M/s Dunlop Estates Pvt. Ltd., Kolkata V. WTO, Ward - 7(1), Kolkata, Kolkata

CO 31/KOL/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7218 (ITAT-KOLKATA)
• Duration Of Justice: 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 23-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: R P AGARWAL; MANOJ KATARUKA O
• Keywords: Capital asset; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI PRAMOD KUMAR, A.M. & SHRI MAHAVIR SIN GH, J.M. ] W.T.A. NO.36/KOL/2011 ASSESSMENT YEAR :2007-08 W.T.O., WARD-7(1), KOLKATA VS- M /S. DUNLOP ESTATES PVT. LTD. 46, SYED AMIR ALI AVENUE, KOLKATA- 700 017 (PAN: AACCD 5451F) ( APPELLANT ) ( RESPONDENT ) C.O.NO.31/KOL/2012 (ARISING OUT OF WTA NO.36/KOL/2011) ASSESSMENT YEAR :2007-08 M/S. DUNLOP ESTATES PVT. LTD. -VS- W.T.O., WARD- 7(1), KOLKATA ( CROSS OBJECTOR ) ( RESPONDENT) DATE OF CONCLUDING THE HEARING : 30.03.2012 DATE OF PRONOUNCING THE ORDER : 20.04.2012 APPEARANCES : FOR THE DEPARTMENT : SHRI NIRA J KUMAR, CIT(DR) : FOR THE ASSESSEE : SHRI R.P.AGARWAL & SHRI MANOJ KATARUKA O R D E R PER PRAMOD KUMAR 1. THE APPEAL, FILED BY THE ASSESSING OFFICER, IS D IRECTED AGAINST THE ORDER OF THE CIT(A)-VIII, KOLKATA DATED 9 TH SEPTEMBER, 2011, PASSED U/S 16(3) R.W.S. 17 OF THE WEALTH TAX ACT, 1957 FOR THE ASSESSMENT YEAR 20 07-08. 2. THE SHORT ISSUE THAT IS REQUIRED TO ADJUDICATE I N THIS APPEAL IS THAT WHETHER OR NOT THE LD. CIT(A) WAS JUSTIFIED IN TREATING THE LA ND AS STOCK-IN-TRADE, WHILE ASCERTAINING THE TAX LIABILITY OF THE ASSESSEE. THE ASSESSMENT YEAR INVOLVED IS 2007- 08 AND WEALTH TAX ASSESSMENT IS FRAMED UNDER SECTIO N 16(3)/17 OF THE WEALTH TAX ACT. 2 WTA NO.36/KOL/11 & C.O.31/KOL/12 WTO -VS- DUNLOP ESTATES PVT. LTD. ASSESSMENT YE AR 2007-08 3. THE ISSUE IN APPEAL LIES IN A NARROW COMPASS OF UNDISPUTED MATERIAL FACTS. THE ASSESSEE IS A COMPANY AND THE MAIN OBJECT OF TH E ASSESSEE COMPANY IS, INTER ALIA , TO CARRY ON THE BUSINESS OF CONSTRUCTION, BUILD ERS, PROMOTERS & DEVELOPERS OF LAND, BUILDINGS, HEREDITAMENTS, BUILDING SITES, WHETHER RESIDENTIAL OR COMMERCIAL AND IN CONNECTION THEREWITH TO ACT AS CONTRACTOR FO R EXECUTION, CONSTRUCTION, RECONSTRUCTION, IMPROVEMENT, AND DEVELOPMENT OF LAN D & BUILDING, ROADS, INDUSTRIAL ESTATES, HOTELS, ROOMS, INNS, MOTELS, HO LIDAY HOMES, HOLIDAY RESORTS, FALTS, HOUSES, RESTAURANTS, MARKETS, SHOPS, WORKSHOPS, MIL LS, FACTORIES, WAREHOUSES, COLD STORAGES, GODOWNS, OFFICES, GARDENS, SWIMMING POOLS , PLAY-GROUND AND PROJECTS OF ALL KINDS AND OTHERWISE AS CONTRACTOR FOR EXECUTION , CONSTRUCTION & COMPLETION OF ALL SORTS OF PROJECTS & GENERALLY TO DEAL IN IMMOVA BLE PROPERTIES OF ALL DESCRIPTION AND TO SUPPLY, DEAL, TRADING, IMPORTING AND EXPORTI NG THE BUILDING MATERIALS, RAW MATERIALS, IRON RODS, CEMENTS, BUILDING CONSTRUCTIO N EQUIPMENTS FROM/OR TO DIFFERENT PARTIES INCLUDING THE GOVERNMENT, AGENCIE S AND OTHER BODIES AND ACT AS A CONTRACTOR. THE ASSESSEE COMPANY ACQUIRED LAND AD MEASURING 241625 SQ. METERS FROM DUNLOP INDIA LTD. THIS LAND WAS SHOWN I N THE BALANCE-SHEET AS ONE OF THE FIXED ASSETS. IT WAS IN THIS BACKGROUND THAT TH E AO REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE SAID LAND SHOULD NOT BE TR EATED AS COVERED BY THE SCOPE OF SECTION 2(EA) OF THE WEALTH TAX ACT. THE ASSESSE ES CONTENTION WAS THAT THIS LAND WAS HELD AS STOCK-IN-TRADE. THE ASSESSEE, INTER ALIA , INVITED THE ATTENTION OF THE AO TO THE MINUTES OF THE BOARD OF DIRECTORS MEETING DATED 28.02.2007 WHICH IS PLACED ON RECORD AND THE FACT THAT THE SAID LAND WA S ACQUIRED IN CONSONANCE AND IN CONFORMITY WITH THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATIOIN OF