Income Tax Appellate Tribunal - Jaipur
Ito , Alwar vs Achalanand, Alwar on 3 November, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 901/JP/2012
fu/kZkj.k o"kZ@Assessment Year : 2008-09.
The Income Tax Officer,
Ward 1(1),
Alwar.
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Vs.
Shri Achalanand
Ward No. 5, Near Pushkarna Mandir,
Khairthal, Alwar.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. ALMPA 0059 J
vihykFkhZ@Appellant
izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Smt. Roshanta Meena (JCIT)
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Rajeev Sogani (C.A)
lquokbZ dh rkjh[k@ Date of Hearing : 27.10.2016.
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 03/11/2016.
vkns'k@ ORDER
PER SHRI KUL BHARAT, JM.
This appeal by the revenue is directed against the order of ld. CIT (A), Alwar dated 05.09.2012 pertaining to assessment year 2008-09. The solitary ground raised by revenue reads as under :-
" That the ld. CIT (A), Alwar has erred in law as well as on the facts and circumstances of the case in holding that the capital gain could not be computed in this case and therefore directing the assessing officer to compute the income of the assessee at returned income without appreciating the facts of the case."
2. Briefly stated the facts are that the case of the assessee was picked up for scrutiny assessment and the assessment under section 143(3) of the I.T. Act, 1961 (hereinafter referred to as the Act) was completed vide order dated 30.12.2010. While completing the assessment, the AO computed the capital gain at Rs. 70,76,335/- after giving deduction under section 54B and 54F of the Act on the ground that assessee during the year under appeal had sold a part of the land and the computation of capital gain was made on the DLC value of the land at Rs. 1,02,00,000/-. The assessee aggrieved by this order, preferred an appeal before ld. CIT (A), who after considering the submissions partly allowed the appeal directing the AO to exclude the long term capital gain from the total income and assess the total income at Rs. 41,767/- as declared by the appellant.
3. Now the revenue is in appeal before us.
4. The ld. D/R submitted that the ld. CIT (A) was not justified in deleting the capital gain. He strongly supported the order of the AO.
4.1. On the contrary, ld. Counsel for the assessee reiterated the submissions as made in the written brief and submitted that the issue is squarely covered in favour of the assessee by the decision of Coordinate Bench as well as the Hon'ble Gujarat High Court. He submitted that the assessee had migrated in the year 1947 under the Rehabilitation Scheme. The land in question was allotted to the assessee without any cost. Therefore, he submitted that there was no cost of acquisition. He submitted that capital gains would arise only when there is a cost of acquisition. In support o this, the ld. Counsel relied on the judgments of the Hon'ble Supreme Court rendered in the case of CIT vs. B.C. Srinivasa Setty, 128 ITR 294 (SC), Hon'ble Madhya Pradesh High Court rendered in the case of CIT vs. HH Maharaja Sahib Lokendra Singh Ji (1986) 25 Taxman 66 (MP). The ld. Counsel further placed reliance on the Coordinate Bench decision rendered in the case of Manohar Pyarelal Sadane vs. ITO in ITA No. 220/PN/2011, also the Judgment of Hon'ble Bombay High Court rendered in the case of CIT vs. Sambhaji Nagar Co-op. Housing Society Ltd. (2015) 370 ITR 325 (Bombay).
