Sushila Devi Kejriwal, CHENNAI V. ITO, CHENNAI

ITA 1064/CHNY/2015

• Counselvise Citation: 106421714 RSA 2015
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2015
• Court: TRIBUNAL
• Department Lawyers: S BALASUBRAMANIAN
• Assessee Lawyers: SAROJ PARIDA KUMAR
• Keywords: Capital asset; Cost of acquisition; Fair market value; Capital receipt

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! , ' #$ BEFORE SHRI N.R.S.GANESAN, JUDICIAL MMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO. 1064/MDS/2015 / ASSESSMENT YEAR : 2006-07 MS. SUSHILA DEVI KEJRIWAL, PLOT A-6, 1 ST FLOOR, 1 ST MAIN ROAD, RANGAREDDY GARDEN, NEELANGARAI, CHENNAI 600115. PAN AAIPK7177N APPELLANT) V. THE INCOME-TAX OFFICER, NON CORPORATE WARD-15(5), CHENNAI. RESPONDENT) / APPELLANT BY : SHRI SAROJ PARIDA KUMAR, ADVOCATE / RESPONDENT BY : SHRI S. BALASUBRAMANIAN, CIT ! / DATE OF HEARING : 15.07.2015 '# ! / DATE OF PRONOUNCEMENT: 17.07.2015 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX(PCIT) D ATED 9.3.2015 PASSED UNDER SEC.263 OF THE INCOME-TAX ACT , 1961. - - ITA 1064/15 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL. THE ASSESSEE FILED HER RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2006-07 ON 27.7.2006 ADMITTING TOTA L AMOUNT OF ` 22,606/-. THE CASE WAS REOPENED U/S.148 TO FIND O UT THE ESCAPEMENT OF INCOME ON ACCOUNT OF SALE AGREEMENT E NTERED BY THE ASSESSEE TO SELL HER VACANT LANDS AT NEELANGARA I, CHENNAI. THE ASSESSEE HAD ENTERED INTO A SALE AGREEMENT ON 8 .12.2004 WITH ONE SHRI BHARATHIRAJA FOR SALE OF HER VACANT L ANDS AT NEELANGARAI FOR ` 1.87 CRORES AND RECEIVED AN ADVANCE OF ` 1.05 CRORE. HOWEVER, THE SALE WAS NOT MATERIALIZED AND HENCE, AS PER CLAUSE 9(B) OF THE SAID AGREEMENT, THE ASSESSEE HAD RETAINED ` 32.20 LAKHS AND RETURNED BACK ` 72.80 LAKHS WITHOUT INTEREST TO THE PARTY CONCERNED. THE ASSESSING OFFICER WHILE C OMPLETING THE ASSESSMENT U/S.143(3) R.W.S.147 OF THE ACT, HAD NOT BROUGHT INTO TAX NET THE SAID RECEIPT OF ` 32.20 LAKHS, BY ACCEPTING THE ASSESSEES SUBMISSION DATED 27.6.2012 WHICH STATES AS FOLLOWS: ADVANCE MONEY RECEIVED WHERE ANY CAPITAL ASSET WAS ON ANY PREVIOUS OCCASIO N THE SUBJECT OF NEGOTIATIONS FOR ITS TRANSFER, ANY A DVANCE OR OTHER MONEY RECEIVED AND RETAINED BY THE ASSESSE E IN RESPECT OF SUCH NEGOTIATIONS SHALL BE DEDUCTED F ROM THE COST FOR WHICH THE ASSET WAS ACQUIRED OR THE WRITTEN DOWN VALUE OR THE FAIR MARKET VALUE, AS THE CASE MAY BE, IN COMPUTING THE COST OF ACQUISITION. - - ITA 1064/15 3 2.1 THE ASSESSING OFFICER HAD ACCEPTED THE ASSESSEE S VERSION THAT THE SAID RECEIPT WAS NOT A REVENUE REC EIPT TO BE TAXED UNDER ANY OF THE PROVISIONS OF THE IT ACT WIT HOUT FULLY APPRECIATING AND ANALYZING THE FACTS OF THE CASE. ACCORDING TO THE PCIT, THE ASSESSING OFFICER COMMITTED ERROR WHI LE PASSING THE ORDER U/S.143(3) R.W.S.147 OF THE ACT ON 29.11. 