ITO, BARAN vs. SH. HAZARI LAL NAGAR, BARAN

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh Hkkxpan] ys[kk lnL; ,oa Jh dqy Hkkjr] U;kf;d lnL; ds le{k BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM vk;dj vihy la-@ITA No. 775/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2007-08 cuke Income Tax Officer, Hazari Lal Nagar, Vs. Ward- Baran S/o- Shri Har Narain Dhakad, village- Nalka, Baran. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ANEPM 2424 Q vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by : Shri R.A. Verma (Addl.CIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri Manish Agarwal & Shri O.P. Agarwal (CA) lquokbZ dh rkjh[k@ Date of Hearing : 29/05/2017 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 06/06/2017 vkns'k@ ORDER

PER: KUL BHARAT, J.M. This is an appeal filed by the revenue against the order dated 27/07/2012 passed by the ld. CIT(A), Kota for the A.Y. 2007-08, wherein the Revenue has taken following grounds of appeal: “On the facts and in the circumstances of the case, the ld. CIT(A) has erred in: (i) deleting the addition of Rs. 9,12,805/- made on account of unexplained land conversion charges; (ii) holding that no long term capital gain accrued to assessee on sale of agricultural land since the said land

ITA 775/JP/2012_ 2 ITO Vs Hazari Lal Nagar

fell within the definition of capital asset as per section 2(14) as a result of Government’s notification No. 2074 dated 04/06/2008 and not as a result of Government’s notification No. 232 dated 23/02/2006 as held by A.O.”

was reopened on the basis that the assessee had sold an agricultural land

situate in the revenue area of village Nalka, Tehsil- Baran, Khasra No. 328,

admeasuring 1.84 hectare out of 4.24 hectare to Shri Rajiv Singh, S/o- Shri

Ranjit Singh, R/O- Krishna Kund, Kota on 15/06/2006. This land was

included in the municipal limit on 23/2/2006. Further the Assessing Officer

observed that the assessee had deposited conversion charges of Rs.

9,12,805/-. The Assessing Officer subsequently framed the assessment U/s

148 read with Section 143(3) of the Act dated 31/10/2011 thereby he

computed the capital gain at Rs. 45.00 lacs and made addition of the same

into the income of the assessee and also added the conversion charges of

Rs. 9,12,805/-.

carried the matter before the ld. CIT(A), who after considering the

submissions, partly allowed the appeal, thereby the ld. CIT(A) deleted the

addition with regard to conversion charges of Rs. 9,12,805 and also held

that the land in question came to be included in the area of municipal limit

only w.e.f. 06/4/2010, therefore, land became capital asset only on

ITA 775/JP/2012_ 3 ITO Vs Hazari Lal Nagar

04/6/2008 and not before that and all other legal consequences would

follow.

Sr. DR has vehemently supported the order of the Assessing Officer and

submitted that the ld. CIT(A) was not justified in deleting the

disallowances.

submissions as made in the written submissions and further submitted that

the assessee during the course of assessment proceedings filed copy of

agreement of sale alongwith affidavit of buyer wherein it is clearly stated by

the buyer that the conversion charges was paid by him. Besides this, the

buyer also filed a schedule of fixed assets as part of balance sheet as on

31/3/2007 as conversion charges was included in the cost of land.

However, the Assessing Officer had reproduced the statement made by the

buyer. He did not accept the same for the reason that the receipt was in

the name of the assessee. He submitted that the case of other three

individuals were also reopened U/s 148 of the Income Tax Act, 1961

(hereinafter referred as the Act) but such expenses were only added in the

case of assessee.

