Income Tax Appellate Tribunal - Ahmedabad
Dipak Kalidas Pauwala, Surat vs Department Of Income Tax on 14 August, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD ''D'' BENCH - AHMEDABAD
Before S/Shri Pramod Kumar, AM & S. S. Godara, JM.
ITA No. 2685/Ahd/2011
Asst. Year 2008-09
Income-tax Officer , Ward 3(3), Vs Shri Dipak Kalidas Pauwala,
Surat 202,/A, 2nd Floor, Sarela Tower,
Nr. St. Xavier's School, Ghod
Dod Road, Surat
(Appellant) (Respondent)
PA No.AMYPP9318E
Appellant by Shri Kamlesh Makwana, Sr.DR
Respondent by Smt. Urvashi Shodhan, AR
Date of hearing: 22.7.2015
Date of pronouncement: 14/8/2015
ORDER
PER S. S. Godara, Judicial Member.
This Revenue's appeal for AY 2008-09, arises from order of the CIT(A)-II, Surat dated 30.8.2011 passed in case no.CAS-II/387/2010- 11/176, reversing the Assessing Officer's action in adding long term capital gains of Rs. 1,46,75,120 and treating assessee's agricultural income of Rs.1.77 lakhs under the head "other" sources; respectively, in proceedings under section 143(3) of the Income-tax Act, 1961 (for short the Act).
2. Facts of the case are in a narrow compass. The assessee - individual co-owned a parcel of land measuring 29,718 sq.mtrs. in RS ITA No.2685/Ahd/2011 2 Asst. Year 2008-09 No.192, Block No.305, village -Dindoli, Surat situated within its municipal corporation limits. The assessee transferred the same to the Corporation on 28.3.2008 by way of a registered deed. The purpose stated in the sale deed happens to be reservation of the land for a sewerage treatment plant. The consideration money reads Rs.5,94,36,000/-. The Surat municipal corporation vender also deducted TDS of Rs.15 , 15, 173/- under section 194 LA of the Act. The assessee enclosed the said TDS certificate, claimed exemption of the sale deed amount of Rs.1,42,93,050/- u/s 10(37) including his agricultural income in question of Rs.1.77 lakhs.
3. The Assessing Officer took up scrutiny. He received AIR information about the assessee having executed the sale deed in question. He sought for the necessary details i.e. cost of acquisition as on 1.4.1981, copy of 7/12 and 8-A revenue documents proving the assessee to be the land holder, income/expenditure account of the agricultural income, purchase and sale bills of seeds, fertilizer and agricultural produce along with working of capital gains arising from the above stated transfer. He also proposed to treat the assessee's agricultural income of Rs.1.77 lakhs under the head ''other'' sources.
4. The assessee filed his response in return. He pleaded for section 10(37) exemption and inter alia submitted the land to be situated within Surat municipal corporation jurisdiction later on transferred under compulsory land acquisition provisions, referred to necessary particulars stated in transfer documents in support thereof. He further stated that the land in question was used for agricultural ITA No.2685/Ahd/2011 3 Asst. Year 2008-09 purposes since long including the immediately preceding two assessment years as per form 7/12 produced on record from AY 2005-06. The assessee explained that once the impugned gain had arisen from compulsory acquisition, all four conditions u/s 10(37) stood fulfilled. He further stressed that since he was mainly an agriculturist, no income/expenditureaccount had been maintained regarding details of seeds, fertilizers and the produce sold.
5. We find from the case file that the Assessing Officer did not agree to the above stated pleadings. He admitted the assessee's land to be falling within the limits of Surat municipal corporation limits. However, he observed that there was no evidence of any agricultural operations being carried out nor were the necessary details of the bills and vouchers (supra) had been produced so as to accept agricultural income claim of Rs.1.77 lakhs. He took cognizance of the fact that the Surat municipal corporation had deducted TDS on the sale consideration and also that the sale deed did not categorise the land sold to be agricultural. The relevant revenue record in the form 7/12 documents was held to be sufficient. The Assessing Officer accordingly concluded in the assessment order dated 29.12.2010 that the assessee did not fulfil all necessary conditions to claim section 10(37) exemption as the land did not fall within 8 kilometres from municipal limits. He accordingly computed the impugned long term capital gains of Rs.1,46,75,120/- and treated the assessee's agricultural income of Rs.1.77 lakhs under the head ''other'' sources.
ITA No.2685/Ahd/2011 4Asst. Year 2008-09 6 The CIT(A) has reversed the Assessing Officer's action as under :-
4.1 The first ground of appeal is against the denial of exemption claimed u/s 10(J7) of the Act, whereas the second ground of appeal is against the value of Rs 4.50 per sq. meter adopted by the Assessing Officer for determining the cost of acquisition of the land as on 01.04.1981., as against the value of Rs 100 shown by the appellant, (n view that both grounds of appeal are inter-related, I take them up together for discussion and disposal.
