2023 (4) TMI 856 - AT - Income Tax

Belated employees contribution of ESI PF under respective statutes - HELD THAT - We noted that this issue is now settled by the decision of M/s. Checkmate Services P.Ltd 2022 (10) TMI 617 - SUPREME COURT Admittedly these payments are made beyond due dates as prescribed under respective statues which is not disputed by the assessee s counsel. Hence we dismiss this issue of assessee s appeal. Assessment of capital gains on sale of agricultural land or landed property - Nature of land sold - Calculation of distance to get jurisdiction of municipality - as per section 2(14)(iii)(a) the village population is to be considered for ascertaining whether the land is capital asset or not - whether clause (a) or clause (b) to section 2(14)(iii) will apply to the present dispute? - HELD THAT - Interpretation of provisions of section 2(14)(iii) sub-clause (a) clearly applies in case where land falls in any area which comprised within the jurisdiction of municipality and which has population of not less than ten thousand. Hence in the present case meaning of clause (a) to section 2(14)(iii) agricultural land in India not being land situated within jurisdiction of municipality and which municipality has population of not less than ten thousand is to be read together. In the present case as argued by the Sr.DR the assessee s case clearly falls under clause (b)(ii) to provisions of section 2(14)(iii) reason being assessee s land is outside Hindupur Municipal limits at a distance of 4 kms measured aerially and as per provisional report of Census of India population of Hindupur Municipality in 2011 is 151677. Hence the AO has rightly charged assessee s land to capital gain tax and the CIT(A) has rightly affirmed the same. Decided against assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Disallowance of payments made belatedly on account of employees' contribution to ESI & PF.
3. Assessment of capital gains on the sale of agricultural land.
4. Charging of interest under sections 234B and 234C of the Income Tax Act.

Summary:

1. Condonation of Delay:
The appeal filed by the assessee was barred by a limitation of 161 days. The delay was attributed to the Covid-19 pandemic, and the Hon'ble Supreme Court had directed that delays during the pandemic period be condoned. Respectfully following the Supreme Court's directions, the Tribunal condoned the delay and admitted the appeal.

2. Disallowance of Payments to ESI & PF:
The first issue concerned the disallowance of payments made belatedly on account of employees' contributions to ESI and PF. The Assessing Officer disallowed these payments under section 2(24)(x) and Explanation to Section 36(1)(va) of the Income Tax Act because they were made beyond the due dates prescribed under the respective statutes. The CIT(A) confirmed this disallowance. The Tribunal noted that the Hon'ble Supreme Court in the case of M/s. Checkmate Services P. Ltd Vs. CIT had settled this issue, and since the payments were made beyond the due dates, the Tribunal dismissed this issue of the assessee's appeal.

3. Assessment of Capital Gains on Sale of Agricultural Land:
The next issue was the assessment of capital gains on the sale of agricultural land. The assessee sold land and claimed exemption under section 10(14) of the Act, asserting it was agricultural land. The Assessing Officer, however, noted that the land was classified as dry and waste land due to drought, and it fell within the municipal limits of Hindupur Municipality, which had a population exceeding one lakh. Consequently, the land did not qualify as agricultural land under section 2(14)(iii) of the Act and was liable for capital gains tax. The CIT(A) upheld this view. The Tribunal reviewed the facts and relevant provisions, concluding that the land fell within the municipal limits and had a population as per the 2011 census, thus confirming the lower authorities' decision to tax the capital gains.

4. Charging of Interest under Sections 234B and 234C:
The assessee challenged the charging of interest under sections 234B and 234C. The Tribunal held that the charging of interest is consequential in nature.

Conclusion:
The appeal of the assessee was dismissed in its entirety. The Tribunal upheld the decisions of the lower authorities on all issues, including the disallowance of delayed payments to ESI & PF, the assessment of capital gains on the sale of land, and the consequential charging of interest. The order was pronounced in the open court on 19th April 2023.