Asha George, Trichur v. Income tax officer, Thrissur

ITA 542/COCH/2011 | misc
Pronouncement Date: 17-02-2012

Appeal Details

RSA Number 54221914 RSA 2011
Assessee PAN AISPG8512D
Bench Cochin
Appeal Number ITA 542/COCH/2011
Duration Of Justice 5 month(s) 19 day(s)
Appellant Asha George, Trichur
Respondent Income tax officer, Thrissur
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2012
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 17-02-2012
Date Of Final Hearing 09-02-2012
Next Hearing Date 09-02-2012
Assessment Year misc
Appeal Filed On 29-08-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE: SHRI N.R.S.GANESAN JUDICIAL MEMBER AND SHRI B.R. BASKARAN ACCOUNTANT MEMBER ITA NO.542/COCH/2011 ASSESSMENT YEAR : 2005-06 SMT. ASHA GEORGE NELLISSERY HOUSE AYYANTHOLE P.O. THRISSUR DISTRICT. [PAN: AISPG 8512D] THE INCOME-TAX OFFICER WARD- 2(1) THRISSUR. (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI M. RAMDAS C.A. RESPONDENT BY: MS. S.VIJAYAPRABHA JR. DR DATE OF HEARING: 09/02/2012 DATE OF PRONOUNCEMENT: 17/02/2012 ORDER PER SHRI B.R.BASKARAN ACCOUNTANT MEMBER:- THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 22-07-2011 PASSED BY LD CIT(A)-V KOCHI AND IT RELATES TO THE ASSESSMENT YEAR 2005-06. THE ISSUE URGED BY THE ASSESSEE BEFORE US RELATES TO THE DETE RMINATION OF CAPITAL GAINS ON SALE OF LAND LOCATED AT A PLACE CALLED AYYANTHOLE THRISSUR . 2. THE FACTS RELATING TO THE SAID ISSUE ARE SET OUT IN BRIEF. THE ASSESSEE INHERITED 1/4 TH SHARE OF LAND HAVING AN EXTENT OF 1.10 ACRES FROM HER FATHER ALONG WITH OTHERS. THE SAID LAND WAS SOLD FOR A CONSIDERATION OF RS.44 LAKHS ON 14.11.2004 AND ACCORDINGLY THE ASSESSEE RECEIVED HER SHARE OF 11 L AKHS ON IT. THE ASSESSEE RETURNED NIL AMOUNT OF CAPITAL GAIN ON THE SAID SALE. THE SA ID LAND WAS PURCHASED BY HER FATHER IN 1969 AND AFTER HIS DEATH THE ASSESSEE AND OTHER S INHERITED THE SAME. AS PER THE RELEVANT PROVISIONS THE ASSESSEE HAS AN OPTION TO ADOPT THE MARKET VALUE AS ON I.T.A. NO.542 /COCH/2011 2 1.4.1981 AS THE COST IF THE PROPERTY HAD BEEN PURC HASED EARLIER TO THAT DATE. ACCORDINGLY WHILE WORKING OUT THE LONG TERM CAPITA L GAIN THE ASSESSEE TOOK THE MARKET VALUE OF THE LAND AS ON 1.4.1981 AT RS.10 000/-. I T WAS ALSO CLAIMED THAT A COMPOUND WALL WAS CONSTRUCTED ON THE PERIPHERY OF LAND AT A COST OF RS.3 50 000/- AND THE SAME WAS CLAIMED AS COST OF IMPROVEMENT. SUBSEQUENT T O THE IMPUGNED SALE THE ASSESSEE HAD INVESTED A SUM OF RS.11 LAKHS FOR PURCHASE OF A NOTHER LAND HAVING AN EXTENT OF 1.92 ACRES ALONG WITH A FARM HOUSE AT A PLACE CALLE D KOOTHATTUKULAM. THE ASSESSEE DEDUCTED THE ABOVE SAID INVESTMENT OF RS.11.00 LAKH S AGAINST THE LONG TERM CAPITAL GAIN U/S 54F OF THE ACT TREATING THE FARM HOUSE AN D THE LAND AS RESIDENTIAL HOUSE. 