TMI Blog2021 (4) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... al, 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 land in dispute. Even from the proceedings of the Sub-Collector, Nuzvid whereby imposed the penalty on the builder for conversion of agricultural land into non-agricultural land without obtaining permission as required u/sec. 3 of the Andhra Pradesh Agricultural Land (conversion for non-agricultural purposes) Act, 2006 and for non-payment of conversion fees, it goes to show that the land under dispute was agricultural land only. The aforesaid facts have been duly considered by the ld. Commissioner while admitting the claim of the Assessee and holding that the land under dispute was an agricultural land and therefore exempt u/sec. 2(14) of the Act and cannot be subjected to tax. Addition on the ground that the Assessee could not substantiate with any evidence for carrying out the agricultural activities during the year on the land given for development and as per local enquiries conducted through ITI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said return was processed by the AO and during 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 ₹ 29,63,738/- for investment in house property i.e. one residential flat of ₹ 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 ₹ 3,70,22,969/- and while subtracting the indexed cost at ₹ 4,30,515/- made the addition of 3,65,92,453/- . Further allowed the deduction ₹ 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 ₹ 3,50,00,300/- and added to the income of the Assessee . The AO also disallowed deduction of ₹ 92,79,935/- as claimed u/sec. 54B of the Act and to the tune of ₹ 45,000/- claimed exempted qua agricultural income by the Assessee. 3. Against the aforesaid disallowances, the Assessee preferred the first appeal bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any tax as the land sold was an agricultural and exempted as per provision of section 2(14) of the Act. 3.3 The 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 ₹ 60,76,620/- an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first time that the land is agricultural land and hence does not come under the definition of capital asset is not a claim for deduction but a total turnaround from the stand taken by it in the return 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf admitted capital gains in the return of income. 4. The CIT(A) ought not have considered the land as an agricultural land since the decision on which reliance placed by the CIT(A) is distinguishable. 5. The CIT(A) is not justified in holding the land 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 ₹ 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 ₹ 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 sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se decisions only to deal with two submissions on behalf of the department. The first is with respect to an observation of the Supreme Court in Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688 /[1990] 53 Taxman 85 . The second submission is based on a judgment of the Supreme Court in Goetze (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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority may have in the matter. There appears to be no good reason and none was placed before us to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the Assessee in seeking modification of the order of assessment passed by the Income Tax 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not make him liable to tax thereon. If the Income-tax Officer assesses an Assessee upon a receipt, which is not taxable in law, it is always open to the Assessee to take the case in appeal or in revision thereafter. Further the Assessee is within his rights in requiring the appellate or the revisional authority to examine 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 circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the original return of income. Hence, we are inclined, not to interfere with the decision of the ld. Commissioner for allowing the fresh/amended claim made by the Assessee by way of raising the additional ground No.1 and admission of the same for adjudication. 8. Now coming to the issue in hand on merit. The Assessee in support of 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits 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 activit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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