TMI Blog2012 (10) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... rities below that the brothers of the assessee have given these amounts to the assessee for depositing in the bank account of the assessee - CIT(A) further gave benefit of current income of Rs. 25,500/- in which we do not find any infirmity - assessee would be entitled for reduction of Rs. 25,500/- out of the total addition - appeal of the Revenue is partly allowed - IT APPEAL NO. 127 (AGRA) OF 2010 - - - Dated:- 30-3-2012 - BHAVNESH SAINI AND A.L. GEHLOT, JJ. Sohail Akhtar for the Appellant. Rajesh Malhotra for the Respondent. ORDER Bhavnesh Saini, Judicial Member - The departmental appeal as well as the cross objection by the assessee are directed against the order of ld. CIT(A)-I, Agra dated 10.02.2010 for the assessment year 2005-06. The Revenue has raised two effective grounds of appeal, which read as under : "1. That the CIT(A)-1, Agra has erred in law and on the facts of the case in deleting the addition of Rs. 26,31,467/- made on account of long term capital gain without appreciating the facts that the land was acquired by the ADA on 25.08.2000 while the assessee has entered into agreement to sale in A.Y. 2005-06 and has obtained the advance ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO dated 26.12.2008 and explained that the assessee and his brothers entered into an agreement to sale of the same property on 20.11.2004 and entire consideration of Rs. 70,00,000/- has been paid. The details have been noted in the impugned order and the same amount has been shown by the builder as stock-in-trade in their balance sheet. However, physical possession has still not been received by the builder. With regard to deposit of Rs. 10,00,000/- in the bank account of the assessee, the assessee explained that Rs. 2,16,000/- has been received from the builder in cash and similarly, Rs. 2,17,000/- and Rs. 2,67,000/- in cash have been received by brothers of the assessee, namely Radhey Shyam and Shri Sukh Singh. 2.2 The AO, however, did not accept the contention of the assessee and made addition of Rs. 26,31,467/- on account of capital gains on sale of land in question and also made addition of Rs. 7,84,000/- on account of unexplained deposit in the bank account, treating the same as income from other sources. The AO observed in the assessment order that the assessee and his two brothers entered into an agreement to sale in respect of the land in question and received a sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions made before the Authority below and it was further explained that addition on account of capital gain was wrongly made which was not in accordance with law. Agra Development Authority has already notified the land in question for acquisition for its Shashtri Puram Yojana and an application for release had been filed with the State Government, which is pending. According to the agreement to sale, it was clear at the time of entering into the agreement that the land in question was already acquired by the ADA. Therefore, section 45(5) would not be applicable in this case because the assessee has not received any compensation from ADA. Therefore, the capital gain will arise only when compensation will be received by the assessee. The agreement to sale also contained first clause that the second party, i.e., the builder, shall make all efforts to get released the land from ADA. It was, therefore, submitted that since there was no transfer of land as per agreement, which is yet to be released by the ADA, therefore, the agreement to sale was contingent and was based on future events. It was, therefore, explained that the provisions of section 2(47) would not apply in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- each received by the assessee from his two brothers has not been proved with any cogent evidence. Therefore, Rs. 4,34,000/- remained unexplained. The opening balance of Rs. 2,75,000/- was considered, but the assessee has not furnished any evidence in support thereof. Therefore, in absence of any corroborative documentary evidence, the ld. CIT(A) considered reasonably that the assessee could have saved Rs. 1,75,000/-. Therefore, Rs. 1,00,000/- was treated as unexplained. The ld. CIT(A) out of total addition of Rs. 7,84,000/- considered the following amounts as explained : ( i ) Opening cash in hand 1,75,000/- ( ii ) Cash withdrawn from IOB: On 08.04.2004 45,000/- On 20.05.2004 4,500/- ( iii ) Out of current income of Rs.42200/- 25,500/- 2,50,000/- The ld. CIT(A) gave benefit to the assessee in a sum of Rs. 2,50,000/- and balance of Rs. 5,34,000/- was confirmed for the purpose of addition, on which the Revenue as well as the assessee are in appeal. 4. The ld. counsel for the assessee reiterated the submissions made before the authorities below and submitted that land in que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the government vide notification dated 30.01.1989 and possession of the impugned land was taken by the ADA on 25.08.2000. It is also not in dispute that no compensation has been given to the assessee because the matter was pending before the Hon'ble Allahabad High Court. The letter of Special Land Acquisition Officer dated 01.01.2010 and Land Acquisition Officer dated 11.12.2009 are filed in the paper book in respect of the same. It is, therefore, clear that the matter is subjudice before the Hon'ble High Court for de-notifying the land in question and possession with the ADA and no compensation has been received by the assessee. The Relevant provisions of section 2(47)(iii) (v) read as under : "(47) transfer, in relation to a capital asset, includes - ( i ) ( ii ) ** ** ** ( iii ) the compulsory acquisition thereof under any law; or ( iv ) ( iva ) ** ** ** (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882)." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in clause (b) shall be deemed to be the income, chargeable to tax under the head "Capital gains", of such other person." 6.1 The combined reading of above provisions provides that transfer in relation to capital assets includes the compulsory acquisition under any law and that the capital gain could be charged in the previous year, in which such compensation or part thereof or such consideration or part thereof was first received. Hon'ble Madras High Court in the case of Anil Kumar Forma (HUF) v. CIT [2007] 289 ITR 245 held - "Held, that the right to the amounts received by the assessees as part of the compensation, was only an inchoate right during the pendency of the appeals before the High Court and the amounts could be assessed only when the appeals were finally determined by the High Court on April 20, 2000. The amounts received under interim conditional orders of the court were not liable to tax in the assessment years 1997-98 and 1998-99." 6.2 Hon'ble Punjab Haryana High Court in the case of CIT v. Karanbir Singh [2008] 303 ITR 231 held - "Held, that the Revenue was not entitled to tax the amount of interest received by the assessee on account of acquisition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. The ld. CIT(A) apart from the above findings has further noted that as per DVO's report, which was filed before the AO after completion of the assessment, would shows that the assessee made investment in agricultural land and residential house in terms of section 54B and 54F. Therefore, on alternate contention, the assessee would be entitled for deduction on account of capital gains. Admittedly, the AO referred the matter to the DVO for clarification of investments as per law and the DVO has given report in favour of the assessee. Therefore, the AO would be bound by the same. Considering the totality of the facts and circumstances, noted above, we do not find any infirmity or illegality in the order of the ld. CIT(A) in deleting the addition on account of capital gains on sale of land. Ground No. 1 of appeal of the Revenue has no merit and is, accordingly, dismissed. 7. With regard to ground No. 2 of the departmental appeal and ground No. 1 of the cross-objection of the assessee regarding deposit made in the bank account of the assessee in a sum of Rs. 10,00,000/- in cash, the ld. CIT(A) gave part benefit to the assessee out of addition of Rs. 7,84,000/-. The assessee in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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