Abdul Zafar,, Saharanpur vs Assessee

Late Shri Abdul Zafar, vs. ITO, Deoband, Through L/H Smt. Sultana Begum, Distt. Saharanpur. Mohalla Takan, Distt. Saharanpur.

(PAN : AKMPB4842B)

(APPELLANT) (RESPONDENT)

ASSESSEE BY : Shri Ankit Gupta, Advocate REVENUE by : Ms. Y. Kakkar, DR

Date of Hearing : 04.03.2015 Date of Pronouncement : 10.04.2015

ORDER

PER G.C. GUPTA, VICE PRESIDENT :

This appeal filed by the assessee for the assessment year 2005-06 is

directed against the order of the CIT (Appeals).

2. The grounds of appeal of the assessee are as under :-

"1. That the Learned CIT (Appeals), MZR was totally incorrect and unjustified in confirming the addition made on account of Long Term Capital Gain at Rs.9,90,500.00.

2. That the Learned CIT (Appeals), MZR was totally incorrect in adopting cost of acquisition of Agriculture Land at Rs.100.00 per meter as against the cost of acquisition as shown 2 ITA No.3600/Del./2009

by the assessee at Rs.126.58 per meter, which was actual market value as on 01.04.1981.

3. That the Learned CIT (Appeals), MZR was totally incorrect and unjustified is not accepting the Deduction U/S 54B, while the assessee appellant has deposited the Sale Amount in Bank Account.

4. That the addition of Rs.9,90,500.00 as confirmed is highly arbitrary, unjustified and against the facts of the case.

5. That the Learned CIT (Appeals), MZR was totally incorrect and unjustified is not accepting the contents No.1 to 4 of affidavit of dated 13.03.2009, enclosed as annexure 'A'.

3. Ld. Counsel for the assessee submitted that the assessee is entitled to

relief u/s 54B of the Income-tax Act, 1961 as the assessee has deposited

sale proceeds of the agricultural land in the bank account. He submitted

that although due to wrong advice of the bank, the assessee could not

deposit the sale proceeds of agricultural land in the "specified" bank

account, but the assessee has deposited the amount of sale proceeds in his

saving bank account and thereafter, has purchased agricultural land on

16.11.2006 i.e. within the stipulated period under the provisions of the Act.

He submitted that the technical mistake of not depositing the sale proceeds

in the specified bank account was due to the advice given by the bank

officer and a certificate to this effect from the bank has been filed in the

compilation filed before the Tribunal. He relied on the decision of

Hyderabad Tribunal in ITO vs. Smt. Dharam Shoba Rani in ITA

No.302/Hyd/2014 dated 18.06.2014 in support of the case of the assessee. 3 ITA No.3600/Del./2009

4. The ld. DR has opposed the submissions of the ld. Counsel for the

assessee. She submitted that in order to claim exemption, the assessee has

to deposit the sale proceeds of the land in specified bank account only and

not in his saving bank account and there is a clear violation of the

provisions of the Act, in particular the provisions of section 54B of the Act

and accordingly, the exemption u/s 54B of the Act was rightly denied by

the revenue authorities.

5. We have considered the rival submissions carefully and have

perused the order of the AO and CIT (A). The basic facts of the case are

not in dispute. The assessee has failed to deposit sale proceeds of the land

in question in the specified bank account and, therefore, in our view, has

not fulfilled the requirement of the provisions of section 54B of the Act

and accordingly, we hold that the assessee is not entitled to exemption

from capital gains tax under the provisions of section 54B of the Act and

the order of the CIT (A) on this issue is confirmed.

6. The only other issue raised in the grounds of appeal of the assessee

is regarding the merits of the case. The ld. Counsel for the assessee

submitted that the land was agricultural in nature and the circle rate of the

land was Rs.1,100/- per sq.mtr. at the relevant time. The assessee has sold

the same at Rs.641.17 per sq.mtr. The assessee has claimed that the area

rate was too high as compared to the actual market rate of the land and has

pleaded that there were certain deficiencies in the land of the assessee 4 ITA No.3600/Del./2009

which justifies the land sold at Rs.641.17 per sq.mtr. He submitted that the

DVO in his report dated 26.12.2007 has accepted that there were number

of deficiencies in the land of the assessee and has accordingly adopted the

land rate of Rs.770/- per sq.mtr. as against Rs.1,100/- per sq.mtr. as per

circle rate of the area. He referred to the assessee's approved valuer report,

a copy of which has been filed in the compilation before the Tribunal.

7. Ld. DR has opposed the submissions of the ld. Counsel for the

assessee. She referred to first page of the assessee's approved valuation

report wherein against column 5, the land has been shown as "residential

land" and not agricultural land. In column 8 thereof, the property has been

shown by the assessee's valuer as situated in "residential area". She

submitted that the AO in his order has given sale instances to show that the

area rate was justified. She relied on the order of the AO and CIT (A).

8. The ld. Counsel for the assessee in his rejoinder submitted that the

sale instances referred to by the AO relate to the land rate at the time of

purchase of the property and does not pertain to the period of sale of the

said land.

9. We have considered the rival submissions and perused the order of

the AO and CIT (A). We find that the Departmental Valuation Officer has

himself rejected the area rate notified for the relevant land transferred by

the assessee. The DVO in his report dated 26.12.2007 has allowed a rebate

of 30% i.e. Rs.330/- per sq.mtr. out of the circle rate and has recorded that 5 ITA No.3600/Del./2009

the reason for rebate is due to the fact that the land sold was part of

agricultural land. The approach thereof was through katcha road, the other

side entrance was blocked by the compound wall for which litigation was

going on in the Court of Civil Judge, Deoband, the plot was low lying, the

area of the plot was large and there was an open nallah flowing on one side

of the property. We find that considering the deficiencies in the land of the

assessee as narrated by the DVO himself and also the fact that the

assessee's approved valuer in his valuation report has cited 6 sale instances

of the area and has adopted the average thereof for arriving at the fair

market value of the land, we hold that it shall be reasonable to adopt the

land rate at Rs.700/- (Rupees Seven hundred) per sq.mtr. as against the

land rate of Rs.770/- per sq.mtr. determined by the DVO and the AO is

directed to work out the capital gains in the transfer of property

accordingly. The grounds of the appeal are accordingly partly allowed.

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

Order pronounced in open court on this 10th day of April, 2015.

Sd/- sd/- (B.C. MEENA) (G.C. GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT

Dated the 10th day of April, 2015 TS 6 ITA No.3600/Del./2009

Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A), Muzaffarnagar. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.