Anil Kumar, Meerut vs Assessee

CO No 16 and 17/Del/2014 I.T.A. No.: 3872 and 3873/Del/2013 Assessment year: 2009-10

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IN THE INCOME TAX APPELLATE TRIBUNAL DELHI A BENCH, NEW DELHI

[Coram: Pramod Kumar AM and C M Garg JM]

I.T.A. No.: 3872 and 3873/Del/2013 Assessment year: 2009-10

Income Tax Officer Ward 1(1), Meerut ......................Appellant

Vs.

Anil Kumar ................Respondent Son of Shri Jagan Pal Singh Village Jatoli, Kankar Khera Meerut 250 002 [PAN: AHNPK3667K]

CO No 16 and 17/Del/2014 I.T.A. No.: 3872 and 3873/Del/2013 Assessment year: 2009-10

Anil Kumar ...........Cross objector Son of Shri Jagan Pal Singh Village Jatoli, Kankar Khera Meerut 250 002 [PAN: AHNPK3667K]

Vs.

Income Tax Officer Ward 1(1), Meerut ................Respondent

Appearances by: P Dankanunjana, for the appellant Sandeep Sapra, for the respondent and cross objector

Date of concluding the hearing: 22 nd January, 2015 Date of pronouncing the order: 30 th January, 2015

Per Pramod Kumar AM:

1. These two appeals and two cross objections pertain to the same assessee, the same assessment year and were heard together. As a matter of the CO No 16 and 17/Del/2014 I.T.A. No.: 3872 and 3873/Del/2013 Assessment year: 2009-10

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convenience, therefore, both the appeals and the cross objections are being disposed of by this consolidated order.

2. In ITA 3873/Del/13, which is an appeal filed by the Assessing Officer against order dated 25 th March 2013 in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2009 -10, the Assessing Officer has raised a grievance against the learned CIT(A) adopting the fair market value of the land, as on 1.4.81, sold by the as sessee at Rs 85 per square yard. The Assessing Officer's stand is that this value should have been taken at Rs 70 per square yard, as was taken by him in the assessment order. In the related cross objection no 17/Del/14 filed by the assessee, the assessee is also aggrieved of the stand so taken by the CIT(A) but his grievance is that the value should have been taken at Rs 110 per square yard. The assessee is also aggrieved of the cost of improvement of Rs 1,00,000 being declined in the computation of capital gains. We will take up all these grievances together.

3. So far as this issue is concerned, the relevant material facts are like this.

The assessee before us is a salaried employee with the Army Base Workshop. During the relevant previous year, he sold certain agricultural land. In the computation of capital gains on sale of the land, he adopted the fair market value of the land as on 1.4.1981 at Rs 110, and accordingly, computed the capital gain at NIL. However, in the course of the assessment procee dings, the Assessing Officer rejected this value so adopted by the assessee. He noted that in the case of another assessee, namely Jai Pal Singh, the Additional Commissioner has issued a direction under section 144A, by taking into account all the relevant factors, that the value as on 1.4.81 be adopted at Rs 70 per square yard. The Assessing Officer adopted the same rate, as FMV as on 1.4.81. The Assessing Officer also declined the claim of having spent Rs 1,00,000, on account of levelling of land, as cost of improvement, for want of evidence. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without complete success. While learned CIT(A) did take note of the fact that Hon'ble Supreme Court, in the case of Meharban & Ors Vs The State of Uttar Pradesh CO No 16 and 17/Del/2014 I.T.A. No.: 3872 and 3873/Del/2013 Assessment year: 2009-10

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[Civil Appeal No. 8196 of 1995; judgment dated 30 th April 1997] has held the value of the land at Rs 85 per square yard plus solatium of Rs 30 per square yard, he adopted the FMV at Rs 85 and decline to take the solatium into account for the computation for this purpose. He upheld the action of the AO in declining to take into account the cost of improvement for want of evidence. None of the parties is satisfied. The AO is aggrieved of the CIT(A) adopting Rs 85 as FMV as on 1.4.81, as against Rs 70 adopted by him, and the assessee is aggrieved of the solatium not being taken into account for the purpose of computing FMV as on 1.4.81. The assessee is also aggrieved of the cost of improvement being declined in computation of capital gain s.

4. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

5. We find that in the light of Hon'ble Supreme Court's judgment in the case of Mehraban & Ors, a copy of which was filed before us as well, there is indeed no error in rejecting in valuation @ Rs 70 per square yard adopted by the assessee. However, learned CIT(A) was in error to the extent that solatium is required to be treated as a part of the compensation, for income tax purposes, in the light of Hon'ble Gujarat High Court's judgment in the case of Vadilal Soda Ice Factory Vs CIT [ (1970 80 ITR 711], and, therefore, as against valuation at Rs 85 per square yard, he should have taken the same as at Rs 110 per square yard as claimed by the assessee. As regards the cost of improvement, there is no dispute about the fact of the levelling having been done but the claim is declined only for want of evidences. In the case of expenses of this nature, i .e on levelling etc, it is not always possible to have third party evidences of expenses. The assessee is an individual and not a corporate. Keeping in view all these factors, and smallness of amount, we see no reasons to decline the claim. We uphold the grievance of the assessee on this count as well.

6. In the result, the appeal filed by the Assessing Officer is dismissed and the cross objection filed by the assessee is allowed.

CO No 16 and 17/Del/2014 I.T.A. No.: 3872 and 3873/Del/2013 Assessment year: 2009-10

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7. We now take up the ITA No 3872/ Del/13 which is directed against learned CIT(A)'s order dated 25 th March 2013 in the matter of penalty under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2009 -10.

8. So far as this appeal is concerned, as we have deleted the related quantum addition by our order above, the very foundation for impugned penalty ceases to hold good in law. The deletion of the penalty is, therefore, to be upheld. We do so.

9. The ITA No 3872/Del.13 is thus dismissed.

10. As for CO no. 16/Del/ 14, it merely supports the order of the CIT(A ) and does not have any grievance for independent adjudication. Accordingly, it is dismissed as infructuos.

11. In the result, while CO No. 17/Del/14 is allowed, CO No. 16/Del/14 and ITA Nos. 3872 and 3873/Del/13 are dismissed. Pronounced in the open cour t today on the 30 th day of January, 2015.

Sd/xx Sd/xx C M Garg Pramod Kumar (Judicial Member) (Accountant Member) New Delhi, 30 th day of January, 2015

Copies to: (1) The assessee (2) The Assessing Officer (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order etc

Assistant Registrar Income Tax Appellate Tribunal Delhi benches, New Delhi