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Income Tax Appellate Tribunal, DELHI BENCH: ‘C’ NEW DELHI
Before: SHRI SAKTIJIT DEY & SHRI PRADIP KUMAR KEDIA
This is an appeal by the assessee against order dated 14.11.2017 of learned Commissioner of Income Tax (Appeals), Aligarh, pertaining to assessment year 2009-10.
The grounds raised by the assessee are as under:
(1) That the Ld. CIT(A) has erred in sustaining the addition of Rs. 1,07,18,779/- made towards the long term capital gain, since the land sold was an agricultural land and the same does not fall within the definition of capital asset u/s 2(14) of the I. T. Act, 1961, at the time of the agreement to sell dated 20.06.2008. The use of land sold was changed and treated as industrial land for the purpose of sale-deed executed on 24.03.2009 only on the intention of the purchaser, since the purchaser had purchased the agricultural land for the use of non-agricultural i.e. industrial purposes. (2) That the Ld. CIT(A) has erred in law and on facts that there is a extinguishment of some rights in the land sold by the assessee in favour of the purchaser vide the agreement to sell dated 20.06.2008. The extinguishment of any rights also amounts to the transfer as per the definition of ‘Transfer’ vide section 2(47) of the I. T. Act, 1961. (3) That the Ld. CIT(A) has erred in ignoring the decision of Hon’ble Supreme Court in case of Sh. Sanjeev Lai Etc. vs. CIT [ (2014) 365 ITR 389 ] in which it has been hela that an agreement to sell creates some rights in favour of transferee and it is a transfer within section 2(47) of the I. T. Act, 1961. (4) For these and other grounds, which may be urged at the time of the hearing, the appeal may be allowed and justice rendered.
As could be seen from the grounds raised, the core issue arising in the present appeal is, whether the land sold by the assessee, which has been subjected to long term capital gain is in the nature of agricultural land.
Briefly the facts are, during the year under consideration, the assessee along with other two co-owners had sold an immovable property (land) for a total sale consideration of Rs.3,93,97,000/-, wherein, assessee’s share in sale consideration was to the tune of Rs.1,31,32,330/-. Since the assessee did not offer long term capital gain in relation to the sale of land, based on information available on record, the Assessing Officer reopened the assessment under section 147 of the Act. In course of assessment proceedings, though, the assessee submitted that, since the asset sold is an agricultural land not coming within the definition of capital asset under section 2(14) of the Act, hence, it is not subject to capital gain tax, the Assessing Officer, however, did not accept the claim of the assessee. He observed that the land sold by assessee is an industrial plot situated at Ibrahimpur, Junaidpur Urf Maujpur Tehsil Khurja, hence, it will not fall in the category of agricultural land. Accordingly, he proceeded to compute long term capital gain and added an amount of Rs.1,07,18,779/-. The assessee contested the aforesaid addition before learned Commissioner (Appeals). However, learned Commissioner (Appeals) upheld the decision of the Assessing Officer.
When the appeal was called for hearing, none appeared on behalf of the assessee. However, vide letter dated 27.12.2021, the assessee has submitted that the issue is covered by the decision of the Tribunal in case of other co-owners. In support, order dated 24.11.2021 passed in in case of Sarwati Urf Sarvati Devi Vs. ITO has been furnished before the Bench.
Going through the order of the Coordinate Bench, learned Departmental Representative fairly agreed that identical issue has 3 | P a g e been decided by the Tribunal in case of co-owners. However, she relied upon the observations of Departmental Authorities.
We have considered rival submissions and perused the materials on record. Undoubtedly, the dispute between the parties is with regard to the nature of land sold. While the assessee has claimed the land sold to be in the nature of agricultural land, thereby, not coming within the definition of capital asset under section 2(14) of the Act, the departmental authorities have held that the land sold being an industrial land is subject to capital gain. It is a fact on record that the land sold, which is subjected to capital gain, is a jointly owned property by three co-owners and each having 1/3rd share in the property.
Even, the Assessing Officer has accepted the aforesaid position.
Facts on record reveal that in case of one of the co-owners, Sh. Jitender Kumar, the Assessing Officer made identical addition of long term capital gain. When the assessee contested the addition before learned Commissioner (Appeals), being convinced with the submissions, learned Commissioner (Appeals) held that the land sold is agricultural land, hence, not subject to long term capital gain. This decision of the Tribunal was subsequently followed in case of another co-owner viz. Sarwati Urf Sarvati Devi 4 | P a g e Vs. ITO passed in dated 24.11.2021. The relevant observations of the Bench in this regard are as under:
“6. We find that in one of the co-owners i.e. Jitender Kumar, this Tribunal in for A.Y.2009-10 held as under:
“13. We have gone through the record is the light of the submissions made on either side. In so far as the location of the land or the standing crops thereon is concerned, absolutely there is no dispute. Khasra revealed that there was standing crop of wheat and jwar on the land at the time of transfer. Further, as a matter of fact, Id. AO in the order dated 22.3.2013 u/s 143(3)/148 of the Act had accepted the agricultural income of the assessee to the tune of Rs.41,000/-. Further, there is no explanation as to how the mutation could have taken place in the Revenue record if the land was put to commercial use as on the date of sale. Merely because the land was near the area said to be developed as industrial by 2021, without any notification from the competent authority, it cannot be said that the land in question loses its character and status of being an agricultural land. It is not the case of the Revenue that any competent government had issued any notice changing the nature of land from rural agricultural land in order to apply the provisions u/s 54B of the Act.
Having accepted the agricultural income of the assessee and having possession of the record at the time of passing the order u/s 147/143(3) of the Act, it seems that the learned AO failed to appreciate the fact that unless and until a competent Government issues a notification or the conversion of the use of land takes place, land with standing crop whose mutation had taken place in the Revenue record, cannot be said to be a non agricultural land. On a careful consideration of the findings of tin learned CIT(A) in the light of die record that was made available before the learned AO as well as the learned C1T(A) and also the remand report, we are of the considered opinion that the approach of the learned CFItA) is not questionable and it does not suffer from any illegality or irregularity warranting interference by this Tribunal. We, therefore, while uphold the findings of the learned CIT(A) find the grounds of appeal
as devoid of merit. Appeal is accordingly dismissed.
15. In the result, appeal of the Revenue is dismissed.”
7. Respectfully following the findings of this Tribunal (supra) we direct the AO to delete the impugned addition.”
Facts being identical, respectfully following the aforesaid decision of the Coordinate Bench, while deciding the identical issue in case of other co-owners, we delete addition made on account of long term capital gain.
In view of our aforesaid decision, various other ancillary and incidental issues raised by the assessee have become academic, hence, do not require adjudication.
In the result, the appeal is allowed, as indicated above.
Order pronounced in the open court on 30th May, 2022