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TMI Blog2015 (2) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... eceding the date of transfer, the date of transfer is material effect. When the assessee relinquished their rights in land on 30/5/2006, the assessee has not completed two years and has not used the agricultural land for agriculture purposes. It is a fact that the compulsory acquisition proceedings were completed on 29/12/2007 and when award was passed by the Land Acquisition Officer U/s 12(2) of the Act. The assessee was allotted residential and commercial plot on 21/8/2008 at village Khatwada, Tehsil- Sanganer, district- Jaipur. The assessee received the compensation on 21/8/2008. The learned Assessing Officer has adopted the reserve rate fixed for residential plot @ 2800 per sq. mt and ₹ 5600 per sq.mt for commercial plot on the basis of reserve rate fixed by the JDA for villages Jhai, Khatwada, Bagru, Khurd, Palri and Bhambhoria. The residential and commercial plots allotted to the appellant in the area of Khatwara. Therefore, the Assessing Officer concluded short term capital gain on the basis of reserve rate is justified. The learned CIT(A) was not justified by holding that agricultural land was not a capital asset on the basis of certificate issued by the Tehsildar, Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering short term capital gain on the acquisition of land on the ground that the same was not pressed by the assessee whereas the fact is that the ground was not pressed because no capital gains were taxable in the case U/s 10(37) of Income Tax Act, 1961. 2. Under the facts and circumstances of the case, the learned CIT(A) has erred in not accepting and deciding the fifth ground of the assessee that the learned Assessing Officer erred in determining short term capital gain at ₹ 3,00,35,000/- on the acquisition of the land notwithstanding the fact that the learned CIT(A) has given decision that no capital gains are taxable in the case of the assessee being exempt U/s 10(37) of the Income Tax Act, 1961. 2. All the grounds of revenue s appeal are revolving around capital gain determined by the Assessing Officer, which was deleted by the learned CIT(A). The learned Assessing Officer observed that the assessee had declared income from house property and long term capital gain and income from other sources, which is reproduced as under:- a. Income from house property ₹ 27,128/- b. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- which was a proportion between both the properties in the ratio of area sold. The area sold was 625 sq.mt. Residential area for ₹ 11,25,000/- and commercial area 400 sq.mt. for ₹ 22,00,000/-. Copy of receipt of brokerage payment is enclosed herewith (Page No. 16). 7. The above both properties sold by the assessee were purchased in financial year 2005-06 alongwith Smt. Pushpa Sharma. The assessee was 50% co-owner of this property. This property was purchased for ₹ 42,00,000/- and ₹ 2,56,000/- was incurred on stamp duty and other misc. expenses. The assessee s contribution was ₹ 22,28,000/- for purchase of this property for 50% share. Copy of purchase deed is enclosed herewith. (Page No. 17 to 23 8. The above property purchased by the assessee on 16/05/2005 was acquired by Jaipur Development Authority for special Economic Zone and in consideration of that the assessee was allotted 15680 sq.mt. residential and 3920 sq.mt. commercial land. The assessee s share @ 50% was 7840 sq.mt. residential and 1960 sq.mt. commercial land. So for total cost of ₹ 22,28,000/- the assessee has allotted 7840 sq.mt. residential land and 1960 sq.mt. commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he JDA has acquired this land under section 44 of JDA Act, 1982 (a law created by Rajasthan Govt.) and in consideration thereof the assessee was allotted commercial land and residential plots by lottery dated 21/08/2008 and 22/05/2008. So the new assets in the form of commercial plots and residential plots came into the existence and the date of allotment was in case of commercial plots was 22/05/2008 and some plots in 03/10/2008 on which the assessee has declared capital gain income and paid capital gain taxes by assuming the value of old assets (agriculture land) as acquisition cost of property sold. In this regard our humble submission is that we have wrongly taken the cost of acquisition of old assets whereas the cost of acquisition of the assets sold should be taken in the fair market value on the date of allotment by the JDA which is 22/05/2008 in case of commercial plots and 21/08/2008 in case of residential plots and short term capital gain should be computed on sales price and there is no change in fair market value and sale price as the assessee has sold the property immediately after allotment from JDA. Therefore, the assessee has not earned any capital gain income. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al land. On 30/5/2006, the joint owner of this land i.e. Smt. Pushpa Sharma and assessee Vinita Agarwal surrendered the land before the Land Acquisition Officer. The content of the letter is reproduced as under:- On 02/11/2006, the Amin of JDA office had reported as under:- On 03/11/2006, reservation letter issued in furtherance of allotment letter to be issued in pursuance to notification order No. P.6(29)Navi/3/2004 dated 27/10/2005. According to reservation letter, the assessee was allotted 20% residential and 5% commercial land as compensation of surrender of land without any consideration following the above notification of acquisition by the JDA. On 30/12/2006 subsequent to the issue of reservation letter, according to section 4(1) of notification/Circular No. P.6(29)Navi/3/2006 dated 30/12/2006, it was notified that now legally the sellers were prevented from making any legal dispute about the sale of the land. On 21/08/2008 vide lottery specific residential plot No. 15680 sq.mt. and commercial plot of 3920 sq.mt. was allotted at village Khatgwada, Tehsil Sanganer, district- Jaipur jointly to the assessee and her co-owner. On 03/10/2008 residential plot No. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Value of compensation- Residential area 7840 sq.mt.X2800 (reserve rate) = ₹ 2,19,52,000/- Commercial Area 1960 sq.mt. x 5600 (reserve rate) = ₹ 1,09,76,000/- Total amount of compensation ₹ 3,29,28,000/- Short term capital gain ₹ 3,07,00,000/- B. During the relevant previous year, the assessee and her co-owner sold 1250 sq.mt. of residential plot No. 624 for ₹ 22,50,000/- on 03/10/2008 and 800 sq.mt. of commercial plot No. 169 on 24/12/2008 for ₹ 44,00,000/-. Thus, the total share of the assessee becomes ₹ 33,25,000/- (1125000 + 2200000). Short term capital gain/loss on the sale of the above plot is worked out as under:- Total sale consideration Cost of acquisition ₹ 33,25,000/- Of residential plot of 625 sq.mt. x 2800 = ₹ 17,50,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally assessed short term capital gain at ₹ 3,00,35,000/-. 3. Being aggrieved by the order of the Assessing Officer, assessee carried the matter before the learned CIT(A), who had allowed the appeal in favour of the assessee by observing that basically issue pertained to the completion of the acquisition proceedings. The notification was issued on 27/10/2005 to acquire the land by the JDA for development of SEZ. However, this notification was not an order of acquisition. The Assessing Officer was of the opinion that the appellant had surrendered her rights in the said land vide letter dated 30/05/2006 to the Land Acquisition Officer. However, he found that it was a simply an unconditional offer for surrender of land and in absence of clear title or defects in the title of the property, this offer was liable to be rejected by the State Government. Many a times, the land requisitioned U/s 3 is not acquired by the State Govt. and it is released from acquisition and the possession is also returned to the owner. The requisition of the land is not a transfer because the ownership remains with the owner. The Assessing Officer was of the opinion that the transfer was complete when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accessibility of capital gain and transfer was affected when possession was taken over pursuant to an award under the provisions of Land Acquisition Act. (ii) For A.Y. 1982-83, CIT Vs. Smt. Sheggy Abdulla (243 ITR 792), for accessibility of capital gain in assessment year and made award by the Collector and took the possession of land. (iii) For A.Y. 1970-71, Appala Narsamma Vs. CIT (168 ITR 17), for acceptability of capital gain. (iv) For A.Y. 1978-79, CIT Vs. Pandari Laxmiah (223 ITR 671), for vesting of land took place on the date of award. (v) For A.Y. 1971-72, CIT Vs. Cachar Native Joint Stock Co. Ltd. (223 ITR 754), for determination of compensation amount, the question of determination of capital gain did not arise. (vi) For, A.Y. 1974-75, CIT Vs. Subodh Kumar Jain (221 ITR 802) for computation of capital gain and awarding of compensation and taking possession of land by the Sanchalak. The learned CIT(A) further held that the assessee filed the copy of khasra Girdawari for agricultural operation to show that the crops of Chola and Bazra were grown in the said land as per Revenue record. It was argued by the assessee before him that other co-owner namely Sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lavleen Singhal Vs. DCIT (111 TTJ 326). He further decided the assessee s claim made before the learned CIT(A) U/s 10(37) of the Act by considering the various case laws, which has also been challenged by the revenue in ground No. (v) and decided in favour of the assessee. Further, he also held that it is the agricultural land and is not a capital assets as per provisions of Section 2(14) of the Act. Further calculation of the capital gain of residential plot and commercial plot allotted to the assessee on the basis of reserve rate on the basis of land acquisition at village Jhai, Khatwada, Bagru, Khurd, Palri and Bhambhoria whereas the assessee s land was situated in village Kalwad, Tehsil- Sanganer, therefore, it has been held that the Assessing Officer was not justified in adopting the reserved price of other villages to case of assessee. Therefore, he accepted the consideration shown by the assessee as on selling of the part of both lands i.e. residential and commercial plots. Therefore, he also deleted the addition, which was difference between the price calculated by the Assessing Officer and on which part land has been sold by the assessee. 4. Now the Revenue is in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Kalwad, Tehsil- Sanganer, as per his calculation, this amount should not be more than ₹ 2,48,92,000/- and short term capital gain would work out to ₹ 2,26,64,000/-. The learned CIT(A) is empowered by law to entertain the deduction U/s 10(37) of the Act even which has not been claimed through the revised return. Therefore, he prayed to confirm the order of the learned CIT(A). The learned A.R. has not pressed the cross objection filed by the appellant. 6. We have heard the rival contentions of both the parties and perused the material on record. It is fact that the assessee purchased agricultural land on 15/5/2005, which was acquired by the JDA in pursuant to notification dated 25/10/2005. In lieu of the acquisition of land, reservation letter was issued on 3/11/2006 to the assessee for the allotment of certain area of residential and commercial plots. Vide letter dated 30/5/2006 both the co-owners had surrendered the agricultural land before the Land Acquisition Officer and requested to allot 25% of land acquired (20% residential and 5% commercial) developed plot as per JDA rule. The Amin on 2/11/2006 on ordersheet recommended compensation to the Tehsildar. On 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r outside India) or otherwise, notwithstanding that such transfer of rights has been characterized as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India;] It is a fact that the assessee has relinquished her right in the land by letter dated 30/05/2006 to the JDA. The learned CIT(A) has not considered Section 2(47) wherein other mode of transfer has been prescribed under the Income Tax law. According to it, the exchange/relinquishment of assets or the extinguishment of any right therein has been provided a mode of transfer. The learned CIT(A) has applied general law, even case law referred by him was relevant to old law or pertained to earlier amendment made U/s 2(47) of the Act, which are squarely not applicable on the case of assessee. The transfer is complete even the assessee relinquished her rights in the land. The case law applied by the learned CIT(A) on the assessee s case were on assessability of compensation in the year. Here the moot question was to decide when transfer got completed, the compensation is to be assessed in the year in which it has been received. For determining whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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