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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI DUVVURU RL REDDY, & SHRI D.S.SUNDER SINGH
आदेश / O R D E R PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against Order dated
05.02.2016 of Commissioner of Income Tax (Appeals), Salem, in ITA
No.144/2014-15 for the AY 2011-12.
2.0 All the grounds of the appeal are related to the alternate claim made
by the assessee u/s.10(37) of the Income Tax Act. The assessee filed
return of income declaring total income of Rs.9,81,570/- on 16.03.2012.
The assessee expired on 17.12.2012 and the legal heirs are Shri S.Sekar,
ITA No.306/Mds/2016 :- 2 -:
Shri S.Ramachandran and Shri S.Kumar, the sons of the assessee are
brought on record. During the previous year relevant to the assessment
year, the assessee filed the Return of income admitting the capital gains
of Rs.2,15,42,069/- and claimed deduction of Rs.2,06,19,000/- in respect
of indexed cost of acquisition and the difference amount of Rs.9,23,069/-
along with the bank interest of Rs.58,496/- was offered to tax. The
capital gains arose on account of acquiring the urban agricultural land and
buildings by the Special District Revenue Officer, National Highways.
During the assessment proceedings, the AO found certain discrepancies
with regard to cost of acquisition and re-computed the capital gains at
Rs.1,52,41,012/- as under:
On adopting the above values the capital gain works out as follows:-
Compensation received (1,76,40,258 + 39,01,811) (involving two TDS Rs.2,15,42,069 Certificates (i) Cost of Indexation of Land: 1872 sq.mtr (1401 + 471) 1872 x 1.23 = 2303 2303 x 711 =16374 100 (ii) Land acquired in Survey No.163/5A is 450 sq. mtr. 450 sq.mtr. 450 x 12.5 = 5558 5558 x 711 = 16374 100
Cost of indexation of lands acquired (i) + (ii) Rs.55,891
Cost of Indexation of Building: Rs.38,46,425 1898868 x 711 = 350
Cost of Indexation of Borewell: Rs.23,98,741 543175 x 711 = 161 (The compensation received for Tree value of Rs.34,520 is taken as Agriculture Rs.63,01,057 income) Long term capital gain arrives at Rs.1,52,41,012 While making the above calculation, the measurement taken for 1 Acre is 4047 Sq. Mtr.
ITA No.306/Mds/2016 :- 3 -:
3.0 The AO issued show cause notice proposing to assess the capital
gains at Rs.1,52,41,012/- and in response to the show cause notice, the
assessee made an alternate claim u/s.10(37) of the Income Tax Act and
requested the AO to allow the exemption of long term capital gains. The
AO following the order of the Hon’ble Supreme Court in the case of
Goetze (India) Ltd. v. CIT [2006] 284 ITR 323/157 Taxman 1 (SC)
rejected the alternate claim made by the assessee, since the claim for
exemption was not made through revised return of income.
4.0 The assessee went on appeal before the CIT(A) and the Ld.CIT(A)
dismissed the appeal of the assessee following the decision of Hon’ble
Apex court cite(supra). For the sake of convenience and clarity we extract
the relevant paragraph of the CIT(A) order in Para No.4 & 5 which reads
as under:
It is seen that the issue to be adjudicated is, whether the assessee is entitled for the claim of exemption u/s.10(37) which was neither claimed in his original return nor filed a revised return. I have perused the Assessment Order and written submissions of the Authorized Representative, it is seen that the assessee did not make his claim of exemption u/s.10(37) in his original return of income and also filed no revised return claiming the above said exemptions. The case was selected for scrutiny by CASS. During the course of hearing, the assessee for the first time made a claim u/s.10(37). The Assessing Officer rejected the claim of the assessee relying on the judgment of the Hon’ble Supreme Court Order in the case of Goetze (India) Ltd., Vs.CIT in 284 ITR 323. 5. After perusing the Assessment Order, the details filed b the assessee and arguments of the Authorized Representative in my considered view, there is no compelling reason to interfere with the Assessment Order. Hence, the grounds of the appellant are dismissed.
5.0 Appearing for the assessee, the Ld.AR argued that the government
has acquired the urban agricultural land of the assessee in public interest
and awarded the compensation to the assessee, therefore, assessee is
ITA No.306/Mds/2016 :- 4 -:
entitled for exemption u/s.10(37) of IT Act. By ignorance, the assessee
has admitted the income under the head capital gains, instead of claiming
exemption u/s 10(37) of Income tax act. Though the assessee has not
made the claim in the return of income, the claim was made during the
assessment proceedings and also before the CIT(A). Though, the Hon’ble
Apex Court in the case relied upon by the AO restricts the assessing
authority to accept the fresh claim, otherwise than revised return it does
not impinge the power of appellate authority to entertain the fresh claim
of the assessee in the appellate proceedings, hence, requested to allow
the claim made u/s 10(37) of I.T. act.
On the other hand, the Ld. DR argued that the assessee has filed
the belated return, against the due date of 31.07.2011 as the return was
filed on 16.03.2012 and the assessee himself had offered the income
under the head capital gains and has not claimed the exemption
u/s.10(37) of IT Act, hence, the claim of exemption u/s.10(37) was an
afterthought and should not be allowed.