material available on the record and also gone through the orders of the

ITA 775/JP/2012_ 4 ITO Vs Hazari Lal Nagar

authorities below. The ld. CIT(A) has given his finding on fact in paragraph

No. 5.12 of his order, which is reproduced as under:-

“5.12 The assessee claimed that the conversion charges of Rs. 9,12,805/- were paid by Shri Rajeev Hada (the purchaser of the property in question) whereas the A.O. doubted the balance sheet of Shri Rajeev Hada (submitted by assessee) on the ground that it was not signed by a Chartered Accountant. I have gone through the submissions of assessee and A.O.’s findings. It was seen that assessee alongwith the balance sheet of Shri Rajeev Hada also submitted affidavit of Shri Rajeev Hada, if the A.O. had any doubt about the genuineness of the balance sheet then he should have verified the details from the A.O. of Shri Rajeev Hada or could have verified the same by issuing summons to Shri Rajeev Hada. However, the A.O. has rejected the claim of assessee without bringing anything contrary to what was claimed by assessee. In view of the above, the A.O. is directed to delete the addition of Rs. 9,12,805/-.

The above finding on fact is not controverted by the revenue by placing

any contrary material on record as the buyer himself has categorically

stated that the expenditure with regard to conversion charges was incurred

by him and statement to this effect was also made. The Assessing Officer

has not confronted the same with the assessee, therefore, we do not see

ITA 775/JP/2012_ 5 ITO Vs Hazari Lal Nagar

any reason to interfere in the finding of the ld. CIT(A), therefore, the same

is hereby affirmed. Ground No. 1 of the revenue’s appeal is dismissed.

CIT(A) that the land in question became capital asset in consequence of

the government’s notification dated 04/6/2008 not as a result of

government’s notification dated 23/2/2006. The ld. Sr. DR has submitted

that the ld. CIT(A) was not justified in holding this as the Assessing Officer

has given a finding that the land in question i.e. khasra No. 328 in the

revenue area of village Nalka, tehsil-Baran was included on 23/2/2006.

However, the ld. CIT(A) accepting the explanation of the assessee and

relying the notification dated 04/6/2008 has given the finding.

submissions as made in the written submissions. He submitted that the

notification No. 232 dated 23/2/2006 as relied by the Assessing Officer was

not a final notification and subject to the approval made by the concerned

authority as the same was merely a declaration. In pursuance to the said

notification, a notification dated 04/6/2008 was issued whereby the village

Nalka was removed from Gram panchayat Melkheri and included in the

Baran municipal area.

material available on the record and also gone through the orders of the

ITA 775/JP/2012_ 6 ITO Vs Hazari Lal Nagar

authorities below. The ld. CIT(A) has given his finding on fact in paragraph

No. 5.12 of his order, which is reproduced as under:-

“The assessee submitted that Notification dated 23.02.2006 was not final and that it was subject to final approval by Gramin Vikas & Panchayatiraj Vibhag, Rajasthan, Jaipur. The assessee also submitted that the Gram Panchayats continued to exist till, the Notification dated 04.06.2008, which was an order u/s 101 of the Rajasthan Panchayatiraj Adhiniyam, 1994, was not passed. The assessee also submitted that the land in question therefore continued to be part of Panchayat Samiti and was situated in Baran District where the concept of boundary of 8 Km. was not applicable, and therefore the land in question was not capital asset within the meaning of section 2(14) of the I.T. Act. I have gone through the above Notifications and I am of the opinion that the Notification dated 23.02.2006 was not absolute and was subject to further directions by Gramin Vikas & Panchayatiraj Vibhag, Rajasthan, Jaipur. I am also of the opinion that the land continued to be within the limits of Gram Panchayat, Nalka till the order dated 04.06.2008 when the Gram Panchayat was removed from Panchayat Area and included in the limits of Nagar Palika, Baran. In view of this, it is held that the land became capital asset only w.e.f. 04.06.2008 and not before that and all other legal consequence will follow. This ground of appeal is therefore allowed.”

