND HAS NO FORCE AS VALUED BY THE STATUTORY AUTHORITY. 5.5 FURTHERING, FOR THE MATTER OF VALUATION OF URBAN LAND IT IS SEEN THAT THE PROPERTY SITUATED AT SURVEY NO.17/2 PART, MUKTAINAGAR ROAD, MALKAPU R DIST - BULDANA IS 4 HEC 5 ARE. OUT OF THE SAID LAND ADMEASURING 3 ACRES WAS GIFTED TO SHRI DUTTA MEGHE BAL KALYAN SHIKSHAN SANSTHA ON 06/09/2005 VIDE DOCUMENT NO.2170 WHICH WAS VALUED AT RS.97.57 LACS. THE FAIR MARKET VALUE OF THIS 3 ACRE LAND IS RS.97.57 LACS I.E. 38.40 LACS PER HECTARE. 3 WTA NO. 03 /NA G/20 13 SINCE, THE THREE ACRES OF LAND HAS BEEN GIFTED TO SHRI DUTTA MEGHE BAL KALYAN SHIKSHAN SANSTHA, THE REMAINING ADJACENT LAND IS AT 3.34 HECT. VALUE OF WHICH AS ON 31 - 03 - 2006 WORKED OUT TO RS.1,27,44,567/ - @ RS.38.40 LACS PER HECTARE. THE FAIR MARKET VALUE ADOPTED BY THE SUB REGISTRAR, STAMP DUTY OFFICER IS ADOPTED FOR VALUATION OF W. T. ALSO THE ASSESSEE HAS ALSO PAID THE STAMP DUTY ON THE ABOVE TRANSACTION. (ADOPTED VALUE FOR VALUATION AT RS.1,27,44,567/ - ). 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE ACTION OF THE WTO WAS CONFIRMED BY THE LEARNED CWT(A) IN THE FOLLOWING MANNER: - 3.2 THE APPELLANT, IN THE GROUNDS OF APPEAL APPENDED WITH FORM E, STATED THAT AS PER THE PROVISIONS OF INDIAN EL ECTRICITY RULES, 1956, AS THE CONSTRUCTION ON THE SAID AGRICULTURAL LAND AND CONVERSION OF SAID AGRICULTURE LAND FOR NON - AGRICULTURE USE IS PROHIBITED, THE APPELLANT WAS UNDER BONA FIDE PRESUMPTION THAT THE AGRICULTURAL LAND IN QUESTION IS NOT AN URBAN LA ND. THAT IN THIS REGARD, THE AOS CONTENTION IS WRONG AS THE APPELLANT IS MERELY A FARMER, HENCE HE HAS TRIED HIS BEST TO PROVE THE CLAIM ON THE BASIS OF DOCUMENTS AVAILABLE WITH HIM. THE AR OF THE APPELLANT FURTHER STATED THAT IT WAS THE DUTY OF THE AO T O REFER THE PROVISIONS OF INDIAN ELECTRICITY RULES, 1956 AND TO BRING THE ADDITIONAL EVIDENCES TO DISCLAIM THE CLAIM OF THE APPELLANT. THAT THE AO HAS REJECTED THE CLAIM OF THE EXEMPTION OF THE POOR FARMER WITHOUT TAKING ANY ADDITIONAL EFFORTS AND HAS NOT ACTED AS PER THE PRINCIPLE OF NATURAL JUSTICE. 3.3 THE AOS ORDER, THE CONTENTIONS OF THE APPELLANT AS WELL AS MATERIAL ON RECORD HAVE BEEN CONSIDERED. SINCE THE LAND IS SITUATED WITHIN THE JURISDICTION OF THE MUNICIPALITY, THE AO HAS RIGHTLY TREATED THE L AND AS URBAN LAND. THE APPELLANT HAS NOT PROVED WITH DOCUMENTARY EVIDENCE THAT THE LAND IS EXEMPT. THE GROUND IS ACCORDINGLY DISMISSED. 