ITO-3(2), Agra v. Mahipal Shorewala HUF, Mathura

ITA 88/AGR/2010 | 2006-2007
Pronouncement Date: 18-11-2011 | Result: Dismissed

Appeal Details

RSA Number 8820314 RSA 2010
Assessee PAN AADHM6555M
Bench Agra
Appeal Number ITA 88/AGR/2010
Duration Of Justice 1 year(s) 7 month(s) 11 day(s)
Appellant ITO-3(2), Agra
Respondent Mahipal Shorewala HUF, Mathura
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 18-11-2011
Date Of Final Hearing 16-11-2011
Next Hearing Date 16-11-2011
Assessment Year 2006-2007
Appeal Filed On 06-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER ITA NO.86/AGR/2010 ASSESSMENT YEAR: 2006-07 MAHIPAL SHORAWALA HUF VS. INCOME TAX OFFICER 3 (2) SHORAWALA BHAVAN MATHURA. MANDI RAM DAS MATHURA. (PAN: AADHM 6555 M). ITA NO.88/AGR/2010 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER 3(2) VS. MAHIPAL SHORAWALA HUF MATHURA. SHORAWALA BHAVAN MANDI RAM DAS MATHURA. (PAN: AADHM 6555 M). (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI NAVIN GARGH ADVOCATE REVENUE BY : SHRI A.K. SHARMA JR. D.R. DATE OF HEARING : 16.11.2011 DATE OF PRONOUNCEMENT : 18.11.2011 ORDER PER BENCH : THESE CROSS APPEALS OF THE ASSESSEE AND THE REVENUE ARISE FROM THE ORDER OF LD. CIT(A)-I AGRA DATED 25.01.2010 FOR THE ASSESSM ENT YEAR 2006-07. ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 2 2. THE ASSESSEE HAS RAISED THE CONCISE GROUNDS OF A PPEAL AS UNDER :- 1.1 BECAUSE FOR WORKING OUT THE LONG TERM CAPITAL GAIN ON SALE OF LAND U/S 55(2) IN ANY VIEW THE VALUE AS ON 01/04/19 81 BE TAKEN AT ` 180/- PER SQ. MTR. AGAINST ` 105/- PER SQ. MTR. DIRECTED BY THE LD. CIT(A) AS ADOPTED BY THE APPELLANT DULY SUPPORTED BY THE VALUATION REPOT OF REGISTERED VALUER. 1.2 BECAUSE THE VALUE AS ON 01.04.1981 AT ` 180/- PER SQ. MTR. AS PER VALUATION REPOT OF GOVERNMENT APPROVED VALUER W HO IS AN EXPERT BE ACCEPTED. 1.3 BECAUSE THE APPROVED VALUER SHRI SHASHI SHIRMOA NI AGAIN SUPPORTED HIS REPORT PERSONALLY ON BEING SUMMONED B Y LD. CIT(A). 1.4 BECAUSE THE LOCATION OF THE LAND BEING ON MAIN DELHI AGRA NATIONAL HIGH WAY ACCORDINGLY THE VALUATION REPORT IS AN EXPERT REPORT UNDER PROVISION OF SECTION 45 OF EVIDENCE AC T. 1.5 BECAUSE THE EVIDENCE OF THE VALUER IN ABSENCE O F ANY CONVINCING EVIDENCE BY DEPARTMENT TO REBUT THE VALU ER REPORT DESERVE TO BE ACCEPTED. 1.6 BECAUSE THE EXEMPLARS FILED BY A.O. ARE NOT COM PARABLE DULY CONTROVERTED BY FILING OF COUNTER AFFIDAVIT NO FUR THER EVIDENCE WAS ADDUCED BY THE LD. A.O. TO NEGATIVE THE CONTENTS OF THE AFFIDAVIT. 2.1 BECAUSE THE LD. CIT(A) HAS ERRED IN HOLDING THA T THE AMOUNT RECEIVED FROM SHRI CHETAN MALIK OF ` 9 41 816/- BE TAXED U/S 55(2) AS CAPITAL GAIN TAKING COST AS NIL INSTEAD OF BEING TAXED UNDER THE HEAD PROFIT FROM BUSINESS THE RECEIPTS BEING IN NATURE OF THE PROJECT OF COL ONY IS IN THE NATURE OF BUSINESS RECEIPTS. 