MRS. SHEELA RAVINDRA DURUGKAR, Nagpur V. ITO WARD-6(1), Nagpur

ITA 109/NAG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93374 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 26-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R KIRTANE
• Assessee Lawyers: ALOK BHAGAT
• Keywords: Capital asset; Business income
• Section: 143(3); 54F; 54

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO.109/NAG/2013 ASSE SSMENT YEAR : 2006-07. SMT. SHEELA RAVINDRA DURUGKAR,. THE INCOME-TAX OFFICER, NEAR OLD SHYAM TALKIES, V/S. WARD-6(1), NAGPUR. CHITNAV IS PARK SQ.,MAHAL, NAGPUR. PAN AGJPD0970F APPELLANT. RESPONDENT . APPELLANT BY : SHRI ALOK BHAGAT. RESPONDENT BY : SH RI S.R. KIRTANE. DATE OF HEARING - 24-04-2015 DATE OF ORDER 8 TH MAY, 2015 O R D E R PER SHRI MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATING F ROM THE ORDER OF CIT(APPEALS)-19, MUMBAI, (CAMP OFFICE, NAGPUR) DATE D 09-01-2013 AND THE GROUNDS RAISED ARE REPRODUCED BELOW. 1. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN SNOT ALLOWING THE DEDUCTION U/S 54F AMOUNTING TO RS.19,04,753/- AS CLAIMED BY THE ASSESSEE. 2 2. THAT ON FACTS AND IN CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE FAILED TO MAKE ANY SUBM ISSION ON THE ISSUE OF 54F, THOUGH ALL THE DETAILS WERE DULY PLACED O N RECORD. 2. THIS IS A CASE OF AN INDIVIDUAL AND AS PER THE A SSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 29-12-2008 A CAPITAL GAIN OF ` .19,04,753/- WAS DECLARED WHICH WAS CLAIMED AS EXEMPT ON THE GROUND OF THE AP PLICABILITY OF SECTION 54F ON THE INVESTMENT MADE BY THE ASSESSEE. THE CLAIM OF T HE ASSESSEE WAS THAT AN INVESTMENT OF ` .19,50,000/-WAS MADE TOWARDS ACQUIRING A RESIDENTI AL HOUSE. THERE WAS ONE MORE ISSUE BEFORE THE ASSESSING OFFIC ER THAT WHETHER THE INCOME EARNED BY THE ASSESSEE WAS TO BE TAXED UNDER THE HE AD CAPITAL GAIN OR TO BE TAXED AS INCOME FROM ADVENTURE IN THE NATURE OF TR ADE. ON THESE TWO ISSUES, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY WHO HAS DISCUSSED THE MATTER AND THEREUPON IN RESPECT OF THE ISSUE OF CA PITAL GAIN HAS HELD AS UNDER : I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E, THE SUBMISSIONS OF THE APPELLANT AND ASSESSMENT ORDER. FROM THE ORDER IT EMERGES THAT APPELLANT HAD A PLOT OF LAND SHE ENTERED INTO AN A GREEMENT WITH PARTNERSHIP FROM DEVIDAYAL BUILDER WHERE SHE WAS A PARTNER TO DEVELOP THE PROPERTY BY CONSTRUCTING THE APARTMENT ON THE SAID PROPERTY. HOWEVER, SHE RETAINED THE POSSESSION OF THE LAND. THERE IS NO E VIDENCE BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE LAND WAS TRANSFERRED TO THE PARTNERSHIP0 FIRM. AFTER THE BUILDING W3AS CONSTRU CTED ON SAID LAND WITH EVERY BUYER TWO AGREEMENTS WAS EXECUTED ONE FOR TH E PORTION OF THE LAND AND OTHER FOR THE APARTMENT. THE AGREEMENT TRANSF ERRING THE RIGHT OF THE LAND TO THE BUYER OF THE APARTMENT WAS ENTERED BY THE APPELLANT WITH THE BUYER IN THE INDIVIDUAL CAPACITY. THE FACT ON RECO RD STATES THAT APPELLANT HAS HELD THE PLOT FOR MORE THAN 36 MONTHS. THE ASSESSI NG OFFICER HAS NOT BROUGHT OUT ANYTHING ON RECORD TO SHOW THAT THE AP PELLANT IS A REGULAR DEALER IN THE ACTIVITY OF BUYING AND SELLING OF LA ND. IT IS AN ADMITTED FACT THAT THE LAND WAS IN POSSESSION OF THE APPELLANT WHICH SHE HAS DEVELOPED WITH THE PARTNERSHIP FIRM. THE PARTNERSHIP FIRM HAS ALR EADY FILED ITS RETURN OF INCOME FOR A.Y. 2005-06 ON 30 TH OCTOBER, 2006 WHEREIN THE INCOME EARNED 3 FROM THE BUSINESS ACTIVITY WAS DECLARED. THERE IS NOTHING IN LAW THAT DEBARS AN APPELLANT TO MAKE TWO AGREEMENTS FOR THE SALE O F FLAT SINCE LAND WAS IN POSSESSION OF THE APPELLANT WHEN THE BUYER PURCHAS ED THE APARTMENT, SHE HAS RIGHTLY TRANSFERRED THAT PORTION OF THE LAND T O BUYERS. THE ASSET IN QUESTION THAT IS LAND WHETHER IT IS A BUSINESS OR CAPITAL ASSETS IS A QUESTION OF FACT AND THE FACTS ON RECORD IN THE INSTANT CAS E CORROBORATES THAT IT IS A CAPITAL ASSET AND THE PROFIT EARNED ON THE SAME I S LONG TERM CAPITAL GAINS. THE A.O. HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT LAND IN QUESTION WAS BUSINESS ASSET. CONSIDERING THE FACTU AL MATRIX OF THE CASE, THE CHRONOLOGY OF EVENTS AND SURROUNDING EVIDENCES, T HE AO IS DIRECTED TO TREAT THE PROFIT ON SALE OF LAND AS LONG TERM CAPI TAL GAINS. GROUND IS ALLOWED. ON THE SECOND ISSUE OF THE APPLICABILITY OF THE PR OVISIONS OF SECTION 54F, LEARNED CIT(APPEALS) HAS OPINED AS UNDER : THIS REMAND REPORT WAS GIVEN TO THE APPELLANT FO R THE SUBMISSION. THE APPELLANT IN ITS SUBMISSION FILED ON 20.11.201 1 ONLY REITERATED ITS SUBMISSION ON THE FIRST ISSUE, I.E., TAXABILITY OF LAND AS LONG TERM CAPITAL ASSET, BUT MADE NO SUBMISSION ON THE ISSUE OF 54F. THUS, IT C AN BE INFERRED THAT THE ASSESSEE HAS ACCEPTED THE CONTENTION OF T HE ASSESSING OFFICER THAT HE IS NOT ELIGIBLE FOR DEDUCTION U/S 54F. IN VIE W OF THIS FACT ON RECORD, AS THE ASSESSEE IS NOT FULFILLING THE MANDATED CONDIT IONS U/S 54F, THE CLAIM OF DEDUCTION U/S 54F OF THE APPELLANT IS REJECTED. GR OUND IS DISMISSED. 3. AT THE OUTSET, LEARNED A.R. MR. ALOK BHAGAT, HAS STRONGLY PLEADED THAT IT WAS WRONG ON THE PART OF LEARNED CIT(APPEALS) TO HO LD THAT THE ASSESSEE HAD ACCEPTED THE CONTENTION OF THE ASSESSING OFFICER TH AT THE DEDUCTION UNDER SECTION 54F WAS NOT ELIGIBLE. HE HAS DRAWN OUR ATTENTION ON THE SUBMISSIONS NOT ONLY MADE BEFORE THE ASSESSING OFFICER BUT ALSO MADE BEF ORE THE LEARNED CIT(APPEALS) FOR CLAIMING 54F DEDUCTION. IT HAS ALSO BEEN INFORM ED BY THE LEARNED A.R. THAT AS FAR AS THE ISSUE OF NATURE OF INCOME WAS CONCERNED, THE ASSESSING OFFICER HAS ASSESSED THE SAME UNDER THE HEAD BUSINESS INCOME BUT LEARNED CIT(APPEALS) 4 HAS ACCEPTED THE PLEA OF THE ASSESSEE AND TAXED THE SAME UNDER THE HEAD LONG TERM CAPITAL GAIN, WHICH IS NOT CHALLENGED BY THE REVENUE DEPARTMENT. FROM THE SIDE OF THE REVENUE, LEARNED D.R., MR. S. R. KIRTANE, APPEARED AND EXPRESSED THAT DUE TO NON AVAILABILITY OF THE RECOR DS HE CANNOT COMMENT THAT WHETHER AN APPEAL HAS BEEN FILED BY THE REVENUE DEP ARTMENT AGAINST THE SAID VIEW OF LEARNED CIT(APPEALS) DIRECTING THE ASSESSIN G OFFICER TO ASSESS INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN. IN RESPECT OF THE ISSUE AS RAISED BY THE ASSESSEE, HE HAS SUPPORTED THE VIEW TAKEN BY THE RE VENUE AUTHORITIES. 4. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. AT THE OUTSET, IT IS WORTH TO MENTION THAT IN RESPECT OF GROUNDS OF APPEAL PERTAI NING TO THE CLAIM OF DEDUCTION UNDER SECTION 54F THERE WAS INCOHERENCE IN THE IMPU GNED ORDER OF LEARNED CIT(APPEALS) BECAUSE ON ONE HAND ON PAGE 9 VIDE PAR A NO. 4 AND 4.1 THE ASSESSEE HAS RAKED UP THE ISSUE OF SECTION 54 BY FURNISHING THE CERTAIN CASE LAWS ETC., WHICH WAS ALSO FORWARDED TO THE ASSESSING OFFICER TO GET A REMAND REPORT ON THE ISSUE OF CLAIMS OF DEDUCTION U/S 54F OF I.T. ACT. THEREFORE, IN OUR OPINION, LEARNED CIT(APPEALS) HAS WRONGLY INFERRED THAT THE ASSESSEE HAD ACCEPTED THE CONTENTION OF THE ASSESSING OFFICER THAT THE DEDUCTION UNDER S ECTION 54F WAS INELIGIBLE TO THE ASSESSEE. THE FACTS OF THE CASE HAVE RATHER REVEALE D THAT THE ASSESSEE HAS SERIOUSLY CONTESTED THE CLAIM OF DEDUCTION UNDER SE CTION 54F NOT BEFORE THE ASSESSING OFFICER ALONE BUT ALSO BEFORE THE LEARNE D CIT(APPEALS). HENCE WE HEREBY HOLD THAT THE INFERENCE DRAWN BY THE LEARNED CIT(APPEALS) WAS INCORRECT T. HOWEVER, IN A SITUATION WHEN A DISCUSSION HAS BEEN MADE IN THE BODY OF IMPUGNED ORDER IN RESPECT OF CLAIM OF DEDUCTION U/S 54F OF I.T. ACT BUT THERE WAS NO FINDING BY THE LEARNED CIT(APPEALS) ON MERITS TH EN IN ALL FAIRNESS IT IS JUSTIFIABLE 5 TO RESTORE THIS ISSUE BACK TO THE FILE OF LEARNED C IT(APPEALS) TO DECIDE THIS ISSUE IN TERMS OF THE PROVISIONS OF SECTION 250(6) OF I.T. A CT BY DISPOSING THIS ISSUE STATING THE MERITS AS ALSO POINTS FOR DETERMINATION. SIDE BY SIDE, WE ALSO DIRECT THE ASSESSEE TO SUO MOTO APPEAR BEFORE THE LEARNED CIT( APPEALS) WITHIN 30 DAYS ON RECEIPT OF THIS ORDER OF THE TRIBUNAL WITHOUT WAITI NG FOR ANY NOTICE OF HEARING TO GET THIS APPEAL DECIDED AT AN EARLY DATE AND FILE REQUISITE INFORMATION. NEEDLESS TO SAY THE LEARNED CIT(APPEALS) IS OTHERWISE FREE T O TAKE LEGAL RECOURSE AS PER LAW TO GET THIS APPEAL DECIDED AT AN EARLY DATE. 5. RESULTANTLY, THE ISSUE OF THE ADMISSIBILITY OF C LAIM OF DEDUCTION UNDER SECTION 54F IS RESTORED BACK TO THE FILE OF LEARNED CIT(APPEALS) FOR DENOVO ADJUDICATION. HENCE THE GROUND RAISED MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES ONLY. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MAY, 2015. SD/- SD/- (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER. NAGPUR, DATED: 8 TH MAY, 2015. 6 COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. T RUE COPY. BY ORDER ASSISTAN T REGISTRAR, ITAT, NAGPUR WAKODE