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TMI Blog2022 (12) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... pandemic and the judgment passed by the Hon'ble Apex Court in this regard, we condone the delay. 3. The original assessment order was passed by the Learned AO on 15.12.2017 under Section 143(3) of the Act, upon hearing the learned counsel appearing for the assessee and considering the written submissions along with copy of the computation of income, bank statement and other details as sought for. These documents were duly examined by the Ld. AO as stated in the order passed by the Learned DCIT, Circle-2(1), Indore. The Learned AO finally upon considering the documents duly submitted by the assessee in support of claim made in the return of income duly perused by him and after due verification of the documents placed on record and after having discussion with the Learned AR, accepted the return of income of Rs.29,49,980/- filed by the assessee for A.Y. 2015-16. Subsequently, the Learned PCIT observed the said order is erroneous in so far as it is prejudicial to the interest of the Revenue on account of passing of the order without making required inquiry/investigation on the following two counts; (i) the issue regarding capital gains in respect of sale of agricultural land which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question admeasuring about 1.964 hectare lying and situated at Shriram Talawali. The Gram Sirpur Baank is the outer limit of Indore Municipal Corporation from where the distance of Gram Shriram Talawali where is property in question is situated is 8.4 km. The page No.8 of the sale deed indicates the land situated at Gram Shriram Talawali, Patwari Halka No. 7 (New 19), Tehsil and Distt. Indore (M.P.), the land is in the nature of agricultural and the land in question is situated at a distance approximately 9km from the Municipal limit of Indore Municipal Corporation. In fact in order to substantiate the contents of the sale deed, the assessee submitted the certificate dated 14.12.2017 issued by the Executive Engineer, Indore, Division-1 and the certificate issued by the Chief Executive Engineer, Nagar Nigam dated 08.12.2017 and the certificate issued by the Tehsildar dated 02.03.2020 certifying that the distance from the outer limit of the Indore Municipal Corporation to the land in question is not less than 8.4km. During the assessment proceedings, a copy of letter issued by the SDM has been handed over to the assessee whereby and whereunder the distance of the agricultural land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining the distance of the land in question is 6.4 kms. from the Municipal limit and also the rebuttal of the assessee against the said finding of the SDM was duly discussed by the Ld. AO with the Ld. JCIT as also mentioned in the said noting. Apart from that a further case has been made out by the assessee before us to this effect that the land in question is of the Gram Panchayat area as it is already evident from the page 9 of the sale deed executed by the assessee being part of paper book filed before us. In that view of the matter the sale does not require any prior permission, prior approval or no objection certificate. If that be so, then the land in question was not situated within the limit of any Municipality or Cantonment Board rather this is in a Panchayat area. In terms of Section 2(14) of the Act, the exclusion of agricultural land as capital asset would be applicable to land within the limits of Municipality and not a Panchayat. The assessee, since purchased agricultural land in the Panchayat, it is not a capital asset as per Section 2(14)(3) of the Act and accordingly, the amount of capital gain claimed by the assessee has been rightly allowed by the AO in the orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take in a panchayat, we are unable to countenance the argument of learned counsel for the Revenue. We are satisfied that the Tribunal was quite justified in deleting the tax arising on capital gains on account of the sale of the agricultural lands by the assessee. The tax case petition is dismissed. There will be no order as to costs." 9. We further find that the said ratio as laid down by Hon'ble Madras High Court was applied by the Co-ordinate Bench with the following observations: "In light of the facts re-iterated above and after going through the findings of the Hon'ble Madras High Court (supra), we find that there is a clear distinction between a municipality and a gram panchayat as also enunciated in the judgment (supra), therefore, we are of the view that the land in question was not situated Krishna Mohan Chourasia within the limit of any municipality or cantonment board. Thus, in view of these facts and circumstances of the case, we find that the agricultural land initially purchased by the assessee was not a capital asset as per section 2(14)(iii) of the Act. Accordingly, the amount of capital gain accruing to the assessee till the diversion of agricultural land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf and also from the noting made the Ld. AO in the regular order sheet entries the same cannot be interfered with by the Ld. PCIT. On the contrary, the Revenue pointed out that the same is not reflecting from the order passed by the Ld.AO. In reply, it was submitted by the assessee's counsel that the assessment order cannot give detailed reasons in respect of each and every item of deduction, which would cause impossible burden on the AO and secondly, the said order is appealable one. On this count, he has further relied upon the judgment passed by the Hon'ble High Court of Gujarat in the case of CIT vs. Kamal Galani reported in (2018) 95 taxmann.com 261 (Gujarat) and CIT vs. Nirma Chemicals Works (P.) Ltd. [2009] 309 ITR 67 (Guj.), wherein Hon'ble High Court held as under: "22. The contention on behalf of the revenue that the assessment border does not reflect any application of mind as to the eligibility or otherwise under section 80-1 of the Act requires to be noted to be rejected. An assessment order cannot incorporate reasons for making/granting a claim of deduction. If it does so, an assessment order would cease to be an order and become an epic some. The reasons are not fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation of the business at the book value as on that date. After giving the chronological sequence of events, the assessee also contended in his submission before the Income-tax Officer that there was no actual transfer of any asset inasmuch as when a partner is admitted into the firm no transfer takes place. It was also contended that no cash transfer took place from person to person and the transfer and the dissolution of the firm also did not result in accrual of capital gains. In the face of this material on record, it is difficult to explain that the assessment order was made without making any enquiry into the goodwill account of Rs. 10,75,000. . . ." (p. 158) 13. We have further considered the judgment passed in the matter of CIT vs. Kamal Galani (supra) when we find that the observation made by the Hon'ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd. (supra) has been relied upon which is reproduced below: "12. The scope of the Commissioner's power of revision under section 263 has been a matter of judicial consideration on various ocassions. In case of CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167/[2010] 189 Taxman 436 Division Bench of Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Incometax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue, unless the view taken by the Income-tax Officer is unsustainable in law." 25. Applying the aforesaid tests to the facts of the case it is not possible to uphold the order of the Tribunal as regards jurisdiction after considering the law enunciated by the Apex Court. The Assessing Officer after making due inquiries, as noted hereinbefore, adopted one view and granted partial relief under section 80-1 of the Act. The Commissioner of Income-tax takes a different view of the matter. However, that would not be sufficient to permit the Commissioner of Income-tax to exercise powers under section 263 of the Act because when two views are possible and the Commissioner of Income-tax does not agree with the view taken by the Assessing Officer, the assessment order cannot be treated as erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocation of provision of Section 263 of the Act on the basis of change of opinion is, thus, not found to be sustainable. We have also found substance in the arguments advanced by the Ld. AR that the original order needs not to give detailed reason. Further that when one possible view has been taken by the Ld AO the said cannot be treated as erroneous and prejudicial to the interest of the Revenue. In this regard, we are also inspired by the ratios laid down by the Hon'ble Gujarat High Court in the judgment passed in the matter of CIT vs. Nirma Chemicals Works (P.) Ltd. (supra) and CIT vs. Kamal Galani (supra). Under this circumstance, we find the order passed by the Ld PCIT under Section 263 of the Act is not sustainable and thus quashed. 16. So far as the second issue of interest amount of Rs.20Lakhs as received by the assessee from Gujarati Samaj, Indore is concerned, we have heard the rival submissions made by the respective parties and perused the relevant materials available of record. 17. It appears that since in the computation of income the assessee has shown interest income received from Gujarati Samaj amounting to Rs.20Lakhs whereas the financial statement as on 31.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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