4. FROM THE SIDE OF THE APPELLANT, LEARNED ARS SHRI C. J. THAKKAR AND SHRI S. C. THAKKAR, ADVOCATES APPEARED AND PLEADE D THAT IN ADDITION TO THE ARGUMENTS RAISED BEFORE THE AUTHORITIES BELOW, THE CORRECT LEGAL POSITION IS THAT THERE WAS AN AMENDMENT IN SECTION 2 OF THE WEALTH TAX ACT, 1957 ACCORDING TO WHICH THE WORDS BUT DOES NOT INCLUDE LAND ON WHICH CONSTRUCTION OF A B UILDING HAS BEEN SUBSTITUTED AS BUT DOES NOT INCLUDE LAND CLASSIFIED AS AGRICULTURE LAND IN THE RECORDS OF THE GOVERNMENT AND USED FOR AGRICULTURE PURPOSES OR LAND ON WHICH CONSTRUCTION OF A BUILDING. THE SAID SUBSTITUTION IN THE ACT IS WITH RETROSPECTI VE 4 WTA NO. 03 /NA G/20 13 EFFECT FROM 1 ST APRIL, 1993. BECAUSE OF THE SUBSTITUTION, THE CASE OF THE ASSESSEE IS THAT IN A SITUATION WHEN THE LAND IN QUESTION WAS UNDISPUTEDLY AGRICULTURE LAND ALTHOUGH WITHIN URBAN AREA, THEN, EXEMPT U/S 2(EA) OF THE W.T. ACT. 5. FROM THE SIDE O F THE REVENUE, LEARNED DR, SMT. SUMAN MALLIK (JCIT) APPEARED AND PLACED RELIANCE ON THE FINDINGS OF THE AO AND THE LEARNED CWT (A). THE LEARNED DR HAS ALSO PLEADED THAT THE ARGUMENTS NOW RAISED BY THE LEARNED AR HAVE NEVER BEEN PLEADED BEFORE THE REVENUE A UTHORITIES. SHE HAS ARGUED THAT THE ASSESSEE HAS NOT CONCLUSIVELY ESTABLISHED THAT NO CONSTRUCTION COULD BE MADE ON THE LAND IN QUESTION; THEREFORE, IT WAS RIGHTLY TAXED UNDER THE W T ACT. 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AND CAREFULLY PERUSE D THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE MATERIALS BEFORE US. SO FAR AS, THE NATURE OF THE LAND IS CONCERNED, THERE WERE SUFFICIENT EVIDENCES ON RECORD TO ESTABLISH THAT THE LAND IN QUESTION WAS AGRICULTURE LAND. EVEN, THE AO HAS NOT QUEST IONED THE SAME BUT HELD THAT THE LAND IN QUESTION WAS URBAN LAND. WE HAVE BEEN INFORMED THAT A PART OF THE LAND WAS DONATED FOR A NOBLE CAUSE TO AN EDUCATIONAL INSTITUTION NAMELY SHRI DUTTA MEGHE BAL KALYAN SHIKSHAN SANSTHA. A COPY OF THE GIFT DEED IS PLAC ED IN THE COMPILATION WHEREIN A PORTION OF THE LAND WHICH WAS DONATED TO THE SAID EDUCATIONAL INSTITUTION WAS MENTIONED AS AGRICULTURE LAND. IN THE LIGHT OF THE ABOVE FACTUAL POSITION, WE HAVE EXAMINED THE AMENDED PROVISIONS OF THE W. T. ACT. WE HAVE NOTED THAT SECTION 2 (EA) HAS DEFINED ASSETS AND URBAN LAND IS WITHIN THE AMBITS OF WT ACT. HOWEVER, AN EXCEPTION IS CURVED OUT THAT URBAN LAND DOES NOT INCLUDE LAND CLASSIFIED AS AGRICULTURE LAND IN THE RECORDS OF THE GOVERNMENT AND USED FOR AGRICULTURE PURPOSE OR LAND ON WHICH CONSTRUCTION OF A BUILDING IS NOT PERMISSIBLE UNDER ANY LAW FOR THE TIME BEING IN FORCE IN THE AREA IN WHICH SUCH LAND IS SITUATED. THE SUBSTITUTED WORDINGS WERE INSERTED BY THE FINANCE ACT, 2013, HOWEVER, WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 