V.K.SUBRAMANIAM ,ERODE vs. ITO WARD 2(2) , ERODE

आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:

2.0 Mr.N.Madhavan, ACIT, represented on behalf of the Revenue and Mr. S.Sridhar, Adv., Erode, represented on behalf of the assessee.

ITA No.1853/Mds/2017 :- 2 -:

3.0 It was submitted by the Ld.AR that the assessee did not wish to press the additional grounds of the appeal which are marked as Ground No.2 in the assessee’s appeal. Consequently, Ground No.2 of the assessee’s appeal stands dismissed as not pressed.

4.0 In regard to Ground No.7 of the assessee’s appeal, it was submitted by the Ld.AR that the issue was against the action of the Ld.CIT(A) not adjudicating the ground raised by the assessee in respect of the Long Term Capital Gain determined by the AO in respect of the site by applying the provisions of Sec.50C of the Act. It was a submission that in determining the Long Term Capital Gain, the AO had included an amount of Rs.1,17,563/- representing the value admitted by the assessee towards Capital Gains twice. It was a submission that he had no objection, if the issue is restored to the file of the AO for re-adjudication and for verification.

4.1 In reply, the Ld.DR submitted that he had no objection, if the issue is restored to the file of the AO.

4.2 We have considered the rival submissions. Considering the submission of the Ld.AR the issue in respect of the computation of the Long Term Capital Gain is restored to the file of the AO for re-adjudication and for verification as to whether the Long Term Capital Gain determined

ITA No.1853/Mds/2017 :- 3 -: by the AO by applying the provisions of Sec.50C of the Act included the amount of Rs.1,17,563/- which has been admitted by the assessee in its return. If the same found to have been included then the same would be double addition and the same is to be deleted. Consequently, Ground No.7 of the assessee’s appeal is partly allowed for statistical purposes.

5.0 In regard to Ground Nos.3 to 6 of the assessee’s appeal, it was submitted by the Ld.AR that the assessee had sold agricultural land. It was a submission that the assessee had purchased 3.70 acres of agricultural land on 10.02.2011. It was a submission that the assessee sold the said agricultural land on 12.06.2012 and had claimed the benefit of deduction u/s.54B of the Act. It was a submission that the assessee had purchased the said land for a cost of Rs.4,03,980/-, the assessee had incurred nearly Rs.25,46,600/- towards improvement on the said land and as the assessee was unable to do the desired agricultural operations, he had sold the said land. The AO had denied the assessee benefit of deduction u/s.54B of the Act on the ground that no agricultural operations had been done for the immediately preceding two years preceding the date of transfer. It was a further submission that the AO had treated the sale of the agricultural land as giving rise to Short Term Capital Gains and have brought to tax, the difference. It was a submission that the assessee had purchased another agricultural land out of the sale proceeds of the said agricultural land. It was a submission that the AO treated the agricultural land sold by the assessee as a capital asset and brought to tax

ITA No.1853/Mds/2017 :- 4 -: the gain on the sale of the said agricultural land. It was a submission that on appeal the Ld.CIT(A) had upheld the findings of the AO. The Ld.AR drew our attention to Page No.23 of the Paper Book which was a copy of the Tashildar, Certificate confirming that the land measuring 3.70 acres situated in Paduvampalli Village, Sulur, Coimbatore District, in Sy.No.386/3 is a manavari land fit for agricultural operations and that the said land is situated about 20 kms away from Coimbatore Corporation limits. He further drew our attention to Page No.24 of the Paper Book which was a copy of the Patta in respect of the said land which showed that the land as being Punjai. He further drew our attention to Page No.35 of the Paper Book which was Paduvampalli population census details to show that the said Village has population only 4443 as per the population census of 2011. The Ld.AR further drew our attention to Page Nos.5 to 11 of the Paper Book which was an English translation of the Purchase Deed wherein the land has been specifically identified as Punjai land. He further drew our attention to the Sale Deed by general power of attorney wherein it has been mentioned that the land sold also is specified as Punjai land. It was a submission that the land purchased was an agricultural land on which the assessee had attempted to set up his agricultural operations and as he was unable to do agricultural operations on the same, he had sold the same immediately, thereafter, he had re- invested in another agricultural land near Perundurai. It was a submission that the land purchased and the land sold being agricultural land, the ITA No.1853/Mds/2017 :- 5 -: same was not liable to be treated as the capital asset giving rise to Short Term Capital Gain.

5.1 In reply, the Ld.DR vehemently supported the order of the AO and the Ld.CIT(A).

5.2 It was a submission that the assessee had purchased the vacant land which was basically having a huge pond. It was a submission that the assessee had spent substantial amount as claimed for filling up a portion of the pond. It was a submission that consequently, the assessee had sold the same. It was a submission that the assessee having purchased the land and having sold it immediately, thereafter, the same was liable to be treated as giving rise to the Short Term Capital Gain. It was a further submission that the assessee has not shown any agricultural operations on the said land.

5.3 We have considered the rival submissions. At the outset, a perusal of the purchase documents shows that what the assessee has purchased is Punjai land? Further, a perusal of the sale document shows that the assessee has sold agricultural land. The assessee has purchased the said land on 10.02.2011. The assessee has also produced evidences before the AO towards the expenditure incurred in respect of the improvement done to the said land. Admittedly, the Revenue is also admitting that the land purchased had a pond which has been substantially filled up by the ITA No.1853/Mds/2017 :- 6 -: assessee. The photographs of the property also shows that the land is a plane agricultural land, there is no sign of any major development in the surrounding areas. The assessee, admittedly, was unable to do agricultural operations as desired and had consequently, sold the same and had re-invested the gains in buying another agricultural property near Perundurai. The Patta in respect of the property sold by the assessee clearly shows that the said property is Punjai land. The Tashildar’s Certificate clarifies that it is suitable for agricultural operations. The Population Census Certificate details also show that the population is below the prescribed limit in the said area. The Revenue has not been able to dislodge any of these facts or evidences as produced by the assessee. The Revenue records in respect of the said land shows that the said land to be agricultural land, it would not be open to the Revenue to now take a stand that the assessee has only purchased and sold a property and consequently, the same is liable to be treated as capital asset. What has been purchased by the assessee is admittedly, is an agricultural land. The assessee is unable to do agricultural operations on the said land, he sold the same and the intention of the assessee is clear by the fact that he purchased another agricultural land. This being so, it cannot be said that the sale of 3.70 acres of agricultural land by the assessee at Paduvampalli near Annur, Coimbatore District, has given rise to Short Term Capital Gain. Consequently, the AO is directed to delete the addition representing the Short Term Capital Gain as assessed by him

ITA No.1853/Mds/2017 :- 7 -: in respect of the sale of 3.70 acres of agricultural land at Paduvampalli. Consequently, Ground Nos.3 to 6 of the assessee’s appeal are allowed.