Krinesh Farms Pvt. Ltd., Ahmedabad V. ITO, Ward-2(1)(2), Ahmedabad

CO 73/AHD/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0785 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-12-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-03-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 20-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHAURYA S SHUKLA
• Keywords: Business income; Audit objection; Corroborative evidences
• Section: 143(3); 201; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (VIRTUAL COURT) BEFORE: SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBE R THE ITO, WARD-2(1)(2), AHMEDABAD (APPELLANT) VS KRINESH FARMS PVT. LTD. 81, 8 TH FLOOR, NEW YORK TOWER, OPP. MUKTIDHAM DERASAR, THALTEJ CROSS RD. AHMEDABAD PAN: AABCK1965G (RESPONDENT) KRINESH FARMS PVT. LTD. 81, 8 TH FLOOR, NEW YORK TOWER, OPP. MUKTIDHAM DERASAR, THALTEJ CROSS RD. AHMEDABAD PAN: AABCK1965G (APPELLANT) VS THE ITO, WARD-2(1)(2), AHMEDABAD (RESPONDENT) REVENUE BY: SHRI SHAURYA S. SHUKLA, SR. D.R . ASSESSEE BY: SMT NUPUR SHAH, A.R. DATE OF HEARING : 03-12-2020 DATE OF PRONOUNCEMENT : 16-12-202 0 ITA NO. 1511/AHD/2018 ASSESSMENT YEAR 2008-09 CROSS OBJECTION NO. 73/AHD/2019 (IN ITA NO. 1511/AHD/2018) ASSESSMENT YEAR 2008-09 I.T.A NO. 1511/AHD/2018 & 73/AHD/2019 A.Y. 20 08-09 PAGE NO ITO VS. KRINESH FARMS PVT. LTD. 2 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS REVENUES APPEAL AND ASSESSEES CROSS OBJECTIO N FOR A.Y. 2008- 09, ARISE FROM ORDER OF THE CIT(A)-2, AHMEDABAD DA TED 26-03-2018, IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THIS APPEAL FILED BY REVENUE AND CROSS OBJECTION FILED BY ASSESSEE ARE ADJUDICATED TOGETHER AS SIMILAR ISSUE AND IDENTICAL FACTS ARE INVOLVED IN THESE TWO APPEAL AND CROSS OBJECTION. ITA NO. 1511/AHD/2018 FILED BY REVENUE 3. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL:- 1 THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS. 5,62,128/- MADE BY THE AO AND HOLDING THAT THE AO WAS NOT JUST IFIED TO CONSIDER GAIN ON SALE OF LAND AS A BUSINESS INCOME. 1.1 THE LD. CIT(A) HAS ERRED IN NOT APPRECIATIN G THE FACT THAT THE ASSESSEE COMPANY HAD INDULGED IN SYSTEMATIC ACTIVITY OF DEALING IN L AND. 2 THIS APPEAL IS FILED EVEN THOUGH IT IS BELO W THE MONETARY LIMIT SINCE THE REOPENING VAS DONE OWING TO REVENUE AUDIT OBJECTION AND IT CO MES UNDER THE EXCEPTION CLAUSE 8(C) OF THE CIRCULAR 21/2015 ISSUED BY THE CBDT. 4. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLA RING INCOME OF RS. 4,33,010/- WAS FILED ON 25 TH JULY, 2009. THEREAFTER LD. CIT-2 AHMEDABAD HAS PASSED ORDER U/S. 263 OF THE ACT ON 14 MAY, 201 4. THE LD. CIT-2 HAS STATED ASSESSMENT U/S. 143(3) WAS PASSED ON 22 ND OCTOBER, 2010 DETERMINING THE TOTAL INCOME AT RS. 4,83,010/-. ON VERIFICATIO N OF THE CASE RECORD, IT WAS NOTICED THAT ASSESSEE DERIVED INCOME FROM CAPITAL G AIN AND INTEREST. THE ASSESSEE HAD SHOWN TWO TYPES OF INCOME VIZ. PROFIT ON SALE OF LAND RS. I.T.A NO. 1511/AHD/2018 & 73/AHD/2019 A.Y. 20 08-09 PAGE NO ITO VS. KRINESH FARMS PVT. LTD. 3 8,51,987/- AND INTEREST RECEIVED OF RS. 8,73,389/-. IT IS FURTHER NOTICED THAT ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAIN EXEMPTI ON OF RS. 5,06,968/- BEING PROFIT ON SALE OF AGRICULTURAL LAND AND LONG CAPITAL GAIN OF RS. 3,45,019/- BEING PROFIT ON SALE OF AGRICULTURAL LAN D. IT WAS NOTICED THAT THE SAID PROFIT ON SALE OF AGRICULTURAL LAND WAS DERIVE D FROM 15 TRANSACTIONS OF SALES DURING THE YEAR. THE LD. CIT-2 OBSERVED THAT SELLING OF AGRICULTURAL LAND WAS THE BUSINESS OF THE ASSESSEE THEREFORE INC OME OF THE ASSESSEE REQUIRED TO BE TREATED AS BUSINESS INCOME IN RESPEC T OF PROFIT ARISING ON SALE OF LAND AND INCOME FROM OTHER SOURCES IN RESPECT OF INTEREST INCOME. IT WAS FURTHER STATED THAT NO EVIDENCES HAS BEEN PLACED TH AT THE CLAIM MADE BY THE ASSESSEE WAS OBJECTIVELY EXAMINED OR CONSIDERED BY THE ASSESSING OFFICER EITHER ON RECORD OR IN THE ASSESSMENT ORDER. THERE FORE, IT WAS HELD THAT THE ASSESSMENT ORDER WAS ERRONEOUS AS IT WAS PASSED WIT HOUT PROPER EXAMINATION OR INQUIRY OR VERIFICATION OR OBJECTIVE CONSIDERATI ON OF THE CLAIM MADE BY THE ASSESSEE. IN PURSUANCE OF THE ORDER U/S. 263, THE ASSESSING OFFICER HAS COMPLETED ASSESSMENT U/S. 143(3) R.W.S. 263 OF TH E ACT ON 28 TH FEB, 2014 STATING THAT AS PER MEMORANDUM OF ASSOCIATION THE M AIN OBJECT OF THE ASSESSEE COMPANY WAS THAT: TO OWN, OCCUPY, PURCHASE, SELL, DEAL-IN, ACQUIRE, HOLD, HIRE, POSSESS, EXCHANGE, 'LEASE, LICENSE, MORTGAGE, IMPROVE, GROW, DEVELOP, MANAGE, CONTROL LAND AND TO SET UP AGRICULTURE FARMS, AGRICULTURE HOUSE, FARM HOUSE, O RCHARDS, GARDENS AND TO CARRY ON THE BUSINESS AS AGRICULTURIST, FARMERS, MILLERS, GARDEN ERS, CULTIVATORS, PLANTERS, PROCESSORS IN CONNECTION WITH THE AGRICULTURAL AND FARMING ACTIVI TIES.' UNDER THE ABOVE OBSERVATION, THE ASSESSING OFFICER HAS HELD THAT INCOME DERIVED BY THE ASSESSEE FROM SALE AND PURCHASE OF A GRICULTURAL LAND WAS ITS BUSINESS INCOME. I.T.A NO. 1511/AHD/2018 & 73/AHD/2019 A.Y. 20 08-09 PAGE NO ITO VS. KRINESH FARMS PVT. LTD. 4 5. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE L D. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE STATI NG THAT ASSESSEE HAS SOLD 15 AGRICULTURAL LANDS PURCHASED IN THE YEAR 1995-96 , 1996-97 AND 2000-2001 AND COMPUTED THE INCOME UNDER THE HEAD CAPITAL GAIN ON THE BASIS OF SUPPORTING EVIDENCES FILED BY THE ASSESSEE. THE LD . CIT(A) HAS ALSO STATED THAT THE HONBLE SUPREME COURT IN THE CASE OF SULTA N BROTHERS HAS HELD THAT THE INTENTION OF THE ASSESSEE IS OR TO DECIDE THE N ATURE AND CHARACTER OF THE INCOME AND MERELY BECAUSE MEMORANDUM OF ASSOCIATION CONTAINS WORDS PURCHASE AND SALE DOES NOT MEAN THAT APPELLANT IS DEALING IN LAND. FURTHER, THE MEMORANDUM ALSO CONTAINS THE WORK TO OWN AND TO SET UP AGRICULTURAL FARM WHICH HAS BEEN IGNORED BY THE ASSESSING OFFIC ER. THE LD. CIT(A) HAS ALSO REFERRED A NUMBER OF CASES BY THE DIFFERENT CI T(AS) IN WHICH LAND IN THE SAME VICINITY OF THE ASSESSEE HAS BEEN HELD TO BE AGRICULTURAL LAND. 6. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF THE MATERIAL IT IS OBSERVED THAT AGRICULTURAL LA ND PURCHASED BY THE ASSESSEE COMPANY WAS VERY OLD PURCHASED IN F.Y. 1995-96 AND 1996-97 AND THE SAME HAD BEEN TREATED AS FIXED ASSETS. THE CORRECTNESS OF THE AFORESAID FACTS IS DEMONSTRATED FROM THE AUDITED ACCOUNTS OF THE ASSES SEE FOR THE FINANCIAL YEAR 2007-08 AND FROM THE FINDINGS OF THE LD. CIT(A) IN THE APPELLATE ORDER. IT IS UNDISPUTED FACT THAT ASSESSEE HAS SOLD THE AGRICULT URAL LAND AS FIXED ASSET IN ITS BALANCE SHEET. AFTER PERUSAL OF THE ASSESSMENT ORDER, IT IS OBSERVED THAT WITHOUT SPECIFICALLY CONTROVERTING THE RELEVANT MAT ERIAL AND CLAIM OF THE ASSESSEE, THE ASSESSING OFFICER SIMPLY ON THE BASIS OF MEMORANDUM OF ASSOCIATION HAS HELD THAT INCOME DERIVED FROM PURCH ASE AND SALE WAS A BUSINESS INCOME. IN THE LIGHT OF THE ABOVE FACTS A ND CIRCUMSTANCES, WE DO I.T.A NO. 1511/AHD/2018 & 73/AHD/2019 A.Y. 20 08-09 PAGE NO ITO VS. KRINESH FARMS PVT. LTD. 5 NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A ). THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. CROSS OBJECTION NO. 73/AHD/2019 FILED BY ASSESSEE 7. THE ASSESSEE HAS FILED CROSS OBJECTION TO SUPPOR T THE FINDING OF THE LD. CIT(A). SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE, THEREFORE, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME IN FRUCTUOUS AND THE SAME IS TREATED AS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY REVENUE AND C ROSS OBJECTION FILED ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16-12-2020 SD/- SD/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT AC COUNTANT MEMBER AHMEDABAD : DATED 16/12/2020 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,