S. CHOCKALINGAM Vs. DEPUTY COMMISSIONER OF INCOME TAX
LAWS(IT)-2014-7-10
INCOME TAX APPELLATE TRIBUNAL
Decided on July 24,2014

S. CHOCKALINGAM Appellant
VERSUS
DEPUTY COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

Vikas Awasthy, Member (J) - (1.) THE assessees have filed appeals for the Assessment Year (AY) 2008 -09 assailing the order of the Commissioner of Income -tax (Appeals) -VI, Chennai, dated 28 -10 -2013 in their respective cases. The Revenue has also filed cross -appeals impugning the order of CIT (Appeals) in respect of all the three assessees. The brief facts as emanating from the records are as under: The assessees during the period relevant to the AY under consideration, sold agriculture land along with standing trees. In the return of income, the assessees claimed exemption u/s. 54B of the Income -tax Act, 1961 (herein after referred to as 'the Act') on account of purchase of new agriculture land from the sale proceeds of agriculture land. The assessment in case of all the assessees was made u/s. 143(3). The Assessing Officer while making assessment in case of Kumari Devisankari Chokalingam (TTA No. 2223/2013) and S. Chokalingam (ITA No. 2224/2013) held, that the number of trees as mentioned by the assessees in deed of sale appears to be highly exaggerated. The Assessing Officer estimated agriculture income from the sale of standing trees as 1/3rd of the value shown in the deed of sale and thus, made addition of remaining 2/3rd amount in the income returned by the assessees. As regards deduction u/s. 54B claimed by the assessees, the Assessing Officer held that the purchase deed shows that along with new agriculture land, the assessees have purchased a plot described as house -site. The assessees had also claimed expenditure towards development of the new agriculture land. The said development charges relate to removing rocks, leveling and fencing of the land. The Assessing Officer held that the amount spent towards purchase of house -site and development charges cannot be allowed as part of investment u/s. 54B. The Assessing Officer accordingly disallowed the amount of exemption claimed by the assessee to the extent of aforesaid two expenditures. The assessee in ITA No. 2222/2013 has claimed exemption u/s. 54F for investing in residential property. The same was denied by the Assessing Officer for the reason, that on the date of acquiring new residential property, the assessee already owned two residential houses. The assessee is receiving rental income from the said houses, taxable under the head 'Income from House Property'. During the course of assessment proceedings, the assessees submitted revised computation of income, claiming sale of agriculture land as exempt from tax. The Assessing Officer declined to consider revised computation filed by the assessee. Aggrieved by the assessment order, the assessees carried appeal to the CIT (Appeals). The CIT (Appeals) reversed the findings of the Assessing Officer with regard to the estimations made by him in respect of sale of standing trees. As regards the findings of the Assessing Officer for dis -allowing exemption u/s. 54B, the CIT (Appeals) upheld the same. The CIT (Appeals) also endorsed the action of Assessing Officer in rejecting the revised computation filed by the assessees. Now, before the Tribunal, both assessee and Revenue have come in appeal assailing the findings of the First Appellate Authority.
(2.) SHRI B. Ramakrishnan, appearing on behalf of the assessees submitted that the authorities below have erred in not taking into consideration the revised computation filed at the time of assessment proceedings. In the revised computation, the assessees have only claimed that the sale proceeds arising from the sale of agriculture land does not give rise to liability of capital gain tax. The claim was made on the factual matrix of the case. The income generated from the sale of agriculture land falls within the ambit of section 2(1A) of the Act which defines agriculture income and is thus exempt from tax. The ld. AR further submitted that the Tahsildar of the village has confirmed the nature of land, as agriculture. Moreover, the Assessing Officer has not raised any doubt over the nature of land. Therefore, income arising from the sale of land and trees being agriculture income is exempt from tax. The ld. AR made an alternative submission that the Assessing Officer has erred in partly disallowing exemption claimed by the assessees u/s. 54B. The entire investment made by the assessees should be considered for granting exemption u/s. 54B. Au Contraire Shri Hari Rao, appearing on behalf of the Revenue supported the assessment order and contended that the CIT (Appeals) has erred in treating the total amount of sale proceeds of standing trees as exempt. The Assessing Officer after inspecting the site had came to the conclusion that number of trees as mentioned in the deed of sale is highly exaggerated. On the issue of revised computation filed by the assessees at the time of assessment, the ld. DR submitted that for revising the claim, the assessees should have filed revised return of income, but no revised return was filed by the assessees. The Assessing Officer has no power to consider fresh claim at the time of assessment except by way of revised return filed in accordance with the provisions of the Act.
(3.) WE have heard the submissions made by the representatives of both the sides. From the submissions and the pleadings of the rival parties, issues which have come up before us for adjudication are as under: "(a) Whether the CIT (Appeals) has erred in accepting the entire claim of the assessees with regard to sale of standing trees as agriculture income?; (b) Whether the revised computation filed by the assessees at the time of assessment without filing revised return of income can be considered by the Assessing Officer or the appellate authorities?; (c) Whether in the facts and circumstances of the case, the assessees are entitled for exemption u/s. 54B of the Act of the entire amount, as claimed -;


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