TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 948
X X X X Extracts X X X X
X X X X Extracts X X X X
....law on account of various factors (Additional Ground). 2. That the Ld. CIT(A) is not justified in holding that the land transferred by the appellant is an urban agricultural land liable for taxation as per section 2(14)(iii) of the Income-tax Act, 1961. Without prejudice to the above, the following grounds of appeal are raised: 3. That the Ld. CIT(A) ought to have appreciated that the Assessing Officer erred in assessing the sale consideration of Rs. 2,50,00,000/- in the hands of the appellant. 4. That the Ld. CIT(A) is not justified in not appreciating that the appellant is not the sole owner of the land, hence the entire sale consideration cannot be brought to tax in the hands of the appellant alone. 5. That the Ld. CIT(A) is not justified in denying the claim of exemption u/s. 54/54F made by the appellant." 3. The brief facts of the case are that the assessee is an individual, did not furnish his return of income for the impugned assessment year. The assessee is the owner of 121 cents of vacant land situated at Survey No.182, Siruseri Village, Thiruporur Taluk, Kancheepuram District. During the course of survey proceedings conducte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ever, did not accept the assessee's contention. According to the AO that the impugned land constituted a "capital asset" within the meaning of the Act and, therefore, was liable to capital gains taxation. On that basis, the AO computed the long-term capital gains at Rs. 2,45,19,108/-, by adopting the entire receipt including the advance for the balance land as sale consideration at Rs. 2,50,00,000/-.The relevant findings and observations of the AO are as under: "a) The land was sold by assessee comprised in survey no.182 measuring 121 cents, in Siruseri Village, Thiruporur Taluk, Kancheepuram district vide her General Power of Attorney deed 14244/2013 dated 09.10.2013 and sale document No.14250/2013 dated 14.10.2013 for a sale consideration of Rs. 100,44,000/-. The sale deed executed by POA describes the property as "Vacant land". The land is classified as mixed residential zone by Local and Municipal Notification in Government order in G.O.MS. No. 153, Housing and Urban Development (UD4)(2) of Government of Tamilnadu and being residential land, the land sold was a capital asset as per IT Act. b) The buyer, M/s. Jacaranda Properties Private Limited has purchased t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue records. On this basis, it was pleaded that the impugned land did not qualify as a capital asset and, therefore, could not be brought to tax. In the alternative, the assessee argued that the entire receipt of Rs. 2,50,00,000/- could not be subjected to tax as the sale has been taken place only to the extent of 30.35 cents and further sought exemption of Rs. 82,15,610/- on account of reinvestment in a residential house property u/s. 54F of the Act. However, the ld.CIT(A), by order dated 25.09.2024, dismissed the assessee's appeal by observing as under: "6.5 First question is whether the land qualifies as capital asset u/s as per section 2(14)(iii) of the Act or not so as to determine the taxability of sale of land. 6.5.1 The assessee contends that the land is classified as agricultural land (Nanjai land) in the revenue records. The assessee produced the copy of the VAO certificate describing the land as agricultural land. The assessee also produced copy of adangal certificates for the fasli year 1420 (pertaining to calendar year 2010) in which it is clearly mentioned that in land measurement no: 182 cultivation of rice has been carried out. From the above, it is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urisdiction of municipality or in any area within the distance as specified in the act taking in to consideration the population of the municipality. Any agricultural situated outside the limits specified in section 2(14)(iii) (a) and (b) do not fall under the definition of capital asset and hence it is exempt from capital gains tax. It is observed that the siruseri is situated within the specified limits of the municipality. The Chennai Corporation was expanded in the year 2011 and various municipalities and town panchayats were included in to its fold. The Chennai corporation was renamed as Greater Chennai corporation (GCC) with 200 wards and one town panchayat Sholinganallur and one panchayat union semmencherry village was brought within the fold of GCC. Section 2(14)(iii) (a) and (b), as amended by the finance Act, 2013 prescribed aerial mode of measuring the distance between the limits of municipality and the specified locality in which the capital asset is situated. It is seen that the aerial distance between the semmenchery and siruseri is less than 8 kms and the population of Chennai corporation is more than 10 lakhs. 6.5.4 Hence the land fall within the r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) has the power to allow the appellant to go into any ground of appeal not specified in the grounds of appeal if he satisfied that the omission of the ground from the form of appeal was not wilful and unreasonable. 6.7.3 Reliance is placed on the decision of the Hon'ble high court of Madras in CIT Vs Abhinitha Foundation [2017] 83 Taxmann. com 100 (Madras) in which it was held as under: 18. In sum, what emerges from a perusal of the ratio of the judgments cited above, in particular, the judgments rendered by the Supreme Court in Goetze's India Ltd.'s case (supra) and National Thermal Power Co. Ltd.'s case (supra), and those, rendered by the Division Bench of this Court in Ramco Cements Ltd. (supra) and Malind Laboratories (P.) Ltd. (supra) as also the judgments of the Delhi High Court in Sam Global Securities Ltd.'s case (supra) and Jai Parabolic Springs Ltd.'s case (supra), that, even if, the claim made by the assessee company does not form part of the original return or even the revised return, it could still be considered, if, the relevant material was available on record, either by the appellate authorities, (which includes both the CIT (A)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bhan, CA, submitted that the assessee is primarily an agriculturist, carrying on agricultural activities in ancestral agricultural land situated at Perumbakkam. The said ancestral land was sold during the year 2002, and the proceeds from such sale were invested in the purchase of another parcel of agricultural land admeasuring 121 cents located in Siruseri Village, Thiruporur Taluk, Kancheepuram District (Survey No. 182, part), under a registered sale deed bearing Document No. 3067/2003 dated 2003. 16. The ld.AR contended that due to the relatively small scale of agricultural operations and the limited economic viability thereof, the assessee and his family members resolved to dispose of the said property. For this purpose, a General Power of Attorney was executed on 09.10.2013 in favour of Shri V.R. Anbuvelrajan, a real estate dealer, authorising him to negotiate and conclude the sale. 17. It was submitted that Shri V.R. Anbuvelrajan negotiated and agreed upon a total consideration of Rs. 2,50,00,000/- for the entire extent of 1 acre and 21 cents. However, during the relevant assessment year, the assessee conveyed only a portion of the said land, measuring 30.35 cents, throu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 10 lakhs, the land in question falls squarely within the ambit of Section 2(14)(iii) of the Act as "urban agricultural land" and, therefore, constitutes a capital asset exigible to capital gains tax. 21. We have heard the rival contentions, perused the orders of the lower authorities, and examined the written submission and paper book placed on record by the ld.AR. The issue that arises for determination is whether the land admeasuring 30.35 cents situated at Survey No. 182, Siruseri Village, Thiruporur Taluk, Kancheepuram District, transferred by the assessee during the impugned assessment year, qualifies as agricultural land excluded from the definition of "capital asset" u/s. 2(14) of the Act, or whether it falls within the ambit of urban land taxable as capital asset. 22. We note that there is no dispute as to the agricultural character of the land in question, nor its location in Siruseri Village. The Revenue's case rests on the assertion that by virtue of the 2011 expansion of the Greater Chennai Corporation, Semmencherry village was included within the corporation limits, and the distance between Semmencherry and the impugned land is less than 8 kilometres. Consequen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0,44,000/- for the purpose of computation of capital gains and not Rs. 2,50,00,000/-. The clear arrangement with the power agent, Mr. Anbuvelrajan was that no payment beyond Rs. 2.5 crores would be made although he could sell the property for any amount, he may deem fit. This has been explained to the Assessing Officer vide letter dated 15.09.2021 (please refer Paperbook - Pages2,3). It is most respectfully submitted that there is no dispute on the fact that the actual sale consideration for the transfer of land during the impugned assessment year was only an amount of Rs. 1,00,44,000/-. Thus, as per the charging provisions of section 45 of the Act, full value of consideration in respect of the 30.35 cents transferred during the impugned assessment year is to be taken at Rs. 1,00,44,000/- and not Rs. 2,50,00,000/- merely because the appellant had received advance for the entire are of land. It is most respectfully submitted that the balance sum of Rs. 1,49,56,000/- (2,50,00,000 less 1,00,44,000) has to be treated as an advance received towards transfer of the balance land and can be subjected to tax only in the assessment year when the transfer takes place. This i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r noted from the record that subsequently, the power agent, Shri V.R. Anbuvelrajan, acting under the authority of the said GPA, executed a registered sale deed dated 14.10.2013 transferring only to the extent of 30.35 cents (out of the total 121 cents) in favour of M/s. Jacaranda Properties Private Limited for a sale consideration of Rs. 1,00,44,000/-. It is also not in dispute that the actual transfer of land during the relevant assessment year was restricted only to the said extent of 30.35 cents and the sale consideration received in respect thereof was Rs. 1,00,44,000/-. Hence, we find that considering the balance amount as sale consideration for the impugned assessment year by the AO is erroneous. 30. The AO, however, proceeded on the basis that the assessee had received an amount of Rs. 2,50,00,000/- from the power agent, Shri V.R.Anbuvelrajan, and treated the same as the full value of consideration for the transfer of the said 30.35 cents. We note that such conclusion of the AO is not borne out of the material available on record. There is nothing to demonstrate that the said sum of Rs. 2,50,00,000/- was received by the assessee from the ultimate purchaser, i.e., M/s. Jac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... his individual hands on the plea that the impugned land was acquired out of ancestral property, and consequently, he is under a legal obligation to distribute the sale consideration among the respective family members. However, during the course of hearing, the ld.AR failed to furnish any cogent or corroborative evidence in support of the said contention. In the absence of substantiating material, we are not inclined to accept this ground. Accordingly, Ground No. 4 raised by the assessee stands dismissed. 35. The assessee in Ground No.5 has assailed the action of theld.CIT(A) in denying the benefit of exemption u/s. 54F of the Act amounting to Rs. 82,15,610/-claimed on account of reinvestment in a residential house property. It is noted that the assessee had claimed exemption u/s. 54F of the Act before the ld.CIT(A) also, who admitted the said claim for consideration. However, the ld.CIT(A), upon examination, declined to allow the exemption u/s. 54F of the Act on the ground that the evidentiary documents produced in support of the construction expenses were merely on plain paper. The ld.CIT(A), therefore, rejected the claim of the assessee. 36. The ld.AR, furnished the writt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....incurred substantial expenditure towards the said construction out of the sale consideration received. The lower authorities ought to have undertaken a proper verification of the assessee's bank account statements in order to ascertain whether the expenditure claimed was actually incurred. 40. Upon perusal of the assessee's bank account statements, we note that there are significant cash withdrawals as well as payments made towards construction. These entries provide corroborative evidence that the assessee did not merely make a paper claim of exemption u/s. 54F of the Act, but had indeed expended monies towards the construction of the residential property. It is therefore not a case where the assessee has sought to avail exemption u/s. 54F of the Act without incurring any real or tangible cost. When sufficient bank transactions comprising both withdrawals and payments are demonstrably available in support of the claim, the exemption cannot be disallowed solely on the ground that the supporting vouchers or bills are on plain paper or not in the preferred form. Substance must prevail over form, particularly when the evidence otherwise substantiates the incurring of expenditure fo....