9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 1403 - AT - Income TaxReopening of assessment u/s 147 - LTCG - Whether agricultural land not a capital asset ? - HELD THAT - CIT(A) after considering the submissions of the assessee took his view that notice under section 148 was issued within four years from the end of relevant assessment year. Therefore, provision of section 147 is applicable. Further, no assessment under section 143(3) was passed. AO issued noticed under section 148 after receiving information about payment of compensation to assessee. In the return of income filed under section 139 of the Act, the assessee has not shown any income under the head LTCG . AO issued notice after recording reasons for escapement of income. AO had formed his believe after recording all the aspects and Notification of Government of Gujarat about Notified area of Hazira - CIT(A) noted that Chapter XVI-A of Gujarat Municipalities Act, 1963 (GUJ 34 of 1964), defines the Notified area as urban area or part thereof specified as Notified area to be an Industrial Township Area under the provisions of Clause-(1) of Article 243Q of the Constitution of India. Essar Steel Ltd., is located in the said Notified area. The composition of Gujarat Panchayat Act, 1993 ceased to apply in respect of Notified area from the date of Notification. Further, as per section 264B of the said Act a person or committee appointed for assessment / recovery of taxes of such area shall be deemed to be the Municipal Borough . On the basis of such reasons, the Ld. CIT(A) held the re-opening as valid. Agricultural land OR capital asset - whether the land is a capital asset under section 2(14) r.w.s. 2(14)(iii)(a)? - HELD THAT - As satellite images shows that no agriculture activities were carried on the land. DR also submitted that report of NRSC is scientific report and conclusive proof. We do not find merit in the submissions of the ld DR, as disclaimer, attach to the said report, NRSC, itself reported the shape file provided by CIT(A) did not match with field boundaries of the reference satellite data, with implication on accuracies of location area. Further, in absence in absence of adequate number of GCPs, rubber sheeting technique carried out also did not yield the desirable results. And that concurrent ground truth was not available for thus study and interpretation is exclusively based on the manifestation of features and experience of the interpreter, which could be subjective. It is also mention in the last para in the disclaimer that results have to be corroborative in association with the ground observation, available, if any. Thus, the report itself contents vague observation and cannot be used as evidence or conclusive or expert report based of any scientific evidence against the assessee. Moreover, said report was not provided to the assessee. Thus, by applying of such test we find that the land of the assessee acquired by Special Land acquisition officer is agriculture land. In the result, the assessee is also succeeded on this issue/ ground as well. Considering the facts that we have already held that the land of the assessee is not capital asset as the same does not fall in municipal area, Hazira Notified area is not a municipality or deemed municipality and on alternative plea also held eligible for exemption under section 10(37). AO treated part of compensation as income from other sources - On consideration of facts, we find that in some of the cases, there is payment against the built-up units/ pucca houses. Additional payments were also made only for those landowners who were holding such built-up unit. We find that no evidence was furnished by the land owners about the cost of acquisition or improvement thereof, either before the assessing officer or before ld CIT(A). Even before us, no such estimate of cost of such built-up structure is furnished. As recorded above the ld CIT(A) estimated the cost of acquisition of built-up units/ pucca structure @ 50% of the cost awarded for such built-up / pucca structure in the award. Considering the area where in the such built-up unit or pucca house is situated, it our view, the estimation of it s cost of acquisition is on lower side, therefore we deem it fit and proper to increase it to 60%, would be reasonable and fair. Therefore, we direct the Assessing officer to treat the cost of acquisition @ 60% of Rs. 13.00 lacs as cost of acquisition. In the result, the corresponding ground of appeal is partly allowed. Agriculture income as unexplained cash credit - Considering the facts that we have already held that the land of assessee was agriculture and was being used as such, therefore, the income offered by assessee as agriculture is also allowed and the assessing officer is directed to delete this addition. In the result, the corresponding ground of appeal is allowed.
Issues Involved:
1. Validity of reopening the assessment under Section 148. 2. Treatment of the land as a capital asset under Section 2(14). 3. Eligibility for exemption under Section 10(37) of the Income Tax Act. 4. Taxability of compensation received for pucca structures and other assets. 5. Determination of the cost of acquisition of the land. 6. Treatment of agricultural income as unexplained credit under Section 68. Issue-wise Detailed Analysis: 1. Validity of Reopening the Assessment: The assessee challenged the reopening of the assessment, arguing that the reasons recorded by the Assessing Officer (AO) were insufficient and incorrect. The AO had reopened the assessment based on information that the assessee received compensation for land acquired by the Special Land Acquisition Officer, which was not declared in the return of income. The Tribunal held that the AO had prima facie material to reopen the case, and the sufficiency or correctness of the material was not to be considered at this stage. The reopening was deemed valid as the AO had reason to believe that income had escaped assessment. 2. Treatment of the Land as a Capital Asset: The AO treated the land as a capital asset under Section 2(14), arguing it was situated in a notified area with a population exceeding 10,000. The Tribunal examined whether Hazira Notified Area could be deemed a municipality under Section 2(14)(iii)(a). It was concluded that Hazira Notified Area, being an industrial township, did not qualify as a municipality. Therefore, the land did not fall within the definition of a capital asset under Section 2(14), and the compensation received was not taxable as capital gains. 3. Eligibility for Exemption under Section 10(37): The assessee claimed exemption under Section 10(37), which requires the land to be used for agricultural purposes for two years preceding the transfer. The Tribunal found that the land was indeed used for agricultural purposes, as evidenced by the revenue records and certification by the District Agricultural Officer. The compensation received was for compulsory acquisition, fulfilling the conditions of Section 10(37). Therefore, the assessee was eligible for exemption, and the compensation was not taxable. 4. Taxability of Compensation for Pucca Structures and Other Assets: The AO treated Rs. 13,00,000 received for pucca structures as income from other sources. The Tribunal held that the compensation for pucca structures should be treated as capital gains, not income from other sources. The cost of acquisition for these structures was estimated at 50% by the CIT(A), but the Tribunal increased this to 60%, considering the area and nature of the structures. The AO was directed to assess the compensation under the head "capital gains" with the revised cost of acquisition. 5. Determination of the Cost of Acquisition of the Land: The AO determined the cost of acquisition at Rs. 2.05 per square meter based on information from the Sub-Registrar, while the assessee claimed Rs. 150 per square meter based on a valuation report. The Tribunal found that the AO's valuation was based on actual sale instances, and the assessee's valuation was not substantiated. The Tribunal upheld the AO's determination of the cost of acquisition. 6. Treatment of Agricultural Income as Unexplained Credit: The AO treated the agricultural income of Rs. 5,000 as unexplained credit under Section 68, arguing that the assessee did not provide evidence of agricultural activities. The Tribunal, considering that the land was agricultural and used as such, allowed the agricultural income and directed the AO to delete the addition. Conclusion: The Tribunal ruled in favor of the assessee on several key issues, including the non-taxability of the compensation received for agricultural land and eligibility for exemption under Section 10(37). The reopening of the assessment was upheld, but the compensation for pucca structures was to be assessed under capital gains with a revised cost of acquisition. The agricultural income was accepted as valid, and the corresponding addition was deleted. The detailed analysis provided a comprehensive resolution of the issues involved in the appeal.
|
