Balu Vitthal Kharate Vs ACIT (ITAT Pune)
Amendment to section 55A is effective from 01.07.2012 and the same doesn’t have retrospective effect. Exemption u/s 54B cannot be denied on the base that the land was purchased in son’s name when the new land was used for agricultural purpose.
FACTS –
Assessee, along with 5 other members, sold agricultural land for total consideration of INR 48,33,334. Cost of acquisition adopted as INR 40,10,616 as per the approved valuer report.
AO made reference to DVO to determine the FMV of the land as on 01.04.1981. DVO determined valuation at INR 48 per square meter. AO completed assessment u/s 143(3) determining total income as INR 7,50,080 by making addition on account of LTCG. AO also denied exemption u/s 54B alleging that the new agricultural land was purchased in the son’s name.
HELD –
With regard to scope of amendment of section 55A, in the case of Puja Prints, Hon’ble Bombay HC has held that amendment to section 55A is effective from 01.07.2012. The parliament has not given retrospective effect to the amendment. Thus the same is not applicable to the present case since case pertains to AY 2011-12.
With regard to exemption claimed u/s 54B when new land was purchased in assessee’s son name, judgment of Gurnam Singh was referred, wherein, the Hon’ble HC held that merely because in sale deed assessee’s son name is mentioned as co-owner, it doesn’t make any difference since the purchased land is being used by the assessee for agricultural purpose.
FULL TEXT OF THE ITAT JUDGMENT
These two appeals preferred by the different assesses emanates from the separate orders of the Ld. CIT(Appeal)-1, Nashik for assessment year 2011-12 as per grounds of appeal on record.
2. At the time of hearing, the Ld. AR of the assessee for the cases, appraised the Bench that facts and circumstances and issues are common in both the cases. Therefore, ITA No.1596/PUN/2017 may be taken as lead case. Hence, these cases were heard together and since facts common, issues similar, these cases are being disposed of in this consolidated order. We shall take up the lead case in ITA No.1596/PUN/2017 for both the assessees cases as per following grounds of appeal on record:
“1.On the basis of facts and in the circumstances of the case and as per law, the Commissioner of Income Tax (Appeal)-1, Nashik is not justified in confirming the action of the AO of making reference for valuation of property to the DVO u/s.55A of the Act.
2. On the basis of facts and in the circumstances of the case and as per law, the addition of Rs.5,02,459/- made by the AO on account of Long Term capital Gain by confirming the substitution of the Valuation of DVO as on 01.04.1981 against the valuation adopted by the appellant of agriculture land situated at Gat No.151 Makhmalbad, Nashik.
3. On the basis of facts and in the circumstances of the case and as per law, the Commissioner of Income Tax (Appeal)-1, Nashik is not justified in confirming the disallowance made by the AO on account of exemption claimed by the appellant u/s.54B of the Act.
4. The appellant craves for addition to deletion, alteration, modification, change any of the grounds.”
3. The brief facts in this case are that the assessee is an individual and derives income from capital gain, interest, etc. It is observed by the Assessing Officer that the assessee had filed his return of income manually in paper for the A.Y. 2011-12 on 19/12/2013 which is beyond due date for filing return of income for A.Y. 2011-12. Thereafter, the Assessing Officer issued notice u/s. 148 of the Act on the assessee on 02/03/2015. Accordingly, the assessee filed his return of income on 23/03/2015 in response to notice issued u/s 148 of the Act declaring total income at Rs.2,66,030/ – and offered Long Term Capital Gain at Rs.8,22,717/ -. During the year under consideration, the assessee along with other 5 members sold agricultural land situated in Gat No. 150 & 151 (i.e. S. No. 150 of 39800 sq. m. and S. No. 151 of 59300 sq. m.), Makhmalabad, Nashik to Suyojit Group for total consideration of Rs.48,33,334/ – wherein the share of the assessee was 13.72%. The said land is situated within 8 kilometers of the municipal limits of Nashik Municipal Corporation, the same is a capital asset within the meaning of section 2(14) of the Act as such the gain out of sale of agriculture land is chargeable to Income-tax. The said land was ancestral land, the deemed cost of acquisition was to be taken the fair market value of the said land as on 01/04/1981. The assessee took the cost of acquisition at Rs.40,10,616/- as per the report of approved valuer. The Assessing Officer did not accept the valuation of the approved valuer. Further, the Assessing Officer made reference to Departmental Valuation Officer to determine the fair market value of the said land as on 01/04/1981. The DVO has determined the valuation is Rs.48 per square metre. The Assessing Officer completed assessment u/s.143(3) r.w.s147 of the Act determining total income of the assessee at Rs.7,50,080/-by making addition on account of Long Term Capital Gain as per additions/disallowance appearing in the Assessing Officer’s order.
4. The matter, thereafter, travelled upto the First Appellate Authority and the assessee had filed detailed submissions before the Ld. CIT(Appeal). The Ld. CIT(Appeal) after considering the assessment order, submissions of the assessee, upheld the order of Assessing Officer and dismissed the appeal of the assessee.
5. Being aggrieved, the assessee is in appeal before us by raising grounds as extracted in the preceding paragraph.
6. The Ld. AR of the assessee at the time of hearing submitted that there are three grounds of appeal. Ground No.1 and 2 refers to the scope of Section 55A of the Act regarding reference to DVO in case of cost of acquisition as on 01.04.1981. The Ld. AR submitted that the Hon’ble Jurisdictional High Court in the case of CIT Vs. Pooja Prints, reported as 360 ITR 697 (Bom.) has held that such reference cannot be made prior to the amendment to Section 55A of the Act. In para 8 of the said order Hon’ble Court specified that law to be applied for Section 55A shall be as existing during the relevant assessment year. The copy of the said judgment is enclosed at page 1 to 3 of the legal compilation submitted before us. The Ld. AR further submitted that following this judgment in assessee’s group concern, the Hon’ble Pune ITAT has also considered this reference as beyond the power of the Assessing Officer, respective orders are attached at page 4 to 6, in case of Bhima Dada Kharate for assessment year 2009-10 and page 7 to 19 in the case of Arjun Dada Kharate and Parvatibai Kharate for assessment year 2009-10.
6.1 That with regard to the ground No.3, we had asked the Ld. AR of the assessee to furnish compilation of dates in case of the assessee as well as in case of other cases on the assessee relies. The said compilation of dates is as under:
