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Facts
The A.O. originally made an addition u/s 68 of the Income Tax Act. The Ld. CIT(A)/NFAC deleted this addition but directed the A.O. to tax the sale proceeds of land as capital gains, treating the land as a capital asset based on its aerial distance from the municipality. The assessee appealed this direction to the Tribunal.
Held
The Tribunal held that since the CIT(A)/NFAC had deleted the original addition u/s 68, the assessee had no grievance regarding that. The direction to tax capital gains was consequential, and an appeal effect order had already been issued by the A.O. If the assessee was aggrieved by the capital gains addition, the proper legal recourse was to file an appeal before the CIT(A)/NFAC again, not the Tribunal at this stage. Consequently, the appeal was dismissed as infructuous.
Key Issues
Whether the CIT(A)'s direction to the A.O. to tax sale proceeds of land as capital gains, after deleting an addition u/s 68, constituted a substantive grievance for the assessee warranting an appeal before the Tribunal, given that an appeal effect order had already been passed by the A.O.
Sections Cited
Income Tax Act, 1961: Section 68, Income Tax Act, 1961: Section 2(14)(iii)(a), Income Tax Act, 1961: Section 250, Income Tax Act, 1961: Section 143(3) r.w.s 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI ARUN KHODPIA
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM:
The captioned appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 30.03.2025 for the assessment year 2016-17 as per the grounds of appeal on record.
2. Though the present appeal is preferred by the assessee, however, there stand no grievance for the assessee for the fact that no addition has been retained by the Ld. CIT(Appeals)/NFAC and the addition that was made by the A.O u/s. 68 of the Income Tax Act, 1961 ( for short ‘the Act’) has been deleted.
3. Qua this observation, the Ld. CIT(Appeals)/NFAC had observed regarding sale of land by the assessee and directing verification by the A.O to tax the same as capital gain as there appears a mismatch with regard to aerial distance and road distance as observed by the Ld. CIT(Appeals)/NFAC. For the sake of clarity observation of the Ld. CIT(Appeals)/NFAC are culled out as follows: “From the reply of the AR of the appellant, it is clear that he has failed to submit measurement of aerial distance of the sold land from the municipality with evidence. Since, the distance of 9.6 km claimed by the appellant is only road distance as per google map and not aerial distance). Since the Aerial distance (also known as straight line or "as the crow flies" distance) is the shortest distance between two points, ignoring any obstacles or terrain, while road distance measures the actual path travelled along roads or pathways and therefore, aerial distance is always shorter than road distance, which may be longer due to curves, detours and obstacles. Since, the relationship between road distance and aerial distance is not constant but it is often approximated and ratio between road distance and aerial distance, measured scientifically, is about 1.3 means the road distance is about 1.3 times the aerial distance or in other terms, the aerial distance is around 0.77 times of road distance. Thus, the aerial distance of said land in question comes around 7.39 Km (9.6 *.77) which is well within the municipality jurisdiction as specified under the Act. Therefore, the said land is not a rural agricultural land and is a capital asset, as it comes within 8 Km and the population of said municipality i.e. Baloda Bazar is 26,632 which is more than 10,000 as specified in sec 2(14)(iii)(a) of the Act and accordingly, the claim of the appellant that the said land is not a capital asset , is not as per law and accordingly, the sale proceeds from the sale of said land is taxable under the head Capital gain as the said land was clearly a capital asset as per law and has to be taxed in the hands of the appellant . However, the AO has made addition of whole sale proceeds u/s 68 which is not correct. Accordingly, the same is modified as per discussion held in preceding paras and the AO is directed to tax the sale proceeds of the land under the head Capital Gain after giving benefit of indexed cost of acquisition as per the provisions of the Act. Ground No.2 and 7 of the appeal are partly allowed.”
4. In this backdrop, it is contended by the Ld. Counsel for the assessee that though relief has been provided in so far as quantum is concerned and the addition u/s. 68 of the Act has been deleted by the Ld. CIT(Appeals)/NFAC, however, since the Ld. CIT(Appeals)/NFAC had directed the A.O to tax sale transaction of the land under the head capital gain, therefore, the same is a wrong findings on facts. Accordingly, the Ld. Counsel submitted that the matter needs to be addressed by this Bench of the Tribunal.
5. In this regard, it was enquired from the Bench whether appeal effect order has been passed by the A.O and to that, the Ld. Counsel submitted that such appeal effect has already been given where again there is no addition made u/s. 68 of the Act. However, addition has been made by the A.O under the head capital gain. For the sake of completeness, the appeal effect order is culled out as follows:
6. We are of the considered view that the findings of the Ld. CIT(Appeals)/NFAC remanding the matter back to the file of the A.O for proper verification and taxing it as per capital gain is consequential. That giving an appeal effect to such consequential direction already addition has been made by the A.O. That if on such addition made by the A.O on capital gain if the assessee is further aggrieved then the proper legal recourse is filing appeal before the Ld. CIT(Appeals)/NFAC. But at this stage, before the Tribunal it is only a direction given to the A.O by the Ld. CIT(Appeals)/NFAC remanding the matter back to the file of the A.O for necessary addition against which there is no substantive finding or adjudication given in the present impugned order by the Ld. CIT(Appeals)/NFAC.
Considering the aforesaid facts, the present appeal filed by the assessee sans any grievance becomes infructuous and hence dismissed.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 05th day of August, 2025.