VISHNU CHITHAN RAJAM,CHENNAI vs. ITO NON CORPORATE WARD 2(2), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -2, Chennai, dated 27.09.2017 and pertains to assessment year 2013-14.

Shri S.V. Venkateshwaran, the Ld. representative for the assessee, submitted that the only issue arises for consideration is disallowance of deduction claimed by the assessee under Section 54B of the Income-tax Act, 1961 (in short 'the Act'). According to the Ld. representative, the assessee owned an agricultural land at Injambakkam and sold the same on 08.01.2013. After adjusting the index cost of acquisition, the improvement and other expenditure, the capital gain was computed at ₹3,58,24,032/-. According to the Ld. representative, the assessee claimed deduction of ₹50 lakhs under Section 54EC of the Act and the balance of ₹3.08 Crores under Section 54B of the Act. According to the Ld. representative, the assessee had invested long term capital gains to the extent of ₹2.63 Crores in the Capital Gains Account Scheme and ₹50 lakhs was paid as advance to his father Shri Srinath Rajam to acquire an agricultural land at Burliar Village, Coonoor, therefore, long term capital gain was not available for taxation.

Shri S.V. Venkateshwaran, the Ld. representative for the assessee further submitted that with regard to investment made by the assessee, there is no dispute. However, according to the Ld. representative, the Assessing Officer disputes that the land sold by the assessee at Injambakkam Village, Sholinganallur, is not an agricultural land. According to the Ld. representative, the land owned by the assessee was classified as dry land in the State Revenue records. The assessee has cultivated the land with coconut trees. The Ld. representative further clarified that the land in question is situated adjacent to the seashore at Injambakkam, therefore, it is also not fit for cultivation. On a query from the Bench as per the Coastal Zone Regulations, how it was classified? The Ld. representative clarified that it was classified as CRZ III. Since it was classified as CRZ III, according to the Ld. representative, no construction activities permitted. On a further query from the Bench, if it is classified as CRZ III, then hotel / resort and game relating to water may be developed with previous approval of the Coastal Zone Regulation Authority? The Ld. representative submitted that no such permission can be obtained for development or construction.

The Ld. representative for the assessee was very fair enough in bringing to the notice of the Bench that in the case of co- owner in respect of the very same property, the same issue was remitted back to the Assessing Officer by an order dated 28.12.2017. The Ld. representative has also clarified that in the case of co-owner, the Adangal extract was not filed before the authorities below, therefore, this Tribunal remitted back the matter to the file of the Assessing Officer. In this present case, according to the Ld. representative, the Adangal extract, Patta, Village [10(1)] Account are produced both before the lower authorities and before this Tribunal, therefore, the case of the assessee is distinguishable from the case of the co-owner that was decided by this Tribunal.

On the contrary, Shri Asish Tripathy, the Ld. Departmental Representative, submitted that the land in question at Injambakkam was classified as residential land by the State Registration Department. Merely because the assessee has planted some coconut trees, the land will not be construed as agricultural land.

We have considered the rival submissions on either side and perused the relevant material available on record. In the case of the co-owner Shri Keshav Sunderam Rajam in I.T.A.

In the result, the appeal filed by the assessee is allowed for statistical purposes.