3. THE ASSESSING OFFICER RESTRICTED THE CLAIM O F COST OF IMPROVEMENT TOWARDS CONSTRUCTION OF COMPOUND WALL TO RS.50 000/- IN TH E ABSENCE OF ANY DOCUMENTARY EVIDENCE IN SUPPORT OF SUCH CONSTRUCTION. THE ASSE SSING OFFICER NOTICED THAT THE PURCHASE DEED OF LAND LOCATED AT KOOTHATTUKULAM MEN TIONED THE VALUE OF FARM HOUSE AT RS.1.00 LAKH AND THE VALUE OF LAND AT RS.10.00 LAKH S. HENCE THE AO RESTRICTED THE CLAIM OF EXEMPTION U/S 54F TO RS.1.00 LAKH. BEFORE THE AO THE ASSESSEE MADE AN ALTERNATIVE CONTENTION THAT THE ASSESSEE SHOULD BE ALLOWED EXEMPTION U/S 54B OF THE ACT AS BOTH THE LANDS SOLD AND PURCHASED ARE AGRIC ULTURAL LANDS. THE AO NOTICED THAT THE ASSESSEE COULD NOT ESTABLISH THAT THE LAND SOLD BY HER IS AGRICULTURAL LAND AND ACCORDINGLY REJECTED THE SAID ALTERNATIVE CONTENTIO N. 4. THE LD CIT(A) ENHANCED THE COST OF IMPROVEME NT TO RS.1.00 LAKH AND CONFIRMED THE VIEW OF THE AO IN RESPECT OF THE OTHER ISSUES. STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREF ULLY PERUSED THE RECORD. WE SHALL DEAL WITH THE ISSUE OF ELIGIBILITY OF EXEMPTION U/S 54B OF THE ACT. THOUGH THE ASSESSEE DID NOT CLAIM EXEMPTION U/S 54B IN HER RETURN OF IN COME SHE HAS CLAIMED THE SAME BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS. SEC.5 4B PROVIDES FOR EXEMPTION OF THE CAPITAL GAIN ARISING ON TRANSFER OF LAND USED FOR A GRICULTURAL PURPOSES IF THE SAID CAPITAL GAIN IS INVESTED IN PURCHASE OF ANOTHER LAND FOR BE ING USED FOR AGRICULTURAL PURPOSES I.T.A. NO.542 /COCH/2011 3 SUBJECT TO OTHER CONDITIONS PROVIDED IN THAT SECTIO N. IN ORDER TO AVAIL EXEMPTION U/S 54B IT HAS TO BE ESTABLISHED THAT THE LAND THAT WA S SOLD HAD BEEN USED FOR AGRICULTURAL PURPOSES IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE. 5.1 BEFORE THE AO THE ASSESSEE PRODUCED TAX RE CEIPT OF PROPERTY AND THE RECEIPT FROM ELECTRICITY BOARD. HOWEVER THE AO HELD THAT T HE SAID DOCUMENTS DO NOT THROW ANY LIGHT ABOUT THE NATURE OF PROPERTY. IN FACT TH E ELECTRICITY RECEIPT SHOWED THAT THERE WAS NO USAGE OF ELECTRICITY. BEFORE LD CIT(A) AS W ELL AS BEFORE US THE LD A.R PLACED RELIANCE ON THE FOLLOWING DOCUMENTS TO DRIVE THE PO INT THAT THE IMPUGNED LAND THAT WAS SOLD WAS USED FOR AGRICULTURAL PURPOSES PRIOR TO IT S TRANSFER. (A) FEW PHOTOGRAPHS SHOWING COCONUT TREES. (B) RECEIPT FOR PAYMENT OF WATER CESS (C) CERTIFICATES OBTAINED FROM AGRICULTURAL OFFICER AND VILLAGE OFFICER. THE LD CIT(A) CALLED FOR A REMAND REPORT FROM THE A O AND THE IN THE REMAND REPORT HE STATED THAT THESE EVIDENCES ARE NOT ENOUGH TO REACH ANY CONCLUSION WITH REGARD TO THE NATURE OF LAND. ACCORDINGLY THE LD CIT(A) DISMISS ED THE PLEA OF THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS:- THE APPELLANT APART FROM PRODUCING PHOTOGRAPHS AND A CERTIFICATE FROM THE VILLAGE OFFICER THAT THE NATURE OF LAND WAS WET LA ND HAS NOT BEEN ABLE TO PRODUCE ANY OTHER EVIDENCE REGARDING THE CROPS BEIN G CULTIVATED ON THE LAND TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WH ICH THE TRANSFER TOOK PLACE. IN THE ABSENCE OF PROPER EVIDENCE REGARDING THE AGRICULTURAL OPERATIONS WHICH WERE CARRIED OUT FOR CULTIVATING S PECIFIC CROPS IT IS DIFFICULT TO ACCEPT THAT THE CONDITION STIPULATED IN SECTION 54B HAS BEEN FULFILLED BY THE ASSESSEE FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 54B WHICH RELATES TO CAPITAL GAIN ON TRANSFER OF LAND USED FOR AGRICULTU RAL PURPOSE. IN VIEW OF WHAT HAS BEEN STATED ABOVE THE ACTION OF THE ASSES SING OFFICER IN REJECTING THE CLAIM OF THE ASSESSEE THAT THE PROPERTY SOLD BY THE ASSESSEE IS AGRICULTURAL IN NATURE AS WELL AS THE REJECTION OF ASSESSEES CLAIM U/S 54B IS UPHELD. 5.2 ON A CAREFUL PERUSAL OF THE PROVISIONS OF S EC.54B WE NOTICE THAT USER OF THE LAND IS ACTUALLY RELEVANT FOR THE PURPOSES OF SEC.54B BUT NOT THE NATURE OF LAND I.E. THE PRIMARY CONDITION IS THAT THE LAND SHOULD HAVE BEEN USED FOR AGRICULTURAL PURPOSES IN I.T.A. NO.542 /COCH/2011 4 THE TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRA NSFER. IF A LAND EVEN THOUGH IT IS AGRICULTURAL LAND AS PER THE RECORDS OF REVENUE AUT HORITIES IS KEPT UNUSED FOR AGRICULTURAL PURPOSES IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER IN OUR VIEW THE PROVISIONS OF SEC. 54B OF THE ACT SHALL N OT APPLY TO THE SALE OF THE SAID LAND. 5.3 IN THE ASSESSMENT ORDER THE AO HAS STATED THAT THE ASSESSEES FATHER WAS STATED TO BE A BUSINESS MAN AND THE ASSESSEES MOTH ER WAS A NURSE BY PROFESSION. IT IS ALSO STATED THAT NONE HAS DECLARED ANY AGRICULTURAL INCOME. THE AO HAS ALSO STATED THAT THERE WAS NO EVIDENCE TO SHOW THAT THE IMPUGNED LAN D WAS PUT TO AGRICULTURAL USE PRIOR TO ITS SALE. IT IS FURTHER STATED BY THE AO THAT TH E BUYER OF LAND HAS CONVERTED IT INTO AN APARTMENT COMPLEX. IN THESE CIRCUMSTANCES IT IS D IFFICULT TO APPRECIATE THE PHOTOGRAPHS AND CERTIFICATES OF VILLAGE OFFICER PRODUCED AT THI S STAGE. THE VERY FACT THAT THE ASSESSEE CHOSE TO CLAIM EXEMPTION U/S 54F INSTEAD OF SEC. 54B IN HER RETURN OF INCOME ALSO GOES AGAINST THE SAID CONTENTION OF THE ASSESS EE. IN VIEW OF THE ABOVE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION OF L D CIT(A) ON THIS POINT. 6. THE NEXT ISSUE RELATES TO THE QUANTUM OF DEDUCTI ON U/S. 54F OF THE ACT. AS STATED EARLIER THE ASSESSEE PURCHASED A LAND ALONG WITH FARMHOUSE AT A PLACE CALLED KOOTHATTUKULAM FOR A SUM OF RS. 11 LAKHS SUBSEQUEN T TO THE SALE OF LAND LOCATED AT AYYANTHOLE. IN THE PURCHASE DEED THE VALUE OF THE FARM HOUSE BUILDING WAS NOTED AS RS. 1 LAKH AND THE VALUE OF THE LAND WAS NOTED AS RS. 10 LAKHS. ACCORDINGLY THE AO TOOK THE VIEW THAT THE EXEMPTION U/S. 54F IS AVAILA BLE ONLY TO THE VALUE OF THE FARM HOUSE AND ACCORDINGLY RESTRICTED THE DEDUCTION U/S. 54F TO RS. 1 LAKH. THE SAID VIEW OF THE AO WAS ALSO CONFIRMED BY THE LD. CIT(A). 6.1 THE LD. AR HAS CITED MANY CASE LAW TO DRIVE THE POINT THAT THE FARM HOUSE ALSO CONSTITUTES A RESIDENTIAL HOUSE. WE FIND THAT THER E IS NO DIFFERENCE OF OPINION IN THIS REGARD BETWEEN THE PARTIES. THE DISPUTE IS RESTRIC TED TO THE QUANTUM OF AMOUNT THAT SHOULD BE ALLOWED U/S 54F OF THE ACT. BY PLACING R ELIANCE ON THE CIRCULAR NO. 667 DATED 18-10-1993 ISSUED BY THE CBDT THE LD. A.R SUBMITTE D THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF COST INCURRED IN THE PURCHASE OF THE P LOT ALSO UNDER SECTION 54F OF THE ACT. I.T.A. NO.542 /COCH/2011 5 6.2. WE FIND MERIT IN THE CONTENTIONS OF THE ASSESS EE. IN THE PURCHASE DEED THE VALUE OF THE SUPER STRUCTURE IS NORMALLY MENTIONED AS THE VALUE OF THE BUILDING. ACCORDINGLY THE AMOUNT OF RS.1.00 LAKH NOTED AS THE VALUE OF BUILDING SHOULD BE CONSIDERED AS RELATING TO THE SUPER STRUCTURE ONLY. IN OUR VIEW FOR THE PURPOSE OF ALLOWING DEDUCTION U/S 54F OF THE ACT THE COST OF PLOT AND ALSO THE COST OF LAND APPURTENANT THERETO SHOULD ALSO BE CONSIDERED. IN THE INSTANT CASE THE ASSESSEE HAS PURCHASED LAND TO THE EXTENT OF 1.92 ACRES IN WHICH THE IMPUGNED FARM HOUSE IS ALSO LOCATED. HOWEVER THE DETAILS SUCH AS THE EXACT AR EA OF THE FARM HOUSE THE LAND APPURTENANT THERETO THE EXTENT OF OTHER PORTIONS O F THE LAND HAVE NOT BEEN BROUGHT ON RECORD. WE HAVE ALREADY STATED THAT THE VALUE OF P LOT ON WHICH THE FARM HOUSE IF LOCATED AND THE LAND APPURTENANT THERE TO HAS TO BE CONSIDERED FOR THE PURPOSE OF SE. 54F OF THE ACT. THE ASSESSEE HAS NOT BROUGHT ON RE CORD ANY MATERIAL TO CONTEND THAT THE ENTIRE AREA OF 1.92 ACRES SHOULD BE CONSIDERED AS THE LAND APPURTENANT THERE TO. IN OUR VIEW ALSO ONLY A REASONABLE AREA CAN BE CONSID ERED FOR THE SAID PURPOSE AND NOT THE ENTIRE PORTION OF LAND. IN THESE CIRCUMSTANCES IN ORDER TO RESOLVE THE DISPUTE WE ARE CONSTRAINED TO MAKE AN ESTIMATE OF THE VALUE OF THE PLOT ON WHICH THE FARM HOUSE IS LOCATED AND THE VALUE OF LAND APPURTENANT THERE TO. HENCE ON A CONSPECTUS OF THE MATTER WE ESTIMATE THE VALUE OF PLOT AND THE LAND APPURTENANT TO THE FARM HOUSE AT RS. 2 LAKH AND ACCORDINGLY DIRECT THE AO TO ALLOW THE SAME AS DEDUCTION U/S. 54F OF THE ACT IN ADDITION TO THE VALUE OF THE SUPER STRUCTURE OF THE FARMHOUSE ALREADY ALLOWED BY HIM. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. PRONOUNCED ON 17-02-2012 SD/- SD/- (N.R.S.GANESAN) (BR BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER ERNAKULAM DATED: 17TH FEBRUARY 2012 GJ I.T.A. NO.542 /COCH/2011 6 COPY TO 1 SMT. ASHA GEORGE NELLISSERY HOUSE AYYANTHOLE P. O. THRISSUR DISTRICT. 2 THE INCOME TAX OFFICER WARD-2(1) THRISSUR. 3 THE COMMISSIONER OF INCOME-TAX(APPEALS)-V KOCHI 4 THE COMMISSIONER OF INCOME-TAX TRICHUR. 5. THE DR ITAT COCHIN BENCH. 6 GUARD FILE. BY ORDER A SSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH