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II. Direct Taxes Case Laws:
1. Smt. Chalasani Naga Ratna Kumari Vs. ITO, I.T.A. No. 639/Vizag/2013, Date of Order: 23.12.2016, ITAT - Visakhapatnam
Issue: 1
Whether an agricultural land held by assessee, which is suitable
for agricultural operation, loses the characteristics of agricultural
land merely because no agricultural operation was carried by assessee on
such land?
Held_No
Brief Facts:
During the assessment proceedings, the Ld. AO noticed that the
assessee had sold vacant land and has not offered capital gains on the
said transaction/ Therefore, the Ld. AO issued a show cause notice and
asked to explain why capital gains income was not offered to tax on sale
of land. In response to notice, the assessee submitted that land sold
is agricultural land. However, the Ld. AO held that “though assessee
claims to have sold agricultural lands, the land sold by the assessee is
only a vacant land not suitable for agricultural operations and there
are no agricultural operations carried out for past several years”.
Held:
In this regard, The Hon’ble ITAT held that “though there is no
agricultural operation carried out by the assessee, the lands held by
the assessee are classified as agricultural lands in the revenue records
and also suitable for agricultural operations. Therefore, impugned
lands cannot be held as non-agricultural lands, just because the
assessee has not carried out any agricultural operations”.
Issue: 2
Whether for the purpose of Section 50C, stamp duty value on the
date of agreement to sale is to be considered, instead of stamp duty
value as on the date of sale deed.
Held: Yes
Brief Facts:
The assessee entered into an agreement for sale of land for a
consideration of Rs. 3,40,00,000/- on 15/12/2007 and received an advance
of Rs.2,52,00,000/-. As on the date of agreement, the market value of
the property for the purpose of payment of stamp duty is less than the
consideration shown in the sale agreement. Such land has been conveyed
through a registered sale deed on 1.9.2008 for a consideration of Rs.
3,40,00,000/-, whereas the stamp duty valuation of the land was fixed at
Rs. 4,12,30,000/-. Therefore, the ld. AO considered the stamp duty
value as on the date of registration of sale deed as sale consideration
for the purpose of computing capital gain and invoke the provision of
Section 50C of the Income Tax Act, 1961.
Held:
The Hon’ble ITAT placed reliance on the judgment of Hon’ble Ahmedabad
ITAT in the case of Dharma Sibai Sonani Vs. DCIT in ITA
No.1237/Ahd/2013, wherein it was held that “the proviso to section 50C
of the Act inserted by the Finance Act, 2016 w.e.f. 1.4.2017 is curative
in nature and intended to remove an undue hardship to the assessee and
accordingly given retrospective effect from 1st April, 2003 i.e. the
date effective from which section 50C of the Act was introduced.
Accordingly, as per the proviso, the stamp duty value of the property on
the date of execution of the agreement to sale should be adopted
instead of value on the date of execution of sale deed”.
Therefore,
we are of the view that the A.O. was erred in adopting value of the
property as on the date of sale deed to determine deemed consideration
u/s 50C of the Act.
(Please click here for judgment)
2. CIT Vs. M/s Bhushan Steels & Strips Ltd., I.T.A. No. 314/2003, Date of Judgement: 01.12.2016, High Court of Delhi
Issue:
Whether the assessee is entitled to depreciation under Section 32
of the Income Tax Act even when the assessee was not the owner of the
property in question and was in possession thereof as a lessee during
the year under consideration?
Held: Yes
Brief Facts:
The facts of the case are that the assessee for the Assessment Year
(AY) 1994-95 had reported that it had entered into a lease agreement on
16.04.1993. It also stated that on the next day i.e. 17.04.1993 the
parties had entered into a lease arrangement under which assessee had
the option to purchase the leased property on expiry of three years from
the commencement of the lease upon payment of Rs. 3.36 crores. In the
event it chose not to exercise the option the amount of security deposit
(i.e 3.16 cr) would become refundable. The assessee claimed
depreciation under Section 32(1) of the Income Tax Act, 1961 (in short
the Act) contending that the improvements made and the cost of
acquisition is depreciable. The AO rejected assessee’s claim based on
his contention that the term 'Owner' in the context of depreciation
shall mean the full legal owner i.e. when the law recognises that the
title has vested into such owner.
Held:
In the case of “CIT vs. Podar Cement (P) Ltd. (1997) 226 ITR 625” The
Hon’ble Supreme court had held “For the purpose of Section 9, the owner
must be that person who can exercise the rights of the owner, not on
behalf of the owner but in his own right.” Relying on the above decision
of the supreme court it was held that the Tribunal was correct in
holding that non-registration of the agreement did not imply that the
benefit otherwise available under Section 53A of the Transfer of
Property Act, 1882 of being entitled to continue in possession in part
performance of an agreement to sell, had to be denied.
The appeal of the revenue is denied.
(Please click here for judgment)
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