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TMI Blog2015 (12) TMI 1616X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative (Ld DR) on behalf of the Revenue, argued the case. 3. After hearing the parties, all these grounds are adjudicated as under: 4. Ground No.1: In this ground, the assesssee has challenged the action of Ld. CIT(A) in confirming the action of Ld. AO in taxing 'long term capital gain' at Rs. 4,51,95,233/-, as against 'nil' as was claimed by the assessee in the revised computation of income filed during the course of assessment proceedings. 4.1. During the course of hearing, it has been argued by the Ld. Counsel that the assessee has in the original return shown 'long term capital gain' of Rs. 4,53,22,995/-, accrued to the assessee on account of sale of agricultural land. But subsequently, this transaction was cancelled and cancellation deed was also registered with the concerned authorities, and assessee had refunded the entire amount, and thus, no 'income of capital gain' was actually earned by the assessee, and therefore, in these circumstances assessee filed revised computation sheet wherein the income from 'capital gain' was shown as 'nil', which was not accepted by the AO on the ground that once transaction had taken place, then the amount of 'capital gain' earne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of appellate proceedings before the Ld CIT(A), are that in the computation of total income filed along with the return of income, the assessee had shown long term capital gain of Rs. 4,53,22,995/- on sale of land. Against the same, the assessee made set off of loss of Rs. 3,70,50,000/- on account of loss in the investments in the company Niru Jewels Pvt. Ltd. Further, the assessee also made set off of the long term capital loss brought forward from A.Y. 2009-10 amounting to Rs. 82,72,995/- (to the extent long term capital gain was available). Thus, as per the computation of total income, no capital gain was shown as chargeable to tax. During the course of assessment proceedings, the assessee filed a revised computation of total income, wherein the 'long term capital gain' on sale of land was not included, stating that the transfer made during the year was void as the assessee had no right to sell the property, and, therefore, the sale agreement was cancelled and the land was repurchased and thus, no 'capital gain' arose. 4.5. But the AO did not accept the assessee's claim that no capital gain arose during the year, and ignored the revised computation filed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculturist. 4.9. It is to be noted that the impugned agricultural land is situated in the State of Gujarat and therefore provisions applicable in the State of Gujarat shall be applicable on this case. Ld. Counsel has drawn our attention on the cancellation deed dated 28th November, 2011 available at page no. 115 onwards of the paper book, which has been entered between the assessee and the parties with whom the impugned land was intended to be transferred. The relevant portion of the said deed reads as under: 'On today I the party of the second part hereby execute the cancellation of sale deed agreement in your favour i.e. in favour of the party of the first part on 01.01.2010 in respect of cancellation of registered sale deed no. 84 which is as follows. The property described in the said sale deed which is situated at District Surat Sub District City Surat Village Singapor, Block/R.S. No.139 T.P.S. no. is 26, original Plot No. 69F. Plot No.105/1 and the area of the final plot is 8950 sq. mtrs. and the said land and inside and outside all rights, titles and interest is purchased by the party of the second part from the party of the first part vide registered sale deed dated 01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the moment transfer took place, and subsequent developments would not erase the original transaction executed in the impugned year. 4.11. In these facts, we examined the legal effect of the impugned sale deed that was executed by the assessee during the year giving rise to impugned amount of 'capital gain', and perused the same along with the aforesaid cancellation deed, reversing the effect of aforesaid sale deed. In the given factual situation, with a view, to appreciate the correct legal position, we refer to the judgment of Hon'ble Supreme Court in the case of Ramanlal Bhailal Patel (supra) wherein it has been held by their lordships that in view of provisions of section 63 of the Gujarat Tenancy & Agricultural Land Act, 1948, sale of an agricultural land to non-agriculturists will not be valid under the law, and ownership of any such land purchased by the non-agriculturists may have to vest in the State Government subject to, provisions of section 84C of the said Act. We further refer to the judgment of Hon'ble Gujarat High Court in the case of CIT vs. Vithalbhai P. Patel (supra), wherein it was held that if the sale was 'null and void' under the law, then there was no sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies and which income was chargeable to tax in the year under consideration. Once income had not accrued to the assessee in the real sense, then the original return represents wrong statement which was corrected by the assessee by filing a revised return. Therefore, no hypothetical income of the assessee could have been brought to tax. 4.14. Thus, in view of the facts of the case and position of law as discussed above, it can be held that, in fact, no transfer of the impugned land had taken place, and therefore, no amount of 'capital gain' was taxable as per law. We have examined this situation from another angle also. When the technical considerations are pitted against the substantive justice, then the latter must prevail. The objective of the income tax proceedings is to determine amount of income taxable as per law in the hands of assessee and tax payable thereon. The objective is not at all to nail down an assessee in one way or the other, and to recover the maximum tax by using force of law. The revenue authorities should never forget that as per clear mandate of Article 265 of Constitution of India, no tax can be collected without the authority of law. Therefore, under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investments, the resultant reduction is to be charged to the profit and loss statement. 5.3. On the other hand, Ld. DR has vehemently supported the order of lower authorities and submitted that assessee had neither sold these shares nor transferred to any person during the year. This loss has been provided in the books and claim in the return of income of notional basis, and therefore, the claim of the assessee was without the authority of the law, and therefore same has been rightly rejected by both the lower authorities. 5.4 We have gone through the submissions made by both the sides as well as orders of the lower authorities. The brief facts are that the assessee made a claim of loss for the said amount on account of investments in the said company. During the course of assessment proceedings, the assessee was not in a position to give any details with regard to sale or transfer of these shares, and accordingly it was added by the AO. Being aggrieved, the assessee filed an appeal before the Ld. CIT(A), wherein it was submitted that the assesee was having an investment for the aforesaid amount in share capital of the aforesaid company. The said company suffered losses and its c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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