New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (3) TMI 644 - ITAT DELHI

2015 (3) TMI 644 - ITAT DELHI - TMI - Long term capital gain - treatment to agriculture land - whether the assessee is liable to pay tax only on the capital gain earned on the sale of its agricultural land situated at village Kishora, Sonepat, Haryana, as the same being out of the purview of definition of capital asset as per Section 2(14)(iii)? - Held that:- We find that the A.O. has relied upon the information dated 14.03.2013 of the District Town Planner, Sonepat and the learned CIT(A) has al .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the distance. We, therefore, in the interest of justice, set aside the matter to the file of the Assessing Officer to examine the veracity of these two letters, one issued by Tehsildar, Sonepat and the another by Council Engineer, Municipal Council, Sonepat, as well as the mode i.e. aerial or motorable road for calculation of the distance adopted by the District Town Planner, Sonepat, followed by the A.O. as well as learned CIT(A) and decide the issue afresh about the distance in view of noti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ness receipts. The further contention of the learned AR remained that similar expenditure was allowed to the assessee in the assessment years 2006-07 to 2008-09 while in the assessment year 2009-10, there was no interest expenditure claimed by the assessee company. In the present year under consideration, interest income has been declared and various expenditures under the different heads was claimed. The further contention of the learned AR remained that the business expenditure relates to busi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ear, without examining the nexus between those expenses and the purpose on which those were spent for. We thus set aside the matter to the file of the A.O. to examine the claim and dispose of the issue by passing a speaking order after hearing the assessee. - Decided in favour of assessee for statistical purposes.

Disallowance of agricultural income - Held that:- Issue raised needs fresh consideration also keeping in mind that the assessee has not claimed benefit of exemption of agric .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ncome - income from other sources or business income - Held that:- when interest income is part of assessee’s business activities and regularly been assessed, the action of the A.O. in making assessment under the head “income from other sources” cannot be justified. We also find substance in the alternative contention of the learned AR that even otherwise interest income has to be assessed after deducting interest expenditure. We thus set aside the matter to the file of the Assessing Officer to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. That the order of the LD CIT (A) is bad in law and required to be quashed as legally not tenable on various grounds amongst the following because: a) She did not follow the directions of her predecessor vide letter dated 22-04-2014 to the AO for making specific enquiry for calculating the motorable road distance of village Kishora from the then municipal limits of 1994 (when the central government notified in the official gazette issued under section 2 (14)(iii)(b) of the Income Tax Act, 1961 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed by him during the inquiry as it was not clear from the remand report that specific enquiry was completed. d) The appellant also applied to the municipal council seeking clarification by filing letter dated 23-07-2014 itself and duly informed the CIT (A) about the same and to receive copy thereof which she refused to accept and was sent by registered post. e) She did not accept the decision of Hon'ble High Court of Punjab & Haryana in the case of CIT vs Satinder Pal Singh 188 Taxmann 5 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tatutory provisions of Income Tax Act of section 2 (lA) and section 2 (14) of the Income Tax Act. h) She has totally ignored and failed to notice nor enquired from the assessment records where AO himself assessed agriculture income continuously for the last so many years and so he cannot take different stand in absence of any material contrary brought by him on record. 2. Ld CIT (A) has erred in law as well as on facts in confirming the long term capital gain of ₹ 21,26,09,521/- computed b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nterest income of ₹ 44,35,304/- under the head income from other sources as against business income. 2. We have heard and considered the arguments advanced by the parties and have perused the orders of the authorities below, material available on record and the decisions relied upon. 3. In ground no. 1, the issue raised is as to whether the assessee is liable to pay tax only on the capital gain earned on the sale of its agricultural land situated at village Kishora, Sonepat, Haryana, as th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in mind the amendment by Finance Act, 2013 to the effect that distance from municipal limit shall be aerial distance. He relied upon the letter dated 14.03.2013 of the District Town Planner, Sonepat, showing village Kishore, Distt. Sonepat, within 8 kms. limit of Municipal Council, Sonepat attaching with a map of Sonepat- Kundli Multifunctional Urban Complex. The A.O. also noted that the village Kishora falls within notified area vide notification dated 09.10.1986 of Haryana Government being 5 k .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

47, dt. 06.01.1994 of the Central Government specifying the notified area from the municipal limit for the purpose. The learned CIT(A) has also upheld this action of the Assessing Officer. Hence, the assessee is in appeal before the Tribunal on this issue. 3.2 The issue as to whether the assessee is liable to pay tax on the capital gain earned raised in the ground no. 1, will depend upon the distance between the land situated at village Kishora and municipal limit of the area. 3.3 At the outset .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and Country Planning and his reply dated 30.12.2013 to be allowed as additional evidence. The learned CIT(A) called for remand report from the Assessing Officer on the application for admission of additional evidence moved by the assessee. In compliance, the Assessing Officer furnished its report on 01.04.2014 repeating the same version as discussed in assessment order. 3.4 In reply to the remand report, the assessee explained the intricacies to make necessary inquiry to calculate the distance a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and asked to respond her letter dated 09.07.2014. The assessee replied it vide its letter dated 10.07.2014 explaining the facts and also sought the necessary documents supplied by the Assessing Officer. The learned CIT(A) vide letter dated 11.07.2014, enclosed the remand report dated 28.05.2014 showing the letter dated 16.05.2014 received from Dept. of Town and Planning, Sonepat. In response to which, reply dated 16.07.2014 received on 17.07.2014 was filed highlighting certain documents not enc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

so filed before Executive Officer, Municipal Council, Sonepat. The learned CIT(A) was again apprised about the letter dated 23.07.2014 addressed to Executive Officer, Municipal Council, Sonepat and Municipal Engineer, Municipal Council, Sonepat under R.T.I. duly received. These copies of letters dated 23.07.2014 were also sent through letter dated 24.07.2014 by Registered Post on 25.07.2014 to the learned CIT(A). Learned CIT(A) has, however, passed the order on 23.07.2014 i.e. before the receipt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uch type of information so that the same should have been verified by the authorities below before considering the same. 3.7 After considering the above submissions, we concur with the submission of the learned AR that the aforesaid documents issued by different authorities like Tehsildar, Sonepat and Municipal Engineer, Municipal Council, Sonepat, regarding the distance of the agricultural land of the assessee from the limit of Municipal Council will be material for consideration to decide the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ruled out. The urge of the jurisprudence is to meet the ends of justice. It also remained matter of our concern that the assessee had sought information from the Executing Officer and Municipal Engineer, Municipal Council, Sonepat, vide letter dated 23.07.2014 and Council Engineer responded on 29.09.2014 and in between the assessee also obtained a certificate dated 26.08.2014 about the distance from the Tehsildar, Sonepat vide a different letter. The District Town Planner, Sonepat, has also repo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce. The learned AR also referred page nos. 61 to 129 of the paper book which are correspondences with different authorities regarding ascertainment of the distance of Kishora village from the Municipal limit of Sonepat. We, thus, allow the application and admit the additional evidence in question for our consideration to adjudicate upon the issue. 3.8 Now, the issue before our further consideration would be as to which provision will be applicable in the case of the assessee falling in the A.Y. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

learned CIT(A), the assessee had filed Google map (showing the distance at 11.1 kms.), affidavit from farmer who was cultivating the land on Batai and letter to J.E., District Town and Country Planning and his reply dated 30.12.2013 as additional evidence in support of its claim by the assessee that the land in question does not fall within 8 kilometers from the outer municipal limit. The decisions cited in support are Smt. (Dr.) Subha Tripathi Vs. DCIT, 34 Taxmann.com 286 (Jaipur); ITO Vs. Sh. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the issue. The Hon ble High Court has been pleased to observe that the reckoning of urbanization as a factor for prescribing the distance is of significance with the statutory requirement of keeping in view the extent of urbanization. Such a course would be illusory. It is pursuace of the aforesaid provision that the Notification No. 9447 dated 06.01.1994 has been issued by the Central Government, held the Hon ble High Court. 3.9 In the case of Smt. (Dr.) Subha Tripathi Vs. DCTI (supra), the A.Y .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the ratio laid down in the above cited decisions, we hold that in the present case before us, when land in question has been sold during the period falling in the A.Y. 2010-11, the Notification no. 9447, dated 06.01.1994 in operation will be applicable to compute the distance from the municipal limit. 3.11 Before us, the assessee has filed correspondences with the Municipal Engineer and information gathered from them as well as Tehsildar, Sonepat, as additional evidence which we have admitted to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the municipal limit i.e. Truck Union, Sonepat. The another letter is dated 19.02.2013 issued by Council Engineer, Municipal Council, Sonepat, addressed to the Income Tax Officer, New Delhi, stating therein that there is no any village Kishora within 8 kilometers from the limit of Municipal Council, Sonepat. This letter has been issued by the Council Engineer in response to the informations sought under Section 133(6) of the Act by the I.T.O. It appears that SPIO-cum-District Town and Country Pla .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er consideration are the relevant documents on the issue of distance of the land in question from the municipal limit of Sonepat. We find that the A.O. has relied upon the information dated 14.03.2013 of the District Town Planner, Sonepat and the learned CIT(A) has also referred their letter dated 16.05.2014 in this regard that village Kishora is within 8 kms. limits of Municipal Council, Sonepat. This information has been contradicted by the District Town Planner, Sonepat, vide its letter dated .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, Municipal Council, Sonepat, as well as the mode i.e. aerial or motorable road for calculation of the distance adopted by the District Town Planner, Sonepat, followed by the A.O. as well as learned CIT(A) and decide the issue afresh about the distance in view of above cited decisions, notification dated 06.01.1994 and our observations, after affording opportunity of being heard to the assessee. The fate of issue raised in ground no. 2 is depending upon the outcome of the above issue raised in g .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has simply stated that the assessee did not make any specific submission, nor has pressed this issue before her. He submitted that the authorities below have failed to take note of these material facts that the assessee company is engaged in the business of agriculture. The claim of administrative expenses in Schedule VII & VIII of the balance-sheet filed in the paper book for the assessment years 2006-07 to 2009- 10 clearly shows that only small expenditure towards audit fee, salary etc. w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ies as may be seen in the A.Y.s 2006-07 to 2008-09 while in A.Y. 2009-10, there was no interest expenditure claimed by the assessee company. In the year under consideration, again interest income has been declared and various expenditures under the different heads were claimed. The learned AR accordingly submitted that the business results which were regularly been accepted as declared and business expenditure was allowed to the assessee company, the Assessing Officer cannot take different stand .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ities below in this regard. 4.3 Considering the above submissions, we concur with the above contention of the learned AR that genuine expenditure incurred in the business cannot be denied only on the basis that there was no business receipts. The further contention of the learned AR remained that similar expenditure was allowed to the assessee in the assessment years 2006-07 to 2008-09 while in the assessment year 2009-10, there was no interest expenditure claimed by the assessee company. In the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d not only business income from agricultural activities but also earned interests on the funds kept in the bank. We find that the AO has made disallowance merely on the basis that no business activities were carried during the year, without examining the nexus between those expenses and the purpose on which those were spent for. We thus set aside the matter to the file of the A.O. to examine the claim and dispose of the issue by passing a speaking order after hearing the assesse. The ground no. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. vide letter dated 08.12.2012. The A.O. started the framing of assessment at the fag end when it was becoming barred by limitation and has totally ignored his own assessment record where agricultural income was regularly being declared and accepted by him in the earlier years. The Assessing Officer did not make any inquiry about the cultivation and only on presumption disallowed the claim. The learned CIT(A) has also ignored the affidavit filed by the cultivator as additional evidence under Rul .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ot interested on various aspects but interested on the outcome received. The AR further submitted that such declaration of agricultural income was also made in earlier years and drew our attention to page nos. 80 to 99 of the paper book, wherein a chart has been made available along with the balance-sheet, showing the agricultural income declared was included in the gross receipts while declaring the business income. He submitted that the expenditure incurred was claimed from the declared receip .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ned from the land. The expenditure which was not incurred by the assessee is also not claimed by it and so question of keeping such records does not arise. The learned AR accordingly requested that the agricultural income declared as business receipts be directed to be accepted. 5.2 Learned DR, on the other hand, placed reliance on the assessment order, with this submission that since the assessee failed to establish the genuineness of the claimed agricultural income the A.O. was justified in di .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

affidavit filed before the learned CIT(A) and after affording opportunity of being heard to the assessee. The ground no. 4 is accordingly allowed for statistical purposes. 6. Ground no. 5 is regarding the treatment of interest income of ₹ 44,35,304/- under the head income from other sources as against business income. 6.1 In support of this ground, the learned AR submitted that the assessee was regularly declaring business income received from agricultural activities and interest earned. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e relates to payment of interest and bank charges. He submitted that in the assessment year 2006-07, the interest expenses were much more than the interest income shown in the assessment year 2008-09. In the assessment year 2007-08, major expenditure was in relation to interest charges. This practice was regularly declared in the Income Tax Returns and was accepted without any dispute. Learned AR submitted that the A.O. has not given any reason for deviating from the past practice and assessed t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version