PAUL P. ABRAHAM Vs. ACIT

JUDGEMENT

(1.) THIS appeal of the assessee is directed against the order of CIT(A) -II, Kochi dated 12 -12 -2013 and pertains to assessment year 2008 -09.

(2.) SHRI Ramesh Cherian John, the ld. counsel for the assessee submitted that the assessee sold 201 cents of land to M/s. Global Township Pvt. Ltd. for a total consideration of Rs. 402 lakhs. According to the ld. counsel, the assessee acquired the said land by means of a settlement deed executed by his father on 02 -05 -2003. For the purpose of computing capital gain the assessee estimated the cost of acquisition as on 01 -04 -1981 at Rs. 25,000 per cent. The assessee has also claimed cost of improvement at Rs. 27,30,885. According to the ld. counsel though the assessee returned capital gain in the return of income during the course of assessment proceedings, the assessee claimed that what was transferred was an agricultural land, therefore, it is not liable for capital gain tax. The assessing officer disallowed the claim of the assessee on the ground that the exemption of capital gain for transfer of agricultural land was not claimed in the return of income on the basis of the judgment of the Apex Court in Goetze India Ltd. vs. CIT : 284 ITR 323 (SC). The ld. counsel further submitted that the assessee has also raised the very same issue before the CIT(A). The assessee has also claimed exemption u/s. 54F and 54B of the Act. According to the ld. counsel, the Village Officer, Vadavukode panchayat certified that the land was used for agricultural purpose till 2007. A member of grama panchayat, Vadavukode, Puthencruz has also certified that the subject land was used for agricultural purpose upto the financial year 2006 -07. According to the ld. counsel, the land was cultivated with pepper, rubber, cloves, nutmeg, etc. However, the CIT(A) rejected the claim of the assessee on the basis of a recital found in the registered sale deed dated 05 -07 -2007. According to the ld. counsel, in the registered sale deed, the property was wrongly described as "not agricultural land". According to the ld. counsel, in fact, the land is an agricultural land and used for cultivation till 2007. Merely because the description was wrongly given in the sale deed, according to the ld. counsel, it will not lose its character as agricultural land; hence, the assessee is entitled for exemption from capital gain tax. The CIT(A) has also rejected the claim of the assessee u/s. 54F and 54B on the ground that these claims are available only for transfer of agricultural land. In the case before us, the CIT(A) found that the subject land is not an agricultural land, therefore, the claim of the assessee for deduction u/s. 54F and 54B was also rejected.

(3.) REFERRING to the judgment of the Apex Court in Goetze India Ltd. (supra), the ld. counsel submitted that merely because of the assessee included the gain on transfer of the agricultural land in the computation, the revenue cannot take advantage of the same since it cannot be a taxable income. Referring to the judgment of the Kerala High Court in CIT vs. K.N. Narayana : 150 ITR 105, the ld. counsel submitted that the officers of the department must not take advantage of the ignorance of the assessee as a matter of right. It is the duty of the assessing officer to assist a taxpayer in every way particularly in the matter of claiming and securing the relief. According to the ld. counsel, since there is no authority to collect tax on transfer of agricultural land, ignorance of the assessee cannot be taken as a ground for levying tax on the capital gain. According to the ld. counsel, the CIT(A) observed that there is no proof of agricultural operation and there is no evidence for sale of agricultural product. According to the ld. counsel, this observation was made ignoring the certificate issued by the Village Officer and the Member of the village grama panchayat. The CIT(A) has also failed to take note of the purchase bill for sale of rubber which is enclosed alongwith the return statement filed by the assessee before this Tribunal. The ld. counsel further submitted that the assessee has also raised an alternative contention claiming exemption u/s. 54F and 54B of the Act. This was rejected by the CIT(A) on the wrong presumption that exemption u/s. 54B and 54F is available for sale of agricultural land. According to the ld. counsel, section 54F deals with transfer of long term capital asset whereas section 54B deals with transfer of land used for agricultural purpose in the two immediately preceding years from the date of transfer. The usage of the land for agricultural purpose for two years immediately preceding the date of transfer of the land is evidenced by the certificate issued by the Village Officer and the Member of the gram panchayat. Therefore, according to the ld. counsel, the assessee is entitled for exemption u/s. 54B of the Act. Referring to the recital in the sale deed at column 8, the ld. counsel submitted that the description of the land was wrongly made. According to the ld. counsel, when the land was subjected to actual cultivation, wrong description in the sale deed will not change the character of the land.