2.2 BECAUSE THE ABOVE AMOUNT RECEIVED OF ` 9 41 816/- BESIDES THE AMOUNT OF ` 27 04 860/- OUT OF SALE PROCEEDS OF PLOTS HAS BEEN SET OF AGAINST DEVELOPMENT COST INCURRED ON COMPLETION OF THE PROJECT THE ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 3 SAID AMOUNT WOULD BECOME CHARGEABLE TO TAX IN THE F INAL YEAR OF ACCOUNTING. THE INCOME TAX HAS BEEN PAID ON NET ACCRUAL OF INCO ME IN THE FINAL YEAR INCLUDING THE AMOUNTS OF ` 9 41 816/- RECEIVED FROM SHRI CHETAN MALIK AND AS SUCH THE APPELLANT CANNOT BE M ADE TO PAY TAX TWICE AT THE SAME AMOUNT. 3. BECAUSE THE APPELLANT MAY BE PERMITTED TO URGE A NY OTHER AND FURTHER GROUNDS OF LAW OR OF FACT EMERGING AT THE T IME OF HEARING OF THIS APPEAL. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LD. CIT(A)-I AGRA HAS ERRED IN LAW AN D ON FACTS IN DIRECTING TO ADOPT FAIR MARKET VALUE OF LAND CONVE RTED INTO STOCK IN TRADE ON 05.05.1995 AT ` 105/- PER SQ. METERS AS ON 01.04.1981 AND ` 496/- PER SQ. METERS AS ON 05.05.1995 RESPECTIVELY AS AGAINST ` 30/- PER SQ. METERS AS ON 01.04.1981 AND ` 600/- PER SQ. METERS AS ON 05.05.1995 ADOPTED BY THE A.O. IGNORING THE FACTS M ENTIONED IN THE ASSESSMENT ORDER AND COMPARABLE SALE INSTANCES SUBM ITTED DURING THE COURSE OF APPEAL PROCEEDINGS; 2. THAT THE LD. CIT(A)-I AGRA HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO WORK OUT THE INDEXED COST OF ACQUISITI ON BASED ON F.Y. 1981-82 IGNORING THE SPECIFIC PROVISIONS OF EXPLANA TION (III) TO SECTION 48 OF THE INCOME TAX ACT 1961; 3. THAT THE LD. CIT(A)-I AGRA HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO ASSESS THE AMOUNT OF ` 9 41 816/- AS CAPITAL GAIN INSTEAD OF INCOME FROM OTHER SOURCES; 4. THAT THE ORDER OF THE CIT(A)-I AGRA IS ERRONEOU S IN LAW AND ON THE FACTS OF THE CASE AND THAT THE ORDER OF THE A.O . BE RESTORED. ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 4 4. IN GROUND NOS.1.1 TO 1.6 OF THE ASSESSEES APPEA L AND GROUND NOS.1 & 2 OF REVENUES APPEAL THE BRIEF FACTS AS PER ASSESSING OFFICER S ORDER VIDE PARAGRAPHS NOS 5.1 5.2 5.3 & 6 ARE AS UNDER :- 5.1 THE ASSESSEE HAS OPTED FOR THE FAIR MARKET VAL UE AS ON 1.4.1981. THE ASSESSEE WAS ASKED TO JUSTIFY THE VALUE ADOPTED AS ON 1.4.1981 & 5.5.1995 AND AS TO WHY THE FAIR MARKET OF LAND BE N OT TAKEN AT CIRCLE RATES. IN REPLY THE ASSESSEE STRONGLY RELIED UPON THE REPORT OF THE APPROVED VALUER FILED BY IT. IT IS STATED THAT THE LAND WAS VALUED AS ON 1.4.1981 & 5.5.1995 BY THE REGISTERED VALUER WHO H AS VALUED THE SAID LAND @ 180/- & 415/- RESPECTIVELY PER SQ. MTS AND THE SAME SHOULD BE TAKEN FOR WORKING OUT THE FAIR MARKET OF THE LAND AS ON 1.4.81 AND 5.5.1995. THE ASSESSEE HAS ALSO RELIED UPON DECISIONS OF THE HONBLE SUPREME COURT. 5.2 VALUATION REPORTS FILED DURING THE COURSE OF AS SESSMENT PROCEEDING HAVE BEEN EXAMINED. THE REGISTERED VALU ER HAS NOT GIVEN ANY BASIS OF TAKING THE VALUATION OF THE LAND AT ` 180/- PER SQ. MTS. AND VALUED THE SAME ON THE BASIS OF CONSULTATION WI TH THE PEOPLE OF LOCALITY. IT IS ALSO MENTIONED IN THE VALUATION RE PORT THAT LAND IS LOCATED BY THE SIDE OF NH-II NEAR FCI GODOWNS. THE RADHA NAGAR AND KRISHAN NAGAR COLONIES WERE LOCATED NEARBY. TH US ACCORDING TO THE VALUATION OFFICER THE LAND WILL EMERGE AS A VER Y IMPORTANT CITY CENTRE IN FUTURE. THUS IT IS CLEAR THAT REGISTERED VALUER INFLUENCED BY THE FUTURE PROBABILITIES TO VALUE THE LAND AS ON 1. 4.1981 AND HE HAS VALUED THE A ` 180/- PER SQ. METER AS AGAINST CIRCLE RATES DETERMI NED BY THE STAMP AUTHORITIES AT ` 30/- PER SQ. MTS. IT IS INTERESTING TO NOTE THAT THE SAME VALUER WHILE WORKING OUT THE VALUE OF LAND AS ON 1.5.95 VALUED THE SAME LAND BELOW THE CIRCLE RATES ON THE BASIS OF SURVEY OF LOCALITY AND DISCUSSION WITH THE KNOWLEDGEABLE PERS ONS AND ALSO THE FINANCE OFFICE OF THE GOVT. IT IS NOT UNDERSTOOD A S TO HOW TWO SEPARATE CRITERIA CAN BE ADOPTED FOR VALUATION OF SAME LAND I.E. AS ON 1.4.1981 MUCH HIGHER THE CIRCLE RATE AND AS ON 5.5.1995 BELO W THE CIRCLE RATES PARTICULARLY WHEN NO SPECIFIC REASON HAS BEEN MENTI ONED TO SHOW THAT LAND WAS SO POTENTIAL AS ON 1.4.1981 WHICH LEAD TO VALUATION MUCH ABOVE THE CIRCLE RATES AND THAT POTENTIALITY WAS LO ST IN 1995 WHICH ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 5 LEAD TO VALUATION BELOW THE CIRCLE RATES. IN VIEW OF THEE FACTS THE VALUATION SHOWN BY THE ON THE BASIS OF VALUATION RE PORT CANNOT BE ACCEPTED. THE DECISIONS RELIED UPON BY THE ASSESSE E OF THE HONBLE SUPREME COURT ARE IN RELATION TO LAND ACQUISITION A CT AND ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE FOR ASCERTAI NING THE FAIR MARKET VALUE FOR THE PURPOSE OF WORKING OUT CAPITAL GAIN O N CONVERSION OF LAND INTO SOCK IN TRADE. THEREFORE THE FAIR MARKE T VALUE IS TAKEN FOR CAPITAL GAIN PURPOSES AS PER DISCUSSION HEREINAFTER . FAIR MARKET VALUE IS DEFINED IN SECTION 2(22B) OF T HE I.T. ACT WHICH READS AS UNDER :- FAIR MARKET VALUE IN RELATION TO A CAPITAL ASSET MEANS (I) THE PRICE THAT THE CAPITAL ASSET WOULD ORDINARY FETCH ON SALE IN THE OPEN MARKET ON THE RELEVANT DATE; AND (II) WHERE THE PRICE REFERRED TO IN SUB-CLAUSE (I) IS NOT ASCERTAINABLE SUCH PRICE AS MAY BE DETERMINED IN A CCORDANCE WITH RULES MADE UNDER THIS ACT 5.3 IN THE CASE OF THE ASSESSEE PRICE REFERRED TO I N SUB-CLAUSE (I) IS NOT ASCERTAINABLE FOR WANT OF ANY EVIDENCE. THEREF ORE AS PER PROVISIONS OF SECTION 2(22B) AND AS PER PROVISIONS OF INCOME TAX THE REASONABLE FAIR MARKET VALUE WOULD BE THE CIRCLE RA TES AS FIXED BY THE STAMP AUTHORITIES BECAUSE THE PRICE THAT THE SAID L AND WOULD FETCH ON SALE ON 1.4.1981 IS NOT ASCERTAINABLE BY ANY COMPAR ABLE SALE OF LAND IN SAME LOCALITY WITH THE ASSESSEE. HENCE THE FAIR MARKET VALUE AS ON 1.4.1981 IS TAKEN AT ` 30/- PER SQ. METER OR ` 25.038 PER SQ. YDS. ON THE BASIS OF CIRCLE RATES FIXED BY THE STAMP AUTHOR ITIES. 6. THE OTHER ISSUE INVOLVED IS REGARDING THE FAIR M ARKET VALUE AS ON 1.4.1981 OF SALEABLE AREA. TOTAL AREA OF THE LA ND WAS 50602.24 SQ. YD. OUT OF WHICH SALEABLE AREA WORKED OUT WAS 28179 .58 SQ. YD. ONLY. THE ASSESSEE HAS WORKED OUT THE FAIR MARKET VALUE O F THE SALEABLE AREA AT ` 20/- PER SQ. MTS. SINCE FAIR MARKET VALUE OF THE S AID LAND IS TAKEN AT ` 25.038 PER SQ. YDS. AS DISCUSSED ABOVE THE FAIR MA RKET VALUE OF SALEABLE AREA IS WORKED OUT AS UNDER :- TOTAL AREA OF LAND 50 602.24 SQ. YDS. SALEABLE AREA 28 179.57 SQ. YD. FAIR MARKET VALUE AS ON 1.4.1981 OF SALEABLE AREA @ ` 25.038 SQ. YDS. 50602.24X25.038 28 179.58 ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 6 = ` 44.96 PER SQ. YD. = 28 179.57 X 44.96 = ` 12 66 953/- THUS FAIR MARKET VALUE AS ON 1.4.1981 OF TOTAL ARE A 50602 SW. YD. OR SALEABLE AREA 28 179 SQ. YD. COMES TO ` 1266953/- WHICH WILL BE CONSIDERED WHILE WORKING OUT THE LONG TERM CAPIT AL GAIN ON LAND ON THE DATE OF CONVERSION. OUT OF THE ABOVE SALEABLE AREA THE ASSESSEE HAS SOL D 1529.99 SQ. YD. THE VALUE OF THIS AREA SOLD DURING THE YEA R UNDER CONSIDERATION IS WORKED OUT AS UNDER - FMV AS ON 1.4.81 OF PLOT AREA SOLD DURING THE YEAR 1529.99X44.96 = ` 68780 5. BEFORE THE LD. CIT(A) THE ASSESSEE REITERATED I TS CLAIM FOR ADOPTION OF THE FAIR MARKET VALUE AS ON 01.04.1981 @ ` 180/- PER SQ. MTR. BASED ON THE REPORT OF THE REGISTERED VALUER AND ACCORDINGLY HE MADE THE S UBMISSIONS DATED 14.07.2009 WHICH ARE REPRODUCED VIDE PARAGRAPH NO.2.2 OF THE L D. CIT(A)S ORDER. THE SAID SUBMISSIONS WERE FORWARDED TO THE ASSESSING OFFICER FOR HIS COMMENTS AND THE A.O. VIDE LETTER DATED 28.07.2009 REFUTED THE ARGUM ENTS OF THE ASSESSEE WHICH ARE REPRODUCED VIDE PARAGRAPH NO.2.3 OF THE LD. CIT(A) S ORDER. THE ASSESSEE HAD SUBMITTED THE AFFIDAVIT DATED 13.08.2009 BEFORE THE LD. CIT(A) WHICH IS REPRODUCED VIDE PARAGRAPH NO.2.4 OF LD. CIT(A)S ORDER. IN AD DITION THE ASSESSEE IN REJOINDER DATED 26.08.2009 HAD REITERATED THE AVERMENTS MADE IN HIS WRITTEN SUBMISSIONS WHICH ARE REPRODUCED AT PARAGRAPH NO.2.5 OF LD. CIT (A)S ORDER. VIDE REPORT DATED 09.10.2009 THE A.O. FURNISHED THE REQUISITE INFORMA TION AS PER DIRECTIONS ISSUED ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 7 UNDER SECTION 250(4) OF THE ACT BY THE LD. CIT(A) W ITH REGARD TO THE ACTUAL SALE INSTANCES OF THE SURROUNDING AREA WHICH CAN BE TERM ED AS COMPARABLE SALES INSTANCES AS ON 01.04.1981. VIDE REPORT DATED 09.1 0.2009 THE ASSESSING OFFICER FURNISHED THE REQUISITE INFORMATION WHICH ARE REPRO DUCED VIDE PARAGRAPH NO.2.6 OF LD. CIT(A)S ORDER. THIS REPORT OF THE A.O. DATED 0 9.10.2009 WAS SENT TO THE ASSESSEE FOR REBUTTAL VIDE LETTER DATED 19.10.2009 BY THE LD. CIT(A). THE ASSESSEE OBJECTED TO THE COMPARISON OF THE RATES VIDE AFFIDA VIT DATED 13.11.2009. ON CONSIDERATION OF THE FACTS AND THE RIVAL CONTENTION S THE LD. CIT(A) VIDE PARAGRAPH NO.2.9 OF HIS ORDER OBSERVED THAT THE FAIR MARKET V ALUE @ ` 30/- PER SQ. MTR. OR 25.03 SQ. YARD IS NOT TENABLE AND THE LD. CIT(A) TH OUGHT FAIR AND REASONABLE TO ADOPT THE FAIR MARKET VALUE AT THE AVERAGE OF THE R ATE OF ` 30/- PER SQ. MTR. ADOPTED BY THE A.O. AND ` 180/- PER SQ. MTR. ADOPTED BY THE ASSESSEE. ACCORD INGLY HE DIRECTED THE A.O. TO WORK OUT THE FAIR MARKET VALUE AS ON 01.04.1981 BY APPLYING THE RATE AT ` 105/- PER SQ. MTR. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE HAD SUBMITTED THE VALUATION OF THE REGISTE RED VALUER FOR THE VALUATION OF THE LAND AS AT 01.04.1981 AT ` 180/- PER SQ. MTR. AS PER THE VALUATION REPORT OF THE REGISTERED VALUER THE PROPERTY IN QUESTION IS A LA RGE PIECE OF OPEN LAND LOCATED JUST BY THE SIDE OF MAIN ROAD GOING TO DELHI IN FACT TH IS IS THE NATIONAL HIGHWAY NO.II ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 8 WHICH IS A VERY PROMISING LOCATION BEING IN THE CLO SE VICINITY OF FCI GODOWNS TRIVENI STRUCTURES. THE FAMOUS AREA OF IMPORTANT R ESIDENTIAL COLONIES LIKE RADHA VIHAR AND KRISHNA NAGAR ARE ALSO NEARBY. THIS MAKE S THE AREA VERY MUCH IN DEMAND AND COSTLY. THE REGISTERED VALUER WENT AROU ND THE ENTIRE SURROUNDING AREA AND DISCUSSED WITH PEOPLE HAVING KNOWLEDGE OF REAL ESTATE REGARDING FUTURE PROSPECTS AND THE PRICING OF THE LAND AND THIS WAS FURTHER CHECKED WITH THE CONCERNED REVENUE AUTHORITIES IN THE OFFICE OF THE COLLECTOR OF MATHURA. THE AREA BEING EXTRA LARGE THEREFORE VALUATION HAS BEEN DO NE ON BELTING ANALYSIS WHICH COSTS AVERAGE LAND RATE OF ` 180/- PER SQ. MTR. IT IS ALSO MATTER OF RECORD THA T THE ASSESSEE HAD FILED THESE REPORTS OF THE REGISTERED VALUER ALONGWITH FIRST RETURN FOR THE ASSESSMENT YEAR 2001-02 AND THE DEPARTMENT HAS BEEN CONSISTENTLY ACCEPTING THE SAID VALUATION SINCE ASSESSMENT YEAR 2001-02 AN D IN THE SUBSEQUENT YEARS OF ASSESSMENTS AND THERE IS NO REASON TO DEVIATE FROM SUCH CONSISTENCY. THE REGISTERED VALUER IS AN EXPERT IN HIS FIELD AND THE OPINION OF SUCH EXPERT OUGHT NOT TO HAVE BEEN REJECTED. THE GOVERNMENT APPROVED VAL UER IS ALSO AN EXPERT THOUGH THE METHOD OF VALUATION MAY BE DIFFERENT FROM ONE V ALUER TO ANOTHER VALUER BUT THE OPINION OF SUCH EXPERTS CANNOT BE REJECTED SHABBILY . THOUGH THESE REGISTERED VALUERS ARE APPOINTED UNDER A PRESCRIBED RIGOROUS P ROCEDURE AND THE LEGISLATURE ITSELF HAS PRESCRIBED THE QUALIFICATIONS OF SUCH VA LUERS. THOUGH THE VALUATION OFFICER FOR ALL PRACTICAL PURPOSES IS AN OFFICER OF THE INCOME TAX DEPARTMENT ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 