TaxTMI 
TaxTMI 
2019 (11) TMI 649
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....arried out construction by incurring expenditure of Rs. 3,47,651/- in F.Y. 03-04 and 04-05. The said agricultural land along with construction was acquired by Jaipur Development Authority under the Land Acquisition Act 1894. The date wise event related to the acquisition of the land and building and the payment of compensation is tabulated as under:- Date Particulars 27-10-2005 Jaipur Development Authority issued notification u/s 4(1) of the Land Acquisition Act 1894 for acquiring the land and building. 20-12-2005 Survey u/s 4(2) of the land Acquisition Act was carried out. 29-04-2006 08-05-2006 Declaration u/s 6 of the Land Acquisition Act was made on 29-04-2006 stating the purpose of acquisition. This declaration was published in official gazette on 8-05-2006. 29-04-2008 Compensation of Rs. 9,50,734/- for acquisition of the building was received after deduction of TDS of Rs. 97,926/-. 12-05-2008 In respect of land, JDA issued Reservation Letter on 12-05-2008 stating to allot the developed land to the extent of 25% of the land of the assessee acquired by it. This 25% will comprise of 20% residential land and 5% commercial land. This land was ....
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....land. The remaining amount on account of the lesser area under both the heads were made available by the JDA i.e. 20 sq. meter in residential and 5 sq. meter as commercial for which necessary compensation, calculated on the basis of the reserved price for both the lands at Rs. 84,000/- and after adjusting some payment of JDA and remaining amount of Rs. 69,555/- was shown as payable to the assessee. It is already held by the various courts that the land and building acquired under compulsory acquisition are two different assets. The compensation for the land was received by the assessee on 20-11-2009 which falls in A.Y. 2010-11. The case law referred by the assessee are squarely applicable, therefore, the Assessing officer is directed to assess the capital gain in A.Y.2010-11 and not in A.Y. 2009-10. Accordingly on this issue i.e. ground no.1.1 of the assessee's appeal is allowed. 4. It was further submitted that after the order of the Tribunal, the AO completed the set aside assessment proceedings for AY 2009-10 vide order dt. 27.12.2016 where no discussion was made on the issue whether the assessee was carrying out agricultural activity in the two years preceding the d....
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....agricultural activity in the two years immediately preceding the date on transfer on the land which has been compulsorily acquired under the Land Acquisition Act and second is that in case the first issue is decided against the assessee, the capital gain can be assessed in AY 2010-11 and not in AY 2009-10. Therefore, without deciding the issue of claim of exemption u/s 10(37) in AY 2009-10, reopening of the assessment for AY 2010-11 is only a change of opinion and not following the direction of Tribunal ITAT. Hence, the notice issued u/s 148 is illegal & bad in law. 8. It was further submitted that the AO in the reasons for reopening has mentioned part of the direction of the Tribunal. In fact notice u/s 148 can be issued only when the AO is having reason to belief that income has escaped assessment. In the present case as evident from the reasons and other facts, the assessment was reopened only to cover up the lapse on part of the AO in not deciding the issue of exemption u/s 10(37) in the set aside assessment of AY 2009-10. Therefore, unless a finding is given in AY 2009-10 as to the allowability of claim of exemption u/s 10(37), the reopening of assessment for AY 2010-11 is ....
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....rding change of opinion therefore cannot be accepted. The second contention of the ld AR that only where the AO has reason to belief that income has escaped assessment, notice u/s 148 can be issued. Another related contention raised by the ld AR that only where the AO decided the issue of exemption u/s 10(37), it can be said to be a case of escapement of income. As we have stated above, the assessee has received the compensation on compulsory acquisition of land during the year and in absence of disclosure of such transaction in the return of income or any claim of exemption u/s 10(37) in the return of income, it is a clear case where the capital gains on such compulsory acquisition of land in respect of which the compensation has been received during the year has escaped assessment. The matter relating to assessee's eligibility for exemption u/s 10(37) is a matter of detailed examination and so long as prima facie, the AO has formed an opinion that the income received during the year has escaped assessment and such formation of belief is based on tangible and undisputed facts, there is no infirmity in the action of the AO in acquiring jurisdiction u/s 147 of the Act. Further, i....
