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Facts
The assessee sold agricultural land, and the AO made an addition of INR 2,15,03,436 to the income as long-term capital gain. The AO determined the fair market value based on the Delhi Govt website, without a DVO report, and did not admit the assessee's claim for deduction under section 54B.
Held
The Tribunal set aside the order, directing the AO to frame a fresh assessment after considering the DVO report for land valuation. It also restored the claim under section 54B to the AO for re-consideration, citing that the CIT(A) should have admitted it.
Key Issues
The key issues were the proper valuation of agricultural land for capital gains computation and the admissibility of deduction under section 54B of the Income Tax Act.
Sections Cited
Income Tax Act, 1961, Section 54B, Section 148, Section 147, Section 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI “C” BENCH: NEW DELHI
Before: SHRI N.K.BILLAIYA & SHRI KUL BHARAT
PER KUL BHARAT, JM :
The present appeal filed by the assessee is directed against the order passed by Ld.CIT(A), Delhi-13 dated 06.01.2020 for the assessment year 2011- 12.
The assessee has raised following grounds of appeal:-
1. “That the Ld. CIT(A) erred in facts and law in confirming the addition of Rs.2,15,03,436/- to the income of the appellant on account of long term capital gain accrued on sale of two urban lands.
2. That the Ld. CIT(A) failed to appreciate that the Ld. A.O calculated the fair market value of the land in a manner contrary to the provisions contained in the Act. 3. That the failure of the Ld. AO in adopting the cost of land on the basis of rates, specified on the Delhi Govt website and not the District valuation officer (DVO) is a fatal error and the addition should be quashed on this ground alone.
That the Ld. CIT(A) erred in law and on facts by denying the benefit of section 54B of the I.T Act to the appellant, by rejecting it solely on the ground that the claim was made outside the return of income. Reliance is placed upon Commissioner Of Income Tax vs Jai Parabolic Springs Ltd. (2008) 306 ITR 42 and CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. (2012) 349 ITR 336. 5 That the long term capital gain w.r.t sale of land for a notional consideration of Rs. 86,67,726/- cannot give rise to long term capital gain charged in the hands of the appellant as the aforesaid sale was admittedly made without receipt of sale consideration from the wife of the appellant. 6. That the Ld. CIT(A) failed to appreciate that notice u/s 148 of the Act does not meet the requirement of law, in as much as there is no reason to believe' as contemplated u/s 147 of the Act with the Ld. AO to initiate reassessment proceedings. 7. That the Ld. CIT(A) failed to appreciate that no 7 proper sanction was taken by the Ld. AO as contemplated under section 151 of the said Act. 8. That the addition cannot be sustained on the basis 8 of doubt and should be deleted as the same is based on surmises and conjectures. 9. That the assessee-appellant reserves the right to amend, delete, add, substitute, modify or alter any one or more of the grounds of appeal
at the time of hearing.”
3. At the outset, Ld. Counsel for the assessee submitted that she does not wish to press Ground Nos.6 &
7. Therefore, Ground Nos. 6 & 7 raised by the assessee are dismissed as not pressed.
4. Ld. Counsel for the assessee submitted that the matter may be remanded back to the Assessing Authority as the issue involved in this case is related to Page | 2 valuation of agricultural land. Ld. Counsel for the assessee submitted that the matter of valuation was referred to District Valuation Officer (“DVO”) but the valuation report was awaited. However, the Assessing Officer (“AO”) proceeded to make assessment, recording that the assessment was getting time barred. Ld. Counsel for the assessee further submitted that in the interest of principle of natural justice, the matter may be restored to the AO.
On the other hand, Ld. Sr. DR opposed these submissions and supported the orders of the authorities below.
We have heard Ld. Authorized Representatives of the parties and perused the material available on record. The facts in brief on this issue are that the assessee had sold an agricultural land and executed the Sale Deed bearing Nos. R-285 dated 12.05.2010 and R-9414 dated 12.05.2010 during the year under consideration. While framing the assessment, the AO adopted the Fair Market Value (“FMV”) as per the website of Government of National Capital Territory of Delhi and made addition of INR 2,15,03,436/- on account of Long Term Capital Gain (“LTCG”) by taking sale consideration at INR 2,16,67,726/- as on 12.05.2010 and indexed cost of acquisition with reference to year 1980- 81 at INR 1,64,290/-. The grievance of the assessee is that the AO committed patent error in working out sale consideration and indexed cost of acquisition without obtaining report from DVO and rejecting the valuation report furnished by the assessee. It is also seen that the assessee had made request for admitting the claim u/s 54B of the Income Tax Act, 1961 (“the Act”). But the lower authorities did not admit the claim of the assessee. In our view, Ld.CIT(A) being the First Appellate Authority ought to have admitted the claim since the judgement of Hon’ble Apex Court in the case of Goetz (India) Ltd. vs CIT 284 ITR 373 [SC] do not put any fetters on the powers of Appellate Authority. Moreover, law is well settled that if any, deduction is available under law, same shall be allowed to the assessee. Therefore, looking to the totality of the facts and particularly, when the AO had himself referred the matter to the DVO to ascertain the FMV of the land in question and the valuation submitted by the assessee was not accepted, the impugned order is hereby, set aside and the AO is directed to frame the assessment afresh after considering the valuation report submitted by the DVO if any, in accordance with law. The other grounds raised by the assessee qua deduction u/s 54B of the Act, are not being adjudicated and restored back to the AO for considering the same in accordance with law. Accordingly, grounds raised by the assessee in this appeal are allowed for statistical purposes.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 14th February, 2024.