- (1.) WE have heard Shri Shambhu Chopra for the revenue. Shri Faneesh Misra entered appearance on behalf of heirs and legal representative of the respondent assessee.
(2.) THE substitution application was allowed on 26.7.2012 bringing on record the heirs of Shri Devendra Pal Singh-the assessee, who died in the year 2003. The Income Tax Appellate Tribunal, Delhi Bench 'A', New Delhi has referred the following two questions of law in Reference No.116 DEL/98 arising out of the order of the Income Tax Appellate Tribunal dated 28th November, 1997 in ITA No.4994/DEL/92 relevant for the assessment year 1991- 92 as follows:- "1. Whether, on the facts and in the circumstances of the case, Hon'ble ITAT was legally justified in confirming the order of ld. CIT (a) in directing that surplus amount of sale of land is assessable as long term capital gain and not as an adventure in the nature of trade. 2. Whether, on the facts and in the circumstances of the case, Hon'ble ITAT is justified in upholding the order of ld. CIT (A) in directing the AO to ascertain the cost of land as on 1.4.74 and deduct the same to work out the capital gain?" Brief facts giving rise to this reference are that Late Shri Devendra Pal Singh-the respondent assessee was owner of agricultural lands, inherited by him as ancestral properties. He entered into a registered agreement dated 9.5.1989 with M/s Konark Builders for transfer of the agricultural lands for a sale consideration of Rs.1,04,28,000/-. The assessee declared an income of Rs.3,98,180/-, as capital gain on sale of the agricultural land.
(3.) THE Assessing Officer observed that during the relevant assessment year 1991-92 the assessee had sold the area of 3846.73 sq. mtr. out of the area involved of 6516 sq. mtrs. in the land. The assessee had declared the total sale consideration received as Rs.11,31,536, after deducting the cost of land as on 1.1.1974 at the rate of Rs.28.71 per sq. mtr. The assessee had worked out capital gain at Rs.9,36,350/- after claiming deduction under Section 48 and under Chapter VI A. The income was shown as Rs.3,98,180/-. The A.O. issued notice requiring the assessee to explain as to why the sale consideration should not be taken at Rs.13,43,107/- and to furnish evidence of ownership of land, date of acquisition, the basis for valuing the land as on 1.1.1974 and to justify the liability of deduction under Section 48 of the Act. The assessee filed his reply on 4.10.1991, explaining that an agreement to sale was executed with M/s Konark Builders on 19.5.1989. The land in question was agreed to be developed as per specifications of Bulandshahar- Khurja Development Authority. The entire expenses of development were to be borne by the builder. The builder paid Rs.295/- per sq. mtr. and rest of the amount belong to the said builder being the development charges. The sale consideration was paid by M/s Konark Builders through account payee cheque drawn at Vijaya Bank, Bulandshahar out of which Rs.11,31,536/- belong to the petitioner and the rest of the amount of Rs.2,11,570/- belong to the builder, for which it had issued a receipt. The assessee explained the cost of the land as on 1.1.1974 by providing exemplers of the sale of land in the same vicinity. The total area under the agreement was treated as effective area and for the area utilised for road and other public amenities no consideration was received. Since the assessee was in possession of the land for more than 20 years, he was entitled to get deductions under Section 48 of the Act.;