2022 (9) TMI 1095 - AT - Income Tax

Admission of additional grounds under Rule 11 and 29 of the Income Tax (Appellate Tribunal) Rules, 1963 - Denial of deduction from Long Term Capital Gain u/s 54B/54F - Assessee before us took a new stand that the agricultural land giving rise to impugned capital gain is situated beyond 8 kms of municipal limits of Bhiwadi and thus does not fall within the definition of expression capital asset under Section 2(14) - exemption claimed u/s 54B as well as alternative claim made under Section 54F was rejected by the Assessing Officer on the premise that the conditions for claim of deduction are not fulfilled either under Section 54B - HELD THAT - Power of the Tribunal to admit additional grounds in respect of matter relating to which necessary information is on record, is now well established. As held in the case of CIT vs. Stepwell Nature Limited 1997 (8) TMI 5 - SUPREME COURT that where a claim was not made either before the Assessing Officer or the first appellate authority and the relevant facts on the basis of which the claim could be adjudicated upon are not available in the records of either the Assessing Officer or the First Appellate Authority, the claim ought not to be entertained by the Tribunal. As in National Thermal Power Company Ltd . 1996 (12) TMI 7 - SUPREME COURT also observed that the Tribunal has jurisdiction to examine a question of law which arises from facts available on the records of Revenue authorities. Hence as per the judicial precedents, the Tribunal cannot entertain a new ground unless such ground can be decided with reference to the material already on record. In the instant case, it is an admitted position that the evidences to support the additional ground were not available before the Revenue authorities and sought to be placed for admission by way of additional evidence before us. In the absence of relevant facts available before revenue authorities, we are not inclined to admit the additional ground for adjudication. The additional grounds raised towards a new claim that the agricultural land sold is outside the purview of definition of capital assets is thus rejected as inadmissible. We do not find any compelling reason in the petition for admission of additional evidence in terms of Rule 29 of the Income Tax Appellate Tribunal Rules, 1963. Rule 29 of the ITAT Rules provide for stringent stipulation for admission of additional evidence. The assessee has not given any cogent reason for failing to adduce the additional evidence sought to be admitted on this belated stage. Therefore, we also decline to entertain the additional evidences. Appeal of the assessee is dismissed.

Summary

Issues:
1. Denial of deduction under Section 54B/54F of the Income Tax Act.
2. Admission of additional ground and additional evidence by the Tribunal.

Analysis:

Issue 1: Denial of deduction under Section 54B/54F of the Income Tax Act

The appeal was filed by the Assessee against the order of the Commission of Income Tax (Appeals) concerning the Assessment Year 2013-14. The Assessee, an individual, had claimed exemption on Long Term Capital Gain arising from the sale of agricultural land. However, the Assessing Officer found discrepancies in the claim. The land purchased in 2005-06 was sold, and the capital gain was computed. The Assessee claimed deduction under Section 54B for acquiring agricultural land, but it was revealed that the new asset purchased was commercial property in Gurgaon, not agricultural land. Consequently, the exemption under Section 54B was denied. Additionally, the alternative claim under Section 54F was also rejected as the property purchased was not residential. The total income was assessed, bringing the capital gain to tax.

Issue 2: Admission of additional ground and additional evidence by the Tribunal

The Assessee challenged the denial of deduction under Section 54B through additional grounds, claiming that the agricultural land sold did not fall within the definition of a capital asset under Section 2(14) of the Act. The Assessee sought admission of additional evidence to support this claim. The Revenue opposed the admission, arguing that the Assessee was attempting to introduce a new case without relevant facts on record. The Tribunal deliberated on the admission of additional grounds and evidence. It was established that the evidences supporting the additional ground were not available before the Revenue authorities. Consequently, the Tribunal declined to admit the additional ground for adjudication. The appeal of the Assessee was dismissed, and the additional evidence was not entertained.

In conclusion, the Tribunal upheld the denial of deduction under Section 54B/54F and refused to admit the additional ground and evidence due to the lack of relevant facts available before the Revenue authorities. The appeal was dismissed, and the order was pronounced on 22.09.2022.