D.Yasodha, CHENNAI V. Additional CIT, CHENNAI

ITA 1242/CHNY/2011

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4904 (ITAT-CHENNAI)
• Duration Of Justice: 6 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-08-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 05-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M N MAURYA
• Assessee Lawyers: K HEMALATHA
• Keywords: Capital asset; Deemed to accrue or arise in india; Speculation loss; Competent authority
• Section: 143(3); 2(14)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! ' . #$ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.1242/MDS/2011 ( / ASSESSMENT YEAR: 2007-08) SMT. D. YASODHA, NO.46-49, ROYAPETTAH HIGH SCHOOL, ROYAPETTAH, CHENNAI 34. VS THE ADDITIONAL COMMISSIONER OF INCOME TAX, BUSINESS RANGE IX, CHENNAI. PAN: AAVPY0203A ( /APPELLANT) ( /RESPONDENT) ./ I.T.A.NOS.1387/MDS/2011 & 1124/MDS/2012 ( / ASSESSMENT YEARS: 2007-08 & 2008-09) THE ASST. COMMISSIONER OF INCOME TAX, BUSINESS RANGE IX, CHENNAI. VS SMT. D. YASODHA, NO.46-49, ROYAPETTAH HIGH SCHOOL, ROYAPETTAH, CHENNAI 34. PAN: AAVPY0203A ( /APPELLANT) ( /RESPONDENT) /ASSESSEE BY : MS. K. HEMALATHA, CA /REVENUE BY : SHRI M.N. MAURYA, CIT !' /DATE OF HEARING : 13.12.2017 #$!' /DATE OF PRONOUNCEMENT : 30.01.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE APPEALS BY THE ASSESSEE AND REVENUE ARE ARISI NG OUT OF THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME 2 ITA NO.1242&1387/MDS /2011 & ITA 1124/MDS/2012 TAX (APPEALS)-IX, CHENNAI DATED 03.05.2011 IN ITA N O.105/09- 10 FOR THE ASSESSMENT YEAR 2007-08 PASSED U/S.250(6 ) R.W.S. 143(3) OF THE ACT. THE REVENUE HAS RAISED AN APPEAL AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX( APPEALS) IX DATED 27.02.2012 IN ITA NO.224/10-11 FOR THE A SSESSMENT YEAR 2008-09 PASSED U/S.250(6) R.W.S. 143(3) & 148 OF THE ACT 2. ASSESSEES APPEAL IN ITA NO.1242 OF 2011 FOR THE ASSESSMENT YEAR 2007-08: THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPE AL AND THEY ARE CONCISELY STATED HEREIN BELOW FOR ADJUDICATION: - (I) THE LD.CIT(A) HAS ERRED IN ENHANCING THE INCOME OF RS.3,65,00,000/- UNDER THE HEAD INCOME FROM OTHER SOURCE, THOUGH THE AMOUNT WAS RECEIVED & RETAINED B Y THE ASSESSEES POWER OF ATTORNEY HOLDER SHRI BALAJI. (II) THE LD.CIT(A) HAS ERRED IN DISALLOWING THE EXP ENDITURE INCURRED FOR RS.2,95,37,787/- WHICH WAS DEBITED TO THE ASSESSEES ACCOUNT BY M/S. EXIM RAJATHI INDIA PVT. LTD., IN ITS BOOKS, TOWARDS SHIPMENT MADE ON 26.12.2005 BY 3 ITA NO.1242&1387/MDS /2011 & ITA 1124/MDS/2012 HOLDING THAT IT PERTAINS TO FINANCIAL YEAR 2005-06 AND NOT 2006-07. (III) THE LD.CIT(A) HAS ERRED IN SUSTAINING THE DIS ALLOWANCE OF RS.34,00,000/- WITH RESPECT TO EXPENSES RELATING TO CHILLY EXPORTS. (IV) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ORDE R OF LD.AO WHO HAD TREATED THE SALE OF AGRICULTURAL LAND AS NO N- AGRICULTURE LAND AND THEREBY COMPUTED SHORT TERM CA PITAL GAINS OF RS.10,12,00,000/- IN THE HANDS OF THE ASSE SSEE. 3. REVENUES APPEAL:- A) ITA NO.1387 OF 2011 FOR THE ASSESSMENT YEAR 2007 -08 THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APP EAL HOWEVER THE CRUXES OF THE ISSUES ARE THAT:- (I) THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITIO N MADE BY THE LD.AO AMOUNTING TO RS.61,15,180/- TOWARDS DISALLOWANCE OF THE CLAIM OF LOSS ON FOREIGN EXCHAN GE IN THE FORWARD CONTRACT TRANSACTION. (II) THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON MADE BY THE LD.AO AMOUNTING TO RS.3,86,56,582/- OUT OF THE TOTAL 4 ITA NO.1242&1387/MDS /2011 & ITA 1124/MDS/2012 ADDITION OF RS.6,81,94,369/- TOWARDS DISALLOWANCE O F GENERAL EXPENSES INCURRED IN EXPORT OF IRON ORE. (III) THE LD.CIT(A) HAS ERRED IN RESTRICTING THE DI SALLOWANCE OF RS.2,40,00,000/- TO RS.34,00,000/- TOWARDS GENERAL EXPENSES IN RESPECT OF CHILLY EXPORTS. (IV) THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.1,37,90,526/- OUT OF TOTAL ADDITION OF RS.1,38,0 0,156/- MADE BY THE LD.AO TOWARDS DISALLOWANCE OF INTEREST. B) ITA NO.1124 OF 2012 FOR THE ASSESSMENT YEAR 2008 -09:- THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APP EAL HOWEVER THE CRUXES OF THE ISSUE ARE THAT:- (I) THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITIO N MADE BY THE LD.AO OF RS.5,00,000/- TOWARDS INADEQUATE DRAWI NGS. (II) THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.1,44,00,000/- U/S.40(A)(IA) OF THE ACT, TOWARDS FREIGHT CHARGES PAID WITHOUT DEDUCTING TAX AT SOURCE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF EXPORT OF IRO N ORE, CHILLY, & 5 ITA NO.1242&1387/MDS /2011 & ITA 1124/MDS/2012 ONION, FILED HER RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2007-08 & 2008-09 ON 31.10.2007 & 27.09.2008 ADMITT ING TOTAL INCOME OF RS.1,15,75,020/- & RS.60,15,119/- RESPECT IVELY. INITIALLY THE RETURN WAS PROCESSED U/S.143(1) OF TH E ACT AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UND ER CASS. THE ASSESSMENT ORDER WAS PASSED FOR THE ASSESSMENT YEAR 2007-08 U/S 143(3) OF THE ACT ON 24.12.2009 AND FOR THE ASSESSMENT YEAR 2008-09 U/S.143(3) R.W.S 148 OF THE ACT ON 27.12.2010, WHEREIN THE LD.AO MADE SEVERAL ADDITION S. ASSESSEES APPEAL: 5. GROUND NO.2(I) : ENHANCEMENT OF INCOME AMOUNTING TO RS.3,60,00,000/- BY THE LD.CIT(A) TOWARDS 50% OF TH E COMPENSATION RECEIVED FROM M/S. CARMEN BUILDERS PVT . LTD.:- THE LD.CIT(A) HAD TREATED THE AMOUNT OF RS.3,60,0 0,000/- AS THE DEEMED INCOME OF THE ASSESSEE AND THEREBY EN HANCED HER INCOME UNDER THE HEAD INCOME FROM OTHER SOURCE WH ICH WAS ACTUALLY RECEIVED BY THE POWER OF ATTORNEY HOLDER O F THE ASSESSEE SHRI BALAJI TOWARDS COMPENSATION RECEIVED FROM M/S. CARMEN BUILDERS PVT. LTD., THOUGH NOT PAID TO THE ASSESSEE , ON THE 6 ITA NO.1242&1387/MDS /2011 & ITA 1124/MDS/2012 PREMISES THAT ONCE POWER GIVEN TO THE POWER HOLDER ON BEHALF OF THE PERSON CONCERNED THEN WHATEVER ACTIONS DONE BY THE POWER HOLDER ACTUALLY WILL ATTRACT AGAINST THE PERSON WHO HAD GIVEN POWER OF ATTORNEY. 