Shri Vishal Agarwal, Meerut V. ITO, Meerut

CO 59/DEL/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 1880 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 18-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 21-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AASISH MOHANTY
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Tax effect
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SMT. BEENA. A. PILLA I, JM ITA NO.5801/DEL/2013 ASSESSMENT YEAR : 2008-09 ITO, WARD-2(4), MEERUT. VS. VISHAL AGARWAL, PROP. M/S VISHNU COLD DRINKS, 46/3, KALYANI, CIVIL LINES, MEERUT. PAN: AEWPA6423P CO NO.59/DEL/2014 (ITA NO.5801/DEL/2013) ASSESSMENT YEAR : 2008-09 VISHAL AGARWAL, C/O M/S MALIK & CO., 305/7, THAPAR NAGAR, MEERUT. PAN: AEWPA6423P VS. ITO, WARD-2(4), MEERUT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJAY MALIK, ADVOCATE REVENUE BY : SHRI AASISH MOHANTY, SR.DR DATE OF HEARING : 18.01.2016 DATE OF PRONOUNCEMENT: 19.01.2016 ITA NO.5801/DEL/2013 CO NO.59/DEL/2014 2 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE CIT(A ) ON 23.8.2013 IN RELATION TO ASSESSMENT YEARS 2008-09. 2. QUA THE APPEAL BY THE REVENUE, THE LD. AR SUBMIT TED THAT PURSUANT TO THE MANDATE OF SECTION 268A, THE CBDT H AS ISSUED CIRCULAR NO. 21 OF 2015 DATED 10.12.2015 WITH RETRO SPECTIVE EFFECT, REVISING THE MONETARY LIMIT TO RS.10,00,000 /- FOR NOT FILING APPEALS BEFORE THE TRIBUNAL. HE FURTHER SUB MITTED THAT AS THE TAX EFFECT INVOLVED IN THE INSTANT APPEAL IS LE SS THAN RS.10,00,000/-, THE EXTANT APPEAL IS NOT MAINTAINAB LE. THE LD. D.R., ALTHOUGH SUPPORTED THE ORDER OF THE ASSESSING OFFICER, BUT COULD NOT CONTROVERT THE FACT THAT TAX EFFECT I NVOLVED IN THIS APPEAL IS LESS THAN RS.10,00,000/-. 3. PARA 10 OF THE ABOVE CIRCULAR DIVULGES THAT THE INSTRUCTION IS APPLICABLE TO THE PENDING APPEALS ALSO WITH RETR OSPECTIVE EFFECT AND THERE IS A CLEAR-CUT DIRECTION TO THE DE PARTMENT TO ITA NO.5801/DEL/2013 CO NO.59/DEL/2014 3 WITHDRAW OR NOT PRESS SUCH APPEALS FILED BEFORE THE ITAT WHEREIN TAX EFFECT IS LESS THAN RS.10,00,000/-. GOI NG BY THE PRESCRIPTION OF THE AFORENOTED CIRCULAR, WE ARE OF THE VIEW THAT THE REVENUE SHOULD HAVE EITHER NOT FILED THE INSTAN T APPEAL BEFORE THE TRIBUNAL OR WITHDRAWN THE SAME AS THE TA X EFFECT IN THIS APPEAL IS ADMITTEDLY LESS THAN THE PRESCRIBED LIMIT FOR NOT FILING THE APPEALS. EX CONSEQEUNTI, WE DISMISS THE INSTANT APPEAL FILED BY THE DEPARTMENT WITHOUT GOING INTO M ERITS OF THE CASE. 4. THE FIRST GROUND OF CROSS OBJECTIONS IS AGAINST THE CONFIRMATION OF ADDITION TO THE EXTENT OF RS.2,76,560/- MADE BY THE AO ON ACCOUNT OF INTEREST. 5. BRIEFLY STATED, THE FACTS OF THIS GROUND ARE THA T THE ASSESSEE WAS FOUND TO HAVE OBTAINED UNSECURED LOANS OF RS.45.20 LAC ON WHICH INTEREST WAS PAID @ 15%. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE WITHDREW A SUM OF RS.21. 92 LAC FOR HIS PERSONAL USE. IT WAS ALSO NOTICED THAT THE ASSESSE ES CAPITAL AS ON 31.3.2008 STOOD AT RS.5,43,730/-. BY CALCULATING I NTEREST @ 15% ON ITA NO.5801/DEL/2013 CO NO.59/DEL/2014 4 WITHDRAWN AMOUNT OF RS.21.92 LAC MADE BY THE ASSESS EE, THE AO WORKED OUT THE DISALLOWANCE OF INTEREST AT RS.3,28,832/-. THE LD. CIT(A) RESTRICTED THE ADDITION TO RS.2,76,560/-, AGAINST W HICH THE ASSESSEE HAS COME UP IN THE CROSS OBJECTION BEFORE US. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND FROM THE ANNUAL ACCOUNT S OF THE ASSESSEE THAT HIS OPENING CAPITAL STOOD AT RS.8.30 LAC. A SUM OF RS.12.65 LAC WAS DEPOSITED. APART FROM CERTAIN OTHER ADDITIONS AND W ITHDRAWALS, THE CLOSING CAPITAL OF THE ASSESSEE STOOD AT A CREDIT O F RS.5,43,730/-. THIS SHOWS THAT THE ASSESSEES OPENING AS WELL AS CLOSIN G CAPITAL WAS A CREDIT BALANCE AND ALSO HIS CAPITAL BALANCE REMAINED IN CR EDIT THROUGHOUT THE YEAR. WE ARE UNABLE TO APPRECIATE AS TO HOW ANY DI SALLOWANCE OF INTEREST CAN BE MADE WHEN THE PROPRIETOR WITHDRAWS HIS OWN C APITAL FOR PERSONAL USE. SINCE THE WITHDRAWAL MADE BY THE ASSESSEE FRO M HIS PROPRIETORSHIP CONCERN NEVER RESULTED IN A DEBIT BALANCE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING ADDITION OF INTERES T AT THIS LEVEL. THE SAME IS, THEREFORE, ORDERED TO BE DELETED. ITA NO.5801/DEL/2013 CO NO.59/DEL/2014 5 7. THE ONLY OTHER ISSUE RAISED IN THIS C.O. IS AGAI NST THE CONFIRMATION OF ADDITION OF RS.1 LAC MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. 8. SUCCINCTLY, THE ASSESSEE JOINTLY PURCHASED A PRO PERTY ON 4.6.2007 AT SAHIBABAD, WITH HIS INDIVIDUAL SHARE AT RS.6,75,000 /-. THE SAID PROPERTY WAS SOLD JOINTLY ON 5.7.2007 WITH THE ASSESSEES IN DIVIDUAL SHARE IN FULL VALUE OF CONSIDERATION AT RS.8,75,000/-. THE AO NO TICED THAT THE ASSESSEE PAID STAMP DUTY ON THE CIRCLE RATE FOR THI S PROPERTY AT RS.9,75,000/-. INVOKING THE PROVISIONS OF SECTION 50C, HE MADE AN ADDITION OF RS.1 LAC APART FROM SHORT-TERM CAPITAL GAIN ON THE SALE OF PROPERTY. THE LD. CIT(A) SUSTAINED THIS ADDITION. THE ASSESSEE IS AGGRIEVED AGAINST THE SUSTENANCE OF THE ADDITION OF RS.1.00 LAC. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. TO RULE OUT THE APPLICATION OF SECTION 50C, THE ASSESSEE HAS MADE OUT A CASE THAT THE PROPERTY WHIC H WAS SUBJECT MATTER OF PURCHASE AND SALE DURING THE YEAR WAS HIS STOCK IN TRADE AND NOT A CAPITAL ASSET. ON BEING CALLED UPON TO ADDUCE NECE SSARY EVIDENCE TO DEMONSTRATE THAT THE PROPERTY IN QUESTION WAS HIS S TOCK, THE ASSESSEE ITA NO.5801/DEL/2013 CO NO.59/DEL/2014 6 COULD NOT LEAD ANY EVIDENCE WORTH THE NAME EXCEPT F OR STATING THAT HE WAS DOING THE BUSINESS IN PROPERTIES AS WELL. FROM THE MATERIAL ON RECORD, IT IS OBSERVED THAT THE MAIN BUSINESS OF TH E ASSESSEE IS `DISTRIBUTION OF SOFT DRINKS. NO OTHER PROPERTY E XCEPT THE INSTANT ONE WAS SOLD BY THE ASSESSEE DURING THE YEAR. THERE IS NO DOUBT THAT AN ISOLATED TRANSACTION CAN BE AN ADVENTURE IN THE NAT URE OF TRADE, BUT FOR THAT THE ASSESSEE NEEDS TO PROVE THE EXISTENCE OF S UCH TRADE WITH RELEVANT DETAILS AND NECESSARY FACTORS. IN THE ABSENCE OF TH E ASSESSEE PROVING SUCH POSITIVE FACTORS OR BRINGING ON RECORD THE EXISTENC E OF ANY CARRYING ON OF BUSINESS IN PROPERTY, EVEN THOUGH AT A LOWER LEVEL, WE HOLD THAT THE SAID PROPERTY HAS TO BE TREATED AS CAPITAL ASSET, THE PR OFIT FROM WHOSE TRANSFER IS CHARGEABLE UNDER CHAPTER IV-E OF THE ACT. THAT BEING THE POSITION, THE PROVISIONS OF SECTION 50C WILL CONSEQUENTLY ATTRACT . IT IS AN ADMITTED POSITION THAT THE STAMP VALUE OF THE PROPERTY SOLD WAS RS.9,75,000/- AND IF THE SAME IS TAKEN INTO CONSIDERATION, THE ADDITI ON OF RS.1 LAC BECOMES JUSTIFIABLE. WE, THEREFORE, APPROVE THE VIEW TAKEN BY THE LD. CIT(A) ON THIS SCORE. ITA NO.5801/DEL/2013 CO NO.59/DEL/2014 7 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION BY THE ASSESSEE IS PARTLY ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 9 TH JANUARY, 2016. SD/- SD/- (BEENA A. PILLAI) (R.S. SYAL) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: JANUARY, 2016. DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI