TMI Blog2022 (12) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 in the judgment passed in the matter of CIT vs. Nirma Chemicals Works (P.) Ltd [ 2008 (2) TMI 373 - GUJARAT HIGH COURT] and CIT vs. Kamal Galani [ 2018 (6) TMI 1052 - GUJARAT HIGH COURT] Under this circumstance, we find the order passed by the Ld PCIT under Section 263 of the Act is not sustainable and thus quashed. Interest amount as received by the assessee from Gujarati Samaj, Indore - PCIT was of the view that the assessee has unaccounted money and out of books the same has been given to Gujarati Samaj - Since, the buyer could not make payment in due time as agreed upon the interest on delayed payment was made to the assessee. Therefore, such interest has been paid not on any amount of money borrowed from the assessee by the said party rather for non-fulfilment of the commitment of making timely payment in respect of sale of agricultural land. In view of the matter, there was no disclosure of any advance in the financial statement when the source of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rification 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 has been claimed to be the outside of the definition of capital asset under Section 2(14) of the Act on the basis of the letter issued by the SDM dated 23.10.2017 that the land in question is situated 6.4 kms away from the outer limit of Indore Municipal Corporation and not 8km. as stated by the appellant. (ii) Further that though the assessee has shown other fixed income received from Gujarati Samaj, Indore amounting to Rs.20Lakhs, no loan and advance were shown in the name of the said party from whom the said amount of interest has been claimed to have been received. Neither any TDS has been made by the said party on payment of the said interest. The Ld.PCIT was of the view that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.12.2017 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 stated to be 6.4 km. from the municipal limit. It has been duly disputed by the assessee by filing the affidavit dated 17.11.2017 before the Ld.AO. In fact, in order to resolve the dispute relating to the distance of the land in question from the outer limit of the Indore Municipal Corporation, the DCIT has written a letter dated 29.11.2017 to the Ld. SDM. The assessee also requested the Ld.AO for cross examining the said corresponding information with the SDM, Indore but the same remained unanswered. The assessee was of the said opinion as no counter comment was called for from the assessee by the Ld.AO. According to the assessee, the SDM is not a competent authority for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 original proceedings as the submissions made by the Learned counsel for the assessee. In support of his submission, he further relied upon the judgment passed by the Hon ble Madras High Court in the case of CIT vs. P. J. Thomas reported in (1995) 211 ITR 897(Mad.). The ratio of the said judgment was also relied upon by the Co-ordinate Bench in the case of Shri Krishna Mohan Chourasia vs. ITO in ITA No.853/Ind/2017 for A.Y. 2014- 15. 8. We have carefully considered these two judgments as relied upon by the Ld.AO. We find that in an identical situation while granting relief to the assessee by excluding the land in question from this status of capital asset as provided under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unicipality 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 on 25.11.2010 shall not be eligible to tax. 10. As this is an admitted position that the land is lying and situated in the Gram Panchayat area, the ratio laid down by the Hon ble Madras High Court is applicable to the instant case and in that view of the matter since the assessee has not sold any capital asset as per Section 2(14)(iii) of the Act, the capital gain if, at all, is not eligible to tax. 11. On the other hand, apart from relying upon the certificate issued by the SDM , the Revenue has come up with the further case that the aerial distance of the land in question from the Municipal limit is to be considered on from A.Y. 2014-15 in terms of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 far to seek. Firstly, it would cast an almost impossible burden on the Assessing Officer, considering the workload that he carries and the period of limitation within which an order is required to be made; and, secondly, the order is an appealable order. An appeal lies, would be filed, only against disallowances which an assessee feels aggrieved with. 23. As far as absence of discussion in the assessment order is concerned, this is what has been laid down by this court in the case of Rayon Silk Mills v. CIT [1996] 221 ITR 155 :- In the first instance it was contended by learned counsel for the assessee that the very premise on which order und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,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 observed as under: '12. ... ... ... There are judgements galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate, that would not be itself, give occasion to the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 and prejudicial to the interests of the revenue unless the view taken by the Assessing Officer is unsustainable in law. That is not the position in the present case. In fact even the partial denial of relief under section 80-1 of the Act has been found to be incorrect by the appellate authority. Therefore, existence of two views stands established. In the aforesaid circumstances, the Commissioner of Income-tax could not have exercised jurisdiction under section 263 of the Act as per settled legal position. 26. The view expressed by this court in the case of Shashi Theatre (P.) Ltd. (supra), therefore, is in consonance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his 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 31.03.2015 no loans or advances has been shown in the name of the said party. The TDS has not been made by the said part as on payment of such interest. The Ld. PCIT was of the view that the assessee has unaccounted money and out of books the same has been given to Gujarati Samaj. On the contrary, it appears that the assesse has entered into agreement with Gujarati Samaj, Indore on 20.12.2013 to sell of the agricultural land with the condition that the payment to be made on or before 28.01.2014 towards the sale consideration of the assessee. Since, the buyer could not make payment in due time as agreed upon the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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