TaxTMI 
TaxTMI 
2009 (11) TMI 659
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.... 3. WTA 03/09 -do- 1999-2000 -do- -do- 4. WTA 04/09 Ajit Singh (HUF) 1998-99 28-11-2008 -do- 5. WTA 05/09 -do- 1999-2000 -do- -do- 6. IT(SS) 25/09 Mangal Singh (HUF) 1-4-87 to 18-2-97 -do- 26-2-1999 7. IT(SS) 26/09 Department 1987-88 to 10-2-97 -do- 15-3-2005 8. ITA 576/09 Mangal Singh 1997-98 -do- 15-3-2005 9. ITA 591/09 Department 1997-98 -do- -do- 2. First we take IT(SS) A.No. 25/Delhi/2009. The grounds of appeal taken by the assessee are not in consonance with rule 8 of the ITAT's Rules, they are descriptive and argumentative in nature. In brief, the grievance of assessee relates to taxability of income on account of capital gain as a result of transfer of agricultural land. 3. The brief facts of the case are that a search and seizure operation under section 132 of the Act was carried out at the residence of the assessee - GN-61, Gulmohar Marg, DLF, PH-II, Gurgaon on 18-2-1997. During the course of search, a cash of Rs. 2 lakhs and jewellery of Rs. 4,09,814 were found but nothing was seized. A notice under section 158BC dated 10-10-1997 was served upon the assessee inviting him to file block return for the period of 1-4-1987 to 18-2-1....
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....ns of the assessee. He determined the capital gain of Rs. 1,10,58,943 and ultimately determined the income of assessee at Rs. 1,18,63,830. 4. Dissatisfied with the addition, assessee carried the matter in appeal before the learned CIT (Appeals). Assessee reiterated his contentions as were raised before the Assessing Officer. He has also challenged that Assessing Officer has erroneously observed that the distance of the Village Shahpur is about 3 kms. from old Delhi Road and the straight distance of these pieces of land from municipal limit of Gurgaon is 5 kms. only. Learned CIT (Appeals) has reappreciated the facts and circumstances of the case and held that capital gain on sale of agricultural land is not taxable because the land sold by assessee is not covered under the definition of 'capital assets' in terms of section 2(14) of the Act and secondly, the possession of the land was handed over under the agreement to sell dated 8-2-1993. The notification dated 6-2-1973 is applicable. The findings of the learned CIT (Appeals) recorded in paragraph Nos. 6.6 and 6.7 read as under: "6.6 According to the assessee's counsel, the land falling within the panchayat Area is not covered by ....
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....e ITAT that assessee had received some payment in 1996. Learned CIT (Appeals) failed to look into these evidence while holding that the land transferred by the assessee is not a capital asset for charging the assessee to capital gain tax. The ITAT has set aside the issue to the file of the Assessing Officer. The findings of the ITAT recorded in paragraph 6 read as under : "6. We have heard the parties and have perused the records of the case. The issue involved is whether the agricultural land in question which has been sold/transferred by the assessee, to the DLF Universal Ltd. are covered under the definition of "Capital Assets" as provided under section 2(14) of the Income-tax Act, 1961. According to the assessee the said lands do not fall within the definition of 'capital assets' as the lands in question are situated beyond the municipal limits and have been falling under the Panchayat. The Assessing Officer has applied the notification of 1996 for ascertaining whether the property in question falls within the municipal limits or not and not the notification of 1993 when the transaction was made. The perusal of memorandum of agreement of exchange dated on 8-2-1993 entered into....
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....997. Needless to mention that's the assessee may be given reasonable opportunity of being heard. In the result, the appeal of the revenue is allowed for statistical purposes." 6. It emerges out from the record that when dispute was pending before the ITAT, the Assessing Officer has reopened the block assessment on 19-9-2003 by issuing a notice under section 148 of the Act. He passed a reassessment order on 15-3-2005 and determined the undisclosed income of the assessee at Rs. 4,57,87,892. In this order, the Assessing Officer has added the value of plot allotted to the assessee by DLF at the asking of M/s. Bhagirathi Investment (P.) Ltd. in lieu of original agreement. This reassessment order was passed by the Assessing Officer under section l58BC, read with section 147, of the Act on 15-3-2005. 7. The Assessing Officer thereafter framed the assessment under section l58BC/143(3)/254 of the Income-tax Act, 1961 as per the directions of the ITAT on 31-3-2006. In this assessment order, Assessing Officer has observed that the directions given by the ITAT has been considered while framing the reassessment under section 158BC, read with section 147, of the Act. He reproduced the observa....
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....istance of this road. Explaining this, further he pointed out that after a distance of 6 kms., it is meaningless where the land is situated even if it is situated adjacent to the national highway, it will not be a capital assets. Thus, According to this notification, land of assessee does not fall within the ambit of expression "capital assets" employed in section 2(14) of the Act. For buttressing his contention, he took us through the copy of the notification available at pages 99 and 103 of the paper book. Referring to the original assessment order dated 26-2-1999 he pointed out that Assessing Officer has agreed to the fact that land of assessee is situated beyond a distance of 2 kms. from the national highway, however, he did not apply the notification of 1973 rather he applied the notification of 1994 whereby this limit of 2 kms. has been increased to 6 kms. Thus, according to the learned counsel for the assessee, the core issue for adjudication before the ITAT is when agricultural land of assessee was transferred. If it is held to be transferred on 9-2-1993 as claimed by the assessee, then notification of 1973 would be applicable and no capital gain tax would be leviable becau....
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....ain. It is immaterial when the consideration for the transfer of capital asset was received by an assessee. For buttressing his proposition, he relied upon the judgment of the Hon'ble Andhra Pradesh High Court in the case of Addl. CIT v. G.M. Omarkhan [1979] 116 ITR 950 . CIT v. Rohtak Textile Mills Ltd. [1982] 138 ITR 195 (Delhi). He further contended that what the parties did subsequently is not relevant. In support of his contentions, he relied upon rendered in the cases of T.V. Sundaram Iyengar & Sons Ltd. v. CIT [1959] 37 ITR 26 (Mad.) and CED v. Smt. Chander Kala Garg [1983] 15 Taxman 166 (All.) and Shah Vrajlal Madhavji v. CIT [1974] 95 ITR 614 (Ker.). He also relied upon the judgment of the Hon'ble Gujarat High Court in the case of B.N. Vyas v. CIT [1986] 159 ITR 141 and the decision of Hon'ble Madras High Court in the case of M. Venkatesan v. CIT [1983] 144 ITR 886. 11. In his next fold of submissions, he pointed out that in case it is considered that transfer did not took place on 9-2-1993 then all disputes between assessee and M/s. Bhagirathi Investment (P.) Ltd. were resolved on 9-12-1998 when a compromise was reached whereby the vendee agreed to give plotted area at t....
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....dered the rival contentions and gone through the record carefully. Section 45 of the Act provides that any profit or gain arising from the transfer of a capital assets, effected in the previous year shall, save as otherwise provided in sections 54, 54B, D, E, EA, EB, F, G and H of the Act shall be chargeable to income-tax under the head "Capital gains" and shall be deemed to be the income of the previous year in which the transfer took place. The expression 'capital asset' has been defined in section 2 sub-section (14) of the Act. Similarly, the expression 'transfer' has been defined in section 2(47) of the Act. Both these sections have a direct bearing on the controversy in hand, therefore, it is salutary upon us to take note of these clauses : "Section 2(47) : (47) ["transfer", in relation to a capital asset, includes,-- (i)the sale, exchange or relinquishment of the asset; or (ii)the extinguishment of any rights therein; or (iii)the compulsory acquisition thereof under any law; or (iv)in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; or (v)any transaction....
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....the ambit of capital assets as per the exception provided in clause (b) of section 2(14) sub-section ( iii) of the Act. If it is held that transfer has taken place thereafter then according to the notification of 1994, the agricultural land of the assessee would be included in the definition of capital assets because of its geographical location. In the notification of 1994, the area abutting to national highway No. 8 leading from Delhi to Gurgaon has been enhanced and the land of assessee comes within the extended area of this notification. According to the assessee, the land in dispute was transferred on 9-2-1993 when the decree in civil suit Nos. 51 and 52 of 1992 were passed. These decrees have been executed and mutation has also been sanctioned. These documents are available on the record. No one has challenged these decrees. A compromise decree arrived at by the parties before the Court has same binding force as any other decree. Hon'ble Bombay High Court has considered this issue in the case of Anant Chunilal Kate v. ITO [2004] 267 ITR 4821. Hon'ble High Court has held that a decree in terms of settlement arrived at by the parties before the Court has same binding force as a....
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....s has arisen in that assessment year. The Hon'ble Court has held that right to receive the price had accrued to the assessee in the accounting year relevant to the assessment year 1947-48. The Hon'ble Court further held that in the subsequent years what parties did would not have any bearing on their tax liability for that year. Similarly, Hon'ble Andhra Pradesh High Court has also considered this issue in the case of G.M. Omarkhan (supra ). The Hon'ble Court has considered four questions of law in this judgment. Question No. 3 is relevant for our proposition. It reads as under : "Whether the profits or gains arising from the transfer of a capital assets can be chargeable to income-tax if the transfer is effected in the previous year and if no amount is received?" 16. The Hon'ble Court has considered the. judgment of Hon'ble Madras High Court in the case of T.V. Sundaram Iyengar & Sons Ltd. (supra) has also the judgment of Hon'ble Supreme Court in the case of Alapati Venkataramiah v. CIT [1965] 57 ITR 185. The Hon'ble Court has observed that to attract the liability to tax under section 45, it is sufficient if in the accounting year, profits have arisen out of the transfer of cap....
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.... physically verified and is about 3 km. from Old Delhi Road and it has also been verified that straight distance of these pieces of lands from Municipal Limits of Gurgaon is 5 km. only and these pieces of lands are situated within 8 KMs. of Municipal Limits of Gurgaon. 18. Apart from the above, the assessee has applied to the Tehsildar, Gurgaon under Right to Information Act and obtained a report which is placed on record at pages 243 and 244 of the paper book. According to this report of Asstt. Information Officer-cum-Tehsildar, Gurgaon, the lands of the assessee are situated at a distance of 2 kms. and 950 metres and 2 kms. and 500 metres. The Assessing Officer in the original assessment proceeding has held that notification of 1994 is applicable whereby this limit of 2 kms. has been extended otherwise he was convinced that the land of the assessee is situated more than 2 kms. from the bank of NH-8. In the fresh assessment order, the Assessing Officer has not referred any scientific mode for working out distance contrary to the stand taken out in the original assessment. He does not want to rely upon the report of Tehsildar who is a revenue official under the Punjab Land Revenue....
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....were actually exchanged and mutation was sanctioned' recorded in paragraph Nos. 7.4 and 7.5 are to our mind factually incorrect. 21. Learned CIT (Appeals) while affirming the action of the Assessing Officer for holding that transfer has taken place in assessment year 1997-98 has considered one aspect, i.e., receipt of Rs. 3 crores by the assessee along with other two co-owners from the vendee. In the opinion of the Learned First Appellate Authority, receipt of this amount is a decisive factor for determining the date on which agricultural land of the assessee was transferred. On due consideration of this finding of the Learned First Appellate Authority in paragraph No. 7.7, we are of the opinion that Learned First Appellate Authority has failed to construe the facts and circumstances in right perspective because as per the agreement dated 8-2-1993, the vendee was supposed to handover the plots to the assessee within six months from the date of agreement. The assessee has performed his part of contract handed over the possession of his land to the vendee got sanctioned the mutation in favour of the vendee and, thus, in the land revenue record ownership has been changed. The assesse....
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....g the suit of the plaintiff, i.e., the date when judgment was pronounced. Thus, the inferences drawn by the Learned First Appellate Authority are not illogical but on misconstruction and misinterpretation of the facts and circumstances. This date when litigation has come to an end is 19-12-1998. Again it does not fall within the block period and assessee cannot be taxed on account of arisen of capital gains in a block assessment. In view of the above discussion, we hold that the land of assessee was transferred on 9-2-1993. It is not a capital assets in view of the 1973's notification and no capital gains has arisen to the assessee. We delete the additions made by the Assessing Officer in this regard. 22. The learned counsel for the assessee at the time of hearing has pointed out that search was carried out in the individual capacity of the assessee whereas assessment order has been framed in the status of Mangal Singh, HUF. Thus, according to the learned counsel for the assessee, the assessment order is without jurisdiction and not tenable. He made a reference to the punchnama available at page 1 of the paper book. It appears that this issue was not raised by the assessee before ....
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....y issuance of notice under section 148 of the Act has followed the decision of Hon'ble Gujarat High Court as well as the order of the ITAT. In these decisions, it has been held that provisions contained in Chapter XIV-B are special provisions and override general provisions of the Act. Special procedure has been prescribed for block assessment under Chapter XIV-B and there is no mention of section 147 or section 148 in that Chapter. Therefore, the block assessment cannot be reopened. We do not see any error in the order of the learned CIT (Appeals). Learned First Appellate Authority has rightly placed its multiplicity reliance upon the two authoritative pronouncements. Learned DR was unable to point out any circumstance which can suggest that Learned First Appellate Authority has erred in following the proposition laid down in these two decisions. Apart from this, while dealing with the appeal of the assessee, we have already held that agricultural land of assessee was transferred on 9-2-1993 and it was not a capital asset in view of 1973's notification. Therefore, even on merit, there will be no addition on account of capital gain arisen to the assessee. Accordingly, this appeal o....
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....istance of learned representatives, we have gone through the records carefully. On perusal of learned CWT (Appeals)'s order, it reveal that for holding the taxability of the value of these plots in assessment year 1998-99, learned CIT (Appeals) has referred his findings recorded in paragraph No. 7.7 in the block assessment order dated 28-11-2008. We have dealt with this finding of the learned CIT (Appeals) in paragraph No. 21 of this order and held that no transfer of agricultural land has taken place on 27-6-1996. The litigation in between the parties came to an end on 19-12-1998. There were not plots in question owned and possessed by the assessee as on 31-3-1998. The plots in dispute were allotted on 16-1-1999 and, therefore, their value cannot be brought to tax for the purpose of wealth-tax in assessment year 1998-99. We allow all these three appeals and direct the Assessing Officer to exclude the value of alleged 22 plots from the net assets of the assessee for the purpose of Wealth-tax Act. WTA Nos. 03 and 05/Delhi/09 31. The present two appeals are at the instance of Shri Ajit Singh and Shri Mangal Singh, assessees against the separate orders of even date of learned CWT (A....