2022 (12) TMI 1220 - AT - Income Tax

Maintainability of appeal by the revenue on low tax effect - Monetary limit for filing the appeal of the revenue before the Tribunal - AO made an addition on account of Long Term Capital Gain arising on receipt of compensation for acquisition of agricultural land of the assessee - HELD THAT - Monetary limit prescribed for filing of appeal by the department have been revised by CBDT vide its Circular No. 3 of 2018 dated 11.07.2018 and para no. 10 of the said circular has carved certain exception on the issues which should be contested on merits notwithstanding that the tax effect entailed is less than the specified monetary or where there is no tax effect. AO had made an enquiry from the land acquisition officer who had settled the relevant information based on which a view was taken by the ld. AO to complete the assessment. It is not a case where the land acquisition officer was conducting any investigation or enquiry as law enforcement agency within the meaning of exception noted in para 10e of the CBDT s Circular (supra). Also it is a case where information was sought from land acquisition officer by ld. AO to supply the information which was used for purpose of making the assessment in question. In fact the grounds taken by the revenue is not in conformity with the stated exceptions in CBDT Circular. Therefore, in our considered view the present appeal filed by the revenue does not fall in the exception noted in para 10e in the said circular. Accordingly, the appeal filed by the revenue is dismissed on the threshold in terms of CBDT s Circular since the tax is below the monetary limit of Rs. 50 lakhs as prescribed in the said circular. Appeal filed by the revenue is dismissed.

Summary

Issues:
1. Interpretation of RFCTLARR Act, 2013 by CIT(A) without supporting evidence.
2. Treatment of long-term capital gain from compensation for land acquisition.
3. Addition u/s 56(2)(vii) based on difference between consideration value and stamp duty value.

Analysis:
1. The appeal by the revenue challenged the CIT(A)'s order regarding the RFCTLARR Act, 2013 without supporting evidence. The revenue contended that the Act was assumed to be applicable without any claim by the assessee. However, the Tribunal noted that the tax effect was below the revised limit of Rs. 50 lakhs for filing appeals, as per CBDT Circular No. 17/2019. The exception clause specified in Circular No. 3 of 2018 was cited by the revenue, but the Tribunal found that the appeal did not fall under the exceptions listed, leading to the dismissal of the appeal.

2. The dispute involved the treatment of long-term capital gain arising from compensation for land acquisition. The AO had made an addition based on the nature of the land being deemed residential, resulting in a tax liability for the assessee. The CIT(A), however, ruled in favor of the assessee, stating that capital gains from land acquisition by the Government were not taxable. The revenue appealed this decision, but the Tribunal upheld the CIT(A)'s order, leading to the dismissal of the revenue's appeal.

3. Another issue was the addition made u/s 56(2)(vii) based on the difference between consideration value and stamp duty value. The revenue argued that the CIT(A) erroneously deleted the addition without considering the significant difference in values. However, the Tribunal found that the revenue's appeal did not fall under the exceptions listed in the CBDT Circular, as the information was obtained from the land acquisition officer for assessment purposes. Consequently, the appeal was dismissed based on the monetary limit set by the circular.

In conclusion, the Tribunal dismissed the revenue's appeal on the grounds that it did not meet the exceptions specified in the CBDT Circular, and the tax effect was below the prescribed monetary limit. The decision upheld the CIT(A)'s rulings regarding the treatment of long-term capital gain from land acquisition and the addition u/s 56(2)(vii), emphasizing the importance of adhering to the circular guidelines in filing appeals.