4.2. We have heard rival contentions and perused the material available on record. The undisputed facts are that the land in question was allotted to the assessee by the Government of India under the Rehabilitation Scheme. This fact is not refuted by the ld. D/R. The contention of the assessee is that where the cost of acquisition is NIL, no capital gains tax can be charged. In support of this contention, the ld. Counsel has placed reliance on various judicial pronouncements i.e. CIT vs. B.C. Srinivasa Setty (supra). The Hon'ble Supreme Court in the case of CIT vs. B.C. Srinivasa Setty has held as under :-
" 11. What is contemplated is an asset in the acquisition of which it is possible to envisage a cost. The intent goes to the nature and character of the asset, that it is an asset which possesses the inherent quality of being available on the expenditure of money to a person seeking to acquire it. It is immaterial that although the asset belongs to such a class, it may, on the facts of a certain case, be acquired without the payment of money. That kind of case is covered by section 49 and its cost, for the purpose of section 48, is determined in accordance with those provisions. There are other provisions which indicate that section 48 is concerned with an asset capable of acquisition at a cost. Section 50 is one such provision. So also is sub section (2) of section 55. None of the provisions pertaining to the head "Capital gains" suggests that they include an asset in the acquisition of which no cost at all can be conceived. Yet there are assets which are acquired by way of production in which no cost element can be identified or envisaged. From what has gone before, it is apparent that the goodwill generated in a new business has been so regarded. The elements which create it have already been detailed. In such a case, when the asset is sold and the consideration is brought to tax, what is charged is the capital value of the asset and not any profit or gain."
The Hon'ble Madhya Pradesh High Court in the case of CIT vs. HH Maharaja Sahib Lokendra Singh Ji has held that where A acquires some property by way of gift or reward, for instance jagirs from a ruler and the property passed on by inheritance to generations and the same is sold even though for a valuable consideration, in such a case because A had not acquired it at some cost in terms of money, it would not attract capital gain in such a transaction of sale, there being no 'gain' as such. Further, the Hon'ble Madras High Court in the case of CIT vs. HH Sri Raja Rajagopala Thandaiman, 282 ITR 126 (Mad.) affirmed the view of the Tribunal by holding that there was no capital gain assessable in respect of transfer of the site and palace at Pudukkuttai belonging to the assessee for a consideration of Rs. 17,76,020/- on the ground that there was no cost of acquisition. Further, the Hon'ble Gujarat High Court in the case of CIT vs. Mandharsinhji P. Jadeja has held that even if the amendment is taken into consideration section 55 can be invoked in cases of NIL cost of acquisition for the purpose of bringing to tax entire sale consideration only in relation to the specified assets. The Legislature having amended the said section from time to time has roped in only specified assets as noted hereinbefore. In the circumstances, the amendment instead of working to the advantage of the Revenue goes to indicate that the Legislature does not want to bring within the purview of tax net all the assets (except the specified assets) which does not have cost of acquisition and the entire sale consideration cannot be treated as profits and gains chargeable under the head 'Capital gains' by adopting the cost of acquisition as Nil. The Coordinate Bench in the case of Manohar Pyarelal Sadane vs. ITO in ITA No. 220/PN/2011 (supra) has held as under :-
" 8. In view of the above factual and legal discussion, we hold that the land in question was not having cost because the same was allotted to father of the assessee being refugee from Pakistan by Government of India at relevant point of time which is not in dispute. So the land in question was acquired by father of the assessee free of cost. Therefore, there is no question of capital gain on transfer of such land. More so because it does not fall in specified items under section 49(1) (I to iv) of the Act. Accordingly, the same is not liable for capital gain. The Assessing Officer is directed accordingly."
The facts in the present case are identical as were in ITA No. 220/PN/2011 (supra). The Revenue has not pointed out any change in the facts and circumstances of the case, therefore, taking a consistent view, we do not see any reason to interfere in the order of ld. CIT (A), same is hereby affirmed. Ground raised by the revenue is rejected.
5. In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on 03/11/2016.
Sd/- Sd/-
¼foØe flag ;kno½ ( dqy Hkkjr)
(VIKRAM SINGH YADAV) ( KUL BHARAT )
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Jaipur
Dated:- 03/11/2016.
Das/
vkns'k dh izfrfyfi vxzsf"kr@Copy of the order forwarded to:
1. The Appellant- The ITO Ward 1(1), Alwar.
2. The Respondent- Shri Achalanand, Alwar.
3. The CIT(A).
4. The CIT,
5. The DR, ITAT, Jaipur
6. Guard File (ITA No. 901/JP/2012)
vkns'kkuqlkj@ By order,
lgk;d iathdkj@ Assistant. Registrar
6
ITA No. 901/JP/202
Shri Achalanand