SREEDHAR ASOK KUMAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The assessee has preferred this appeal challenging the findings of the Income Tax Appellate Tribunal in I.T.A.No. 18/Coch/2012 for the assessment year 2008-09 allowing the departmental appeal by vacating Annexure B order of the first appellate authority. The appellant was assessed to income tax by the Deputy Commissioner of Income Tax, Circle (2)1, Kochi, for the assessment year 2008-09 determining a total income at Rs. 10,86,71,781/- consisting of business income at Rs. 38,78,390/-, long term capital gain amounting to Rs. 10,34,89,809/- and the short term capital gain at Rs. 13,03,582/-. A demand was raised for Rs. 3,18,35,210/- as per assessment order dated 30-12-2010 at Annexure A. The appellant had executed an agreement on 10-10-2007 in favour of M/s Desai Homes for sale of land for Rs. 11 crores. In the return of income, the appellant had declared his income at Rs. 12,71,577/-, after claiming exemption/deduction admissible under the relevant provisions of the Act regarding capital gain under Section 2(1A) stating that the appellant's agricultural land is situated in Kakkanad Village of Thrikkakara Panchayat, which is a rural area. Notifications issued by the CBDT under Section 2(14) of the Income Tax Act (the 'Act' for brevity) does not include the area; which is the basis of the claim of exemption as an agricultural land.

(2.) Aggrieved by the assessment made, the appellant filed an appeal before the Commissioner of Income Tax (Appeals)-II, Kochi. The assessee's appeal was allowed and the claim for exemption was accepted relying on the decision of this Court in ITA No. 1295/2009, wherein it was held that the agricultural land is exempted from capital gains unless it is located in a municipal area or notified area.

(3.) The Revenue went on appeal before the Income Tax Appellate Tribunal, which was heard by a Bench of two Members, consisting one Judicial Member and one Accountant Member. There was difference of opinion between the Members. While Judicial Member dismissed the appeal of the Revenue, the Accountant Member allowed the appeal and vacated the order of the Commissioner of Income Tax (Appeals). As a consequence of the difference of opinion, an order under Section 255(4) of the Act was passed directing the Registry to place the file before the President for nominating a third Member and as per Annexure E order dated 29-10-2014 the matter was referred to the third Member who agreed with the Accountant Member vide order at Annexure F. Copy of the final order dated 07-05-2015 of the Income Tax Appellate Tribunal, Cochin Bench is at Annexure G. This order is challenged before us.