The ITO, Bhopal v. Shri Ramesh Kumar Richhariya, Bhopal

ITA 382/IND/2009 | 2006-2007
Pronouncement Date: 28-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 38222714 RSA 2009
Assessee PAN AATPR3388M
Bench Indore
Appeal Number ITA 382/IND/2009
Duration Of Justice 2 year(s) 3 day(s)
Appellant The ITO, Bhopal
Respondent Shri Ramesh Kumar Richhariya, Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 28-07-2011
Date Of Final Hearing 15-06-2011
Next Hearing Date 15-06-2011
Assessment Year 2006-2007
Appeal Filed On 25-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH J.M. AND SHRI R.C.SHARMA A.M. PAN NO. : AATPR3388M I.T.A.NO. 382 / IND /200 9 A.Y. : 2006 - 07 INCOME - TAX OFFICER SHRI RAMESH KUMAR RICHHARIYA 3(1) VS 13 - B BH EL BHOPAL. BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI KESHAVE SAXENA CIT DR RESPONDENT BY : SHRI H.P.VERMA AND SHRI ASHISH GOYAL ADV. O R D E R PER R. C. SHARMA A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 13 TH MARCH 2009 FOR THE ASSESSMENT YEAR 2006 - 07 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME - TAX ACT 1961. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE : - - : 2 : - 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN 1. DELETING THE ADDITION OF RS. 49 75 529/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LONG TERM CAPITAL GAIN. 2. DELETING THE ADDITION OF RS. 42 48 047/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHORT TERM CAPITAL GAIN. 3. DIRECTING THE AO TO AL LOW DEDUCTION OF RS. 1 19 72 000/ - U/S 54B OF THE INCOME - TAX ACT 1961. 4. DIRECTING THE AO TO REWORK LONG TERM CAPITAL GAIN HOLDING THAT BOTH THE LANDS SOLD BY THE ASSESSEE WERE LONG TERM CAPITAL GAIN ASSETS AND THERE IS NO SHORT TERM CAPITAL GAIN ON THE SAL E . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENJOYING RENTAL INCOME FROM GURUKUL HOSTEL AND BUSINESS INCOME FROM MADHUBAN DHABA RESTAURANT AT HOSHANGABAD - : 3 : - 3 ROAD BHOPAL. THE ASSESSEE HAS ENCLOSED A SHEET CONTAINING COMPUTATION OF INCOME ALONGWITH RETURN OF INCOME FILED WITH DEPARTMENT . NO OTHER DETAILS I.E PROFIT AND LOSS ACCOUNT BALANCE SHEET HAS BEEN ENCLOSED WITH THE RETURN. IN THIS CASE AIR INFORMATION WAS RECEIVED REGARDING DEPOSIT OF CASH I N SBI SAVING BANK ACCOUNT TOTALING TO RS. 11 70 000/ - . THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THIS CASH DEPOSIT . IN HIS REPLY THE ASSESSEE FURNISHED THE COPY OF BANK ACCOUNT AND EXPLAINED THAT ON 17.1.2006 THE ASSESSEE HAD WITHDRAWN CASH FROM TH E OLD BALANCE IN THE BANK ACCOUNT FOR SOME WORK HOWEVER THE SAME WAS DEPOSITED BACK AFTER FOUR DAYS I.E. 1.1.2006. HOWEVER IT WAS NOTICED THAT THERE WERE SEVERAL DEPOSITS AND TRANSACTIONS IN HIS BANK ACCOUNT IN SBI AND PNB WHICH DID NOT MATCH THE INCOME SHOWN BY THE ASSESSEE IN HIS RETURN. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE S OF EACH CREDIT ENTRIES IN HIS BANK ACCOUNT. IT WAS EXPLAINED BY THE ASSESSEE THAT MOST OF THE CREDIT ENTRIES ARE RELATING TO THE RECEIPT FROM ANSAL HOUSING AND CONSTRUCTION NEW DELHI. IN THIS REGARD ON 3 RD MARCH - : 4 : - 4 2005 ASSESSEE EXECUTED A MOU WITH ANASAL HOUSING & CONSTRUCTION LTD. DELHI. AS PER MOU ASSESSEE HAS TO PROVIDE/ARRANGE 18 LACS SQ.FT. COMMERCIAL/RESIDENTIAL PLOTS TO ANSAL GROUP. THE LAND OWNERS HAD TO TRANSFER T HE LAND TITLE IN FAVOUR OF THE ANSAL GROUP OR NOMINATED CO MPANY . PLANNING OF ANSAL GROUP WAS TO DEVELOP THE TOWNSHIP AT HOSHANGABAD ROAD BHOPAL AND ASSESSEE TOOK THE RESPONSIBILITY OF OBTAINING ALL SANCTIONS FOR PROPOSED TOWNSHIP. BUT ASSESSEE COULD NOT A RRANGE THE SANCTIONS FOR PROPOSED TOWNSHIP AND CERTAIN DISPUTES HAVE ARISEN BETWEEN THE ASSESSEE AND ANSAL HOUSING & CONSTRUCTION LIMITED THEREFORE ON 26.9.2006 BOTH PARTIES DISSOLVED THE AGREEMENT AND EXECUTED ANOTHER MOU. AS PER NEW MOU ASSESSEE HAD TO RETURN WHOLE AMOUNT BY 30 TH JUNE 2007. THE AO FURTHER OBSERVED THAT IN ADDITION TO THE AMOUNT RECEIVED FROM ANSAL HOUSING CONSTRUCTION LIMITED THERE WERE SOME MORE DEPOSIT IN THE BANK ACCOUNT WITH SBI. THE TOTAL OF THE SAME WAS RS. 69 38 000/ - . THE ASSE SSEE SUBMITTED THAT HE HAS SOLD HIS AGRICULTURAL LAND SITUATED AT VILLAGE BAGHUTA DISTT. - : 5 : - 5 CHHATARPUR TO M/S. PEPTECH CONSTRUCTIONS FOR RS. 1 20 00 000/ - AS PER THE AGREEMENT DATED 4.11.2004. THE REGISTRY OF LAND WAS MADE ON 5.8.2005 IN THE NAME OF THE ASSE SSEE AND HIS WIFE SMT. ROOPKUMARI RICHHARIYA. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY NO CAPITAL GAIN HAS BEEN OFFERED ON THE ABOVE TRANSACTION. THE ASSESSEE INITIALLY SUBMITTED THAT THIS IS AN AGRICULTURAL LAND SITUATED IN A VILLAGE BEYOND MUNICIPAL C ORPORATION LIMIT OF CHHATTARPUR CITY THEREFORE NOT COVERED UNDER PROVISIONS OF SECTION 2(14) OF THE ACT THEREFORE NO CAPITAL GAIN IS ATTRACTED ON THE SAME. H OWEVER ON VERIFICATION IT WAS FOUND THAT THE SAID LAND WAS EXISTING WITHIN 8 KMS. FROM MUNIC IPAL LIMIT THEREFORE THE ASSESSEE WAS NOT ENTITLED FOR EXEMPTION ON THE GROUND THAT IT WAS AN AGRICULTURAL LAND SITUATED BEYOND 8 KMS. OF MUNICIPAL LIMITS . 4. WHEN CONFRONTED WITH THE REPORT THE ASSESSEE SUBMITTED AS UNDER : - DURING THE YEAR UNDER CONSIDE RATION ASSESSEE HAS SOLD AGRICULTURAL LAND SITUATED AT VILLAGE BAGUTA DISTT. CHHATARPUR TO M/S. PEPTEK - : 6 : - 6 CONSTRUCTION FOR RS. 1.20 CRORES. ASSESSEE HAS SOLD HIS TOTAL SHARE OF 47 % IN THE AGRICULTURE LAND. 27 % SHARE WAS IN THE NAME OF HIS WIFE AND WAS PURCH ASED ON 26.9.94 FOR RS. 1 68 760 AND 20 % SHARE WAS IN HIS NAME AND WAS PURCHASED ON 24.3.2001 FOR RS. 7 02 700/ - . CALCULATION OF CAPITAL GAIN IS AS UNDER : - A) LAND REGISTERED IN HIS WIFE NAME : SALES CONSIDERATION RS. 68 93 617/ - (DATED OF SALE 5.8.05 ) (12000000 X 27 %/ 47 %) INDEXED COST OF ACQUISITION RS. 3 23 837/ - (DATE OF PURCHASE 26.9.94) (PURCHASE PRICE =155000) COST OF REGOSTREE = 13760 TOTAL = 168760 =323837 LONG TERM CAPITAL GAIN B. LAND REGISTERED IN HIS NAME SALES CONSIDERATION (D ATE OF SALE 05/08/2005) (12000000/ - = 20 %/47%) (DATE OF PURCHASE : 24/02/2001) (PURCHASE PRICE =636500/ - 636500/ - X 497/406 =779164 COST OF REGOSTREE = 66200/ - - : 7 : - 7 TOTAL = 845364 LONG TERM CAPITAL GAIN 10830799 LESS: INVESTMENT IN RESIDENTIAL HOUSE 172500 / - SITUATED AT BHOPAL. DATE OF PURCHASE P: 06/03/2006 (EXEMPT U/S 54F OF THE INCOME - TAX ACT) BALANCE AMOUNT OF LONG TERM CAPITAL GAIN 9105799/ - AVAILABLE FOR FURTHER INVESTMENT LESS: INVESTMENT IN AGRICULTURE LAND 8000000/ - AT VILLAGE BHAIRAPUR DIST. B HOPAL DATE OF PURCHASE 24.04.2006 (EXEMPT U/S 54B OF THE INCOME - TAX ACT) BALANCE TAXABLE AMOUNT 1105799/ - ) 20 % SHARE OF LAND IN THE NAME OF ASSESSEE WAS PURCHASED ON 24/03/2001. ASSESSEE HAD GIVEN WHOLE CONSIDERATION OF RS. 63 500/ - TO SMT. KRISHAN A DEVI AND TAKEN THE POSSESSION OF LAND ON 24.3.2001. ONLY REGISTRY OF LAND WAS EXECUTED ON 8.4.2004. COPY OF AGREEMENT IS ENCLOSED HEREWITH TO PROVE THE OWNERSHIP OF THE ASSESSEE ON 24.3.2001. - : 8 : - 8 5. IT WAS ALSO SUBMITTED THAT THE LAND SOLD BY THE ASSESSEE IS AGRICULTURE LAND AND SITUATED AT VILLAGE BAGBUTA DISTRICT CHHATARPUR. TILL THE AGRICULTURE LAND AS SOLD IT WAS BEING USED BY THE ASSESSEE FOR AGRICULTURE PURPOSE. ON 24.4.2006 ASSESSEE HAS PURCHASED AND TOOK THE POSSESSION OF ANOTHER AGRICULTURE LAND S ITUATED AT VILLAGE BHAIRAPUR VIKAS KHANDA PHANDA TEHSAIL HUZUR DISTRICT BHOPAL FOR RS. 1 19 72 000/ - . ON 24.4.2006 AGREEMENT HAS BEEN EXECUTED FOR PURCHASE OF AGRICULTURE LAND SITUATED AT VILLAGE BHAIRAPUR VIKAS KHAND PHANDA TAHSIL HUZUR DISTT. BHO PAL FOR RS. 1 19 72 000/ - BETWEEN THE PARTY AND SELLER. AS PER AGREEMENT MADE THE ASSESSEE HAD TO PAY WHOLE AMOUNT BY 25.10.2006 BUT TILL 31.10.2006 ( DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE INCOME - TAX ACT FOR THE YEAR UNDER CONSIDERATION ) ASSESSEE HAD PAID ONLY RS. 80 00 000/ - . 6. THE AO DID NOT ACCEPT THE ASSESSEE S CLAIM FOR SHORT TERM AND LONG TERM CAPITAL GAINS AND ITS EXEMPTION ON BEING UTILIZED FOR ACQUISITION OF FURTHER AGRICULTURAL LAND IN VIEW OF THE FOLLOWING OBSERVATIONS : - - : 9 : - 9 I) TH E SO CALLED AGRICULTURE LAND TO CLAIM EXEMPTION U/S 54B HAS NOT BEEN REGISTERED IN THE NAME OF ASSESSEE NOR HIS WIFE. THE ASSESSEE HAS FURNISHED AN AGREEMENT DATED 24.4.2006 WHICH ONLY REFLECTS THE TERMS OF PROPOSED SALE. THE ASSESSEE HIMSELF HAS ACCEPTED THAT THE REGISTRY COULD NOT BE DONE AS ANOTHER PARTY HAS CLAIMED RIGHT OVER THE LAND IN QUESTION. (II) THE ASSESSEE WAS ALLOWED OPPORTUNITY TO FURNISH THE DOCUMENT TO PROVE HIS CLAIM THAT THE LAND IN QUESTION IS UNDER HIS POSSESSION. IN THE MEANTIME A LETTER WAS ISSUED TO THE TEHSILDAR REGARDING OWNERSHIP OF LAND IN QUESTION. THE FORM P - II FURNISHED BY HIM REFLECTS NAME OF SHRI NAVIN ARORA AND OTHERS. THIS PROVES THAT THE POSSESSION IS NOT WITH THE ASSESSEE. (III) THE COPY OF COURT S ORDER DATED 29.1.2008 FURNISHED BY THE ASSESSEE CLEARLY SAYS THAT - : 10 : - 10 TILL THE FINALIZATION OF SUITE THE POSSESSION SHOULD NOT BE TRANSFERRED TO ANY OTHER PERSON BY SHRI NAVIN ARORA AND OTHERS. (IV) SINCE THE ASSESSEE HAD NEITHER PURCHASED THE AGRICULTURE LAND NOR HE HAS TAKEN THE POSSESSION HE IS NOT ELIGIBLE FOR EXEMPTION U/S 54B. (V) FURTHER A PART OF LAND WAS PURCHASE DIN 2004 THEREFORE CONDITION REGARDING 2 YEARS OF AGRICULTURE OPERATION BY THE ASSESSEE IS NOT FULFILLED. (VI) THE ASSESSEE HIMSELF IN HIS WORKING HAS CLAIMED EXEMPTION OF RS. 80 LACS U/S 54B WHEREAS THE TOTAL CAPITAL GAIN IS RS. 92 23 576/ - . THE ASSESSEE HAS OFFERED THE REMAINING AMOUNT FOR TAXATION AS ONLY RS. 80 LACS WAS PAID BEFORE THE DUE DATE OF FILING INCOME TAX RETURN. - : 11 : - 11 7. IN VIEW OF THE ABOVE THE AO BROUGHT TO TAX NET CAPITAL GAIN OF RS. 92.23 LAKHS AFTER GIVING EXEMPTION U/S 54 - F ON ACCOUNT OF INVESTMENT IN RESIDENTIAL HOUSE AMOUNTING TO RS. 17.25 LAKHS. 8. AGGRIEVED BY THE ABOVE ORDER THE ASSESSEE APPROACHED TO THE CIT(A) WHO ALLOWED ENTIRE CLAIM OF ASSESSEE BY OBSERVING THAT AGRICULTURAL LAND WAS SOLD BY THE ASSESSEE VIDE AGREEMENT DATED 24.3.2001 AND NOT FROM THE DATE OF REGISTRY OF THE SAID LAND ON 8.4.2004. AS PER THE LD. CIT(A) THE ASSESSEE WAS HAVING AGRICULTURAL LAND FOR MORE THAN THREE YEARS THEREFORE ITS CLAIM FOR EXEMPTION ON INVESTMENT IN NEW ASSET CANNOT BE DENIED U/S 54 - B. THE CIT(A) FURTHER OBSERVED THAT EVEN THOUGH THERE WAS DISPUTE WITH REGARD TO THE NON - AGRICULTURAL LAND PURCHASED BY THE ASSESSEE BUT IN VIEW OF THE FACT THAT THE ASSESSEE HAS PAID THE ENTIRE AMOUNT OF SALE CONSIDERATION AND HAD ALSO POSSESSION OF THE LAND WITHIN TWO YEARS FROM THE DATE OF SALE OF ORIGINAL ASSETS DEDUCTION U/S 54B CANNOT BE DECLINED. - : 12 : - 12 9. AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A) THE REVENUE IS IN FURTHER APPEAL BEFORE US. 10. IT WAS ARGUED BY THE LD. CIT DR SHRI KESHAVE SAXENA THAT ON PURCHASE OF NEW AGRICULTURE LAND THROUGH SALE AGREEMENT DATED 24.4.2006 FOR CONSIDERATION OF RS. 1 19 72 000/ - FROM SHRI NAVIN ARORA CONDITION OF PURCHASE OF ANY OTHER LAND FOR BEING USED FOR A GRICULTURE PURPOSES AS REQUIRED UNDER SECTION 54B OF INCOME - TAX ACT IS NOT FULFILLED. IT IS BECAUSE THE LAND PURCHASED IS A DISPUTED LAND FOR WHICH LAND OWNER ENTERED INTO SALE AGREEMENT WITH TWO PARTIES FIRSTLY THE ASSESSEE THROUGH AGREEMENT DATED 24. 4.2006 AT RS. 36 50 000/ - PER ACRE AND THEREAFTER SAME LAND WAS ALSO AGREED TO BE SOLD TO SHRI KESHAV SINGH GAUR THROUGH AGREEMENT DATED 13.11.05 FOR RS. 29 LAKH PER ACRE. THEREAFTER SHRI KESHAV SINGH GAUR MOVED TO THE COURT AND COURT ORDERED A STATUS QU O IN THE MATTER AND EVEN TODAY MATTER IS SUBUDICE. THEREFORE ALTHOUGH ASSESSEE MADE FULL PAYMENT TO SHRI NAVIN ARORA OF RS. 1.19 CRORE 15.11.2006 BUT PROPERTY COULD NOT BE REGISTERED IN HIS NAME AND STATUS QUO EXISTS AS MATTER IS - : 13 : - 13 SUB JUDICE. H E FURTHER SUBMITTED THAT IN CASE OF JANSONS VS. CIT (1985) 154 ITR 432 (KAR) AGREEMENT FOR SALE WAS THERE AND EVEN POSSESSION OF IMMOVABLE PROPERTY DELIVERED TO VENDEE BUT REGISTERED SALE DEED WAS NOT EXECUTED. THEREFORE IT WAS HELD THAT VENDEE CANNOT BE TR EATED AS OWNER. 11. IN CASE OF CIT VS. SIREHMAL NAWALAKHA (2001) 251 ITR 108 ( S. C.) THE HON'BLE SUPREME COURT ( IN PARA 6) RELIED ON THE CASE OF CGT VS. R. VALSALA AMMA (1971) 82 ITR 828 ( S.C.) WHEREIN THE COURT AT PAGE 830 OBSERVED THAT THE G. T. ACT DID NOT CHANGE THE GENERAL LAW RELATING TO THE RIGHTS OF PROPERTY . THE GENERAL LAW WOULD TAKE INTO ITS AMBIT NOT ONLY THE PROVISIONS OF THE TRANSFER OF PROPERTY ACT BUT WOULD ALSO REQUIRE THE APPLICATION OF THE PROVISIONS OF THE REGISTRATION ACT. AFTER APPLY ING THIS THEY HELD AS FOLLOWS IN OUR VIEW THE GENERAL LAW DID NOT STAND ABROGATED AND THE REQUIREMENT OF COMPLYING WITH THE PROVISIONS OF THE TRANSFER OF PROPERTY ACT AND THE REGISTRATION ACT HAS TO BE FULFILLED. - : 14 : - 14 (PROVISIONS OF SECTION 17 OF REGISTRATI ON ACT). THE HIGH COURT THEREFORE ERRED IN ANSWERING THE QUESTION OF LAW IN THE NEGATIVE AND AGAINST THE REVENUE. THEREFORE GIFT OF OUT HOUSES OF BUILDING MADE BY WAY OF DECLARATION WITHOUT REGISTERING THE SAME WAS NO GIFT. THE QUESTION OF LAW IS ANSWER ED IN FAVOUR OF REVENUE. 12. THE LD. CIT DR ALSO RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SIREMAL NAWALCHAND 251 ITR 108 REGARDING TRANSFER OF PROPERTY BY WHICH THE REQUIREMENT OF GENERAL LAWS INCLUDING TRANSFER OF PROPERTY ACT AND REGISTRATION ACT HAS TO BE FOLLOWED FOR THE PURPOSE OF TRANSFER OF PROPERTY AND THEREFORE TRANSFER FOR PROPERTY IS COMPLETE ONLY WHEN DEED FOR TRANSFER IS REGISTERED OTHERWISE PROPERTY CANNOT BE CONSIDERED AS TRANSFER. 13. AS PER LD. CIT DR SHRI KEHSAVE SAXENA IN VIEW OF THE AFORESAID DECISIONS OF THE HON'BLE SUPREME COURT THE DISPUTED AGRICULTURAL LAND PURCHASED BY ASSESSEE THROUGH AN AGREEMENT BUT WHICH IS NOT REGISTERED THROUGH A DEED - : 15 : - 15 TILL NOW COULD NOT BE CONSIDERED A VALID TRANSFER AND HE NCE SUCH TRANSACTION WILL NOT MAKE ASSESSEE ELIGIBLE FOR DEDUCTION UNDER SECTION 54B OF THE INCOME - TAX ACT. BESIDES THIS THE LAND ON SALE OF WHICH CAPITAL GAIN ARISES TO ASSESSEE WAS PURCHASED THROUGH REGISTERED SALE DEED ON 8.4.2004 IN WHICH ON PAGE 3 IN 4 TH LIEN IT IS MENTIONED THAT POSSESSION IS GIVEN FROM THIS DATE I.E. FROM 8.4.2004 AND THEREFORE IT CARRIES MORE WEIGHT THAN POSSESSION IF ANY SHOWN TO HAVE BEEN GIVEN BY ANY EARLIER SALE AGREEMENT OF YEAR 2001 ESPECIALLY WHEN SUCH SALE AGREEMENT IS NOT EVEN REFERRED TO IN THE REGISTERED DEED. 14. ON BEHALF OF THE ASSESSEE SHRI H.P. VERMA APPEARED ALONGWITH SHRI ASHISH GOYAL AND CONTENDED THAT THE ASSESSEE HAS ACQUIRED HIS HARE IN LAND ONLY ON 24.3.2001 AND NOT ON 8.4.2004 THEREFORE ENTIRE CAPITAL GA IN SO EARNED ON THE SALE OF LAND WAS LONG TERM CAPITAL GAIN. HE FURTHER SUBMITTED THAT AGREEMENT FOR PURCHASE OF LAND DATED 24.3.2001 WAS ALREADY PLACED BEFORE THE AO WHICH CLEARLY STATED THAT THE POSSESSION IS GIVEN AND ASSESSEE HAS DISCHARGED HIS CONSIDE RATION. THEREFORE THE ASSESSEE - : 16 : - 16 HAS FULFILLED ALL THE CONDITIONS OF SECTION 54A OF THE TRANSFER OF PROPERTY ACT 1882 BY ACQUIRING THE LAND ON 24.3.2001. FOR THIS PURPOSE RELIANCE WAS PLACED ON THE DECISIONS OF PODAR CEMENT (P) LTD. 226 ITR 625 ( S. C.) MYSORE MINERALS 239 ITR 625 ( S. C. ) MRS. SHAHZADA BEGUM 5 ITD 292 (HYD) . 15. AFFIDAVIT OF SMT. KRISHNA DEVI WAS ALSO PLACE DON RECORD IN SUPPORT OF THE CONTENTION THAT POSSESSION WAS GIVEN ON 24.3.2001 WITH REGARD TO THE ACQUISITION OF NEW AGRICULTUR AL LAND TO CLAIM EXEMPTION U/S 54B IT WAS CONTENDED BY LD. SR. A.R. THAT THE ASSESSEE HAD BECOME DEEMED OWNER U/S 53A OF THE TRANSFER OF PROPERTY ACT AS SOON AS AN AGREEMENT WAS EXECUTED WITH THE SELLER ON 15.11.2006. THE POSSESSION OF THE LAND WAS ALSO TAKEN ON 15.11.2006 AND THIS FACT IS SUPPORTED BY THE AFFIDAVIT OF SELLER AS PLACED ON RECORD. HE FURTHER SUBMITTED THAT THE LD. AO DID NOT BRING ANY EVIDENCE ON RECORD TO PROVE THE CONTRARY AND THAT THE AO HAD CHOSEN NOT TO CROSS EXAMINE SHRI NAVEEN ARORA THEREFORE AFFIDAVIT SO FILED BY SHRI NAVEEN ARORA SHOULD BE ACCEPTED. IN ALTERNATIVE IT WAS - : 17 : - 17 ARGUED THAT SECTION 54B IS A BENEFICIAL PROVISION AND THEREFORE A LIBERAL INTERPRETATION SHALL BE ADOPTED. PROVISION SHALL BE INTERPRETED IN A MANNER SO AS TO GRANT BENEFIT TO THE ASSESSEE INSTEAD OF FRUSTRATING IT. FURTHER IT IS SUBMITTED THAT WHERE TWO VIEWS ARE POSSIBLE VIEW IN FAVOUR OF ASSESSEE SHALL BE ADOPTED. RELIANCE WAS PLACED ON BAJAJ TEMPO LIMITED 62 TAXMAN 480 ( S. C. ) CIT VS. VEGETABLE PRODUCT S 88 ITR 192 ( S.C.) . 16. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS COM PLIED WITH SECTION 54B BY INVESTING IN AGRICULTURAL LAND. IT IS ONLY BECAUSE THE PROPERTY WAS UNDER LITIGATION; ASSESSEE COULD NOT GET IT REGISTERED IN HIS FAVOUR. THERE WAS NO FA ULT OF ASSESSEE . THE ASSESSEE SHOULD NOT BE PUNISHED FOR SAME. IN BOMBAY HOUSING CORPORATION 81 ITD 545 (MUM) THE ISSUE BEFORE THE HON'BLE I.T.A.T. WAS WHETHER ASSESSEE SHOULD INVEST HIS OWN MONEY OR EVEN IF INVESTMENT IS MADE FROM LOAN ASSESSEE IS ELIGIB LE FOR EXEMPTION. HON'BLE SHRI R. V. EASWER SPEAKING FOR THE BENCH HELD THAT IF FOR SOME REASONS THE VENDEE DEFAULTS AND DELAYS THE PAYMENT OF THE CONSIDERATION BEYOND 6 - : 18 : - 18 MONTHS THE TRANSFEROR ASSESSEE SHOULD NOT SUFFER. IT WAS FURTHER HELD THAT IT IS N ECESSARY FOR THE ASSESSEE ONLY TO INVEST AN AMOUNT WHICH IS ARITHMETICALLY EQUAL TO THE NET CONSIDERATION IN THE SPECIFIED ASSETS. IT WAS FURTHER HELD THAT INTERPRETATION WHICH ADVANCES THE CAU SE OF JUSTICE SHALL BE ADOPTED. (PG 23 AND 24 OF CASE LAW DIGES T) . THE ASSESSEE INVESTED IN THE AGRICULTURAL LAND AND THEREFORE ASSESSEE HAS COMPLIED WITH THE SECTION 54 - B. 17. IN G. P. SINGH 10 TH EDITION PG. 125 THE LEARNED AUTHOR STATES A CONSTRUCTION THAT RESULTS IN HARDSHIP SERIOUS INCONVENIENCE INJUSTICE ABS URDITY OR ANOMALY OR WHICH LEADS TO INCONSISTENCY OR UNCERTAINTY AND FRICTION IN THE SYSTEM WHICH THE STATUTE PURPORTS TO REGULATE HAS TO BE REJECTION AND PREFERENCE SHOULD BE GIVEN TO THAT CONSTRUCTION WHICH AVOIDS SUCH RESULTS. RELIANCE IS FURTHER PLACED ON CIT VS. SMT. BHARATI C. KOTHARI 254 ITR 22 (CAL). IF THE INTERPRETATION SOUGHT BY DEPARTMENT IS ACCEPTED THIS WILL LEAD TO HARDSHIP TO THE ASSESSEE FOR NO FAULT OF ASSESSEE. THE DEPARTMENT HAS NOT MADE OUT A CASE - : 19 : - 19 THAT THERE WAS CONNIVANCE BETWEEN ASS ESSEE AND NAVIN ARORA 18. IN CIT VS. INFOSYS TECH LIMITED 293 ITR 146 (KARN) WHILE HOLDING THAT THE STATUTE MUST BE INTERPRETED IN THE CONTEXT OF THE PURPOSE (PURPOSIVE INTERPRETATION) FOR WHICH IT IS ENACTED RELIED ON RESERVE BANK OF INDIA VS. PEERLESS GE N.FIN. INVESTMENT CO.LTD. AIR 1987 S.C. 1023 WHERE IT WAS HELD AS FOLLOWS : - INTERPRETATION MUST DEPEND ON THE TEXT AND THE CONTEXT. THEY ARE THE BASES OF INTERPRETATION. ONE MAY WELL SAY IF THE TEXT IS THE TEXTURE THE CONTEXT IS WHAT GIVES THE COLOUR. NEITHER CAN BE IGNORED. BOTH ARE IMPORTANT. THAT INTERPRETATION IS BEST WHICH MAKES THE TEXTUAL INTERPRETATION MATCH THE CONTEXTUAL. A STATUTE IS BEST INTERPRETED WHEN WE KNOW WHY IT WAS ENACTED. THE DECISION WAS AFFIRMED BY HON'BLE SUPREME COURT IN 166 T AXMAN 204 ( S. C.) SECTION 54B IS INTENDED TO PROVIDE BENEFIT TO ASSESSEES . IT SHALL BE INTERPRETED TO PROVIDE THE BENEFIT RATHER THAN TO - : 20 : - 20 FRUSTRATE IT. ASSESSEE SHALL THEREFORE BE HELD ELIGIBLE FOR EXEMPTION. 19. WITH REGARD TO THE CONTENTION THAT THE AS SESSEE IS ELIGIBLE FOR EXEMPTION U/S 54B ON AMOUNT INVESTED AFTER DUE DATE U/S 139(1) RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF CIT VS. RAJESH KUMAR JALAN 157 TAXMAN 398 TAXMAN 398 (GAU) EVEN IF THE ASSESSEE INVESTS THE AMOUNT AFTER DUE DATE U/ S 139(1) WITHOUT DEPOSITING THE AMOUNT IN CAPITAL GAIN ACCOUNT SCHEME STI LL THE ASSESSEE IS ELIGIBLE FOR EXEMPTION. 20. IN COUNTER REPLY TO THE LD. AUTHORIZED REPRESENTATIVE S CONTENTION IT WAS SUBMITTED BY LD. CIT DR THAT WHEN THE REGISTERED SALE DEED IS A VAILABLE THE TERMS AND CONDITIONS OF SUCH REGISTERED SALE DEED SHOULD BE GIVEN PREFERENCE OVER THE AGREEMENT TO SALE WHICH IS NOT REGISTERED. HE FURTHER POINTED OUT CONTRADICTION IN THE TERMS AND CONDITIONS OF REGISTERED SALE DEED VIS - - VIS TERMS AND CON DITIONS MENTIONED IN AGREEMENT TO SALE. AS PER THE REGISTERED SALE DEED THE ASSESSEE WAS GIVEN RIGHT TO USE SUCH AGRICULTURAL LAND ONLY FORM 8.2.2004 WHEREAS - : 21 : - 21 AGREEM ENT TO SALE SPEAKS FOR GIVING P OSSESSION ON 24 TH MARCH 2001. AS PER REGISTERED SALE DEED THE PAYMENT WAS GIVEN JUST PRIOR TO THE REGISTRATION OF SUCH SALE DEED WHEREAS AGREEMENT TO SALE DATED 24 TH MARCH 2001 STATED FOR PAYMENT ON 24 TH MARCH 2001 ONLY. IN REPLY TO LD. CIT DR S CONTENTION FOR RELYING ON DECISION OF SIREMAL NAWALCHAND (SUPRA ) IT WAS ARGUED BY LD. AUTHORIZED REPRESENTATIVE THAT THIS CASE RELATES TO THE GIFT TAX ACT AND NOT TO INCOME TAX ACT AND AS SUCH NO PROVISIONS ARE THERE IN THE INCOME - TAX ACT 1961. HE FURTHER SUBMITTED THAT DEFINITION OF TRANSFER AS GIVEN U/S 2(47) HAS NOT BEEN CONSIDERED BY THE LD. CIT DR WHICH HAS COME INTO FORCE W.E.F. ASSESSMENT YEAR 1988 - 89 WHEREIN BY INSERTING CLAUSE (V) IT HAS BEEN PROVIDED THA T ANY TRANSACTION INVOLVING ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY IS TO BE TAKEN OR RET AINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF TRANSFER OF PROPERTY ACT 1882. HE FURTHER SUBMITTED THAT IN THE INSTANT CASE CONDITION OF SECTION 53A OF THE - : 22 : - 22 TRANSFER OF PROPERTY ACT WAS FULFILLED. THEREFORE THE LD. CI T(A) WAS JUSTIFIED IN ALLOWING THE CLAIM OF EXEMPTION. 21. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DELIBERATED ON THE CASE LAWS CITED BY THE LD. AUTHORIZED REPRESENTATIVE AND LD. CIT D .R. WITH REFERENCE TO THE POINT OF TIME WHEN TRANSFER IS TO BE CONSIDERED WITHIN THE MEANING OF PROVISIONS OF SECTION 2 ( 47 ) READ WITH SECTION 53A OF TRANSFER OF PROPERTY ACT. FROM THE RECORD WE FOUND THAT THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME FILE D WITH THE DEPARTMENT HAD NOT SHOWN ANY CAPITAL GAINS ARISING OUT OF SALE OF AGRICULTURAL LAND NOR CLAIMED ANY DEDUCTION FOR THE PART UTILIZATION OF SUCH GAIN FOR CLAIM OF EXEMPTION U/S 54B. HOWEVER WHEN THE AO INQUIRED THE ASSESSEE TO EXPLAIN CERTAIN DE POSITS OF CASH IN THE BANK ACCOUNT IN PURSUANCE OF AIR INFORMATION RECEIVED BY HIM THE ASSESSEE HAD SURRENDERED THE FACT OF SALE OF AGRICULTURAL LAND AND CAPITAL GAINS EARNED THEREON. CONTENTION OF THE ASSESSEE WAS THAT T HIS AGRICULTURAL LAND WAS PARTLY A CQUIRED BY WIFE OF THE ASSESSEE AND PARTLY BY - : 23 : - 23 THE ASSESSEE V IDE REGISTERED SALE DEED DATED 8.4.2004. AS PER ASSESSEE THE AGRICULTURAL LAND SO SOLD BY THE ASSESSEE WAS HELD BY IT SINCE 24 TH MARCH 2001 IN TERMS OF AGREEMENT TO SALE DATED 24 TH MARCH 2001. AS PER ASSESSEE SINCE ENTIRE SALE CONSIDERATION WAS UTILIZED FOR ACQUISITION OF ANOTHER AGRICULTURAL LAND THE CAPITAL GAIN SO EARNED WAS CLAIMED AS EXEMPT U/S 54B OF THE INCOME - TAX ACT 1961. OBJECTION OF THE AO WAS THAT AGRICULTURAL LAND PERTAINING TO THE SHARE OF ASSESSEE WAS ACQUIRED ONLY ON 8 TH APRIL 2004 WHEN THE RELEVANT SALE DEED WAS EXECUTED . SINCE AS PER THE DATE OF ACQUISITION I.E. 8.4.2004 THE ASSESSEE WAS NOT HAVING POSSESSION OF LAND FOR MORE THAN 3 YEARS THE AO HELD THAT IT WAS NOT A LO NG TERM CAPITAL ASSETS IN THE HANDS OF THE ASSESSEE. THE AO ALSO OBSERVED THAT THE ASSESSEE COULD NOT PROVE THE UTILIZATION OF THE SAID LAND FOR TWO YEARS IMMEDIATELY BEFORE ITS SALE FOR USE OF LAND FOR AGRICULTURAL PURPOSES. THE AO ALSO OBJECTED THE UTILI ZATION OF SALE CONSIDERATION IN ACQUISITION OF ANOTHER AGRICULTURAL LAND IN VIEW OF THE FACT THAT THE NEW AGRICULTURAL LAND WAS NOT REGISTERED IN THE NAME OF THE - : 24 : - 24 ASSESSEE NOR HIS WIFE AND THAT THE ASSESSEE HAS FURNISHED ONLY AN AGREEMENT DATED 24 TH APRIL 2006 WHICH ONLY REFLECTS THE TERMS OF THE PROPOSED SALE AND THAT THE ASSESSEE COLD NOT PROVE NOR FURNISH ANY DOCUMENT TO SUPPORT HIS CLAIM THAT NEW LAND SO PURCHASED IN QUESTION IS UNDER HIS POSSESSION. FURTHERMORE FORM NO. P - II ISSUED BY THE TAHSILDAR REGARDING OWNERSHIP OF THE LAND REFLECTED THE NAME OF SHRI NAVIN ARORA AND OTHERS AS OWNER OF THE LAND. THE AO THEREFORE REACHED TO THE CONCLUSION THAT EVEN THE POSSESSION OF THE NEW AGRICULTURAL LAND WAS NOT IN THE POSSESSION OF THE ASSESSEE. WE HAD MI NUTELY GONE THROUGH A REGISTERED SALE DEED DATED 8.4.2004 AS PLACED ON RECORD WHICH INDICATED THAT FROM THE DATE OF REGISTRATION THE ASSESSEE HAS BECOME OWNER OF THE LAND AND HE WAS GIVEN RIGHT TO USE THE LAND IN ANY MANNER HE WANTS. THE SALE DEED ALSO A CKNOWLEDGES THE RECEIPT OF SALE CONSIDERATION OF RS . 6 36 500/ - PRIOR TO REGISTRATION OF THIS SALE DEED. HOWEVER THERE IS NO MENTION OF ANY AGREEMENT TO SALE AS HAVING BEEN EXECUTED PRIOR TO THIS SALE DEED. AS PER OUR CONSIDERED VIEW WHENEVER AN - : 25 : - 25 AGREEMEN T TO SALE IS ENTERED INTO WITH RESPECT TO CERTAIN PROPERTY AND SUBSEQUENTLY REGISTERED SALE DEED IS EXECUTED IN RESPECT OF SUCH PROPERTY THE SALE DEED INVARIABLY MENTIONS THE FACT OF SUCH AGREEMENT TO SALE AS HAVING BEEN EXECUTED/ENTERED INTO PRIOR TO SUC H SALE DEED. THE SALE DEED SO EXECUTED SUBSEQUENTLY INCORPORATES THE FACT OF SALE AGREEMENT HAVING BEEN ENTERED WITH RESPECT TO SUCH PROPERTY AND THE RESPECTIVE TERMS AND CONDITIONS REGARDING PAYMENT OF SALE CONSIDERATION AND POSSESSION OF THE SAID PROPERT Y AS HAVING BEEN GIVEN PRIOR TO EXECUTION OF SUCH SALE DEED. IN THE INSTANT CASE BEFORE US THE SALE DEED DATED 8.4.2004 NO WHERE MENTIONS RE GARDING ANY SUCH SALE AGREEMENT EXECUTED ON 24.3.2001 THROUGH WHICH P OSSESSION OF LAND WAS HANDED OVER TO THE ASSES SEE. THIS AGREEMENT IS MORE THAN THREE YEARS PRIOR TO SUCH SALE DEED. AS PER THE SALE AGREEMENT DATED 24.3.2001 THE ASSESSEE HAD TAKEN POSSESSION OF THE ENTIRE AGRICULTURAL LAND AND ALSO MADE THE ENTIRE PAYMENT OF SALE CONSIDERATION ON 24 TH MARCH 2001 I TSELF. THE SALE DEED EXECUTED ON 8.4.2004 DOES NOT MENTION FACT OF ANY SUCH - : 26 : - 26 AGREEMENT TO SALE HAVING BEEN EXECUTED ON 24.3.2001 NOR THAT POSSESSION OF THE LAND HAVING BEEN TAKEN BY THE ASSESSEE ON 8.4.2004 . ON THE OTHER HAND THE REGISTERED SALE DEED DATE D 8.4.2004 PROVIDES FOR GIVING OF POSSESSION TO THE ASSESSEE ON 24.3.2001 I.E. THE DATE OF EXECUTION OF THE SALE DEED. THRO UGH THIS REGISTERED SALE DEED T HE SELLER OF AGRICULTURAL LAND HAS ALSO GIVEN RIGHT TO THE ASSESSEE FOR USE OF SUCH AGRICULTURAL LAN D ONLY FROM 8.4.2004. UNDER THESE CIRCUMSTANCES WITHOUT VERIFYING THE GENUINENESS OF THE AGREEMENT AND AFFIDAVIT OF SMT. KRISHNA DEVI AS FILED BY THE ASSESSEE THE CIT(A) HAS REACHED TO THE CONCLUSION THAT THE ASSESSEE HAS PURCHASED AGRICULTURAL LAND AND TAKEN POSSESSION THEREOF ON 24.3.2001. WE ALSO FOUND THAT THE SIGNATURE OF SELLER SMT. KRISHNA DEVI ON THE AGREEMENT OF SALE AND AFFIDAVITS SIGNIFICANTLY DIFFER FROM THE SIGNATURE ON SALE DEED EXECUTED ON 8.4.2004. ALL THESE THINGS SERIOUSLY RAISE S DOUBTS REGARDING GENUINENESS OF SUCH AGREEMENT AND AFFIDAVITS HAVING BEEN FILED TO PROVE THE PURCHASE OF LAND ON 24.3.2001. IT APPEARS THAT WITHOUT MAKING ANY INQUIRY - : 27 : - 27 WITH RESPECT TO SUCH AGREEMENT AND AFFIDAVIT THE AO HAS OUTRIGHTLY REJECTED THE SAME. EVEN TH E SELLER OF LAND SMT. KRISHNA DEVI WAS NOT EXAMINED/ INQUIRED AS TO WHEN SHE HAD GIVEN THE POSSESSION AND RECEIVED SALE CONSIDERATION AND THE YEAR IN WHICH SHE HAD OFFERED THE CAPITAL GAINS IF ANY ARISING OUT OF SUCH TRANSACTION. 22. THE SECOND CONDITION FOR CLAIMING EXEMPTION U/S 54B IS THAT THE AGRICULTURAL LAND SO SOLD SHOULD BE USED BY THE ASSESSEE FOR AGRICULTURAL PURPOSES FOR TWO YEARS. WHILE DECLINING ASSESSEE S CLAIM IT WAS ALSO OBJECTION OF THE AO THAT THE LAND WAS NOT USED BY THE ASSESSEE FOR AGRICU LTURAL PURPOSES IN THE LAST TWO YEARS . HOWEVER THE CIT(A) IN HIS ORDER HAS OBSERVED THAT THE AO HAS NOT DISPUTED THE USE OF LAND BY THE ASSESSEE FOR AGRICULTURAL PURPOSES WHICH IS FACTUALLY INCORRECT. O NE OF THE REASONS ASSIGNED BY THE ASSESSING OFFICER FOR DECLINE OF CLAIM U/S 54B WAS NON - FULFILLMENT OF THE CONDITIONS OF THE USE OF LAND BY THE ASSESSEE FOR AGRICULTURAL PURPOSES FOR TWO YEARS. OBSERVATION OF THE CIT(A) TO THE EFFECT THAT THE LAND WAS USED BY THE ASSESSEE FOR AGRICULTURAL PURPOSES SINCE - : 28 : - 28 24 .3.2001 AGRICULTURAL INCOME WAS SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME REGULARLY IS NOT SUPPORTED BY ANY MATERIAL/EVIDENCE ON RECORD. NO EVIDENCE WAS EVEN REFERRED BY THE LD. A.R. BEFORE US IN SUPPORT OF SUCH FINDING OF CIT(A) . 23. IN VIEW OF THE ABO VE DISCUSSION IT IS CLEAR THAT THE FIRST CONDITION REGARDING OWNERSHIP/POSSESSION OF AGRICULTURAL LAND SINCE 24.3.2001 FOR TREATING THE SAME AS LONG TERM CAPITAL ASSETS ITSELF IS IN GREAT DISPUTE. BEFORE OUT - RIGHTLY REJECTING THE AGREEMENT DATED 24.3.2001 T HE AO HAS ALSO NOT MADE ANY INQUIRY WITH REGARD TO THE GENUINENESS OF THE AGREEMENT NOR HE HAS EXAMINED THE SELLER OF THE LAND SMT. KRISHNA DEVI TO FIND OUT THE CORRECT STATE OF AFFAIRS. IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE RESTORING THE APP EAL BACK TO THE FILE OF AO FOR MAKING DETAILED INQUIRY WITH REGARD TO GENUINENESS OF THE AGREEMENT TO SALE EXECUTED ON 24 TH MARCH 2001 AND TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF OUR ABOVE OBSERVATION. WE DIRECT ACCORDINGLY. - : 29 : - 29 24. IN THE RESULT THE AP PEAL OF THE REVENUE IS ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH JU LY 2011. S D/ - S D/ - (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH JU LY 2011 . CPU* 1112 21