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....istrar. The letter of sub-registrar and Khasra Girdawari is reproduced at Pg 6 to 8 of the assessment order. The AO has not allowed any opportunity to the assessee to cross examine the sub-registrar when on that date itself the assessee has attended before him and the query was raised by the AO to furnish evidence to prove that land was used for agricultural purpose in the preceding two years. It was submitted that these facts shows that AO has made up his mind for making the addition. 14. Further, our reference was drawn to the relevant section 10(37) which exempts the capital gain on compulsory acquisition of the agricultural land reads as under:- "in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head "Capital gains" arising from the transfer of agricultural land, where- (i) such land is situate in any area referred to in item (a) or item (b) of subclause (iii) of clause (14) of section 2; (ii) such land, during the period of two years immediately preceding the date of transfer, was being used for agricultural purposes by such Hindu undivided family or individual or a parent of his; ....
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....r AY 2009-10 but considering the various other evidences of use of agricultural land for agricultural purposes filed by the assessee, the issue was set aside by the Tribunal. If the issue was to be decided only on the basis of Khasara Girdawari than there was no reason for the Tribunal to set aside the issue to the AO. Therefore, the Khasra Girdawari cannot be the sole basis for holding that the land was not used for agricultural purpose in the preceding two years from the date of transfer ignoring the statements of Sh. Laxman Singh and Rameshwar Chaudhary. 17. It was further submitted that even the Khasara Girdawari for samvat year 2065 to 2068 reflects the cultivation of 50 Amla trees on the said land. Samvat year 2065 falls in the year 2008 & 2009. Growing of fruit trees is a user of agricultural land for agricultural purpose. Thus, even the Khasra Girdawari record proves that the land was used for agricultural purpose during the period of two years immediately preceding the date of transfer. 18. Further, the ld AR placed reliance on the decision of the Cochin Bench of the Tribunal in case of ITO Vs. Smt. G.S. Lekha (2019) 180 DTR 249 (TM) where it was held as under:- ....
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....ng on the land. There were about 77 to 80 coconut trees besides jack fruit trees in the property in question. This intrinsic evidence to show the character of the land was agricultural land, has not been noticed by the Hon'ble A.M. Besides the above, the Agricultural Officer, Krishi Bhavan, Vizhinjam has certified in his certificate that the land to be agricultural land. The AO himself has considered the expenses towards improvement of the land as allowable deduction while computing the capital gain. A perusal of the nature of this expense, which we have extracted in the earlier part of the order, shows that the same are all in relation to agricultural activities. The absence of declaration of agricultural income, as I have mentioned in the earlier part of this order, would not in my view negate the fact that the lands were used for agricultural purpose. The admitted position is that the assessee does not have taxable income in the past and there was no occasion for her to file her return of income in which she can declare her agricultural income. 23. In the light of the aforesaid factual and legal position, I agree with the learned J.M. in his conclusion that the....
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....d down in section 10(37) of the Act and therefore the long term capital gain on compulsory acquisition of the land is exempt from tax. Therefore, addition made by the AO and confirmed by Ld. CIT(A) be directed to be deleted. 20. The ld DR is heard who has vehemently argued the matter and submitted that the matter has been extensively examined by the Assessing officer and basis the report of Sub-Tehsildar Bagru and Khasra Girdavari, the land was not used for agricultural purposes during the period of two years immediately preceding the date of transfer. It was accordingly submitted that there is no illegality in the action of the AO in denying the claim of exemption u/s 10(37) of the Act and which has been rightly confirmed by the ld CIT(A) and the same should be upheld. 21. We have heard the rival contentions and pursued the material available on record. To our mind, among all the documents, Khasra Girdawari stand out as a critical piece of document, being part of the Government land and revenue records, which can help determine whether the land was being used for agricultural purposes preceding the date of transfer or not. In the instant case, undisputedly, Khasra Girdawari ....