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2019 (1) TMI 1989 - AT - Income TaxGain on land sold - nature of land sold - assessee had entered into JDA - agricultural Land or capital asset u/s 2(14) - HELD THAT - As to the relevance of the intention of the purchaser, in deciding on the nature of the land sold, CIT (Appeals) who went adverse to the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina, had himself stated of his order that out of 13 conditions set out in this judgment, assessee had satisfied atleast four. Just because assessee received an amount higher than the guideline value would not show that the land was non agricultural. Agricultural land cannot become non agricultural only for a reason that were development of a commercial nature in the nearby areas. In the circumstances, we are inclined to follow the decision of ld. Commissioner of Income Tax (Appeals) in the case of Shri. S.A. Mafaz Mohammed and uphold the view that the land sold by the assessee, in so far assessment year 2010-2011 is concerned was agricultural and not a capital asset coming within the meaning of Section 2(14) - The gains on sale thereof was not exigible to tax. Addition of agricultural income - HELD THAT - Assessee could not bring in evidence to prove the earning of the agricultural income despite being required by the ld. Assessing Officer. Having not done so, ld. Commissioner of Income Tax (Appeals) in our opinion, erred in deleting the addition made for the claim of agricultural income We set aside the order of the ld. Commissioner of Income Tax (Appeals) on this aspect and re-instate the addition. Addition of term loan interest - - HELD THAT - Commissioner of Income Tax (Appeals) clearly observed that loan were used for construction of Usman Road property and this was clearly indicated in the sanction letter. Also CIT-A accepted the claim of the assessee with a finding that it was utilized for repayment of an advance received from M/s. SSPDL, which was earlier used for repaying a loan taken from M/s. BOBL for construction of the building. Nothing has been brought on record by the ld. Departmental Representative to show that the findings of the ld. Commissioner of Income Tax (Appeals) were incorrect or not based on records. Addition of Corporation Tax - HELD THAT - It is not disputed of 1/3rd of the property was gifted by her to the assessee on 30.03.1994 through a registered release deed. Hence, the corporation tax paid in the name of previous owner Smt. Sithi Sayeedha in our opinion was rightly considered by the ld. Commissioner of Income Tax (Appeals) as allowable. Compensation received on acquisition of 666 sq. mtrs land at survey No.14/3A2B, being treated as exigible to capital gains - HELD THAT - Though the intention at the time of purchase of the land initially was crucial, subsequent events, if they show strong indication of a change of such intention, such events need to be considered. Once assessees sold 1.85 acres out of 9.32 acres, they became fully aware that the land sold was being commercially exploited. When they sold the first parcel of land, the initial intention at the time of purchase was very relevant. We cannot say assessees had the same intention in holding the balance land as they had initially. No doubt, they can bring in evidence to show the agricultural use in subsequent years, if they are convinced on the continuing agricultural nature of the land. However on question like nature of land sold, there can be no rule of resjudicate. Lower authorities had simply followed their decision for assessment year 2010-11 and held the land acquired by Government as non-agricultural, for assessment year 2012-2013 also. The question regarding nature of the land, which was subject to acquisition during the previous year relevant to assessment year 2012-2013 requires re-visit by AO. We therefore set aside the orders of the lower authorities below and remit this issue back to the file of AO for consideration afresh as per law. Accordingly appeal of the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina for assessment year 2012-2013 is allowed for Statistical purpose. Rectification u/s 154 - Interest u/s 234A - HELD THAT - As per the ld. AO intimation u/s.143(1) could not be considered as an assessment and therefore the assessment done pursuant to the notice u/s 148 could be considered as the first regular assessment. According to him, the assessment done u/s 147 had to be construed as a regular assessment for application of Section 234A - In our opinion, the question of interpretation of Explanation (3) to Section 234A(1) is not something beyond debate. What can be rectified u/s.154 of the Act is only a glaring and apparent mistake and not one which requires long debates and interpretation of law. In taking this view, we are fortified in the case of ITO vs Volkhart Bros. 1971 (8) TMI 3 - SUPREME COURT . We are therefore of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in quashing the order of the ld. Assessing Officer.
Issues Involved:
1. Tax effect in Revenue appeal No.284/CHNY/2017. 2. Nature of the land sold by the assessees for assessment year 2010-11. 3. Agricultural income claimed by the assessees. 4. Interest on term loans and disallowance of municipal tax paid. 5. Compensation received on acquisition of land for assessment year 2012-2013. 6. Rectification order under Section 154 of the Act. Detailed Analysis: 1. Tax Effect in Revenue Appeal No.284/CHNY/2017: The tax effect in appeal No.284/CHNY/2017 for the assessment year 2008-2009 was less than ?20,00,000/-. By virtue of para 13 of CBDT Circular No.3/2018, dated 11.07.2018, appeals below the specified tax limit had to be withdrawn as not pressed. Accordingly, the appeal of the Revenue for assessment year 2008-09 stands dismissed. 2. Nature of the Land Sold by the Assessees for Assessment Year 2010-11: The main issue was whether the land sold by the assessees was agricultural land and thus not a capital asset under Section 2(14) of the Income Tax Act. The assessees argued that the land was agricultural, supported by revenue records, agricultural income declarations, and no conversion for non-agricultural use. The Assessing Officer contended that the land was commercial, citing the high sale price, location in a developing area, and the Government's notification for multi-storeyed building construction. The Tribunal noted that the nature of the land as per revenue records and the intention at the time of acquisition were crucial. The Tribunal upheld the view that the land sold was agricultural and not exigible to capital gains tax, following the precedent set in the case of Ayisha Fathima. 3. Agricultural Income Claimed by the Assessees: The Assessing Officer disallowed the agricultural income claimed by the assessees due to lack of supporting evidence. The Tribunal, however, noted that the revenue had accepted agricultural income in earlier years and found no reason to disallow it for the impugned year. Thus, the Tribunal upheld the claim of agricultural income. 4. Interest on Term Loans and Disallowance of Municipal Tax Paid: The Tribunal upheld the deletion of disallowance of interest on term loans, finding that the loans were used for construction purposes and the findings were based on records. It also upheld the deletion of the disallowance of municipal tax paid, noting that the tax was paid for the property owned by the assessee, even though the receipt was in the name of the previous owner. 5. Compensation Received on Acquisition of Land for Assessment Year 2012-2013: The compensation received on the acquisition of 666 sq. mtrs land was treated as exigible to capital gains by the Assessing Officer. The Tribunal remitted the issue back to the Assessing Officer for fresh consideration, noting that the nature of the land in the subsequent year cannot be presumed to be the same as in the earlier years without proper evidence. 6. Rectification Order Under Section 154 of the Act: The Assessing Officer passed an order under Section 154 to rectify the omission of interest under Section 234A. The Tribunal upheld the Commissioner of Income Tax (Appeals)'s order quashing the rectification, noting that the interpretation of Explanation (3) to Section 234A(1) was debatable and not a glaring mistake apparent from the record. Summary of Results: - Appeal of the Revenue in ITA No.2337/CHNY/2016 is partly allowed. - Appeal of the assessee in ITA No.323/CHNY/2017 is allowed. - Appeal of the assessee in ITA No.312/CHNY/2017 is allowed for statistical purposes. - Appeals of the Revenue in ITA Nos.284 and 285/CHNY/2017 are dismissed.
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