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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: SHRI SANJAY ARORA, AM & MS. KAVITHA RAJAGOPAL, JM
O R D E R Per Kavitha Rajagopal, J M:
This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2012-13.
It is observed that the assessee had filed the present appeal with a delay of 45 days which the assessee vide an Affidavit had stated that the appeal was e-filed within the limitation period and only the physical documents, which the learned Authorised Representative (ld. AR for short) had filed belatedly. As the appeal per se was filed on time, we deem it fit to condone the delay of 45 days in filing the physical documents.
Delay condoned.
3. The assessee had filed the following grounds of appeal:
2 (A.Y. 2012-13) Soniya David Lathika vs. ITO 1. The order of the learned Assessing officer is against law, facts and circumstances of the case 2. The Officer erred in fixing long term capital gain at Rs 99,39,969 as against Nil claimed by the appellant. The appellant's claim is based on her understanding and belief that the transfer of her land to VISL amounted to compulsory acquisition.
According to the Assessing officer the property was sold to VISL through a sale deed and since on the date of transfer, the property was an urban land, exemption u/s. 10(37) of the IT Act is not available.
4. Under the circumstances explained in the attached 'Statement of Facts' , even though the transfer was by the way of sale deed it was in effect a compulsory acquisition by the Government
5. It is clear that the appellant did not have any choice but to transfer the land to VISL. Even if she wanted to back away from the sale it would not have been possible because through letters dated 9.11.2010 of Spl Tehsildar (LA) and dt 06.08.201 1 of MD&CEo she was informed that if she did not execute the sale deed the property would be compulsorily acquired. Even the negotiations which took place in the Dist. Collectors' office on 04.08.2010 were not fairly done. The discussions and the finalization of the price took place prior to 1-11-2010, the date on which the property of the appellant was converted as a part of Trivandrum Corporation. Thus the price fixed was that applicable to the rural area. The consideration price is fixed by governemt notifications and the assessee is compelled to transfer the price at the rate decided by the government officials/notification. This instates clearly shows that the sales deed comes under compulsory acquisition wherein the rate fixation is not 6. In this method of transfer the appellant suffered two disadvantages. One, she did not get the market price obtainable for urban land and two, she became liable to capital gains tax. The narration in the sale deed that if she got a better price than what she would have got from compulsory acquisition she would execute sale deed directly with VISL' is unworthy of consideration because it is hard to imagine that the price negotiated for the sale is higher than the ruling market price which even in the case of compulsory the annellant would have received anyway. 7. The case laws quoted by the Assessing Officer relate to different circumstances and do not apply here. 8. ITO Vs Smt. Asha Vimala Melpuratharisu Puthen Veedu (Ponnamkulam House) (ITAT Cochin) dated 06/06/2019 The instant case is relating to the acquisition of the property taken by VISL for vizhinjam port construction is well decided by the ITAT Kochi bench in the case - ITO Vs Smt. Asha Vimala Melpuratharisu Puthen Vecdu.ref: 018 : Asst.Year 2013-2014. "In the relevant case it is held that Character of compulsory acquisition not changes merely because sale price was fixed through 3589940 a negotiated settlement. In the instant case, the entire procedure prescribed under the Land Acquisition Act was followed, only price was fixed upon a negotiated settlement. The A.0. did not have case that the impugned land is not an agricultural land. Therefore, in view of the above judgment of the Hon'ble Apex Court (supra), we hold that the acquisition of the urban agricultural land was a compulsory acquisition and the same would be entitled to the benefit enumerated in section 10(37) 9. The property was gifted to the appellant by her parents vide settlement deed number 691/2003 dt 03.04.2003. The parents purchased the property on 20.6.1984 for consideration of Rs 14000 Subsequently they spent more than Rs 100,000 in the same year on its improvements. The Assessing Officer erroneously assumed that the land gifted to the appellant was out of another 19.44 ares purchased by them. The cost of acquisition to the appellant therefore should 3 (A.Y. 2012-13) Soniya David Lathika vs. ITO be Rs.14,000 plus connected expenses and also cost of improvement Rs.1,00,000 which were actually incurred by the parents.
The Assessing Officer accepted as correct bank interest received Rs.340,903 certified by State Bank of Travancore but did not give credit for tax deducted at source Rs.35,535 indicated in the same certificate.
11. Subsequent to receipt of compensation, within a year, the appellant purchased tow plost of agricultural land in the joint names of herself and her husband as detailed below: 1.2 ares 02 square meters of land in survey no. 297/2-3 of Thirumala village as per document no. 908/2012 dated 22.03.20212 and 2.2 ares 07 square meters in survey no. 1555/3-7 of Thirumala village on 20.03.2012, both for total actual price of Rs.3600000 including documentation.
The brief facts are that the assessee is an individual and during the year under consideration had sold 36.309 cents of land to the Managing Director of Vizhinjam International Seaport Ltd. (VISL for short) for a total consideration of Rs.99,90,865/- dated 10.08.2011 for providing infrastructure facility to VISL.
The learned Assessing Officer (ld. A.O. for short) had reopened the assessee’s case vide notice u/s. 148 of the Act dated 25.09.2014 for the reason that there was reason to the believe that the assessee has not offered capital gain out of the said transfer, thereby income had escaped assessment u/s. 147 of the Act. The ld. A.O. passed the assessment order dated 30.03.2016 u/s. 143(3) r.w.s. 147 of the Act determining total income at Rs.1,02,80,872/- after making an addition on long term capital gain (LTCG for short) of Rs.99,39,969/- after deducting the index cost at Rs.50,896/- and making an addition on income from other sources amounting to Rs.3,40,903/- being the interest income received from the bank under the head ‘income from other sources’.
Aggrieved the assessee was in appeal before the first appellate authority.
The ld. CIT(A) vide an ex parte order dated 06.11.2021 had dismissed the appeal filed by the assessee on the ground that there was no compliance during the appellate proceeding. ld. CIT(A).
We have heard the rival submissions and perused the materials available on record. The assessee’s contention that though the impugned transaction was by way of sale deed, the same was a compulsory acquisition by the Government for which the assessee was entitled to benefit as per section 10(37) of the Act. The ld. AR also stated that on identical facts the co-ordinate bench have decided the issue in favour of the assessee and prayed that the assessee may be given one more opportunity to present her case before the ld. CIT(A) as the assessee has a good case in hand.
10. Upon consideration of the submissions made by both the sides, we are of the considered opinion that the assessee may be extended with one more opportunity to present her case before the ld. CIT(A) adhering to the principles of the natural justice.
We, therefore, remand all the issues back to the file of the ld. CIT(A) for fresh adjudication on the merits of the case. Needless to say that the assessee should co-operate with the proceeding without any undue delay.
In the result, the appeal filed by the assessee is allowed for statistical purpose.
Order pronounced on 07.06.2024 under rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963.