2022 (5) TMI 1403 - ITAT SURAT

Reopening of assessment u/s 147 - LTCG - Whether agricultural land not a ‘capital asset’? - HELD THAT:- CIT(A) after considering the submissions of the assessee took his view that notice under section 148 was issued within four years from the end of relevant assessment year. Therefore, provision of section 147 is applicable. Further, no assessment under section 143(3) was passed. AO issued noticed under section 148 after receiving information about payment of compensation to assessee. In the return of income filed under section 139 of the Act, the assessee has not shown any income under the head “LTCG”. AO issued notice after recording reasons for escapement of income. AO had formed his believe after recording all the aspects and Notification of Government of Gujarat about Notified area of Hazira - CIT(A) noted that Chapter XVI-A of Gujarat Municipalities Act, 1963 (GUJ 34 of 1964), defines the Notified area as urban area or part thereof specified as Notified area to be an Industrial Township Area under the provisions of Clause-(1) of Article 243Q of the Constitution of India. Essar Steel Ltd., is located in the said Notified area. The composition of Gujarat Panchayat Act, 1993 ceased to apply in respect of Notified area from the date of Notification. Further, as per section 264B of the said Act a “person or committee” appointed for assessment / recovery of taxes of such area shall be deemed to be the “Municipal Borough”. On the basis of such reasons, the Ld. CIT(A) held the re-opening as valid.

Agricultural land OR capital asset - whether the land is a capital asset under section 2(14) r.w.s. 2(14)(iii)(a)? - HELD THAT:- As satellite images shows that no agriculture activities were carried on the land. DR also submitted that report of NRSC is scientific report and conclusive proof. We do not find merit in the submissions of the ld DR, as disclaimer, attach to the said report, NRSC, itself reported the shape file provided by CIT(A) did not match with field boundaries of the reference satellite data, with implication on accuracies of location area. Further, in absence in absence of adequate number of GCPs, rubber sheeting technique carried out also did not yield the desirable results. And that concurrent ground truth was not available for thus study and interpretation is exclusively based on the manifestation of features and experience of the interpreter, which could be subjective. It is also mention in the last para in the disclaimer that results have to be corroborative in association with the ground observation, available, if any. Thus, the report itself contents vague observation and cannot be used as evidence or conclusive or expert report based of any scientific evidence against the assessee. Moreover, said report was not provided to the assessee. Thus, by applying of such test we find that the land of the assessee acquired by Special Land acquisition officer is agriculture land. In the result, the assessee is also succeeded on this issue/ ground as well.

Considering the facts that we have already held that the land of the assessee is not ‘capital asset’ as the same does not fall in municipal area, Hazira Notified area is not a municipality or deemed municipality and on alternative plea also held eligible for exemption under section 10(37).

AO treated part of compensation as income from ‘other sources’ - On consideration of facts, we find that in some of the cases, there is payment against the built-up units/ pucca houses. Additional payments were also made only for those landowners who were holding such built-up unit. We find that no evidence was furnished by the land owners about the cost of acquisition or improvement thereof, either before the assessing officer or before ld CIT(A). Even before us, no such estimate of cost of such built-up structure is furnished. As recorded above the ld CIT(A) estimated the cost of acquisition of built-up units/ pucca structure @ 50% of the cost awarded for such built-up / pucca structure in the award. Considering the area where in the such built-up unit or pucca house is situated, it our view, the estimation of it’s cost of acquisition is on lower side, therefore we deem it fit and proper to increase it to 60%, would be reasonable and fair. Therefore, we direct the Assessing officer to treat the cost of acquisition @ 60% of Rs. 13.00 lacs as cost of acquisition. In the result, the corresponding ground of appeal is partly allowed.

Agriculture income as unexplained cash credit - Considering the facts that we have already held that the land of assessee was agriculture and was being used as such, therefore, the income offered by assessee as agriculture is also allowed and the assessing officer is directed to delete this addition. In the result, the corresponding ground of appeal is allowed.