The above finding on fact is not disputed by the revenue except that the

stand of the revenue is that the land in question came to be included in the

municipal limit vide notification dated 23/02/2006 whereas the case of the

assessee is that the village was included into the municipality only vide

ITA 775/JP/2012_ 7 ITO Vs Hazari Lal Nagar notification dated 04/6/2008. Now the issue remains to be examined is

whether the notification dated 23/2/2006 would apply or the notification

dated 04/8/2008 would apply. As per notification dated 23/2/2006 issued

by the local self government, the following kharas were to be included in

the area of municipal committee, Baran, which is as under:- 4. xzke uydk ds [kljk uEcj 1 ls mRrhj vksj xzke esy[ksMh ds [kljk uEcjku 1251 ls es<+ ij pyrs gq;s [kljk uEcj 1167, 1166, 1165, 1164, 1162, 390, 387, 386, 381, 376, 377, 376, 375, 374, 380, 330, 329, 289, 280, 285, 217, 216, 214, 213, 210, 208, 206, 205 dks lfEefyr dj nf{k.kh if'peh dh vksj pyrs gq;s [kljk uEcjku 102, 101, 100, 99, 89, 80, 76, 75, 24, 23, 20, 19, 18, 16, dPpk jkLrk esy[ksMh] VkjMk ikj dj [kljk uEcj 15, 14, 4, dks lfEefyr dj nf{k.kh iwohZ vkSj xzke esy[ksMh ds [kljk uEcjku 3, 2, 1, 7, 8, 9, 36, 37, 38, 39, 40, 130, 137, 138, 142, 143, 155, 160, 161, 749, 973, 974, 976, 977, 1008, 1323, 1325, 1327, 1334, 1335, 1336, 1351, 1352, 1350, 1290, 1276, 1272, 1253, o 1252 ls 1251 ds [kljk uEcjku rd dk {ks=k A xzke uydk ds [kljk uEcjku 1 dh es< ls pyrs gq;s uEcj 32, 285, 287, 288, 289, 290, 291, 292, 34, 66, 65 lEefyr dj if'peh vkSj ?kwedj [kljk uEcjku 64 rd ,oa xzke dkth [ksMk ds [kljk uEcjku 62, 57, 56, 53, 52, 51, 50, 49, 15 ls jsyos iVjh dksVk ckjkW chuk ikj dj [kljk uEcj 12 p 3 dks lfEefyr dj if'peh vkSj xzke jtikyh ds [kljk uEcj 245, 244, 243, 239, 234, 55, 20, 21, 20/283, 19, 1, 2, 5, 5/285, 06, 7/284, 8, 9, 10, 11, 32, dh es< ls nf{k.kh vkSj ?kwedj pyrs gq;s xzke jtikyh ds [kljk uEcjku 33, 34, 36, 37, 38, 39, 40, 41, 42, 43 ls dksVk ckWjk lM+d ikj dj [kljk uEcj 74, 75, 76, 767, 82, 86, 87, 88, 89, 90 ls 102, 103, 104, 106, 110, 111, 276, 277, 273, 256, 255/286, 255, 246, rd ds [kljk uEcjku rd dk {ks= A

From the above notification, it is seen that Khasra No. 328 was not part of

the notification. Further the said notification requested the department of

ITA 775/JP/2012_ 8 ITO Vs Hazari Lal Nagar Panchayat Development, Rajasthan Government to issue necessary

instruction for including said gram panchayat in the municipal limit,

therefore, the notification dated 04/6/2008 was issued thereby the

panchayat samiti was included in the municipality. From the above, it is

evident that panchayat samiti was included into the municipality only vide

notification dated 04/6/2008. Under these facts, we are unable to accept

the finding of the Assessing Officer. Accordingly, finding of the ld. CIT(A) is

hereby confirmed. This ground of the revenue’s appeal is dismissed.

Order pronounced in the open court on 06/06/2017.

Sd/- Sd/- ¼Hkkxpan½ ¼ dqy Hkkjr ½ (BHAGCHAND) (Kul Bharat) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 06th June, 2017 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- The ITO, Ward- Baran. 1. izR;FkhZ@ The Respondent- Shri Hazari Lal Nagar, Nalka, Baran. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 775/JP/2012) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत