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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI ANIL CHATURVEDI, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)-1, Aurangabad dated 20.03.2017 for the assessment year 2011-12 as per the following grounds of appeal on record:
1. The Hon. CIT (A) erred in directing the Ld. AO to compute long term capital gains on account of sale of share in agricultural land at Village Khadand, Mangaon, Dist. Raigad, by taking sale consideration in the hands of the appellant at Rs.16,00,000/-, not appreciating that the said land was agricultural land" covered by the exception contained in section 2(14)(iii) of the I.T. Act 1961, and accordingly the gains arising on sale thereof did not lead to any income liable to tax in the hands of the appellant.
The appellant craves leave to add, alter, amend and/or vary the grounds of appeal at any time before the decision of the appeal.”
2. The brief facts in this case are that the Assessing Officer made addition of Rs.80,00,000/- on sale of agricultural land under the head „capital gains‟. That before the Ld. CIT(Appeals) it was contended by the assessee that the assessee along with four co-owners had sold their agricultural lands at Gut No.539/Hissa No.1, Village Khadand, Mangaon, Dist. Raigad for the total sale consideration of Rs.80,00,000/- on 28.12.2010 and the said land had been purchased by Late Shri Ashok Gajanan Potdar i.e. father of the assessee for purchase consideration of Rs.30,000/- on 09.01.1989. As per registered documents, the share of the assessee in the sale consideration arising from the said sale transaction was 1/5th being Rs.16,00,000/- only. The Assessing Officer had also mentioned in the assessment order that five co-owners were involved in the sale of said land. In spite of the above findings, the Assessing Officer had proceeded to tax the entire sale consideration of Rs.80,00,000/- in the hands of the assessee. It was further contended by the assessee before the Ld. CIT(Appeals) that the land sold was agricultural land at Village Khadand, Mangaon, Dist. Raigad and the same was not “capital asset” as the said agricultural land was covered by the exception contained in section 2(14)(iii) of the Act. Accordingly, the gains arising on sale of such agricultural land did not lead !o any "income" liable to be taxed in the hands of the assessee. In support of the above claim, certificate dated 8.5.2015 from local Talathi (Land Revenue Officer) confirming that the said agricultural land was put to use for raising vegetables and affidavit dated 11.05.2015 from one Shri Amod Saple confirming that he was engaged in utilizing the concerned land for raising agricultural produce, were also filed. It was submitted that the above evidences could not be produced before the Assessing Officer for bona fide reasons and therefore the same may kindly be admitted u/r. 46A of the Income Tax Rules.
The Ld. CIT(Appeals), thereafter, called for remand report vide letter dated 20.11.2015. The assessee prima-facie challenged the impugned addition on account of capital gain primarily on the ground of land being agricultural in nature. Therefore, it was brought to the notice of the Assessing Officer that he should depute his Inspector to ascertain the distance of land in question from Mahad Municipal Corporation or Roha Municipality. He was also directed to obtain the report of Talati/Revenue Officer about agricultural activities being performed on the said land. The remand report was dated 17.12.2015 was not received in time. The Income Tax Officer, Ward-1, Panvel vide his remand report dated 05.05.2016 stated that he had deputed his Ward Inspector to ascertain the distance of land from Municipal Corporation/ Municipality jurisdiction. The Ward Inspector had submitted report dated 30.12.2015 wherein it was stated that the land situated at Gut No.539, Village Khadand, Taluka Mangaon, Dist. Raigad was about 32 Kilometer away from Roha Municipality and 27 kilometer away from Mahad Municipal Corporation. The Inspector further reported that the land in question was being used for growing vegetables at the time of his visit and for the irrigation of land; there was a canal nearby i.e. 350 meters away from agricultural land. The Ld. CIT(Appeals) as per detailed reasoning and observation contained in his order which is on record had partly allowed the grounds of appeal of the assessee. To the extent that where the Assessing Officer has made addition of entire sale consideration of Rs.80,00,000/-, the Ld. CIT(Appeals) found that the assessee had 1/5th share in the said land as per sale deed dated 28.12.2010 and accordingly, directed the Assessing Officer to compute long term capital gain in the hands of the assessee by taking sale consideration of Rs.16,00,000/-. The Assessing Officer was also directed to allow the indexed cost of acquisition on proportionate basis (one fifth share) to the assessee as the land in question was purchased on 09.01.1989 for purchase consideration of Rs.30,000/-. Thus, this ground of appeal was partly allowed by the Ld. CIT(Appeals).
4. We have perused the case records and given considerable thought to the findings of the Ld. CIT(Appeals). We find that the assessee submitted documents in the form of additional evidences i.e. certificate from local Talati (Land Revenue Officer) dated 08.05.2015 confirming that the said land was agricultural land and was put to use for agricultural crops along with affidavit dated 11.05.2015 from Shri Amod Saple confirming that he was engaged in utilizing the concerned land for raising agricultural produce etc. These additional evidences were forwarded to the Assessing Officer and remand report was called for by the Ld. CIT(Appeals) and specifically asking the Assessing Officer to depute an Inspector on the said land in order to ascertain the actual character of the land and whether it is agricultural land or not. It is evident from the record that the Ward Inspector in his report dated 30.12.2015 has stated that the land situated at Gut No.539, Village Khadand, Taluka Mangaon, Dist. Raigad was about 32 Kilometer away from Roha Municipality and 27 kilometer away from Mahad Municipal Corporation. That further, the Ward Inspector further reported that the land in question was being used for growing vegetables at the time of his visit and for the irrigation of land; there was a canal nearby i.e. 350 meters away from the said agricultural land. The only reason that the Ld. CIT(Appeals) decided to compute long term capital gain on proportionate basis i.e 1/5th share of the assessee because as per 7/12 extract, the land was shown as “Padit/ barren land”. The Ld. CIT(Appeals) also observed that so far the Inspector report is concerned, he has stated that at present agricultural crops were grown but it was not the position when the land was sold. We observe in the entire order of the Ld. CIT(Appeals), he has not clearly brought any findings negating Inspector‟s report. The Ld. CIT(Appeals) has also not given his findings about the genuanity of the Talati report and also of the affidavit of the person doing agricultural activities on that land.
We find in the case of Shri Govind Gangadhar Sabane Vs. ITO, Ward- 1(4), Parbani, in for assessment year 2009-10, it had been held that when the Inspector has visited the site and has given a detailed report then without negating this report, the Revenue Authorities cannot simply reject the claim of the assessee which is not valid in law and we had allowed the issue in favour of the assessee.
In the present case before us, the Inspector‟s report categorically suggested that agricultural produce were grown on the said land, there was a canal from which irrigation was done on the said land. Even the certificate obtained from local Talati specifies the land being agricultural land. The Ld. CIT(Appeals) has not distinguished or brought any other materials on record to negate such findings in the Inspector‟s report and therefore, we are of the considered view that the land sold was agricultural land and the same is not a capital asset and the same is covered by the exception contained in Section 2(14)(iii) of the Act. In view of the examination of facts on record, we set aside the order of the Ld. CIT(Appeals) and allow the grounds raised in appeal by the assessee.
In the result, appeal of the assessee is allowed. 6.
Order pronounced on 09th day of January, 2020.
Sd/- Sd/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 09th January, 2020. SB आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2.
3. The CIT(Appeals)-1, Aurangabad.