2015 (10) TMI 926 - AT - Income Tax

Entitlement to exemption u/s.54F - Whether the CIT(Appeals) has erred in accepting the entire claim of the assessees with regard to sale of standing trees as agriculture income? - Held that - A perusal of the assessment order shows that the Assessing Officer has partly disallowed the claim of the assessee in respect of agriculture income arising from sale of standing trees. The Assessing Officer has made partial dis-allowance merely on estimation basis. No detailed survey was conducted by the Assessing Officer although he visited the site personally with one inspector. The CIT(Appeals) in his order has given the details of the property sold by the assessees. Along with the details of agricultural land, the details of trees planted in the scheduled property is also given. The precise number of trees along with varieties is mentioned. It has been stated that 679 trees consisting of mango, teak, coconut, guava, jack, lime and sapotta are standing on the two parcels of land sold by the assessees. In view of thorough details given in the sale deed, there was no question of making any estimations by the Assessing Officer. Moreover, the Assessing Officer has not given any basis for making such estimation. Subsequently, in the remand report dt.15-05-2013, in the case of Shri S.Chokalingam, the Assessing Officer in his comments to para No.6a to 6f has stated that sale deed executed has been promptly registered and the value of the said land and trees have been arrived based on relevant market value. Hence, the assessees claim may be accepted . In view of specific admission in the remand report by the Assessing Officer and the detailed findings of the CIT(Appeals) on the issue, we do not find any merit in the appeals of the Revenue. - Decided against revenue. Revised computation filed by the assessees at the time of assessment without filing revised return of income - Whether the Assessing Officer can consider the revised computation of income at the time of assessment? - Held that - Agriculture land of the assessee is clearly outside the ambit of the term capital asset . Initially, the assessees have treated the agriculture land as capital asset and accordingly claimed exemption u/s.54B/54F on account of purchase of new agriculture land/residential property. Subsequently, the assessees realized their mistake, and at the time of assessment filed revised computation by applying correct provisions of the law. The Assessing Officer rejected the revised computation. The CIT(Appeals) confirmed the findings of the Assessing Officer. The Hon ble Supreme Court of India in the case of M/s.Goetze India Ltd., Vs. CIT reported as 284 ITR 323 has held that the Assessing Officer has no power to entertain a claim for deduction otherwise than by revised return. The Hon ble Apex Court further made it clear that it is the power of Assessing Officer that is limited to entertain fresh claim but does not impinge the power of the Income Tax Appellate Tribunal u/s.254 of the Act. In view of the well settled law and the facts of the case, we are of considered opinion that the claim of the assessees to treat the sale proceeds of agricultural land as exempt from tax has merit. The appeals are remitted back to the Assessing Officer to consider the revised computation filed by the assessees and thereafter, decide the issue afresh in accordance with law. - Appeals of the assessees are partly allowed for statistical purposes

Summary

Issues:
1. Acceptance of claim of assessees regarding sale of standing trees as agriculture income.
2. Consideration of revised computation of income without filing revised return.
3. Entitlement of assessees for exemption u/s.54B of the Act.

Analysis:

Issue 1:
The Revenue appealed against the CIT(Appeals) order regarding the claim of assessees on agriculture income from the sale of standing trees. The Assessing Officer had made a partial disallowance based on estimation without conducting a detailed survey. However, the CIT(Appeals) provided detailed information from the sale deed, specifying the number and varieties of trees sold. The Assessing Officer failed to provide a basis for estimation, and in a subsequent report, admitted the correctness of the assessees' claim. The Tribunal dismissed the Revenue's appeal, upholding the CIT(Appeals) decision.

Issue 2:
The question arose whether the revised computation of income filed by the assessees at the time of assessment without filing a revised return could be considered. The assessees initially treated the agriculture land as a capital asset for claiming exemptions u/s.54B/54F. Later, they corrected this treatment in the revised computation. The Assessing Officer rejected the revised computation, which was upheld by the CIT(Appeals). Citing the Supreme Court's ruling in M/s. Goetze India Ltd. vs. CIT, the Tribunal held that the Assessing Officer cannot entertain a claim without a revised return. The appeals were remitted back to the Assessing Officer for reconsideration based on the revised computation.

Issue 3:
As the primary issue was decided in favor of the assessees, the Tribunal did not address the alternate submissions made by them. The appeals of the assessees were partly allowed for statistical purposes, while the Revenue's appeals were dismissed.

This judgment, delivered by the ITAT Chennai, clarified the legal stand on the issues raised by both the assessees and the Revenue, providing detailed reasoning and citing relevant legal precedents.