4.2 The main issue in the appeal of the appellant relates to the claim of exemption u/s 10(37) of the Act. The Assessing Officer has disallowed this claim of the appellant mainly for three reasons:
(i) SMC has made TDS on the payment of amount on the land acquired from the appellant, which proves that it is not an agricultural land.
(ii) no evidence has been furnished by the appellant to substantiate his claim that land in question was used for agricultural activity during two preceding years, and
(iii) the appellant has not furnished copy of sale bills of crop sold, bills and vouchers of expenditure incurred on such ricultural activity to prove that he has cultivated the agricultural land.
4.3 The second and third reason given by the Assessing Officer being overlapping is more or less identical.
4.4 The appellant's submission, on the other hand, is that he has furnished copy of 7/12 Utara, which evidences cultivation of Uowar' on the land in the preceding two years; he has filed copy of Panchnama confirming the fact by the. Panchas before the TalatiMojeDindoli that on the impugned land Mowar' rind 'Tuar 'was cultivated by him; and he has filed confirmation from as many as nine individuals from the village Dindoli confirming that he is a resident of Dindoli for the last 15 years and cultivating 'Jowar' on his land. It is also submitted that the above documents were filed before the Assessing Officer during the course of the assessment proceedings. In regard to the vouchers of expenditure of agricultural activity carried out on the impugned land, the appellant has relied upon the submission dated 28.12.2010 filed during the course of assessment proceedings. As for the TDS made by the SMC on the amount received on account of compulsory acquisition of land, the appellant's submission is that the Assessing Officer has drawn wrong conclusion that since, the SMC has deducted tax on the payment no ITA No.2685/Ahd/2011 5 Asst. Year 2008-09 agricultural activity had been carried out. In this regard, it is also stated that at the time of making compulsory acquisition of the appellant's land, SMC was not required to ascertain whether agricultural operations for a period of two years were carried out on the impugned land before the date of compulsory acquisition and, further, copy of TDS certificate issued by SMC shows that under the head 'nature of payment', the SMC has stated 'contractor bill', whereas the correct nature of payment is ' compensation paid for compulsory acquisition of land', which itself shows that the TDS certificate cannot be made a basis to arrive at a conclusion that no agricultural activity was carried out on the land. The appellant has also stated that the Assessing Officer's observation that the impugned land falls within 8 kms range of the SMC hence, exemption claimed u/s 10(37),is net allowable, is also not on correct appreciation of law, since the impugned land though is within the limits of SMC, as a matter of fact, does not fall within the 8 kms range of the SMC. It is, thus, stated by the appellant that u/s 10 (37), first condition is that the land in question should be situated within the jurisdiction of Municipality or corporation or within the 8 kms range from the jurisdiction of Municipality/Corporation, hence, provisions of the above section have been specifically provided for the purpose of urban agricultural land which are being compulsorily acquired by the Municipal Corporations.
4.5 I have duly considered the above submissions of the appellant and also perused copy of V/l? Utara' issued by the Nayab Mamlatdar City Taluka, Surat which was also filed during course of assessment proceedings I find that the said document records complete details ol crop grown during the Financial Years 2003-04, 2004-05 , 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10. In all the above years, the crop grown has been shown as 'Jowar'. The above document is in respect of survey no. 192 and Block no 305, of village Dindoli, Surat City and also records the names of the agriculturists; Geetaben Janakbhai Chokhawala, Dipakbhai Kslidasbhai Pauwala, Rekhnben Champaklnl Dalai and Mayuriben Asiitbhai Bookseller from the years 2003-04 to 2009-10. I also find that the Assessing Officer has simply rejected this document without carrying out any verification or inquiry from the Nayab Mamlatdar, City Taluka, Surat, who has issued this document. One of the reasons given for rejecting this document by the Assessing Officer is that the appellant has failed to furnish copy of purchase bills of seeds and other agricultural expenses and sale bills of the agricultural produce. This finding of the Assessing Officer is, however, not sustainable for the reason that the appellant is an agriculturist, which fact Assessing Officer has himself recorded in para- 3 of the assessment order, and, is further corroborated by the fact that ITA No.2685/Ahd/2011 6 Asst. Year 2008-09 the appellant has no other source of income, and he has also not properly considered the appellant's submission dated 28.12.2010 filed during course of the assessment proceedings. The third reason given by the Assessing Officer for rejecting the claim of the appellant u/s J.O (37) is the fact that the SMC has made deduction of TDS on the amount of payment by acquisition of land in question. The Assessing Officer has, however, not carried out any verification or inquiry from . SMC to find out as to the correct nature of payment on which TDS has been made, since TDS certificate records the payment on account ''Contractor bill', therefore, he cannot accept the TDS certificate in part..In other words, if TDS has been made on payment, and it means; that the land was not used for agricultural purposes, the Assessing Officer at the same time, has to also see the certificate for the nature of payment, which is recorded as "contractor bill''. I, therefore, hold that the Assessing Officer has without making proper verification dismissed the claim of the appellant u/s 10(37) of the Act, and further, hold that copy of 7/12 Utara is a primary document issued by a State Government Authority, which cannot be rejected, unless it is established as a fake document:. In the light of the same, I hold that agricultural activity was carried out on the land in question being S. No. 192, Block No. 305, in village Dindoli in the name of four co-owners mentioned above, including the appellant, in the Financial Years 2003- 04 to 2007-08 and in the subsequent Financial Years 2008-09 and 2009-10. Further, as the land in question is an agricultural land within the Municipal limits of SMC and is situated in area referred to in Item
(a) of sub-clause (iii) of clause (14) of Section-2 of the Act, the appellant fulfills the first condition laid down u/s 10(37) of the Act. The second condition that such land during the period of two years immediately preceding the date of transfer was used for agricultural purposes by such individuals or HUFs or parents is evidenced by the copy of 7/12 Utara discussed above. The third condition is that the transfer should be way compulsory acquisition under any law. This condition has been fulfilled by the appellant and not disputed by the Assessing Officer as the land has been acquired by the SMC. The fourth condition that the income arising from acquisition of such transfer been received by such Assessee on or after 01,04.2004, has not been disputed in the order. The appellant therefore, fulfills all the conditions mentioned u/s 10(37) of the Act. I, accordingly, hold that the compensation received by the appellant towards acquisition of his land by the SMC, is exempt u/s 10(37} of the Act, The first ground of appeal is, therefore, allowed."' ITA No.2685/Ahd/2011 7 Asst. Year 2008-09
7. We have heard both the parties and gone through the case laws. We reiterate that the assessee's land is situated within the Surat municipal corporation limits u/s 2(14) (iii) (a) of the Act. The Revenue strongly relies upon the Assessing Officer's finding denying the assessee exemption u/s 10(37) of the Act. This section reveals that there are four conditions to claim exemption i.e. the land has to be situated in an area referred to under section 2(14) (iii)(a) or (b). Such a land is to be used for agricultural purposes during the period of two immediately preceding years. The third one is that the transfer in question has to be by way of compulsory acquisition. The fourth and last condition is that such a transfer is on or after 1.4.2004. The assessee duly fulfils the first condition as the land is well within municipal limits. Coming to land's use during the immediately preceding two years, we find that the revenue record form 7/12 as relied upon in the lower appellate proceedings forming part of record contains all details of the crops sown since financial year 2003-04. We deem it proper to observe that the same is public record prepared by agrarian authorities under respective land and tenancy laws which cannot be brushed aside without any specific evidence to the contrary. There is no such evidence much less a specific one forthcoming. Therefore, the assessee satisfies the second stipulation as well. Now we come to Assessing Officer's objection that the land is not transferred under compulsory acquisition. The case record file states purpose of the sale deed to be a sewerage treatment plant. The Revenue does not point any infirmity therein. Therefore, this argument also fails. The fourth condition of the transfer effected on 28.3.2010 is automatically satisfied since the same is after 1.10.2004.
ITA No.2685/Ahd/2011 8Asst. Year 2008-09 It is also to be seen from the case file that assessee led sufficient oral evidence of the concerned panchas in favour of his plea of having cultivated the land. The TDS deduction form (supra) is not in order since it categorized assessee's payment to be contractor bill in spite of the fact that it pertains to land transfer. The assessee's three other co-owners namely -Smt. Mayuriben, Rekhaben and Geetaben have already been granted section 10(37) exemption in question. The Revenue fails to rebut all the above stated facts on record. We accordingly reject its both arguments on the issue of the impugned capital gains and agricultural income (supra). The CIT(A)'s order stands upheld.
8. This Revenue's appeal is dismissed.
Order pronounced in the open Court on 14/8/2015
Sd/- Sd/-
(Pramod Kumar) (S. S. Godara)
Accountant Member Judicial Member
Dated 14/8/2015
Mahata/-
ITA No.2685/Ahd/2011 9
Asst. Year 2008-09
Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT, Ahmedabad
6. Guard File
BY ORDER
Dy. Registrar, ITAT, Ahmedabad
1. Date of dictation: 24/7/2015
2. Date on which the typed draft is placed before the Dictating Member: 27/7/2015 other Member:
3. Date on which approved draft comes to the Sr. P. S./P.S.:
4. Date on which the fair order is placed before the Dictating Member for pronouncement: __________
5. Date on which the fair order comes back to the Sr. P.S./P.S.:
6. Date on which the file goes to the Bench Clerk: 14/8/2015
7. Date on which the file goes to the Head Clerk:
8. The date on which the file goes to the Assistant Registrar for signature on the order:
9. Date of Despatch of the Order: