Income Tax Appellate Tribunal - Chennai
Rasikalal M.Mehta (Huf), , Chennai vs Department Of Income Tax on 30 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH, CHENNAI
BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI S.S. GODARA, JUDICIAL MEMBER
I.T.A. No. 1160/Mds/2012
(Assessment Year : 2006-07)
The Income Tax Officer, Smt. Smita P. Mehta,
Business Ward XV(3), 6, Guruswamy Road,
Chennai - 600 034 . v. Chetpet, Chennai - 600 031.
PAN : AAHPM8197K
(Appellant) (Respondent)
I.T.A. No. 1161/Mds/2012
(Assessment Year : 2006-07)
The Income Tax Officer, Shri Rasikalal M. Mehta (HUF),
Business Ward XV(2), 559, Anna Salai, Teynampet,
Chennai - 600 034 . v. Chennai - 600 018.
PAN : AAAHR0255C
(Appellant) (Respondent)
C.O. No. 112/Mds/2012
(in I.T.A. No. 1160/Mds/2012)
(Assessment Year : 2006-07)
Smt. Smita P. Mehta, The Income Tax Officer,
6, Guruswamy Road, Business Ward XV(3),
Chetpet, Chennai - 600 031. v. Chennai - 600 034 .
(Cross Objector) (Respondent)
2 I.T.A. Nos. 1160 & 1161/Mds/12
C.O. Nos. 112 & 113/Mds/12
C.O. No. 113/Mds/2012
(in I.T.A. No. 1161/Mds/2012)
(Assessment Year : 2006-07)
Shri Rasikalal M. Mehta (HUF), The Income Tax Officer,
559, Anna Salai, Teynampet, Business Ward XV(2),
Chennai - 600 018. v. Chennai - 600 034.
(Cross Objector) (Respondent)
Revenue by : Shri S. Dasgupta, JCIT
Assessee by : Shri Sanjiv Kumar Shah, CA
Date of Hearing : 30.07.2012
Date of Pronouncement : 30.07.2012
O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
These are appeals and cross-objections of the Revenue and assessees respectively, directed against orders dated 15.2.2012 of Commissioner of Income Tax (Appeals)-XII, for the impugned assessment year. Issue raised by the Revenue in its appeals is regarding an addition made by the A.O. on long term capital gains for sale of land which was deleted by CIT(Appeals) on assessees' appeals. Cross-objections of the assessee are in support of the orders of the CIT(Appeals).
3 I.T.A. Nos. 1160 & 1161/Mds/12
C.O. Nos. 112 & 113/Mds/12
2. Since the pieces of land, sale of which gave rise to the assessment of long term capital gains, are adjacently situated, these appeals are disposed of through this consolidated order.
3. Facts apropos are that assessees, Shri Rasikalal M. Mehta (HUF) and Smt. Smita P. Mehta had transferred a jointly owned piece of land, lying in original Survey No.103/1 and 103/3, and re-survey numbering 103/47 at Kannathur Kuppam Village, Chinglepet Taluk, Kancheepuram District, for a consideration of ` 45 lakhs and ` 22.5 lakhs respectively. Claims of the assessees were that these were agricultural land and hence, there could not be any capital gains on the surplus. Assessees also furnished copies of certificate from VAO of Kovalam Village in which it was stated that land falling with Survey Nos. 103/1, 103/3, 103/46 and 103/47 were agricultural land and these were situated 16 KMs away from Chennai city limits. Assessing Officer required the Assistant Commissioner, Urban Land Tax to clarify whether these pieces of land were assessed to any urban land tax. There was a clarification received from Asst. Commissioner, Urban Land Tax, inter alia, stating that Kanathur Reddykuppam was one of the villages coming within Tamil Nadu Urban Land Tax Act and further that land in Survey No.103/3 was 4 I.T.A. Nos. 1160 & 1161/Mds/12 C.O. Nos. 112 & 113/Mds/12 classified as fish drying place/promboke land. As per the A.O., there was no agricultural activity and the certificate of VAO could not be accepted since it was not issued by the jurisdictional VAO. Assessees were issued show cause notice in this regard. Reply of the assessees was that the land was agricultural in nature as per the certificate issued by VAO, Kovalam. However, the Assessing Officer did not accept this contention. According to him, assessees concerned had not returned any agricultural income in their returns for preceding assessment years and descriptions in the sale deed regarding nature of land alone would not be sufficient to substantiate their claim. According to him, nothing was produced for payment of land revenue for the land and assessees could not discharge the burden to show that the land was put to any agricultural use. He refused to accept the contention of the assessees that land sold were agricultural in nature. Thus, he declined to accept the claim that capital gains arising out of such sale, was exempt. He, therefore, denied such claim and computed capital gains.
4. Assessees moved in appeal before CIT(Appeals). Argument of the assessees before the CIT(Appeals) was that the website of Sub- Registry which gave survey number-wise guideline value, clearly 5 I.T.A. Nos. 1160 & 1161/Mds/12 C.O. Nos. 112 & 113/Mds/12 mentioned that land falling in Survey No.103/1 and 103/3 were agricultural in nature. A copy of the print out of the relevant web- page was furnished before CIT(Appeals). As per the assessees, the adangal records clearly showed that the land was agricultural and once it was so recognized, nature of tax collected by local administration was irrelevant. According to them, the land was not situated within the limits of municipality or cantonment nor within 8 KMs of any municipality or cantonment. Further, as per the assessees, whether agricultural operations were carried out, was not important, but only the nature of land was important. CIT(Appeals) was appreciative of these contentions. According to him, whether agricultural operations were carried out in the land was not determinant of the nature of the land. As per the CIT(Appeals), agricultural land could also be used as simple pasture lands. There was VAO certificate that the land was agricultural in nature. Once the land was classified as agricultural, and if it was beyond the limits of any municipality or cantonment, it would be agricultural land as defined under Section 2(14) of Income-tax Act, 1961 (in short 'the Act'). He thus held that the proceeds on such sale were totally outside the scope of any capital gains tax. Thus he deleted the additions made by the A.O. 6 I.T.A. Nos. 1160 & 1161/Mds/12 C.O. Nos. 112 & 113/Mds/12
5. Now before us, learned D.R., strongly assailing the orders of CIT(Appeals), submitted that Inspector of the Income-tax Department, who had visited the land, had clearly mentioned that there were no agricultural activities carried on in such land. According to him, VAO of Kanathur Reddykuppam Village and not VAO of Kovalam Village, had jurisdiction over the area and the former had mentioned that the land was assessed to urban land tax. Asst. Commissioner, Urban Land Tax, had clearly stated that the subject land was classified as fish drying place/poromboke land. CIT(Appeals) did not go through all these relevant records when he came to a conclusion that the land was agricultural. Assessee never produced any evidence for any agricultural operations, nor had it shown any income from agricultural activity in any of the earlier year's returns. Reliance was placed by the learned D.R. on the decision of Hon'ble Apex Court in the case of Sarifa Bibi Mohd Ibrahim And Others v. CIT 204 ITR 631, and that of Hon'ble Kerala High Court in the case of Kalpetta Estates Limited v. CIT (185 ITR 318).
6. Per contra, learned A.R. strongly supporting the orders of CIT(Appeals), submitted that the records of Chitta, Patta and Adangal all classified the land as agriculture. Copies of Adangal, Chitta and 7 I.T.A. Nos. 1160 & 1161/Mds/12 C.O. Nos. 112 & 113/Mds/12 Patta were placed as paper-book pages 2, 3 and 4 in support. According to him, Section 2(14) of the Act, which defined the 'capital asset', clearly excluded therefrom agricultural land in India. It was not necessary that agricultural operations should be carried out, but, the only requirement was that the land should be agricultural. Once the revenue records showed that the land was agricultural in nature, such classification could not be assailed by the income-tax authorities. By virtue of definition of 'capital asset' in Section 2(14), such land stood excluded from being considered as a capital asset and therefore, assessees were not exigible to any capital gains tax.
7. Ad libitum, reply of the learned D.R. was that in Chitta, Patta, Adangal copies filed by the assessee, name mentioned was one Mrs. Parameswari Ammal and at one place one Shri Balasubramaniam. According to him, unless and until some agricultural operations were carried out by the assessee, the land concerned could not be presumed as agricultural land.