1993. WITH THIS LEGAL BACKGROUND, WE 5 WTA NO. 03 /NA G/20 13 HAVE ALSO EXAMINED THE DEC ISION OF CWT VS E. UDAYA KUMAR 284 ITR 511 (MAD.) WHEREIN IT W AS HELD THAT THE AGRICULTURE LAND SITUATED WITHIN THE LIMITS OF CITY CORPORATION ON WHICH NO CONSTRUCTION IS PUT U P, IS NOT CHARGEABLE TO WEALTH TAX. THE SAME VIEW HAS BEEN EXPRESSED IN THE CASE OF CWT VS LT. GEN. (RE TD.) R. K. MEHRA , 228 CTR 205 (P & H). ALTHOUGH, FEW CASE LAWS HAVE BEEN CITED BEFORE US, BUT WE ARE CONCERNED ON THE FUNDAMENTAL REASONING THAT IF THE L AND IN QUESTION IS CLASSIFIED AS AGRICULTURE LAND, THEN NOT TO BE CONSIDERED AS URBAN LAND FOR WEALTH TAX PURPOSE. WE HAVE ALSO EXAMINED THE DECISION OF ITAT, CHENNAI BENC H PRONOUNCED IN THE CASE OF MOHMMAD IBRAHIM, 25 TAXMAN.COM (10) (CHENNAI), WHEREIN IT WAS HELD THAT MERELY BECAUSE SOME AGRICULTURE OPERATIONS WERE CARRIED OUT, IT COULD NOT BE CONCLUDED THAT THE PROVISIONS OF SECTION 2 (EA) OF THE WT ACT WERE INAPPLICABLE. FROM THE SIDE OF THE REVENUE, ANOTHER DECISION OF SUNIL KUMAR VS WTO, 21 TAXMAN.COM 36(DELHI) HAS ALSO BEEN CITED WHEREIN THE LAND IN QUESTION WAS SITUATED WITHIN THE LOCAL LIMITS OF THE MUNICIPALITY AND, THEREFORE, IT WAS HELD AS URBAN LAND FOR WEALTH TAX PURPOSE. HOWEVER, THE FACTS BEFORE US ARE NOT IDENTICAL BECAUSE OF THE REASON THAT THE LAND IN QUESTION WAS DULY RECORDED AT SEVERAL PLAC ES BY THE AUTHORITIES AS AGRICULTURE LAND; HENCE, IN OUR CONSIDERED OPINION, THE LAND IN QUESTION BEING DULY CLASSIFIED AS AGRICULTURE LAND, THEREFORE, IS OUT OF THE AMBITS OF THE DEFINITION OF URBAN LAN D FOR WEALTH TAX PURPOSES. AS A RESULT, WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND ALLOW THE GROUND S RAISED BY THE ASSESSEE ON THIS ISSUE . 7. BEFORE WE CONCLUDE, IT IS WORTH TO MENTION THAT THE GROUND PERTAINING TO DEBT LIABILITY HAS NOT BEEN ARGUE D BEFORE US; HENCE, THE SAME IS NOT ADJUDICATED BY US. THIS GROUND IS DISMISSED BEING NOT ARGUED. 6 WTA NO. 03 /NA G/20 13 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOVEMBER, 20 15. SD/ - SD/. - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 24 TH NOV., 2015. LAKSHMIKANT DEKA/SR. PS COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T., CONCERNED 4. CIT ( APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELL ATE TRIBUNAL, NAGPUR BENCH, NAGPUR. DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 1 7 .11.2015 SR.PS 2. DRAFT PLACED BEFOR E AUTHOR 18 .11.2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUNCEMENT SR.PS 7. FILE SENT TO THE BENCH CLE RK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK