2022 (3) TMI 1271 - AT - Income Tax

Nature of lad sold - treating the agricultural land sold by the Assessee as capital asset liable for long-term capital gain as against claim of the assessee that the land was agricultural land which would be exempt under the Act - As per DR gains were admitted by the assessee in the return of income and fresh claims could be made only by way of revised return of income - HELD THAT - The department should freely advise the assessee as to their rights and liabilities and as to the procedure to be adopted for claiming refund and relief's. In CIT V/s Pruthvi Brokers and Shareholders Pvt. Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT noted that even if no claim is made before Ld. AO, the same could be made before appellate authorities and the jurisdiction of appellate authorities to entertain such a claim has not been negated by the Hon ble Supreme Court in Goetz India Ltd. Vs CIT. 2006 (3) TMI 75 - SUPREME COURT In fact, the Hon ble court has made it clear that the judgment would not impinge on the powers of Tribunal u/s 254 of the Act. Considering all these factors, the Hon ble High Court of Madras in CIT V/s Perlo Telecommunication Electronics Components India Pvt. Ltd. 2021 (10) TMI 236 - MADRAS HIGH COURT dismissed revenue s appeal. Respectfully following the same, we would hold that Ld. CIT(A) was not right in law to dismiss the otherwise eligible claim of the assessee. We order so. Accordingly, since the land sold by the assessee was an agricultural land, the same could not be brought to tax merely on the ignorance of the assessee. The on-money as admitted by the assessee has also been received as well as accepted by revenue to have arisen out of the sale of land. Therefore, the character of the same would remain the same i.e. agricultural income. Deduction u/s 54Fnoted that even if no claim is made before Ld. AO, the same could be made before appellate authorities and the jurisdiction of appellate authorities to entertain such a claim has not been negated by the Hon ble Supreme Court in Goetz India Ltd. 2006 (3) TMI 75 - SUPREME COURT In fact, the Hon ble court has made it clear that the judgment would not impinge on the powers of Tribunal u/s 254 of the Act. Considering all these factors, the Hon ble High Court of Madras in CIT V/s Perlo Telecommunication Electronics Components India Pvt. Ltd. 2021 (10) TMI 236 - MADRAS HIGH COURT dismissed revenue s appeal. Respectfully following the same, we would hold that Ld. CIT(A) was not right in law to dismiss the otherwise eligible claim of the assessee. We order so. Accordingly, since the land sold by the assessee was an agricultural land, the same could not be brought to tax merely on the ignorance of the assessee. The on-money as admitted by the assessee has also been received as well as accepted by revenue to have arisen out of the sale of land. Therefore, the character of the same would remain the same i.e. agricultural income. The other grounds relating to deduction u/s 54F has been rendered infructuous.

Issues involved:
1. Treatment of agricultural land as a 'capital asset' for long-term capital gain.
2. Claim for exemption under section 10(1) and section 54F of the Income Tax Act.
3. Denial of deduction under section 54F due to lack of satisfactory documents.
4. Validity of claim made during appellate proceedings.
5. Assessment of on-money received as 'income from other sources.'
6. Consideration of the agricultural land sold by the assessee.

Detailed Analysis:
1. The first issue in the appeal concerns the treatment of agricultural land as a 'capital asset' for long-term capital gain. The Commissioner of Income Tax (Appeals) upheld the Assessing Officer's decision, leading to the dispute. The appellant claimed that the land was agricultural and thus exempt under the Act. The appellant's plea was based on the ground that the land was agricultural and not a capital asset, which would make it eligible for exemption under section 10(1). However, the Assessing Officer treated the land as a capital asset, resulting in a long-term capital gain liability.

2. The second issue revolves around the denial of relief under section 10(1) and section 54F of the Act. The appellant contended that the Commissioner erred in not granting relief under these sections. The appellant specifically mentioned that the claim for relief was justified by a binding decision. The denial of the deduction under section 54F was a significant point of contention due to the lack of satisfactory documents provided by the assessee to support the claim for exemption.

3. The third issue pertains to the denial of deduction under section 54F due to insufficient documentation. The appellant's claim for deduction under this section was based on an investment made to purchase or construct another house property. However, the Assessing Officer denied the deduction as the necessary documents were not provided by the assessee. This denial led to further appeal proceedings to contest the decision.

4. The fourth issue involves the validity of the claim made during the appellate proceedings. The appellant raised a plea that the land in question was agricultural and not a capital asset, which would impact the assessment of capital gains. Despite producing evidence such as Patta, Chitta, and Adangal, the claim was rejected on the grounds that the income declared in the return could not be altered during the appellate process.

5. The fifth issue concerns the assessment of on-money received as 'income from other sources.' The appellant admitted to receiving on-money during the sale of the land, which was considered as income from other sources and not eligible for deduction under section 54F. The lack of satisfactory documentary evidence further complicated the assessment process, leading to a dispute over the characterization of the income received.

6. The final issue involves the consideration of the agricultural land sold by the assessee. The Tribunal examined the evidence provided, including field inquiries and photographs confirming cultivation on the land. The Tribunal's analysis focused on establishing that the land sold was indeed agricultural in nature. The Tribunal also considered relevant notifications and legal precedents to support the decision that the land should not be taxed as a capital asset.

In conclusion, the Tribunal allowed the appeal based on the finding that the land sold by the assessee was agricultural and not a capital asset. The Tribunal emphasized that the character of the income received, including on-money, remained agricultural income. The decision highlighted the importance of providing sufficient documentation to support claims and the obligation of tax authorities to assist taxpayers in claiming reliefs and refunds.

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