2012, WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO B RING INTO TAX AN AMOUNT OF ` 32.20 LAKHS AS FORFEITURE MONEY OUT OF THE ADVANCE RECEIVED IN RESPECT OF SALE AGREEMENT ENTER ED INTO BY THE ASSESSEE ON 8.12.2004 WITH ONE SHRI BHARATHIRAJ A. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. IN THIS CASE, THE ASSESSEE HAD ENTERED INTO A SALE AGREEMENT WITH SHRI BHARATHIRAJA. TO CONSIDER THE RECEIPT OF ` 32.20 LAKHS AS ADVANCE MONEY, WHICH IS INCOME OF TH E ASSESSEE, THE ASSESSMENT WAS REOPENED BY THE ASSESS ING OFFICER. HOWEVER, BY PASSING THE ASSESSMENT U/S.14 3(3) R.W.S. 147 OF THE ACT, THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION TOWARDS THIS GROUND. HENCE, THE PCIT WHILE PASSING THE ORDER - - ITA 1064/15 4 UNDER SEC.263, THE IMPUGNED AMOUNT WAS BROUGHT INTO TAX. IN OUR OPINION, THIS ISSUE IS SQUARELY COVERED IN FAVO UR OF THE ASSESSEE BY THE JUDGMENT OF THE SUPREME COURT IN TH E CASE OF TRAVANCORE RUBBER & TEA CO. LTD. V. CIT (243 ITR 15 8), WHEREIN IT WAS HELD THAT RECEIPTS BY WAY OF FORFEITURE OF A DVANCE AND EARNEST MONEY UNDER ABORTIVE SALE TRANSACTIONS OF O LD AND UNYIELDING RUBBER TREES CONSTITUTED CAPITAL RECEIPT S IN HANDS OF ASSESSEE PLANTATION COMPANY. ACCORDINGLY, THE ASSE SSING OFFICER HAS NOT BROUGHT THE IMPUGNED AMOUNT TO TAX AND THE SAME IS TO BE CONSIDERED AS CHARGE AGAINST THE PROP ERTY AND THE VALUE OF THE PROPERTY IS SUITABLY ADJUSTED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS AS AND WHEN THE PROPER TY IS SOLD. CONTRARY TO THIS, THE PCIT EXERCISED HIS JURISDICTI ON TO INVOKE THE PROVISION OF SEC.56(2)(IX) OF THE ACT, WHICH READS AS UNDER: SEC.56(2)(IX) ANY SUM OF MONEY RECEIVED AS AN ADVANCE OR OTHERWISE IN THE COURSE OF NEGOTIATIONS FOR TRANSFER OF A CAPITAL ASSET, IF, ---- (A) SUCH SUM IS FORFEITED; AND (B) THE NEGOTIATIONS DO NOT RESULT IN TRANSFER OF SUCH CAPITAL ASSET. 4. IN OUR OPINION, THE PCIT COMMITTED ERROR IN INVO KING THIS PROVISION. THE PROVISION OF SEC.56(2)(IX) WAS BROUGHT INTO STATUTORY BOOK BY THE FINANCE (NO.2) ACT, 2014 W.E.F. - - ITA 1064/15 5 1.4.2015. BEING SO, THE PROVISION OF THIS SECTION CANNOT BE APPLIED TO THE PRESENT ASSESSMENT YEAR 2006-07. ACCORDINGLY, WE ARE NOT INCLINED TO AGREE WITH THE ORDER PASSED BY THE PCIT U/S.263 OF THE ACT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON FRIDAY, THE 17 TH OF JULY, 2015 AT CHENNAI. SD/- SD/- ( $ . . $ . %& ) ( ' ( ) * ) N.R.S.GANESAN + ,-./01.2334.15+ 6 78 /JUDICIAL MEMBER ! 789::3;/<./<=>?@>1 '6 /CHENNAI, A7 /DATED, THE 17 TH JULY, 2015. MPO* 7& BCDC /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. E+ /CIT(A) 4. E /CIT 5. CF% G /DR 6. %HI /GF.