9 WHEREAS REGISTERED VALUER IS NOT. AT THE MOST THE A.O. SHOULD HAVE REFERRED THE MATTER TO THE VALUATION OFFICER WHO COULD HAVE OBTA INED THE OPINION FROM THE SAID VALUATION OFFICER BUT THE SAME HAS NOT BEEN DONE. THE ASSESSING OFFICER HIMSELF HAS STEPPED INTO THE SHOES OF THE VALUATION OFFICER . THESE FINDINGS ARE SUPPORTED BY THE DECISION OF VARIOUS COURTS OF LAW. ALSO THE VALUE DETERMINED FOR THE PURPOSE OF STAMP DUTY CANNOT BE SAID TO BE THE ACTUAL CONSI DERATION PASSING BETWEEN THE PARTIES TO A SALE. THE ACTUAL CONSIDERATION MAY BE MORE OR LESS. EVEN THE VALUATION REGISTER PREPARED AND MAINTAINED FOR THE PURPOSE OF COLLECTING STAMP DUTY HAS NO STATUTORY BASIS OR FORCE. IT CANNOT FORM A FOUNDAT ION TO DETERMINE THE MARKET VALUE MENTIONED THEREUNDER IN AN INSTRUMENT BROUGHT FOR R EGISTRATION. THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE AUTHORITIE S BELOW CANNOT IGNORE THE VALUATION MADE BY THE REGISTERED VALUER IN THE ABSE NCE OF ANY DVOS REPORT AND THEREFORE THE A.O. IS NOT JUSTIFIED IN ADOPTING TH E FAIR MARKET VALUE AT ` 30/- PER SQ. METER AND ALSO THE LD. CIT(A) IS NOT JUSTIFIED IN A DOPTING THE AVERAGE RATE AT ` 105/- PER SQUARE METER. THEREFORE THE A.O. IS DIRECTED TO ADOPT THE RATE OF ` 180/- PER SQ. MTR. ADOPTED BY THE ASSESSEE ON THE BASIS OF TH E DVOS REPORT AND ALLOW THE CLAIM OF THE ASSESSEE. THUS GROUND NOS.1.1 TO 1.6 OF THE ASSESSEE ARE ALLOWED AND GROUND NOS.1 & 2 OF THE REVENUE ARE DISMISSED. ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 10 7. IN GROUND NOS.2.1 AND 2.2 OF THE ASSESSEE AND GR OUND NO.3 OF THE REVENUE THE BRIEF FACTS ARE THAT THE A.O. HAS OBSERVED THA T THE ASSESSEE HAS SHOWN RECEIPT OF 25% OF THE SALE CONSIDERATION IN VISHWA LAKSHMI NAG AR (EXTENSION) AT ` 9 41 816/-. BEFORE THE A.O. THE ASSESSEE EXPLAINE D THAT ONE SHRI CHETAN MALIK HAS DEVELOPED A COLONY BEHIND THE ASSESSEES COLONY FOR WHICH HE REQUIRED PASSAGE THROUGH THE ASSESSEES COLONY. IN LIEU OF PROVIDIN G RIGHT OF WAY SHRI CHETAN MALIK CONTRIBUTED ` 9 41 816/- BY WAY OF REIMBURSEMENT OF PART OF THE DEVELOPMENT EXPENSES. HOWEVER NO SUCH AGREEMENT C OULD BE PRODUCED BY THE ASSESSEE. THE A.O. HELD THAT UNDISPUTEDLY THE ASSE SSEE HAS RECEIVED ` 9 41 816/- FROM SHRI CHETAN MALIK AS CONSIDERATION FOR RIGHT T O WAY FROM THE COLONY. HENCE THE SAID AMOUNT IS ASSESSABLE IN THE YEAR UNDER CON SIDERATION AS INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER ACCORDINGLY TAXED ` 9 41 816/- AS INCOME FROM OTHER SOURCES. 8. BEFORE THE LD. CIT(A) THE ASSESSEE FILED AN APPL ICATION UNDER RULE 46A ALONGWITH COPY OF AGREEMENT DATED 07.07.2005 ENTERE D WITH SHRI CHETAN MALIK. THE SAID APPLICATION UNDER RULE 46A ALONGWITH THE S AID AGREEMENT WERE FORWARDED TO THE ASSESSING OFFICER FOR COMMENTS VIDE LETTER D ATED 14.07.2009 AND ACCORDINGLY THE ASSESSING OFFICER SUBMITTED HIS REP ORT DATED 28.07.2009 REITERATING THEREIN THE FINDING GIVEN IN THE ASSESSMENT ORDER V IDE PARAGRAPH NO.5.6 TO 5.9. THE ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 11 LD. CIT(A) OBSERVED THAT THE GAINS OF ` 9 41 816/- IS LIABLE TO BE TAXED UNDER SECTION 55(2) OF THE ACT AND ACCORDINGLY DIRECTED T O TAX ` 9 41 816/- AS CAPITAL GAINS. SINCE THERE IS NO COST OF ACQUISITION THE COST THEREOF SHALL BE TAKEN AS NIL AS PER SECTION 55(2)(II) OF THE ACT. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSING OFFICER HAS MADE THE ASSESSMENT TREATING THE SAID RECEIPT AS INCOME FROM OTHER SOURCES WHEREAS THE ASSESSEE HAS CLAIMED THE SAME AS INCOME FROM BUSINESS BY TREATING THE SAID RIGHT OF WAY AS STOCK IN TRADE . THE APPROACH OF THE A.O. AB- INITIO CANNOT BE ACCEPTED SINCE THE QUESTION WHICH HAS TO BE ANSWERED BY THE A.O. IS WHETHER THIS RIGHT OF WAY FOR WHICH THE ASSESSEE WAS PAID ` 9 41.816/- IS A CAPITAL ASSET CHARGEABLE UNDER SECTION 45(1) OF THE ACT OR IT IS A STOCK IN TRADE CHARGEABLE AS INCOME FROM BUSINESS. IT IS EVIDENT FROM THE COPY OF THE AGREEMENT PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSE E THAT THE LD. CIT(A) VIDE PARA CLAUSE (VI) OF THE SAID AGREEMENT THAT SALE PROCEED S OF THE PLOTS AND THE COLONY TO BE DEVELOPED BY HIM AND 25% WILL BE PAID IMMEDIATEL Y AT THE TIME OF SALE. THE LAND WAS DEVELOPED BY THE ASSESSEE WHICH WAS CONVER TED INTO STOCK IN TRADE ON 05.05.1995 IS A MATTER OF RECORD WHICH HAS NOT BEEN TAKEN INTO CONSIDERATION BY EITHER OF THE AUTHORITIES BELOW. THIS MATTER IS NO T IN DISPUTE THAT THE ASSESSEE HAD CONVERTED THE SAID RIGHT OF WAY IN STOCK IN TRADE W HICH HAS ALL TOGETHER BEEN ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 12 BRUSHED ASIDE BY THE AUTHORITIES BELOW. THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CASE ESSENTIALLY THE RECEIPTS RECEIVED BY T HE ASSESSEE BY TRANSFERRING IN THE RIGHT TO WAY TO SHRI CHETAN MALIK HAS TO BE ASSESSE D UNDER THE HEAD INCOME FROM BUSINESS AND NOT UNDER THE HEAD CAPITAL GAINS AS OB SERVED BY THE LD. CIT(A). THE A.O. IS DIRECTED TO ACT ACCORDINGLY. THUS GROUND NOS.2.1 & 2.2 OF THE ASSESSEE ARE ALLOWED AND GROUND NO.3 OF THE REVENUE IS DISMISSED . 10. GROUND NO.3 OF THE ASSESSEE AND GROUND NO.4 OF THE REVENUE ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATI ON. 11. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO .86/AGR/2010 IS ALLOWED AND APPEAL OF THE REVENUE IN ITA NO.88/AGR/2010 IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.11.2011). SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 18 TH NOVEMBER 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R. ITAT AGRA BENCH AGRA/GUARD FILE. ITA NOS.86 & 88/AGR/2010 A.YS. 2006-07 13 BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY