M.Veeramuthu, CHENNAI V. ITO, Villupuram

ITA 1195/CHNY/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4970 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 25-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 19-05-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH JT
• Assessee Lawyers: N GOWTHAM CHAND
• Keywords: Business income; Deemed to accrue or arise in india; Cost of acquisition
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, CHENNAI , . , ! ' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ITA NO.1195 & 1196/MDS/2015 ! # $# / ASSESSMENT YEAR : 2009-10 & 2010-11 M.VEERAMUTHU, 20B, SALEM MAIN ROAD, KALLAKURICHI 606 202. [PAN: AKZPV 4373N] VS. INCOME TAX OFFICER, WARD-I(2), VILLUPURAM. ( /APPELLANT ) ( / RESPONDENT ) ./ITA NO.1247/MDS/2015 ! # $# / ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER, WARD-I(2), VILLUPURAM. VS. M.VEERAMUTHU, 20B, SALEM MAIN ROAD, KALLAKURICHI 606 202. [PAN: AKZPV 4373N] ( /APPELLANT ) ( / RESPONDENT ) %& ( ) / APPELLANT BY : SHRI N.GOWTHAM CHAND, CA *+%& ( ) / RESPONDENT BY : SHRI A.V.SREEKANTH, JT. CIT ( , / DATE OF HEARING : 25.01.2017 -$ ( , / DATE OF PRONOUNCEMENT : 13.04.2017 /O R D E R PER SANJAY ARORA, AM : THIS IS A SET OF TWO APPEALS BY THE ASSESSEE, AN INDIVIDUAL, FOR TWO CONSECUTIVE YEARS, I.E., ASSESSMENT YEARS (AYS.) 20 09-10 AND 2010-11, 2 ITA NOS.1195, 1196 & 1247 /MDS/2015 M.VEERAMUTHU V. ITO (AY 2009-10 & 2010-11) CONTESTING HIS ASSESSMENTS UNDER THE INCOME TAX ACT , 1961 (THE ACT HEREINAFTER), SINCE PARTLY CONFIRMED BY THE FIRST A PPELLATE AUTHORITY, BEING COMMISSIONER OF INCOME TAX (APPEALS), PUDUCHERRY ( CIT(A) FOR SHORT) OF EVEN DATE (27.02.2015). THE REVENUE IS ALSO IN APPE AL FOR AY 2010-11. THE ISSUE ARISING IN THESE APPEALS BEING COMMON, THE AP PEALS WERE POSTED FOR HEARING AND, ACCORDINGLY, HEARD TOGETHER, AND ARE B EING DISPOSED BY A COMMON ORDER. 2. AT THE VERY OUTSET, IT WAS OBSERVED BY THE BENCH THAT THE REVENUES APPEAL IS DELAYED BY A PERIOD OF SIX DAYS. THE CONDONATION PETITION IS ON RECORD. WE ARE SATISFIED WITH THE REASONS FOR THE DELAY AS STATED THEREIN. THE APPEAL WAS ACCORDINGLY ADMITTED AND THE HEARING OF THE APPEALS PROCEEDED WITH. THE FIRST AND THE PRINCIPAL ISSUE ARISING IN THE INSTANT CASE , WHICH IS FOR BOTH THE YEARS, IS THE COST OF THE PLOTS OF LAND (FORMING PART OF THE LAY OUT IN THE NAME AND STYLE JEEVAN NAGAR) SOLD BY THE ASSESSEE DURING THE REL EVANT YEARS. THE ASSESSEE, IN THE BUSINESS OF REAL ESTATE, WAS SUBJECT TO SURVEY U/S. 133A OF THE ACT ON 13.7.2010 AND HIS SWORN STATEMENT RECORDED THEREAT (COPY ON RECORD). THE ASSESSEE PER THE SAID STATEMENT PROVIDED THE PHYSIC AL AND THE FINANCIAL DETAILS OF THE ENTIRE TRANSACTION, WHICH WAS STATED TO BE IN R ESPECT OF 11.01 ACRES OF LAND RESULTING IN A SALEABLE AREA OF 2,72,689 SQ. FT., D IVIDED INTO 134 PLOTS, DETAILS OF WHICH ARE AS UNDER: SOURCE OF INFORMATION TOTAL EXTENT OF LAND IN THE LAYOUT - IN ACRES CONVERSION CRITERIA TOTAL EXTENT OF LANDS IN THE LAYOUT IN SQ.FT. STATEMENT RELATING TO AY 2010-11 FILED ALONG WITH RETURN FOR AY 2009-10 11.01 ACRES 1 ACRE = 100 CENTS 1 CENT = 436 SQ.FT. 480145 SQ.FT. LESS : AREA LEFT FOR PATH 100527 SQ.FT. BALANCE 379618 SQ.FT. LESS : ACQUISITION BY HIGHWAYS 106829 SQ.FT. BALANCE : AREA COVERED BY 134 PLOTS 272689 SQ.FT. 3 ITA NOS.1195, 1196 & 1247 /MDS/2015 M.VEERAMUTHU V. ITO (AY 2009-10 & 2010-11) BREAK-UP OF 134 PLOTS SOURCE OF INFORMATION SIZE OF THE PLOTS IN SQ.FT. NUMBER OF PLOTS TOTAL AREA IN SQ.FT. SWORN STATEMENT 1200 36 43200 1742 29 50518 1456 7 10192 RETURN DIFFERENT SIZES 62 168779 TOTAL 134 272689 3. THE ASSESSEE CLAIMS THE COST OF THE PLOTS SOLD D URING THE RELEVANT YEARS, BEING 2 (TWO) AND 70 (SEVENTY) FOR THE TWO CONSECUT IVE YEARS RESPECTIVELY, AT . 72.25 PER SQ.FT. ( . 31,500/- PER CENT) AS AGAINST . 8 ADOPTED BY THE ASSESSING OFFICER (AO). THE SALE CONSIDERATION OF THE SUBJEC T PLOTS IS TAKEN AT . 147 PER SQ.FT. PER THE SWORN STATEMENT, I.E., AS AGAINST TH E STATED CONSIDERATION OF . 10 AND . 20 (FOR AYS. 2009-10 AND 2010-11 RESPECTIVELY), T HE COST PRICE MUST THEREFORE ALSO BE TAKEN AS PER THE SAME STATEMENT. NOT SO DOING RESULTS IN AN UNDERSTATEMENT OF COST BY . 5,33,950 AND . 73,57,970, I.E., IN RESPECT OF 8311 SQ.FT. (19.062 CENTS) AND 114525 (262.672 CENTS) SO LD DURING THE PREVIOUS YEARS RELEVANT TO AYS. 2009-10 AND 2010-11 RESPECTIVELY. THIS REPRESENTS THE ASSESSEES CASE AS MADE OUT BEFORE US AS WELL AS TH E REVENUE AUTHORITIES. THE REVENUE, HOWEVER, DECLINES THE ASSESSEES CLAIM ON THE GROUND OF IT BEING WHOLLY UN-EVIDENCED. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE M ATERIAL ON RECORD. 4.1 THE ASSESSEES CASE IS, IN PRINCIPLE, UNEXCEPTI ONAL. ADMISSION IS THE BEST FORM OF EVIDENCE. IF THE SALE CONSIDERATION ON THE SALE OF PLOTS IS TAKEN AT AN ENHANCED SUM, CLAIMED TO BE PER THE SWORN STATEMENT , THE COST PRICE OF THE RELEVANT PLOTS MUST, LIKEWISE, ALSO BE PER THE SAME STATEMENT. NOT DOING SO WOULD IMPLY THAT THE REVENUE IS ACCEPTING IT IN PAR T. AND, FURTHER, WITHOUT 4 ITA NOS.1195, 1196 & 1247 /MDS/2015 M.VEERAMUTHU V. ITO (AY 2009-10 & 2010-11) ASSIGNING ANY REASON. IN OTHER WORDS, THE STATEMENT , WHICH REMAINS UNRETRACTED, IS