SHRI OM PRAKASH AGARWAL,JAIPUR vs. DCIT, CIRCLE-6, JAIPUR

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ITA 1393/JPR/2019Status: DisposedITAT Jaipur03 August 2020AY 2015-1616 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the agricultural land sold by the assessee is not a capital asset as per the provisions of Section 2(14)(iii) of the Act. The assessee provided documentary evidence, including the sale deed, Jamabandi, census data showing the village population below 10,000, and a Patwari's certificate, to establish that the land was rural agricultural land situated outside municipal limits. The Tribunal found that the CIT(A) erred in rejecting this claim. Regarding the applicability of Section 50C, the Tribunal noted that the assessee had declared a sale consideration higher than the DLC rate. The Tribunal observed that the stamp duty authority's valuation, which included a 1.5 times multiplier for the buyer being a company, was arbitrary and not in line with the intent of Section 50C, which aims to substitute the sale consideration with the fair market value (DLC rate) if the former is lower. Since the declared sale consideration exceeded the DLC rate, there was no justification for making an addition under Section 50C. The Tribunal directed accordingly.

What were the facts?

The assessee, Shri Om Prakash Agarwal, filed an appeal against the order of the CIT(A) for Assessment Year 2015-2016. The appeal challenged an order passed by the AO under Section 143(3) of the Income Tax Act, 1961. The assessee, who jointly owned agricultural land, sold his 1/4th share of 2.09 hectares. The sale consideration declared was Rs. 4,92,00,000/-. The stamp duty authority valued the land at Rs. 7,38,00,000/-. The AO made an addition of Rs. 61,50,000/- under Section 50C, representing 1/4th of the difference between the stamp duty valuation and the declared sale consideration. The CIT(A) confirmed this addition.

What were the issues?

1. Whether the agricultural land sold by the assessee is a capital asset under Section 2(14)(iii) of the Income Tax Act, 1961, and thus chargeable to capital gains tax. - Assessee's contention: The land is rural agricultural land situated in a village with a population below 10,000 and outside municipal limits, therefore not a capital asset. - Revenue's contention: Not explicitly recorded, but implied by the AO's action and CIT(A)'s confirmation that it is a capital asset. 2. Whether the provisions of Section 50C of the Income Tax Act, 1961, are applicable to the sale of the land, particularly when the assessee was not the absolute owner but held Khatedari rights and transferred tenancy rights. - Assessee's contention: Section 50C is not applicable as the land is rural agricultural land and not a capital asset. Additionally, the stamp duty valuation was arbitrary and based on a multiplier for companies, which should not affect the fair market value for Section 50C purposes. The AO should have referred the matter to the DVO if dissatisfied. - Revenue's contention: Not explicitly recorded, but implied by the AO's addition under Section 50C and CIT(A)'s confirmation.

Which sections of the Income-tax Act were involved?

Section 2(14)(iii),Section 50C,Section 143(3),Section 48,Section 54B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR

Before: SHRI RAMESH. C. SHARMA, AM & SHRI VIJAY PAL RAO, JM

For Appellant: Shri Vijay Goyal, CA
For Respondent: Smt. Runi Paul, DCIT
Hearing: 28/07/2020

Order pronounced in the open court on 03 /08/2020.

Sd/- Sd/- ¼ jes’k lh0 “kekZ ½ ¼fot; iky jko½ (Vijay Pal Rao) (Ramesh. C. Sharma) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 03/08/2020.

*Mishra. Shri Om Prakash Agarwal vs DCIT, Circle-6, Jaipur

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