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TMI Blog2021 (4) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of assessment proceedings, the Assessee has filed a revised computation of income on dated 29/07/2017 claiming deduction u/sec. 54F of Rs. 29,63,738/- for investment in house property i.e. one residential flat of Rs. 30,00,000/-, which includes additional work i.e. power connection charges, power deposit, woodwork, interior works, electrical fittings, corpus fund and internal painting etc. The AO ultimately considered the sale amount received by the Assessee to the tune of Rs. 3,70,22,969/- and while subtracting the indexed cost at Rs. 4,30,515/- made the addition of 3,65,92,453/- . Further allowed the deduction Rs. 15,92,153/- as against the claim of 1,08,72,088/- and 29,10,250/- made u/sec. 54F of the Act by Assessee and finally computed the long term capital gain of Rs. 3,50,00,300/- and added to the income of the Assessee . The AO also disallowed deduction of Rs. 92,79,935/- as claimed u/sec. 54B of the Act and to the tune of Rs. 45,000/- claimed exempted qua agricultural income by the Assessee. 3. Against the aforesaid disallowances, the Assessee preferred the first appeal before the ld. Commissioner and during the appellate proceedings before the ld. Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. Commissioner forwarded the said additional evidences which have been filed by the Assessee in support of its additional grounds of appeal, to the AO for furnishing remand report, in pursuance to which the AO carried out the field enquiry and submitted the remand report which is as under:- "2. Originally Assessee is the owner of the agricultural land to the extent of 4 acres 65 cents located in Survey No. 65/7 to 65/12. The Assessee has entered into a development agreement on 21.10.2014 with Hema Durga Realtors for development of said land into flats. However, at the time of handing over the land to the developer the so called agricultural land was not converted for the purpose of non-agricultural activities. 3. As per the information furnished by the Assessee before the CIT(A), Vijayawada and also before the undersigned, the Sub-Collector vide order in Rc.G.1052/1/2016 dated 30-04 -2016 has passed an order, stating that the above said lands were deemed to have been converted into non-agricultural purpose and levied conversion fee of Rs. 60,76,620/- and penalty of Rs. 30,38,310/-. Later on, the builder Hema Durga Realtors has paid an amount of Rs. 26,33.202/-. Also during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der for conversion of Agricultural land into Non-Agricultural land without obtaining permission as required u/s.3 of the Andhra Pradesh Agricultural Land (conversion for non-agricultural purposes) Act, 2006 and for non-payment of conversion fees." 27. The above mentioned evidences were furnished as additional evidence in support of the additional ground of appeal and the same were forwarded to the AO for the purpose of furnishing the remand report After considering the said evidences, the AO has also stated in his remand report that the land given on development by the Assessee were agricultural land. Though it was stated by the AO that the Assessee did not furnish any evidence that he carried out agricultural activities in the said land prior to transfer of the land, it is seen that the said observation of the AO is contrary to the evidence furnished by the Assessee by way of certificate of the VRO, wherein it was clearly mentioned that agricultural activities were carried out in the said land upto the month of December, 2014. In view of the above mentioned evidences, it is held that the land transferred by the Assessee constituted agricultural land. 28. As regards the locatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income. 8. The ld.CIT(A) is not justified in putting the Revenue in a worse position than in a situation where either the return was not taken up for scrutiny or where the income returned was accepted in the scrutiny assessment. 9. The ld.CIT(A) has overlooked the fact that in the Joint Development Agreement dated 27.10.2014 and in the supplementary agreement dated 06.04.2017, the land under consideration was mentioned as 'nivesana sthalam' meaning house site but not as agricultural land. Without prejudice to the above, the following grounds are also made: 10. The ld.CIT(A) ought to have followed the decision of the ITAT, Hyderabad in the case of Suresh Kumar D. Shah reported in 16 taxmann.com 324 (Hyderabad) wherein their lordships held under similar circumstances that the gains arising out of transfer of land are liable to be taxed. 11. The ld.CIT(A) erred in not following the tests laid down by the ITAT, Hyderabad in the case of Suresh Kumar D. Shah reported in 16 taxmann.com 324 (Hyderabad) for arriving at a conclusion whether the land under consideration qualifies for exemption from capital gains. 12. The ld.CIT(A) ought to have appreciated that mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd as an agricultural land ignoring the enquiries made by the A.O and the evidences brought on record and without any evidences with regard to the agricultural activities carried on by the Assessee on such land. 6. The CIT(A) is not justified in deleting the addition of Rs. 45,000/ - made under the head 'Other Sources.' 7. The appellant craves for leave to add, delete or modify any ground at the time of hearing. 5. Ground Nos. 2 to 5 pertains to issue qua the treatment of consideration of land sold by the Assessee not chargeable to tax under the head income from capital gains. Ground Nos. 1 & 7 are formal in nature and ground No.6 is with regard to deletion of addition of Rs. 45,000/- which was made by the AO under the head "other sources‟. 5.1 In the instant case only two issues are involved. First issue with regard to treatment of sale amount of the land sold by the Assessee and the second issue relates to deletion of addition of Rs. 45,000/- by the ld. Commissioner. Even the ld. DR emphasised/focused on two issues only. Let us to decide this appeal by issue wise. 6. First issue:- The Assessee though in income tax Return and during the Assessment proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (India) Ltd. v. CIT [2006] 157 Taxman 1 . 11. (A) In Jute Corpn. of India Ltd. (supra) for the assessment year 1974-75 the appellant did not claim any deduction of its liability towards purchase tax under the provisions of the Bengal Raw Jute Taxation Act, 1941, as it entertained a belief that it was not liable to pay purchase tax under that Act. Subsequently, the appellant was assessed to purchase tax and the order of assessment was received by it on 23rd November, 1973. The appellant challenged the same and obtained a stay order. The appellant also filed an appeal from the assessment order under the Income Tax Act. It was only during the hearing of the appeal that the Assessee claimed an additional deduction in respect of its liability to purchase tax. The Appellate Assistant Commissioner (AAC) permitted it to raise the claim and allowed the deduction. The Tribunal held that the AAC had no jurisdiction to entertain the additional ground or to grant relief on a ground which had not been raised before the Income Tax Officer. The Tribunal also refused the appellant's application for making a reference to the High Court. The High Court upheld the decision of the Tribunal and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer." [Emphasis supplied] (B) It is clear, therefore, that an Assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction. 7.2. In the aforesaid judgment as relied upon by the ld. Commissioner for adjudicating the issue, the Hon'ble Bombay High Court has also considered the judgments of the Hon'ble Apex Court in the case of Jute Corporation of India Ltd. (187 ITR 688), Kanpur Coal Syndicate (supra) [(1964) 53 ITR 225)] and Goetze (India) Ltd case [2006] 157 Taxman 1 7.3 The Hon'ble Supreme Court in the case of NTPC Ltd. Vs. CIT [(1998) 229 ITR 383] clearly held that the raising of additional legal ground during the appellate stage/proceedings is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the validity of the assessment to tax a receipt which, though admitted by him, is not taxable in law. This judgement of Hon‟ble Court is squarely applicable to the facts of instant case as in this case the Assessee in its return of income shown the long term capital gain, however before the first appellate authority by realizing his misconception change the stand and claimed the capital gain as exempt u/s 2(14) of the Act. Relevant part of the judgement is reproduced herein for ready reference:- " That it is the duty of the A.O. to determine whether a particular receipt is taxable as income or not. Just because the Assessee has shown the receipt as income in his return, it does not make him liable to tax thereon. The Hon'ble Court further observed that the Assessee may have committed a mistake in treating a certain receipt as taxable. The mere circumstance that he has shown that receipt, as income in his return does not make him liable to tax thereon. An Assessee is liable to tax only upon such receipt as can be included in his total income and is assessable under the Income-tax Act. The law empowers the Income-tax Officer to assess the income of an Assessee and determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f additional ground, also filed additional evidences and details, which for the sake of brevity and ready reference, are reproduced herein under:- "1. Copy of the Adangal extract obtained from the Mee-Bhumi portal evidencing that the Land situated in RS No.65/12 & 65/8, Kesarapali is an agricultural land and is useful for cultivation. 2 Certificate of VRO, Kesarapalli Village stating that the Land situated in RS No.65/12 & 65/8, Kesarapalli is Agricultural land and agricultural activity was carried out in the said lands upto for the month of December 2014. 3. Certificate of the Addl. Assistant Engineer, APSPDCL, Gannavararn stating that Agricultural Power Connection was available in the name of the Assessee for the land situated in RS No.65/12, Kesarapalli. 4. Proceedings of the Sub-Collector, Nuzvid imposing penalty on the builder for conversion of Agricultural land into Non-Agricultural land without obtaining permission as required u/s.3 of the Andhra Pradesh Agricultural Land (conversion for non-agricultural purposes) Act, 2006 and for non-payment of conversion fees." "1. Taking congnizance of the fact that the land of Accounts. 2.00 which is under consideration is sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation.-For the purposes of this sub-clause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year; 8.2 As per section 2(14) if the land falls more than 8 km. from the local limits of any municipality or cantonment board to in item (a) and which has a population of more than ten lakh cannot be considered as capital asset. In the instant case, admittedly the land situated at an aerial distance of 9.2 km. and it is also admitted fact by the AO that the land sold by the Assessee was an agricultural land prior to sale and as per VRO, the agricultural activities were carried out in the said land upto the month of December 2014. From Adangal extract obtained from the Mee-Bhumi portal, the land has been described as an agricultural land and is useful for cultivation. Further, from the certificate of the Addl. Assistant Engineer, APSPDCL, Gannavaram, it clearly reflects that agricultural power connection was also available in the name of the Assessee for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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