RELIABLE EVIDENCE, HAVING BEEN IN FACT, AS CLAIM ED, ACCEPTED BY THE REVENUE ITSELF AS REGARDS THE SALE PART OF THE TRANSACTION IS CONCERNED. THIS IS RATHER AMUSING IN-AS-MUCH AS IT IS THE ASSESSEE WHO PLEADS ACCEPTANCE OF HIS STATEMENT, WHILE NORMALLY IT IS THE REVENUE WHO INSISTS ON REL YING ON THE SAME. THE UNMISTAKABLE INFERENCE, IN ANY CASE, IS THAT THE ST ATEMENT IS NOT INFLICTED WITH ANY INFIRMITY, NOR IS ANY CLAIMED AT ANY STAGE. 4.2 WE MAY NEXT CONSIDER THE SPECIFICS OF THE CASE, SO AS TO EXAMINE IF WHAT THE ASSESSEE STATES IS FACTUALLY CORRECT. IN THIS R EGARD, HIS CLAIM BEING BASED ON HIS STATEMENT DATED 13.7.2010, THE RELEVANT PART TH EREOF IS REPRODUCED AS UNDER: Q6. EXPLAIN ABOUT REAL ESTATE BUSINESS WHICH YOU ARE DO ING FOR THE PAST 4 YEARS. IN THE FINANCIAL YEAR 2008 - 09 PLOTS WERE LAID IN LAND AREA AT JEEVAN NAGAR. DE TAILS ARE FURNISHED BELOW DATE PURCHASER AREA RATE TOTAL 1 1 . 07.2008 SAROJKUMAR, S/O. BABU DHANRAJ 3.48 ACRES 1200/ - PER CENT 417600.00 13 . 07 . 2010 SARATHY & PANEER 2.69 ACRES 1100/ - 335500.00 22 . 12.2008 KALAYA MOORTHY 4.22 ACRES 1200/ - 468000 . 00 30 . 02.2008 SELVA NAVAGAM 62 CENTS 1500/ - 93000.00 TOTAL 1190800 . 00 STAMP DUTY @ 8% 95000 . 00 OTHER EXPENSES 20000 . 00 COMMISSION 23000 . 00 COST OF LAYING PLOTS 712500 . 00 TOTAL 2177350 . 00 Q 7 . IN THE ABOVE REFE RR ED AREA HOW MANY PLOTS ARE LAID 36 PLOTS OF 1200 SQUARE FEET, 29 PLOTS OF 1742 SQUA RE FEET, 7 PLOTS OF 1456 SQUARE FEET AND THE BALANCE WITH A LARGE AREA. THUS IN TOTAL 120 PLOTS Q8 . OUT OF THE 120 PLOTS HOW MANY ARE SOLD . FURNISH MORE DETAILS PLOT NO SQUARE FEET TOTAL SQ .FEET TO TAL 24 1200 28800 94 X .02 X 65000 6110000. 0 0 7 1742 12194 12 1742 20904 50 X 25000 X 3750000. 0 0 5 1456 7280 17 X 75000 1275000. 0 0 5 ITA NOS.1195, 1196 & 1247 /MDS/2015 M.VEERAMUTHU V. ITO (AY 2009-10 & 2010-11) 1 1200 1200 14.30 X 31500 450765.0 0 2 2520 5040 TOTAL 11575765.00 DETAILS OF PLOTS SOLD TO FRIENDS AT [COST PRICE]. PLOT NO. SQARE FEET TOTAL SQUARE FEET 8 1200 9600 3 1 800 5400 9 1742 15678 2 3072 6144 4 21913 TOTAL 58735 (135 CENTS) 135 CENTS @ 31500 4252500.00 TOTAL SALE PROCEEDS = 15838265/ - Q9 . GIVE DETAILS OF EXPENSES INCURRED IN THE SALE OF PL OTS REFERRED ABOVE. BROKERS COMMISSION OF 2 % AMOUNTING TO RS.232000/- WAS PAID FROM THE SALE PROCEEDS. Q10 . SUMMARY OF YOUR ANSWERS: Q11 . FOR THE SALE OF PLOTS MENTIONED HAVE YOU INCURRED A NY OTHER E X PENSES. APART FROM THE EXPENSE S MENTIONED ABOVE I HAVE INCURRED RS. 15,00,000/- TOWARDS PLOT AP P ROVAL, REG I STRATION, SURFACING WITH GRAVEL AND OTHER RELATED E XPENSES. 4.3 TO BEGIN WITH, THE MATTER IS PRINCIPALLY FACTUA L. THE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT, AS ALSO CLARIFIED BY HIM IN ANSWER TO Q.4 OF HIS STATEMENT. THE (AVERAGE) SALE RATE ACCEPTED BY THE REVENUE IS AT . 118 PER SQ.FT., AND NOT . 147 PER SQ.FT., AS STATED BY THE LD. AR DURING HE ARING. 4.4 THE COMPUTATION OF THE COST PRICE IS BASED ON T HE FIGURES STATED IN ANSWER TO Q.6, COMPUTING THE TOTAL PURCHASE COST AT . 21,77,350/- , I.E., FOR THE ENTIRE 11.01 ACRES, AS UNDER: PURCHASE COST OF 120 PLOTS 2040500.00 PURCHASE COST OF 77 PLOTS 1500000 . 00 COMMISSION@ 2% (AS PER ANSWER TO QUESTION 9 ) 232000.00 TOTAL COST 1732000.00 SALE P ROCEEDS(ANSWER TO QUESTION 8) 15838265.00 PROF I T EARNED 14106265.00 6 ITA NOS.1195, 1196 & 1247 /MDS/2015 M.VEERAMUTHU V. ITO (AY 2009-10 & 2010-11) SL. NO. LANDS PURCHASED FROM EXTENT RATE(RS.) COST (RS.) 1. SMT. SARAJ KUMARI W/O SHRI BANU DHANARAJ 3.48 ACRES 1200/- PER ACRE 4,17,600 2. SHRI SARATHY AND SHRI PANNEERSELVAM 2.69 ACRES 1100/- PER ACRE 2,95,900 3. SMT. SAVITHI W/O SHRI KALIYAMOORTHY AND OTHERS 4.22 ACRES 1200/- PER ACRE 5,07,000 4. SHRI SELVANAYAGAM 62 CENTS 1500/- PER CENT 93,000 TOTAL 11.01 ACRES 13,13,500 ADD : COMMISSION @ 2% ON RS.13,13,500/- 26,270 ADD : STAMP DUTY @ 8% ON 1,05,080 ADD : REGISTRATION CHARGES ETC. 20,000 ADD : ROAD LAYING AND STONING EXPENSES 7,12,500 TOTAL VALUE OF THE LANDS PURCHASES 21,77,350 IT IS THIS COST THAT HAS BEEN TAKEN INTO ACCOUNT IN ARRIVING AT THE COST PRICE OF . 8 (PER SQ.FT.) OR . 3481 (PER CENT) BY THE AO, AS UNDER: COST PER SQ.FT. = RS.21,77,350 DIVIDED BY 272689 SQ .FT. = RS.7.98 (OR RS.8) COST PER CENT = RS.21,77,350 DIVIDED BY 625.43 CENT S = RS.3481/- THE SAME IS, FURTHER, IN AGREEMENT WITH THE SUMMARI ZED DATA AT Q.10, WHEREBY, THUS, THE VERACITY OF THE FACTS AND FIGURE S STATED IN THE EARLIER PART OF THE STATEMENT, AS WELL AS THE CALCULATIONS, STAND C ONFIRMED. THE TOTAL PURCHASE COST IS ALSO CONFIRMED ON THE BASIS OF THE BROKERAG E FIGURE (OF 2 PERCENT), AT . 26,270/-. THE COST OF . 21,77,350/- (IN Q.6) IS IN AGREEMENT WITH THE FIG URE OF . 20,40,500/- (IN Q.10), WHEN THE COST OF STAMP DUT Y, COMMISSION AND OTHER EXPENSES (AT A TOTAL OF . 1,38,000/-) IS EXCLUDED. THE SAID REDUCTION/EXCLU SION THOUGH IS OF NO CONSEQUENCE AS THE PURCHASE COST, A S AFORE-STATED, HAS BEEN TAKEN AT . 21,77,350/-, IMPLYING THE INCLUSION OF THE SAID C OSTS. WE STATE OF THE SAID AGREEMENT WITH A VIEW TO EMPHASIZE THAT THE ST ATEMENT IS INTERNALLY CONSISTENT, ALSO EXHIBITING FULL CONCIOUSNESS OF TH E DEPONENT . IN FACT, THE ASSESSEE HAS CLAIMED A FURTHER SUM OF . 17.32 LACS BY WAY OF COST OF DEVELOPMENT, AND WHICH IS THE SUBJECT MATTER OF THE REVENUES APPEAL, HAVING 7 ITA NOS.1195, 1196 & 1247 /MDS/2015 M.VEERAMUTHU V. ITO (AY 2009-10 & 2010-11) BEEN SINCE ALLOWED BY THE LD. CIT(A). HOW COULD THEN, WE WONDER, THE ASSESSEE BE AGGRIEVED ? IT IS HE WHO IS THUS RESILING FROM HIS STATEMENT, RATHER THAN THE REVENUE DECLINING TO GIVE CREDENCE THERETO, AS PROJ ECTED BY THE LD. AR DURING HEARING. WE, NO DOUBT, OBSERVE TWO DIFFERENCES BETW EEN THE STATEMENT AND THE ASSESSMENT ORDER. FIRST, WHILE THE ASSESSEE STATES THE NUMBER OF PLOTS AT 120, THE ASSESSMENT ORDER RECORDS THE SAME AT 134. THE SAME IS ONLY AS PER THE RETURN AND, IN FACT, HAS THE EFFECT OF REDUCING THE SALE P RICE (PER PLOT) AND, THUS, THE PROFIT FURTHER IN-AS-MUCH AS THE NUMBER OF PLOTS SO LD (FOR THE TWO YEARS) REMAIN THE SAME. THE DIFFERENCE IS IN FACT INCONSEQUENTIAL AS THE QUANTUM (IN TERMS OF SQ. FT.) IS THE SAME AND, FURTHER, ONLY AS PER THE RETURN. TWO, WHILE THE STATEMENT REFLECTS THE NUMBER OF PLOTS SOLD AT 77 (REFER Q.10 ), THE ASSESSMENT ORDER STATES THE SAME AT 72, AGAIN, AS RETURNED. THIS IS AS THE SALE FIGURE IS UP TO 13.7.2010, THE DATE OF THE STATEMENT, SO THAT, AS IT APPEARS, 5 PLOTS STAND SOLD SUBSEQUENT TO 31.3.2010, I.E., AFTER THE CLOSE OF THE LATER OF TH E TWO YEARS UNDER REFERENCE. COMING BACK TO THE QUESTION OF HOW, THEN, IS THE AS SESSEE AGGRIEVED, I.E., WHEN THE REVENUE HAS ADOPTED HIS OWN STATEMENT, WHICH TH E ASSESSEE ALSO RELIES UPON, WE OBSERVE THAT THE BASIS OF THE ASSESSEES GRIEVAN CE IS THE WORDS COST PRICE, WRITTEN BY HAND, AFTER THE WORDS DETAILS OF PLOTS SOLD TO FRIENDS AT IN ANSWER TO Q.8 (OF THE TYPED STATEMENT). ON THAT BASIS THE ASS ESSEE CLAIMS THE SALE TO FRIENDS TO BE AT COST, SO THAT THE SAME, AT . 31,500/- PER CENT, REPRESENTS THE ASSESSEES COST PRICE. WE ARE COMPLETELY AT LOSS TO UNDERSTAND THE ASSESSE ES CASE. THE WORDS COST PRICE ARE ADDED BY HAND IN THE TYPED STATEME NT, AND WHICH RAISES A SERIOUS DOUBT AS TO ITS GENUINENESS. THE SAME HAVE NOT BEEN SHOWN TO BE A PART OF THE ORIGINAL STATEMENT, TYPED COPY OF WHICH IS PLACED O N RECORD. SURPRISINGLY, THIS (Q.8) IS NOT FOLLOWED BY ANY QUESTION AS TO COST, W HICH IS EXTREMELY UNLIKELY CONSIDERING THAT THE SAID COST ( . 31,500/- PER CENT) IS AT HUGE VARIANCE WITH THAT STATED EARLIER (IN ANSWER TO Q.6), WHICH WORKS TO, AS AFORE-STATED, . 3481 PER 8 ITA NOS.1195, 1196 & 1247 /MDS/2015 M.VEERAMUTHU V. ITO (AY 2009-10 & 2010-11) CENT, I.E., AT A MERE 11% OF THE COST BEING CLAIMED AS INCURRED BY THE ASSESSEE. THIS IS INCOMPREHENSIBLE INDEED, I.E., IF THE ASSES SEE HAD ACTUALLY STATED COST PRICE IN ANSWER TO Q.8. Q.8 PROFILES THE SALES DA TA, VIZ. PLOT SIZE-WISE, AS WELL AS CUSTOMER-WISE AND, ACCORDINGLY, CANNOT BE REGARD ED AS AN INDICATION OF THE COST PRICE. THE STATEMENT DOES NOT EXPLICITLY SATE OF THE SALE TO FRIENDS BEING AT COST. FURTHER, THE ASSESSEE NOWHERE EXPLAINS THE BA SIS OF THE SAID COST PRICE, WHICH IS, AS AFORE-EXPLAINED, WITHOUT REFERENCE TO ANY QUESTION IN THE STATEMENT, I.E., DE HORS THE SAME, AND COULD ONLY BE COMPUTED BY AGGREGATIN G THE VARIOUS COSTS AND ALLOCATING THE SAME OVER THE AREA FINALLY AVAILABLE FOR SALE. WHY, THE ASSESSEE WOULD, IN CASE OF HAVING INCURRED A HIGHER COST, FURNISH THE RELEVANT DETAILS, AS INDEED DONE IN ANSWER TO Q.6. IN FACT, THE ASSESSEE, BY SO STATING, CONTRADICTS HIS OWN STATEMENT, FOUND BY US AS INTER NALLY CONSISTENT, SO THAT IT IS HE WHO WHILE RELYING THEREON (FOR THE SALE PART), S EEKS IT BEING IGNORED FOR THE OTHER PART IN-AS-MUCH AS THE COST STANDS COMPUTED I N THE VERY SAME STATEMENT (AT Q.6), AND WHICH THE REVENUE ADOPTS. WE HAVE HEREINB EFORE, GOING BY THE VARIOUS FACTS AND FIGURES SUPPLIED, WHICH ARE IN AG REEMENT, EVEN AS STATED IN DIFFERENT CONTEXTS, WITH ANSWER TO Q.10 SUMMARIZING THE DATA FURNISHED VIDE ANSWERS TO THE EARLIER QUESTIONS, OBSERVED THE STAT EMENT TO BE DELIVERED IN FULL CONSCIOUSNESS. THIS ALSO ASSUMES RELEVANCE AS PROFI T (ON THE SALE OF 77 PLOTS) IS COMPUTED THEREAT, AT . 141.06 LACS. HOW COULD THE ASSESSEE VALIDATE THE SAME WHEN THE COST TAKEN FOR THE PURPOSE IS, AS NOW CLAI MED, A SMALL FRACTION OF THE ACTUAL COST. THE OVERALL SALE PRICE CHARGED TO FRIE NDS, WHICH WORKS TO . 72.40 PER SQ.FT., IS LOWER THAN THAT OBTAINING FOR OTHERS , I.E, . 153.49 PER SQ.FT. (REFER Q.8). THE REVENUE HAS, BY ACCEPTING THE SAME (EVEN AS STATED BY THE LD. CIT(A)), GIVEN DEFERENCE TO THE ASSESSEES CLAIM (M ADE IN ANSWER TO Q.8) OF THE SALE TO FRIENDS BEING AT A HEAVY DISCOUNT WHICH, AS SHALL BE APPARENT, WORKS TO A HEALTHY FIGURE OF . 81.09 PER SQ.FT., OR AT NEARLY 53 PERCENT (TAKING THE OVERALL SALE RATE FOR OTHERS AS THE BASE RATE). THE ASSESSE ES CASE IS MISLEADING, IF NOT 9 ITA NOS.1195, 1196 & 1247 /MDS/2015 M.VEERAMUTHU V. ITO (AY 2009-10 & 2010-11) FALSE. WE, ACCORDINGLY, THOUGH IN AGREEMENT WITH TH E ASSESSEE IN PRINCIPLE, FIND NO MERIT IN HIS CASE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.5 WE MAY LOOK AT THE MATTER FROM ANOTHER ANGLE. T HE TOTAL ENHANCED COST WORKS TO .175.61 LACS, I.E., 2,72,689 SQ.FT. @ . 64.40 PER SQ.FT. (IN-AS-MUCH AS THE ADDITIONAL COST PER UNIT BEING CLAIMED IS AT . 64.40 PER SQ.FT. ( . 72.40 PER SQ.FT. . 8 PER SQ.FT.)). WHILE THE ASSESSEE, WHO STARTED T HE REAL ESTATE BUSINESS ONLY FOUR YEARS BACK (REFER ANSWER TO Q.2, AND Q.6) AND HAS NOT FILED ANY RETURN FOR ASSESSMENT YEAR 2009-10 (UP TO 13.7.2010), COUL D BE REGARDED AS HAVING A CAPITAL OF . 20-22 LACS TO FUND THE PURCHASE, THE ADDITIONAL S UM OF OVER . 175 LACS SHALL DEFINITELY NEED TO BE EXHIBITED, OF WHIC H THERE IS NO WHISPER AT ANY STAGE. THE ASSESSEE IS ADMITTEDLY NOT MAINTAINING A NY BOOKS OF ACCOUNT. THERE IS NOT AN IOTA OF EVIDENCE SUGGESTING THE ASSESSEE AS HAVING THE REQUISITE CAPITAL, I.E., FROM DISCLOSED SOURCE/S OF INCOME. THAT BEING THE CASE, THE ENTIRE ADDITIONAL COST OF . 175.6 LACS WOULD STAND TO BE ASSESSED FOR THE CUR RENT YEAR, BEING THE COST INCURRED AND PAID, AS UNEXPLAINED ASSET/INVEST MENT U/S. 69/69A. IN FACT, THIS IS PRECISELY WHAT THE REVENUE ARGUES WHEN IT STATES OF THE ASSESSEES CASE BEING WHOLLY UN-EVIDENCED. IN OTHER WORDS, EVEN IF THE PR OFIT RATE ON THE ACTIVITY OF PURCHASE OF LAND AND ITS SUBSEQUENT SALE UPON PLOT TING, ESSENTIALLY A TRADING ACTIVITY, I.E., RETAIL IN LAND, IS REGARDED AS ABNO RMAL, AS PLOT PRICES WOULD HAVE A CORRELATION WITH THE LAND PRICE, EVEN AS THAT (PROF IT RATE) CANNOT BE BY ITSELF REGARDED AS CONCLUSIVE; THE SAME BEING DEPENDENT O N A VARIETY OF FACTORS AND, BESIDES, ARRIVED AT ONLY ON THE BASIS OF ASSESSEES EVIDENCE, YET, THERE BEING NO SOURCE DISCLOSED BY THE ASSESSEE TO FUND THE SAME ( I.E., THE ADDITIONAL COST), IT IS TO BE NECESSARILY REGARDED AS UNEXPLAINED. AND FURT HER, WOULD STAND TO BE BROUGHT TO TAX IN ITS ENTIRETY (I.E., . 175.61 LACS) AS DEEMED INCOME FOR THE CURRENT YEAR, I.E., IN WHICH THE PURCHASE COST HAS BEEN ADMITTEDLY INCURRED, AS AGAINST THAT INCURRED IN EXCESS ONLY IN RESPECT OF THE LAND SOLD. THE TWO, IT MAY 10 ITA NOS.1195, 1196 & 1247 /MDS/2015 M.VEERAMUTHU V. ITO (AY 2009-10 & 2010-11) BE APPRECIATED, ARE PARI MATERIA , AND REPRESENT TWO ASPECTS OF THE TRANSACTION, WITH THE REVENUE SEEKING TO BRING THE UNEXPLAINED S UM/S TO TAX, WHETHER AS PART OF COST OR PROFIT. AS SUCH, CONSIDERED EITHER WAY, THE ASSESSEE HAS NO CASE AND, RATHER, THE REVENUE HAS ADOPTED A LESS RIGOROUS APP ROACH. WE DO NOT WISH TO DISTURB THE SAME EVEN AS IT IS THE CORRECT LEGAL PO SITION THAT IS RELEVANT, AND NOT THE VIEW THAT THE PARTIES MAY TAKE OF THEIR RIGHTS IN THE MATTER ( CIT V. C. PARAKH & CO. (INDIA ) LTD . (1956) 29 ITR 661 (SC); KEDARNATH JUTE MFG. CO. LTD. V. CIT (1971) 82 ITR 363 (SC)), THOUGH, NEVERTHELESS, DRA W FULL SUPPORT AND ENDORSEMENT OF OUR CONFIRMATION OF THE REVENUES AC TION THERE-FROM. WE DECIDE ACCORDINGLY. 5. COMING TO THE REVENUES APPEAL, THE SAME RELATES TO THE ALLOWANCE OF THE ASSESSEES CLAIM OF HAVING INCURRED A DEVELOPMENT C OST OF . 15 LACS, AS WELL AS INCURRED COMMISSION EXPENDITURE ON SALE OF THE PLOT S AT . 2.32 LACS, SO THAT HIS PROFIT, AS COMPUTED BY THE AO, OUGHT TO BE REDUCED BY A SUM OF . 17.32 LACS. THE COST OF . 15 LACS STANDS STATED AS INCURRED FOR THE PURPOSE IN ANSWER TO Q.11 OF THE STATEMENT. WE HAVE ALREADY, IN THE CONTEXT O F THE ASSESSEES APPEAL, UPHELD HIS STATEMENT DURING SURVEY AS A VALID BASIS FOR COMPUTING THE ASSESSEES BUSINESS INCOME ON THE SALE OF JEEVAN NAGAR PLOTS ( OF LAND). THE CLAIM FOR COMMISSION ON SALE IS ALSO VERY REASONABLE, AND IN CONFORMITY WITH THE FACT THAT THE SALE IN REAL ESTATE NORMALLY TAKES PLACE THROUG H THE AGENCY OF BROKERS WHO CHARGE A COMMISSION FOR THEIR SERVICES. WHY, THE RE VENUE HAS ITSELF ALLOWED COMMISSION (AT . 26,270) ON THE PURCHASE OF LAND. WE, ACCORDINGLY, FIND NO INFIRMITY IN THE ASSESSEES CLAIMS. SO, HOWEVER, W E OBSERVE THAT THE ASSESSEE HAS ALREADY BEEN ALLOWED A SUM OF . 7,12,500/- AS ROAD LAYING AND STONING EXPENSES (REFER ANSWER TO Q.6 & PARA 4.5). THE ASSE SSEES CLAIM QUA THE ENHANCED COST WOULD THEREFORE STAND TO BE RESTRICTE D TO THE BALANCE . 7.875 LACS (I.E., . 15 LACS MINUS . 7.125 LACS). THE COST PRICE OF LAND (FOR BOTH THE YEARS) 11 ITA NOS.1195, 1196 & 1247 /MDS/2015 M.VEERAMUTHU V. ITO (AY 2009-10 & 2010-11) SHALL ACCORDINGLY BE WORKED OUT BY THE AO BY TAKING THE ROAD LAYING COST AT . 15 LACS INSTEAD OF . 7,12,500/-. AS REGARDS THE CLAIM FOR COMMISSION ( ON SALES), THE SAME IS, IN PRINCIPLE, ALLOWABLE, FINDING IN FA CT MENTION IN Q.10. IT IS, HOWEVER, NOT CLEAR IF THE SAME HAS BEEN ALREADY ALL OWED IN-AS-MUCH AS THE AO HAS DISTURBED ONLY THE COST, SO THAT ALL OTHER EXPE NSES, AS CLAIMED, STAND ALLOWED, EVEN AS EXPLICITLY STATED (AT PG.4) IN THE ASSESSME NT ORDER FOR AY 2009-10. THE AO SHALL VERIFY THIS ASPECT, AND IF AND TO THE EXTE NT NOT ALREADY ALLOWED, SHALL DO SO. AGAIN, THE SAME IS NOT DEVELOPMENT COST, SO THA T IT SHALL, INSTEAD OF A STRAIGHT DEDUCTION, BE ALLOWED ON A PROPORTIONATE BASIS, I.E ., AT 2% OF THE SALES FOR THE YEAR. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEALS ARE DISMIS SED AND REVENUES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON APRIL 13, 2017 AT CHENNAI . SD/- SD/- ( . ) ( ) (G. PAVAN KUMAR) (SANJAY ARORA) ! /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, . /DATED, APRIL 13 TH , 2017. EDN / ( *!,01 21$, /COPY TO: 1. %& /APPELLANT 2. *+%& /RESPONDENT 3. 3, ( )/CIT(A) 4. 3, /CIT 5. 145 *!,! /DR 6. 56# 7 /GF