8. We have perused the orders and heard the rival submissions. There is no dispute that the pieces of land sold by the assessees fell beyond 8 KMs of any municipality or cantonment. As per the assessees, in the land revenue records, the land was classified as 8 I.T.A. Nos. 1160 & 1161/Mds/12 C.O. Nos. 112 & 113/Mds/12 agricultural and this would be sufficient to prove that it was not a capital asset falling within the definition of Section 2(14) of the Act. As per the A.O., the VAO whose certificate was produced by the assessee was not the VAO having jurisdiction over the subject land. There is also a certificate from Asst. Commissioner, Urban Land Tax, that it was a part of a village falling within the Tamil Nadu Urban Land Tax Act. As against this, Chitta, Adangal and Patta copies have been filed by the assessees in support of their case. There are some cultivations mentioned by the Village Administrative Officer in the certificate given by him, which is placed at paper-book page 6. Nevertheless, these certificates are in the name of one Mrs. Parameswari Ammal who, as per the learned A.R., was the earlier owner of these pieces of land. We are also unable to accept the contention of the learned A.R. that the question whether agricultural operations were carried out, was irrelevant for determining the nature of the land. As held by Hon'ble Apex Court in the case of Sarifa Bibi Mohd Ibrahim And Others (supra), whether a land is agricultural or not is a question of fact. Several tests have been evolved by Hon'ble Apex Court for determining the nature of a land. Hon'ble Apex Court in the above mentioned decision, had considered its earlier decision in the case of CIT v. Raja Benoy Kumar Sahas Roy (32 ITR 466), 9 I.T.A. Nos. 1160 & 1161/Mds/12 C.O. Nos. 112 & 113/Mds/12 wherein it was held that one of the factors that was required to be looked into was whether there was use for the purpose of agriculture. It was not the mere potentiality but its actual and intended use that was to be seen. Mere possibility of use of the land was not sufficient. Though the learned A.R. strongly relied on a decision of the co- ordinate Bench of this Tribunal in the case of DCIT v. Shri Sayarchand Nahar dated 16th February, 2012, there, in the wealth tax returns filed, the concerned assessees had shown the land as agricultural. Asst. Commissioner of Urban Land Tax had also come to a conclusion that the land concerned was agricultural and agricultural activities were carried on in it. Here, on the other hand, assessees concerned had never produced anything to show that agricultural activities were carried on. Nevertheless, as mentioned by us, the records produced by the assessees in the form of Adangal, Chitta and Patta, do mention that the land was agriculture in nature and certain crops were raised therein, though the name mentioned in such records was of one Mrs. Parameswari Ammal. We are of the opinion that the issue has not been decided by the A.O. considering the guidelines laid down by Hon'ble Apex Court for determining the nature of land and after going through the relevant records in detail. Each of the factors that are to be considered have not been dealt with 10 I.T.A. Nos. 1160 & 1161/Mds/12 C.O. Nos. 112 & 113/Mds/12 by the Assessing Officer. CIT(Appeals), on the other hand, gave relief to the assessees based on their submissions and ignoring the certificate issued by Asst. Commissioner, Urban Land Tax, as also assessee's own admission regarding use of the land. We are, therefore, of the opinion that the matter requires to be re-visited by the A.O. for consideration afresh. If the assessees are able to show that agricultural activities were carried out, and the intended purpose was to use the land for agriculture and if other conditions specified by Hon'ble Apex Court are satisfied in such a way that a safe conclusion can be drawn that the nature of the land was agricultural, then the assessees cannot be considered as liable for capital gains tax on sale thereof. We do agree with the learned D.R. that it is the onus of the assessees to show that the land was agricultural in nature. We, therefore, set aside the orders of authorities below and remit the issue back to the file of the A.O. for consideration afresh, in accordance with law.
9. In the result, appeals of the Revenue are allowed for statistical purposes.
10. Cross-objections of the assessee, being in support of the orders of CIT(Appeals), have become infructuous.
11 I.T.A. Nos. 1160 & 1161/Mds/12
C.O. Nos. 112 & 113/Mds/12
11. To summarize the result, appeals filed by the Revenue are allowed for statistical purposes, whereas cross-objections filed by the assessee are dismissed.
The order was pronounced in the Court on Monday, the 30th of July, 2012, at Chennai.
sd/- sd/-
(S.S. Godara) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 30th July, 2012.
Kri.
Copy to: (1) Assessees
(2) Assessing Officer
(3) CIT(A)-XII, Chennai-34
(4) CIT-X, Chennai
(5) D.R.
(6) Guard file