TMI Blog2009 (11) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 30-3-2006 2. WTA 02/09 -do- -do- 28-11-2008 -do- 3. WTA 03/09 -do- 1999-2000 -do- -do- 4. WTA 04/09 Ajit Singh (HUF) 1998-99 28-11-2008 -do- 5. WTA 05/09 -do- 1999-2000 -do- -do- 6. IT(SS) 25/09 Mangal Singh (HUF) 1-4-87 to 18-2-97 -do- 26-2-1999 7. IT(SS) 26/09 Department 1987-88 to 10-2-97 -do- 15-3-2005 8. ITA 576/09 Mangal Singh 1997-98 -do- 15-3-2005 9. ITA 591/09 Department 1997-98 -do- -do- 2. First we take IT(SS) A.No. 25/Delhi/2009. The grounds of appeal taken by the assessee are not in consonance with rule 8 of the ITAT s Rules, they are descriptive and argumentative in nature. In brief, the grievance of assessee relates to taxability of income on account of capital gain as a result of transfer of agricultural land. 3. The brief facts of the case are that a search and seizure operation under section 132 of the Act was carried out at the reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out by the assessee that land was transferred on 9-2-1993 by way of a consent decree passed in civil suit No. 51 of 1992. The mutation of change of ownership has been effected in the revenue record maintained under the Punjab Land Revenue Act in pursuance of this Court decree. The Assessing Officer did not find merit in these contentions of the assessee. He determined the capital gain of Rs. 1,10,58,943 and ultimately determined the income of assessee at Rs. 1,18,63,830. 4. Dissatisfied with the addition, assessee carried the matter in appeal before the learned CIT (Appeals). Assessee reiterated his contentions as were raised before the Assessing Officer. He has also challenged that Assessing Officer has erroneously observed that the distance of the Village Shahpur is about 3 kms. from old Delhi Road and the straight distance of these pieces of land from municipal limit of Gurgaon is 5 kms. only. Learned CIT (Appeals) has reappreciated the facts and circumstances of the case and held that capital gain on sale of agricultural land is not taxable because the land sold by assessee is not covered under the definition of capital assets in terms of section 2( 14 ) of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already held that the said land is not covered by the definition of capital asset under section 2( 14 ) of the Income-tax Act, I am not dealing with the other grounds of appeal urged by the assessee." 5. Dissatisfied with the order of the Assessing Officer, revenue filed an appeal bearing No. IT(SS)A. No. 12/Delhi/2000 before the ITAT. The revenue argued before the ITAT that assessee had received some payment in 1996. Learned CIT (Appeals) failed to look into these evidence while holding that the land transferred by the assessee is not a capital asset for charging the assessee to capital gain tax. The ITAT has set aside the issue to the file of the Assessing Officer. The findings of the ITAT recorded in paragraph 6 read as under : "6. We have heard the parties and have perused the records of the case. The issue involved is whether the agricultural land in question which has been sold/transferred by the assessee, to the DLF Universal Ltd. are covered under the definition of "Capital Assets" as provided under section 2( 14 ) of the Income-tax Act, 1961. According to the assessee the said lands do not fall within the definition of capital assets as the lands in question are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below while deciding the main issue. In the facts and circumstances of the case, we are of the view that in the interest of justice, the matter needs so be set aside and restore to the file of the Assessing Officer who may examine the matter afresh in accordance with law keeping in view both the agreements, the original agreement dated 8-2-1993 and the settlement made in 1997. Needless to mention that s the assessee may be given reasonable opportunity of being heard. In the result, the appeal of the revenue is allowed for statistical purposes." 6. It emerges out from the record that when dispute was pending before the ITAT, the Assessing Officer has reopened the block assessment on 19-9-2003 by issuing a notice under section 148 of the Act. He passed a reassessment order on 15-3-2005 and determined the undisclosed income of the assessee at Rs. 4,57,87,892. In this order, the Assessing Officer has added the value of plot allotted to the assessee by DLF at the asking of M/s. Bhagirathi Investment (P.) Ltd. in lieu of original agreement. This reassessment order was passed by the Assessing Officer under section l58BC, read with section 147, of the Act on 15-3-2005. 7. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the status of agricultural land whether capital assets or not, it has to be seen that such a land should be situated beyond a distance of 2 kms. on either side of the Delhi-Gurgaon Road up to 6 kms. from Delhi to Gurgaon on High Way. He submitted that undisputedly the land of assessee was situated within the limit of 6 kms. from Delhi on NH-8 but it is not abutting within the 2 kms. distance of this road. Explaining this, further he pointed out that after a distance of 6 kms., it is meaningless where the land is situated even if it is situated adjacent to the national highway, it will not be a capital assets. Thus, According to this notification, land of assessee does not fall within the ambit of expression "capital assets" employed in section 2( 14 ) of the Act. For buttressing his contention, he took us through the copy of the notification available at pages 99 and 103 of the paper book. Referring to the original assessment order dated 26-2-1999 he pointed out that Assessing Officer has agreed to the fact that land of assessee is situated beyond a distance of 2 kms. from the national highway, however, he did not apply the notification of 1973 rather he applied the notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons have been resolved by way of a compromise decree dated 19-12-1998. The assessee in between no doubt received a sum of Rs. 1 crore on 27-6-1996. He pointed out that as far as accrual of capital gain on transfer of a capital assets is concerned, it is to be construed as accrued on the day when the transfer has taken place. The date of the transfer is the decisive factor of accrual of capital gain. It is immaterial when the consideration for the transfer of capital asset was received by an assessee. For buttressing his proposition, he relied upon the judgment of the Hon ble Andhra Pradesh High Court in the case of Addl. CIT v. G.M. Omarkhan [1979] 116 ITR 950 . CIT v. Rohtak Textile Mills Ltd. [1982] 138 ITR 195 (Delhi). He further contended that what the parties did subsequently is not relevant. In support of his contentions, he relied upon rendered in the cases of T.V. Sundaram Iyengar Sons Ltd. v. CIT [1959] 37 ITR 26 (Mad.) and CED v. Smt. Chander Kala Garg [1983] 15 Taxman 166 (All.) and Shah Vrajlal Madhavji v. CIT [1974] 95 ITR 614 (Ker.). He also relied upon the judgment of the Hon ble Gujarat High Court in the case of B.N. Vyas v. CIT [1986] 159 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the already paid one. This Rs. 3 crores was paid through account payee cheque to the assessee along with co-owner. Subsequent to this a formal decree has been drawn by compromising the dispute before the trial court. The actual transfer has taken place on the day when this Rs. 3 crores was paid to the assessee along with other co-owners. In this way, he relied upon the orders of the revenue authorities below. 13. We have considered the rival contentions and gone through the record carefully. Section 45 of the Act provides that any profit or gain arising from the transfer of a capital assets, effected in the previous year shall, save as otherwise provided in sections 54, 54B, D, E, EA, EB, F, G and H of the Act shall be chargeable to income-tax under the head "Capital gains" and shall be deemed to be the income of the previous year in which the transfer took place. The expression capital asset has been defined in section 2 sub-section (14) of the Act. Similarly, the expression transfer has been defined in section 2( 47 ) of the Act. Both these sections have a direct bearing on the controversy in hand, therefore, it is salutary upon us to take note of these clauses : "Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset; ( ii )it must have been transferred during the accounting period relevant to the assessment year; ( iii )capital gain must have arisen to an assessee on transfer of such assets. At the cost of repetition, we would like to observe that status of assessee s agricultural land, whether a capital asset or not could be determined only after the determination of the date of its transfer. If it is held that the transfer has taken place on 9-2-1993 then it would be excluded from the ambit of capital assets as per the exception provided in clause ( b ) of section 2( 14 ) sub-section ( iii ) of the Act. If it is held that transfer has taken place thereafter then according to the notification of 1994, the agricultural land of the assessee would be included in the definition of capital assets because of its geographical location. In the notification of 1994, the area abutting to national highway No. 8 leading from Delhi to Gurgaon has been enhanced and the land of assessee comes within the extended area of this notification. According to the assessee, the land in dispute was transferred on 9-2-1993 when the decree in civil suit Nos. 51 and 52 of 1992 were passed. These dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t representing written down value of said vehicle which was much lower then the price at which assets were sold. The assessee was assessed to capital gains tax on sum representing selling price less written down value of assets. The issue arose before the Hon ble Court was whether without any understating that price was to be paid to any future time, price become payable forthwith in the relevant accounting period and assessee obtained a right to receive price in that year and its profit, therefore, capital gains has arisen in that assessment year. The Hon ble Court has held that right to receive the price had accrued to the assessee in the accounting year relevant to the assessment year 1947-48. The Hon ble Court further held that in the subsequent years what parties did would not have any bearing on their tax liability for that year. Similarly, Hon ble Andhra Pradesh High Court has also considered this issue in the case of G.M. Omarkhan ( supra ). The Hon ble Court has considered four questions of law in this judgment. Question No. 3 is relevant for our proposition. It reads as under : "Whether the profits or gains arising from the transfer of a capital assets can be chargea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. This finding of the Assessing Officer reads as under : "Therefore, capital gains tax in this transaction is leviable on this assessee in the assessment year 1997-98 in the block period ending on 17-2-1997. Therefore, earlier notification dated 6-2-1973 is not applicable in this case. As per distance certificate filed by the assessee on 23-2-1999 village Sirhaul is at a distance of three and half km. from Delhi-Gurgaon Road and village Shahpur is at a distance of four and half km. from Delhi-Gurgaon Road. This distance has been physically verified and is about 3 km. from Old Delhi Road and it has also been verified that straight distance of these pieces of lands from Municipal Limits of Gurgaon is 5 km. only and these pieces of lands are situated within 8 KMs. of Municipal Limits of Gurgaon. 18. Apart from the above, the assessee has applied to the Tehsildar, Gurgaon under Right to Information Act and obtained a report which is placed on record at pages 243 and 244 of the paper book. According to this report of Asstt. Information Officer- cum -Tehsildar, Gurgaon, the lands of the assessee are situated at a distance of 2 kms. and 950 metres and 2 kms. and 500 metres. The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not take place as per Memorandum of Agreement of Exchange dated 8-2-1993. It was only an agreement. No documents relating to mutation of respective lands have been produced to prove that the land at village Shahpur and village Sarhaul was actually exchanged with land and village Balula". 20. These findings are factually incorrect. The assessee has produced copies of the decrees passed in civil suit Nos. 51 and 52 of 1992. He also produced copy of the mutation. The findings of the learned CIT (Appeals) that no evidence to prove that lands were actually exchanged and mutation was sanctioned recorded in paragraph Nos. 7.4 and 7.5 are to our mind factually incorrect. 21. Learned CIT (Appeals) while affirming the action of the Assessing Officer for holding that transfer has taken place in assessment year 1997-98 has considered one aspect, i.e., receipt of Rs. 3 crores by the assessee along with other two co-owners from the vendee. In the opinion of the Learned First Appellate Authority, receipt of this amount is a decisive factor for determining the date on which agricultural land of the assessee was transferred. On due consideration of this finding of the Learned First App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace on the date when vendee agreed to pay Rs. 45, certainly not. The transfer for the purpose of Income-tax Act, would be considered as taken place on the date when sale deed was executed and possessed on acceptance of part consideration was handed over to the vendee. Similarly, the payment of consideration in between pending of litigation would not be the conclusive date on which litigation has come to an end. The litigation would be considered as come to an end on the day when order is passed by the competent court resolving the dispute or rejecting the suit of the plaintiff, i.e., the date when judgment was pronounced. Thus, the inferences drawn by the Learned First Appellate Authority are not illogical but on misconstruction and misinterpretation of the facts and circumstances. This date when litigation has come to an end is 19-12-1998. Again it does not fall within the block period and assessee cannot be taxed on account of arisen of capital gains in a block assessment. In view of the above discussion, we hold that the land of assessee was transferred on 9-2-1993. It is not a capital assets in view of the 1973 s notification and no capital gains has arisen to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon ble Gujarat High Court rendered in the case of Cargo Clearing Agency v. Jt. CIT [2008] 307 ITR 1 and the order of the ITAT in the case of Western India Bakers (P.) Ltd. v. Dy. CIT [2003] 87 ITD 607 (Mum.). He prayed that in view of the above, appeal of the revenue be dismissed. 25. Learned DR, on the other hand, was unable to controvert the contentions of the learned counsel for the assessee. 26. We have considered the rival contentions and gone through the record carefully. Learned CIT (Appeals) while holding that a block assessment cannot be reopened by issuance of notice under section 148 of the Act has followed the decision of Hon ble Gujarat High Court as well as the order of the ITAT. In these decisions, it has been held that provisions contained in Chapter XIV-B are special provisions and override general provisions of the Act. Special procedure has been prescribed for block assessment under Chapter XIV-B and there is no mention of section 147 or section 148 in that Chapter. Therefore, the block assessment cannot be reopened. We do not see any error in the order of the learned CIT (Appeals). Learned First Appellate Authority has rightly placed its mul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d received a sum of Rs. 3 crores on 27-6-1996. They have received 22 plots also in lieu of transfer of their agricultural land. The contention of the assessee before the revenue authorities below was that dispute in respect of allotment of plot by the vendee to the assessee was resolved on 19-12-1998 when the Court has passed a decree on the basis of compromise decree arrived at between the parties. As per this compromise, plots were allotted on 16-1-1999 and, therefore, the value of these plots cannot be brought to tax for the purpose of wealth-tax in assessment year 1998-99. 30. With the assistance of learned representatives, we have gone through the records carefully. On perusal of learned CWT (Appeals) s order, it reveal that for holding the taxability of the value of these plots in assessment year 1998-99, learned CIT (Appeals) has referred his findings recorded in paragraph No. 7.7 in the block assessment order dated 28-11-2008. We have dealt with this finding of the learned CIT (Appeals) in paragraph No. 21 of this order and held that no transfer of agricultural land has taken place on 27-6-1996. The litigation in between the parties came to an end on 19-12-1998. There w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Nos. 1 and 2 are rejected. 33. Ground Nos. 5 and 6 are general in nature and they do not require any adjudication. 34. As far as the determination of value of these plots on the basis of the valuation report gathered from the bank is concerned, we are of the opinion that this document is one of the corroborative piece of evidence in determining the value of the plots but solely on the basis of this document valuation of the plots for the purpose of Wealth-tax Act cannot be determined. The mechanism to determine the value of an asset for the purpose of the Wealth-tax Act has been provided in section 7 and Schedule III. Part-B of Schedule-III provides the valuation of immovable properties. Assessing Officer has to work out the value of the properties according to this Schedule. He has not made this exercise and solely worked out the value of these plots on the basis of the bank s certificates. Therefore, we set aside the issue to the file of the Assessing Officer for readjudication. Both these wealth-tax appeals are allowed for statistical purposes. 35. We summarize the result as under : ( i )IT(SS) A. No. 25/Delhi/09, the appeal of the assessee is partly allowed; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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