×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
04-11-2019, Lilo Ramchandani, Section 10(37), 2, 54B, Tribunal Jaipur
This is an appeal filed by the assessee against the order of ld. CIT(A), Ajmer dated 01.03.2019 wherein the assessee has taken the following grounds of appeal:-
“1. The ld. CIT(A) has erred on facts and in law in upholding the validity of the order passed by AO u/s 147 of IT Act, 1961.
2. The Ld. CIT(A) has erred on facts and in law in denying the exemption u/s 10(37) of the IT Act on the ground that land was not used for agricultural purpose, thereby, confirming the addition of Rs. 69,54,000/- on account of long term capital gain on compulsory acquisition of agricultural land.”
2. Firstly, regarding Ground no. 1, the ld AR submitted that the assessee purchased agricultural land at Mahapura on 22-12-2003 for Rs.10,12,400/-. On part of the land, he carried out construction by incurring expenditure of Rs.3,47,651/- in F.Y. 03-04 and 04-05. The said agricultural land along with construction was acquired by Jaipur Development Authority under the Land Acquisition Act 1894. The date wise event related to the acquisition of the land and building and the payment of compensation is tabulated as under:-
3. It was further submitted that in the return filed for AY 2009-10, no capital gain was declared with reference to allotment of residential/ commercial land on acquisition of agricultural land as there was no transfer. In AY 2010-11 also, no capital gain was declared as gain was exempt u/s 10(37). However, the AO in AY 2009-10 worked out the capital gain on such acquisition at Rs73,62,800/. The matter travelled to the Tribunal where the assessee took two grounds, one that Ld. CIT(A) has erred in confirming the action of AO that the appellant did not carry out any agricultural operation on the said land and thereby not entitled for exemption u/s 10(37) and second that the Ld. CIT(A) has erred in confirming the action of AO in taxing the capital gain in AY 2009- 10 instead of AY 2010-11. The Tribunal on these two grounds vide its order dt. 14.12.2015 set aside the issue to the AO by giving following findings as under:
“6. We have heard the rival contention of both the parties and perused the material available on record. The issue of whether the assessee was carrying out the agricultural activity in the two year preceding the date of transfer is disputed and whatever evidence submitted by the assessee required to be examined by the AO. It is difficult for us to decide the issue in absence of any verification, which can be done only by the Assessing Officer. Accordingly we set aside this issue to the AO to examine this issue afresh and consider the evidence furnished by the assessee and make investigation on this issue as he deemed fit. The ground no. 1 of the appeal is set aside to the Assessing Officer.
6.1 The year of taxability is also disputed between the revenue or the assessee. The reservation letter issued by the JDA on 12/05/2008, which simply a letter as per the policy of the JDA that 20% of residential land acquired and 5% of commercial land would be awarded to the assessee as a compensation against the acquisition of the land and residential as well as commercial plot was allotted vide letter date 20-11-2009 against acquisition of the land. The remaining amount on account of the lesser area under both the heads were made available by the JDA i.e. 20 sq. meter in residential and 5 sq. meter as commercial for which necessary compensation, calculated on the basis of the reserved price for both the lands at Rs.84,000/- and after adjusting some payment of JDA and remaining amount of Rs.69,555/- was shown as payable to the assessee. It is already held by the various courts that the land and building acquired under compulsory acquisition are two different assets. The compensation for the land was received by the assessee on 20-11-2009 which falls in A.Y. 2010-11 The case law referred by the assessee are squarely applicable, therefore, the Assessing officer is directed to assess the capital gain in A Y.2010-11 and not in A.Y. 2009-10. Accordingly on this issue i.e. ground no.1.1 of the assessee’s appeal is allowed.
4. It was further submitted that after the order of the Tribunal, the AO completed the set aside assessment proceedings for AY 2009-10 vide order dt. 27.12.2016 where no discussion was made on the issue whether the assessee was carrying out agricultural activity in the two years preceding the date of transfer and at the same time, no addition of Rs.73,62,800/- as made in the original assessment was made in the set aside assessment proceedings.
5. Thereafter, the AO issued notice u/s 148 dated 17.02.2017 for AY 2010- 11 after recording the following reasons:-
“The assessee filed its return of income on 30.07.2010 at Rs.2,05,730/-. The case was processed/assessed u/s 143(1) at the returned income on 26.03.2011.
The AO observed that the assessee had received the compensation from Jaipur Development Authority (JDA) on account of acquisition of land at Mahapura acquired by them for SEZ. This compensation was in the form of allotment of residential plot & commercial plot. The AO has observed that the assessee had not disclosed these transactions in his return of income filed on 27.11.2009 for A.Y. 2009-10 Neither the assessee had disclosed it in capital gain head or not under exempt income. Therefore the tax liability had been decided in the A Y. 2009-10 by the Assessing Officer. The case has travelled to ITAT. Further, Hon’ble ITAT has directed to assessing officer to assess the capital gain in A.Y. 2010-11 as the compensation for land was received by the assessee on 20.11.2009, which falls in F.Y. 2010-11.
On perusal of records also it is gathered that compensation of land was received on 20.11.2009, which falls in A.Y. and therefore the liability of capital gain over the assessee arises in A.Y. 2010-11 instead of 2009- 10.”
6. The assessee filed the objection to the issue of notice u/s 148. The AO, however, rejected the same and completed the assessment u/s 147 vide order dt. 26.12.2017. On appeal, the Ld. CIT(A) upheld the reopening of assessment by stating that since the Tribunal has directed the AO to assess the capital gain in AY 2010-11, therefore, issue of notice u/s 148 is valid and in accordance with the provisions of law.