GAYATRI,AGRA vs. INCOME TAX OFFICER 2(1)(5), AGRA

The appeal in AY 2010-11, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] dated 04.03.2024 against the order of assessment passed u/s 144 r.w.s. 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 17.11.2017 by the Assessing Officer, ITO, Ward- 2(1)(5), Agra (hereinafter referred to as ‘ld. AO’).

The only issue to be decided in this appeal is as to whether the learned NFAC was justified in upholding the action of the Learned AO in computing the long term capital gains on sale of agricultural land in the facts and circumstances of the instant case.

I have heard the rival submissions and perused the materials available on record. The assessee is an agriculturist and had sold the agricultural land for Rs 42 lakhs as against the circle rate of Rs 60.20 lakhs. It is not in dispute that the assessee has only 1/11th share in the property sold. The Learned AO issued notice to the assessee as to why the sale consideration be not substituted by adopting the circle rate in terms of section 50 C of the Act. The assessee filed his reply stating that the land under consideration is agricultural land and that there would be no capital gain that would arise on sale of the above land as it is outside the definition of capital asset under section 2(14) of the Act. The Learned AO however did not agree to the assessee’s submissions and computed the long term capital gain at Rs 4,79,993/- as assessee’s share is 1/11th on account of sale of above land after substituting the sale consideration at Rs 60.20 lakhs and after giving deduction on account of purchase value of the land at Rs 10,000 per bigha. This action of the Learned AO was upheld by the Learned NFAC.

Before me, the Learned AR submitted that the Learned NFAC had indeed accepted the purchase cost of land as on 1-4-1981 at Rs 50,000 per bigha in the hands of Shri Peetam Singh (co-owner of the same property). He pleaded that if the purchase cost of Rs 50,000 per bigha is accepted, then the adjudication of other grounds would become academic in nature. He also made a statement from the Bar that against the order of the Learned NFAC dated 29- 12-2021 in the hands of another co-owner (Peetam Singh), no appeal has been preferred by the revenue before this Tribunal and the said order had attained finality. Hence he pleaded for adoption of uniform purchase cost of land as on 1-4-1981 at Rs 50,000 per bigha. Per Contra, the Learned DR pleaded that the provisions of section 50 C of the Act had been rightly applied by the lower authorities in the instant case.

I find that the assessment was framed under section 144 read with section 147 of the Act dated 17-11-2017 due to the absence of the assessee. In the instant case, the assessment was framed under section 144 read with section 147 of the Act dated 17-11-2017 due to the absence of the assessee. I find that the assessee had merely objected to the adoption of circle rate of Rs 60.20 lakhs as against the actual sale consideration of Rs 42 lakhs before the Learned CITA only. The assessee had also objected to the action of the Learned AO in substituting the purchase cost of land as on 1-4-1981 at Rs 10,000 per bigha. I find that the Learned CITA in the case of another co- owner of the property i.e. Peetam Singh in Appeal Number DIN and Order No. ITBA/NFAC/S/250/ 2021-22/1038198709(1) dated 29-12-2021 for assessment year 2010-11 on the adjudication of capital gains on the very same land which is before me, had indeed accepted the purchase cost of land to be adopted at Rs 50,000 per bigha as on 1-4-1981. I hold that the adoption of sale consideration of Rs 60.20 lakhs by applying the provisions of section 50 C of the Act is in order in the facts and circumstances of the instant case. At the same time, in order to have uniformity, the purchase cost of land as on 1-4- 1981 should be considered at Rs 50,000 per bigha as is adopted in the case of the co-owner of the property i.e. Peetam Singh, which order had already attained finality as per the statement made from the Bar by the Learned AR. I direct the Learned AO to re-compute the capital gains by adopting purchase cost of land at Rs 50,000 per bigha and compute only 1/11th share of the capital gains in the hands of the assessee. Accordingly, the grounds raised by the assessee are partly allowed.

In the result, the appeal of the assessee is partly allowed.