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Income Tax Appellate Tribunal, DEHRADUN BENCH, DEHRADUN
Before: Sh. A. D. Jain, Vice-Dr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. CIT(A)-II, Dehradun dated 22.11.2012.
Following grounds have been raised by the assessee:
“1. That on the facts and in circumstances of the case the learned Assessing Officer as well as the learned first appellate authority have erred in principle and in law in disallowing the claim of cost of improvement to the tune of Rs.17,60,000/- while calculating the Long Term Capital Gains.
2. That on the facts and in circumstances of the case, the learned assessing Officer as well as the learned first appellate authority have erred in principle and in law in disallowing the claim of transfer expenses to the tune of Rs. 4,00,000/- while calculating the Long Term Capital Gains.
3. That on the facts and in the circumstances of the case, the learned assessing Officer as well as the learned first appellate authority have erred in principle as well as in law in treating agricultural income as income from other sources merely on suspicion and surmises and without having any adverse material on record.”
Long Term Capital Gain:
Apropos, the issue of Long Term Capital Gains is concerned, we find that the assessee has sold land of 25 bighas for an amount of Rs.57.32 lacs and computed the LTCG after claiming transfer expenses incurred and the cost of improvement. The assessee has claimed that an amount of Rs.17,60,000/- has been incurred towards the cost of improvement of this land. The revenue authorities held that the assessee could not furnish evidences for improvement of the land as well as the sources amount incurred for such improvement. The revenue held that the amount of Rs.17,60,000/- which has been received by the assessee on different dates from his son and brother could not be treated as incurred for improvement of the land. After going through the details filed before the revenue authorities, we find that the assessee has an operating Brick Kiln and the details filed in relation to the receipts from the Brick Kiln in the form of sales tax assessment produced before the revenue authorities have not been considered. The certificate from the approved architect with regard to the cost of improvement has been ignored by the revenue authorities. Keeping in view, the undisputed remittances from abroad which have been furnished date wise, income from the Brick Kiln supported by the sales tax Assessments and the certificate of the architect, we hereby hold that the assessee is eligible to claim cost of improvement made to the land. The AO is hereby directed to re-compute the Long Term Capital Gains allowing the year wise cost of improvement.
Transfer Expenses:
The revenue has disallowed the transfer expenses of Rs.4,00,000/- claimed by the assessee owing to non-production of vouchers. Keeping in view the general market trend and peculiar facts and circumstances of the case, we hereby hold that an amount of Rs.1,04,640/- being the 2% of the sale consideration can be deemed to be the commission & brokerage expenses and a lumsump amount of Rs.50,000/- towards the document expenses be considered as amount riveted in transfer charges. The assessee gets remission of Rs.1,54,640/-. The AO is hereby directed to re-compute the Long Term Capital Gains taking this remission into consideration.
Agriculture Income:
The assessee has disclosed a sum of Rs.1,20,000/- as agriculture income. The fact of ownership of the land is not in dispute. The fact that the assessee is disclosing agricultural income since last several years has also been accepted in the assessment. Merely because the land lord was unable to produce any documentary evidence in connection with the sales of agricultural produce does not result in change of its nature. Since, this income has been accepted as agricultural income in the past years, the same cannot be distrusted without having any adverse material on record. The cost of improvement was completed in 2007-08 and thereafter there was no problem in carrying out agricultural activities on the same land. Further, the land owned by the assessee was an agricultural land in the revenue department records also.
We have also perused the Income Tax Returns and computation of income of the assessee from the A.Y. 1997-98 to A.Y. 2007-08 wherein the agriculture income has been duly disclosed. Hence, we hold that non acceptance of claim of the assessee with regard to agriculture income is antithetical and direct that the agricultural income declared by the assessee be allowed.
In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 28/01/2022.