×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.
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-41, Mumbai, dated 07.11.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short „IT. Act‟), dated 22.12.2016. The assessee has assailed the order passed by the CIT(A) on the following grounds of appeal before us :
“1. The Ld. AO as well as CIT(A) erred in treating the amount of Rs.2,67,740/- as income from other sources whereas the said amount represents agriculture income.
2. The Ld CIT(A) erred in confirming the action of AO in treating the amount of Rs.3,84,33,378/- as gain on sale of ancestral agricultural land.
3. The Ld. CIT (A) is also erred in considering agricultural land as capital asset within the meaning of Sec 2(14) of the Income Tax Act, 1961.
4. The Ld. AO as well as CIT(A) erred in calculating the Capital gain on sale of agricultural/ND land, also undivided and disputed land in the year under consideration, as the Agreement for Sale was done on 27.8.2009 i.e. in the AY 2010-11 & not in AY 2014-15.
5. Without prejudice to the above, the Ld. AO as well as CIT(A) erred in not referring the matter to the Valuation officer, which may please be allowed.
6. Without prejudice to the above, the Ld. AO as well as CIT(A) erred in considering the Market value as per provisions of Sec. 50C in the AY 2014-15, whereas the Agreement for Sale was entered in the AY 2010- 11 & valuation, if at all to be adopted, may be adopted of AY 2010-11 instead of AY 2014-15.
7. Further without prejudice to the above, you are requested to allow the deduction U/s 54 of the Income Tax Act for Purchase of Residential House which was not claimed because of the fact that there was no capital gain on sale of agricultural land.
8. Your Honors are requested to allow the claim of the Appellant accordingly.
9. The Appellant craves leave to add, amend, alter, or delete any of the above ground/s.”
2. Briefly stated, the assessee who is a labour contractor had e-filed his return of income for A.Y. 2014-15 on 22.08.2014, declaring total income of Rs.2,67,740/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the I.T Act.
3. During the course of the asse sment proceedings it was observed by the A.O that the assessee had sold urban agricultural land vide a „sale deed‟, dated 28.06.2013 for a consideration of Rs.1,65,00,000/-. On the basis of an unsubstantiated claim, it was submitted by the assessee that the aforesaid agricultural land was co-owned by 5 persons in equal share. The assessee despite specific directions by the A.O failed to place on record the copy of the purchase deed on the pretext that the same was an ancestral property. Further, on a perusal of the „sale deed‟ it was noticed by the A.O that the assessee was in receipt of an amount of Rs.1,09,00,000/- (out of the total sale proceeds of Rs.1,65,00,000/-) on the sale of the aforesaid property. Accordingly, the share of the assessee in the aforementioned property was worked out by the A.O at 66.06% i.e on a pro rata basis of the amount of sale consideration received by him. It was observed by the A.O that the reserve price of the aforesaid property as per the stamp valuation authority as was discernible from the „sale deed‟ was Rs.5,81,79,500/-. Accordingly, the A.O called upon the assessee to explain as to why the capital gain on the sale of the aforementioned property may not be worked out as per Sec.50C of the I.T Act. As the assessee failed to put forth any explanation, therefore, the A.O worked out the long term capital gain (for short „LTCG‟) in the hands of the assessee as per Sec. 50C of the I-T Act. Further, as the assessee did not place on record the copy of the purchase deed, therefore, the A.O worked out the share of the LTCG in the hands of the assessee at 66.06% of the deemed sale consideration under Sec. 50C of Rs. 5,81,79,500/-. Accordingly, the A.O worked out the LTCG in the hands of the assessee at Rs.3,84,33,378/- (i.e 66.06% of Rs. 5,81,79,500/-) and assessed his income at Rs. 3,87,01,120/-.
4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). During the course of the appel ate proceedings, it was claimed by the assessee that as the agricultural land was a rural agricultural land, hence, the same was not a capital asset under Sec. 2(14) of the I-T Act. However, the CIT(A) observing that as the agricultural land was situated within the jurisdiction of a sub-urban district which had a population of 93,32,481 according to the 2011 census, thus, concluded that the claim of the assessee that the land under consideration was a rural agricultural land was incorrect and did not merit acceptance. Apart there from, it was claimed by the assessee that he was eligible for claim of deduction under Sec.54F. However, the said contention of the assessee was also declined by the appellate authority for three reasons viz. (i) that, the land under consideration could not be termed as agricultural land; (ii) that, the assessee had also not demonstrated that any agricultural land was purchased by him by utilising the proceeds of the sale of the impugned land within a period of 2 years; and (iii) that, the assessee had also not raised any