THE COMPANY TO DEVELOP, PROMOTE, BUILD AND DISPOSE OF T HE PREMISES. IT WAS ALSO POINTED OUT THAT DUNLOP INDIA LTD., FROM WHOM THE S AID LAND WAS ACQUIRED, HAS SHOWN CAPITAL GAINS OF TRANSFER OF SHARES IN TERMS OF PROVISION OF SECTION 47A OF THE I.T.ACT WHICH RELATES TO STOCK-IN-TRADE. ELABOR ATE SUBMISSIONS WERE MADE IN SUPPORT OF THE PROPOSITION THAT EVEN THOUGH THE ASS ESSEE INADVERTENTLY MAY HAVE 3 WTA NO.36/KOL/11 & C.O.31/KOL/12 WTO -VS- DUNLOP ESTATES PVT. LTD. ASSESSMENT YE AR 2007-08 SHOWN AS FIXED ASSETS, LAND IN QUESTION IS A TRADIN G ASSET IN NATURE. NONE OF THE SUBMISSIONS, HOWEVER, IMPRESSED THE AO. HE PROCEEDE D TO HOLD THAT THE LAND SHOWN IN THE ASSESSEES BALANCE-SHEET WAS A FIXED A SSET AND IT WAS CHARGEABLE TO WEALTH TAX. AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) UPHELD THE ASSESSEES CONTENTION, INTER ALIA , ON THE GROUND THAT THE TRANSFEREE COMPANY HAD OFFERED TO TAX CAPITAL GAINS UNDER SECTION 47. THE AO IS AGGRIEVED AND IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE MAIN THRUST OF THE ISSUE RELATES TO ARGUMENT THAT T HE DECISION ARRIVED AT BY THE CIT(A) WAS BASED ON ADDITIONAL EVIDENCES WHICH WERE NOT BEFORE THE AO AND TREATMENT OF THE CAPITAL GAINS AND TRANSFER OF LAND IN QUESTION BY THE TRANSFEROR COMPANY. A PLAIN READING OF THE FACTS RECORDED IN T HE ASSESSMENT ORDER, READ WITH THE MAIN OBJECTS CLAUSE OF THE MEMORANDUM OF ASSOCI ATION, CLEARLY SHOWS THAT THE LAND WAS ACQUIRED TO DEVELOP THE SAME FOR CONSTRUCT ION PURPOSES WHICH IS IN CONSONANCE WITH THE MAIN OBJECTS OF THE ASSESSEE CO MPANY. THE ASSET IN QUESTION, THEREFORE, HAS TO BE NECESSARILY TREATED AS A TRADI NG ASSET. THE LAW IS WELL-SETTLED THAT ENTRIES IN THE BOOKS OF ACCOUNTS DO NOT DECIDE THE NATURE OF ASSET. WHEN THESE FACTS WERE POINTED OUT TO THE LEARNED DEPARTMENTAL REPRESENTATIVE AND IT WAS POINTED OUT THAT AS EVIDENT FROM THE MEMORANDUM OF ASSOCIATION, WHICH WAS BEFORE THE AO, AND ALSO FROM THE MINUTES OF THE BOA RD OF DIRECTORS MEETING, WHICH WERE ALSO BEFORE THE AO AND WHICH HAVE BEEN R EFERRED TO IN THE ASSESSMENT ORDER ITSELF, THE LAND IN QUESTION INDEED APPEARS T O BE OF TRADING ASSET, THE LEARNED D.R. DID NOT HAVE MUCH TO SAY EXCEPT FOR PLACING HI S RELIANCE ON THE ORDER OF THE AO. HE ONCE AGAIN POINTED OUT THAT IT IS NOT ON THI S GROUND THAT THE CIT(A) HAS GIVEN IMPUGNED RELIEF TO THE ASSESSEE. THIS LINE OF ARGUMENT DOES NOT, HOWEVER, IMPRESS US. ONCE THE MATERIAL ON RECORD CLEARLY IND ICATES, AS IN THE PRESENT CASE, THAT THE LAND ACQUIRED BY THE ASSESSEE WAS A TRADIN G ASSET, THERE CANNOT BE ANY GOOD 4 WTA NO.36/KOL/11 & C.O.31/KOL/12 WTO -VS- DUNLOP ESTATES PVT. LTD. ASSESSMENT YE AR 2007-08 REASON IN TREATING THE SAME AS CHARGEABLE ASSET UND ER THE WEALTH TAX ACT. WE, THEREFORE, UPHOLD THE ORDER OF THE LD. CIT(A) AND D ECLINE TO INTERFERE IN THE MATTER. 5. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT IN THE EVENT OF REVENUES APPEAL BEING DISMISSED, HE DOES NOT WISH TO PRESS T HE CROSS OBJECTION. THE C.O. IS THEREFORE, DISMISSED AS NOT PRESSED. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. TO SUM UP, THE APPEAL AS ALSO THE C.O. ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 20.04.2012. SD/- SD/- (MAHAVIR SINGH) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20 TH APRIL, 2012 COPY OF THE ORDER FORWARDED TO: 1. M/S. DUNLOP ESTATES PVT. LTD., 46, SYED AMIR ALI A VENUE, KOLKATA- 700 017 2 W.T.O., WARD-7(1), KOLKATA 3. THE CIT(A), KOLKATA 4. CIT, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.) 5 WTA NO.36/KOL/11 & C.O.31/KOL/12 WTO -VS- DUNLOP ESTATES PVT. LTD. ASSESSMENT YE AR 2007-08