6.0 We heard the rival submissions and perused the material placed
before us. The assessee was owning urban agricultural land which was
acquired by the Special district Revenue officer, National Highways for
public purpose and awarded compensation of Rs.2,15,42,069/- as per the
details given below:
ITA No.306/Mds/2016 :- 5 -:
In respect of Award copy letter dated 11.08.2010 the details of Land acquired and compensation amount given are as follows:
Area as per sub Area as per 3D in Area as per Addl. Sl.No. Survey No. Division records Sq. Mtr. 3A(1) in Sq. Mtr. (1) (2) (3) (4) (5) 1 158/8A 1872 1401 471 2 163/5A2 2322 1851 - Total 2322 1851 471
As Per Letter dt.11.08.2010 workings of compensation for the above said land and building are as follows:-
1 The land value for 1851 Sq. Mtrs. At Rs.7531/- Rs. 139,39,881 2 Structure value Rs. 16,56,147 3 Deduct Salvage Amount (Structure value x 6%) Rs. 99,369 4 Net value of structure Rs. 15,56,778 5 Well/Bore Well value Rs. 5,05,419 6 Tree value Rs. 34,520 Total Rs. 1,60,36,598
In respect of Award copy letter dated 01.10.2010 the details of Land acquired and award amount given is as follows:
Area as per sub Extent already Area as per 3D in Sl.No. Survey No. Division records awarded Sq. Mtr. (1) (2) (3) (4) (5) 1 158/8A 1872 471 - Total 1872 471 -
Working of compensation for the above said land is as follows:-
1 The land value for 471 Sq. Mtrs. At Rs.7531/- Rs. 35,47,101 2 Structure value Rs. 0 3 Deduct Salvage Amount (Structure value x 6%) Rs. 0 4 Net value of structure Rs. 0 5 Well/Bore Well value Rs. 0 6 Tree value Rs. 0 7 10% additional value users right compensation Rs. 35,47,101 Grand Total Rs. 39,01,811
6.1 The assessee has offered the compensation as capital gains and
claimed the indexed cost of acquisition, which resulted into taxable income
of Rs.9,23,069/- and the AO recomputed the capital gains at
Rs.1,52,41,012/-. At this juncture, the assessee made an alternate claim
u/s.10(37) of IT Act. Both the AO and the Ld.CIT(A) refused the alternate
claim made by the assessee following the decision of the Hon’ble Supreme
Court in the case of Goetze (India) Ltd., Vs.CIT in 284 ITR 323 cited
supra. During the appeal hearing, the Ld.AR relied on the following
judgments of the Hon’ble High Courts and argued that the appellate
ITA No.306/Mds/2016 :- 6 -:
authorities are not barred from entertaining the fresh claims made during
the appellate proceedings.
• Ramco Cements Ltd. Vs. DCIT (2015) 373 ITR 0146 (Madras) • CIT v. Pruthvi Brokers & Shareholdes [2012] 23 taxmann.com 23 (Bom.) • CIT v. Sam Global Securities Ltd [2013] 38 taxmann.com 129 (Delhi)
Though the Hon’ble Supreme Court in the case of Goetze (India) Ltd.,
Vs.CIT in 284 ITR 323 places restrictions on the AO to entertain any fresh
claim otherwise than by revised return of income, it does not place any
restrictions to entertain any legal and valid claim by the Tribunal. For
ready reference, we re-produce the relevant part of the judgment of the
Hon’ble Supreme Court, which reads as under: 4. The decision in question is that the power of the Tribunal under section 254 of the Income-tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax Appellate Tribunal under section 254 of the Income-tax Act, 1961. There shall be no order as to costs.
6.2 The issue regarding entertaining the fresh claim by appellate
authorities is also settled by the Hon’ble Supreme Court in the case of Jute
Corporation of India 187 ITR 688 (SC). The Hon’ble jurisdictional High
Court in the case law relied upon by the Ld.AR held that there is no
provisions in the Act, restricting the appellate authority to entertain
additional grounds in the appeal, if, the same are found to be bona-fide
and not unreasonable.
7.0 In the instant case, the assessee was an agriculturist and had
expired. The case is being represented by the legal heirs. The claim made
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by the assessee regarding the exemption u/s.10(37) of IT Act appears to
be a bona-fide claim and the contention of the A.R that the assessee could
not make claim u/s 10(37) in the return of income due to ignorance
appears to be correct. Therefore, we are of the considered opinion that in
the interest of justice, the additional claim of the assessee required to be
considered. Accordingly, we admit the additional claim made by the
assessee with regard to exemption u/s.10(37) of IT Act and remit the
matter back to the file of the AO with a direction to verify the claim and if
the assessee satisfies all the conditions for allowing the exemption
u/s.10(37) of IT Act, the same may be considered. Accordingly, we set-
aside the orders of the lower authorities and direct the AO to decide the
case in the light of the discussion made in this order.
8.0 In the result, the appeal of the assessee is allowed for statistical
purposes.
Order pronounced in the Open Court on 30th May, 2017, at Chennai.
Sd/- Sd/- (DUVVURU RL REDDY)) (D.S.SUNDER SINGH) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER
चे�नई/Chennai, +दनांक/Dated: 30th May, 2017. TLN आदेश क ��त,ल-प अ.े-षत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु/त/CIT 2. ��यथ�/Respondent 5. -वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF 3. आयकर आयु/त (अपील)/CIT(A)