5.1 AT THE OUTSET, WE FIND THAT IN THE CASE OF SHRI BALAJI FOR THE ASSESSMENT YEAR 2007-08 IN THE ASSESSEES CROSS OBJ ECTION NO.119 OF 2011 AT PARA 8.1 TO 8.3, WE HAVE CONFIRME D THE ADDITION IN THE HANDS OF SHRI BALAJI. THE RELEVANT PORTION O F THE ORDER IS REPRODUCED HEREIN BELOW FOR REFERENCE:- 8. ASSESSEES CROSS OBJECTIONS : 8.1 CO NO.119 OF 2011 OF SHRI J. BALAJI, AY 2007-08: IN THE CO, THE ASSESSEE HAS RAISED THE GROUND THAT THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE LD.AO OF RS.3,60,96,000/- BEING THE DIFFERENCE IN T HE SALE CONSIDERATION RECEIVED AND THE AMOUNT PAID TO THE V ENDORS OF LAND SMT. NEENA OF RS.96,000/- AND SMT. YASODHA OF RS.3,60,00,000/- BY ACTING AS POWER AGENT. 8.2 THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE I N THE CAPACITY OF POWER OF ATTORNEY HAD SOLD THE LANDED P ROPERTY BELONGING TO SMT. YASODHA OF 5 ACRES FOR SALE CONSI DERATION OF RS.11,50,00,000/- AND THE LANDED PROPERTY BELONGING TO SMT. NEENA OF 3.48 ACRES FOR SALE CONSIDERATION OF RS.8,00,40,000/- ON 5 TH OCTOBER 2006. THE ASSESSEE RECEIVED THE SALE CONSIDERATION ON VARIOUS DATES DURING THE MONTH OF OCTOBER 2006, WHICH WAS PASSED ON TO THE OWNERS OF THE LAND. FURTHER SHRI J. BALAJI ACTING AS POWER AGENT ENTERE D INTO A 7 ITA NO.1242&1387/MDS /2011 & ITA 1124/MDS/2012 TRIPARTITE AGREEMENT WITH M/S. BDCL AND M/S. CARMEN BUILDERS TO FOREGO THE FARMING RIGHTS HELD BY M/S. BDCL AND THE LANDLORD, TOWARDS WHICH M/S. CARMEN BUILDERS PA ID AN AMOUNT OF RS.10,17,60,000/- TO M/S. BDCL. OUT OF T HE ABOVE ADDITIONAL CONSIDERATION M/S. BDCL PASSED ON 60% OF THE AMOUNT TO SHRI J. BALAJI, THE ASSESSEE. THE ASSESSE E EXPLAINED BEFORE THE LD.AO THAT HE HAD PASSED ON THE AFORESAI D CONSIDERATION TO THE LANDOWNERS. THE LD.AO DIRECTE D THE ASSESSEE TO PRODUCE THE EVIDENCE FOR HAVING PAID TH E COMPENSATION AND THE SALE CONSIDERATION RECEIVED BY HIM TO THE LANDLORDS. THE ASSESSEE COULD NOT SUBSTANTIATE WITH EVIDENCE THE AMOUNT OF RS.96,000/- AND RS.3,60,00,0 00/- PAID TO SMT. NEENA AN SMT. YASODHA RESPECTIVELY OUT OF T HE AGGREGATE AMOUNT RECEIVED BY HIM TOWARDS THE SALE O F THE LANDED PROPERTY. SINCE THE VENDORS OF THE PROPERTY SMT. NEENA AND SMT. YASODHA HAD ALSO NOT DISCLOSED THE AFORESA ID AMOUNT AS THEIR RESPECTIVE INCOME IN THE RETURN OF INCOME AND SINCE THERE WAS NO PROOF THAT THEY HAVE RECEIVED THE AFOR ESAID AMOUNT FROM THE ASSESSEE, THE LD.AO OPINED THAT THE AMOUNT WAS RETAINED BY THE ASSESSEE AND THEREFORE ADDED TO HIS INCOME. THE LD.CIT(A) AGREEING WITH THE VIEW OF THE LD.AO CONFIRMED HIS ORDER. 8.3 AT THE OUTSET, WE FIND THAT EVEN BEFORE US AT THIS STAGE THE ASSESSEE IS NOT ABLE TO ESTABLISH WITH COGENT EVIDE NCE THAT HE HAS PAID THE AFORESAID AMOUNT RECEIVED ON BEHALF OF THE VENDORS OF THE PROPERTY TO THE VENDORS. THE VENDOR S OF THE PROPERTY HAS ALSO NOT ACKNOWLEDGED THE RECEIPT OF T HE AMOUNT OF RS.3,60,96,000/- FROM THE ASSESSEE. IN THIS SIT UATION, WE DO NOT FIND IT NECESSARY TO DISTURB THE FINDING OF THE LD.REVENUE AUTHORITIES ON THIS ISSUE. ACCORDINGLY WE HEREBY CONFIRM THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. 8 ITA NO.1242&1387/MDS /2011 & ITA 1124/MDS/2012 SINCE WE HAVE ALREADY CONFIRMED THE ADDITION OF RS. 3.6 CRORES IN THE HANDS OF SHRI BALAJI FOR THE ASSESSMENT YEAR 2007-08, ASSESSING THE SAME AMOUNT AS THE DEEMED INCOME OF T HE ASSESSEE, WOULD AMOUNT TO DOUBLE ADDITION. MOREOVER THERE IS NOTHING ON RECORD THAT IS PRODUCED BEFORE US TO EST ABLISH THAT THE ASSESSEE SMT. YASODHA HAS RECEIVED THE AMOUNT OF RS.3,60,00,000/- FROM SHRI BALAJI. THEREFORE WE HER EBY SET ASIDE THE ORDER OF THE LD.CIT(A) WHO HAS ENHANCED THE INC OME OF RS.3,60,00,000/- IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCE AND FURTHER DIRECT THE L D.AO TO DELETE THE SAME. IT IS ORDERED ACCORDINGLY. 6. GROUND NO.2(II) : DISALLOWANCE OF RS.2,95,37,78 7/-:- M/S. EXIM RAJATHI INDIA PVT. LTD. HAD RAISED A DE BIT NOTE IN THE NAME OF THE ASSESSEE FOR RS.2,95,37,787/- DATED 24.04.2006 TOWARDS SHIPMENT EXPENSES INCURRED ON BEHALF OF THE ASSESSEE ON 26.12.2005. SINCE THE EXPENSE OF RS.2,95,37,787/ - WAS RELATED TO FINANCIAL YEAR 2005-06 RELEVANT TO ASSES SMENT YEAR 2006-07, THE LD.AO DISALLOWED IT TO BE TREATED AS D EDUCTION FOR THE RELEVANT ASSESSMENT YEAR 2007-08. AGREEING WITH THE VIEW OF 9 ITA NO.1242&1387/MDS /2011 & ITA 1124/MDS/2012 THE LD.AO, THE LD.CIT(A) CONFIRMED HIS ORDER. BEFOR E US THE LD.AR SUBMITTED THAT THE AFORESAID AMOUNT WAS PAID TO M/S. EXIM RAJATHI PVT. LTD., WITH RESPECT TO THE GENUINE EXPENSES REIMBURSED BY THE ASSESSEE AND THEREFORE IT WAS PLE ADED THAT THE EXPENSES MAY BE ALLOWED AS DEDUCTION FOR THE AS SESSMENT YEAR 2006-07. WE DO NOT FIND ANY MERIT IN THE SUBMI SSION OF THE LD.AR. THE YEAR UNDER CONSIDERATION BEFORE US IS AS SESSMENT YEAR 2007-08 AND AFORESAID EXPENDITURE CANNOT BE AL LOWED AS DEDUCTION FOR THE RELEVANT ASSESSMENT YEAR 2007-08 BECAUSE IT IS AN EXPENSE INCURRED PERTAINING TO THE ASSESSMENT YEAR 2006- 07. THE ISSUE WHETHER SUCH EXPENDITURE IS GENUINE O R NOT IS TO BE EXAMINED IN THE RELEVANT ASSESSMENT YEAR 2006-07 . HENCE WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE O RDERS OF THE LD.REVENUE AUTHORITIES IN THIS ISSUE. 7. GROUND NO.2 (III) : DISALLOWANCE OF RS.34,00,000/- WITH RESPECT TO EXPENSES RELATING CHILLY EXPORTS:- IT WAS OBSERVED BY THE LD.AO THAT M/S. EXIM RAJAT HI INDIA PVT. LTD., HAD RAISED A DEBIT NOTE ON 31.03.2007 IN THE NAME OF THE ASSESSEE FOR RS.2,40,00,000/- TOWARDS GENERAL E XPENSES 10 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 INCURRED WITH RESPECT TO CHILLY EXPORTS AND ACCORDI NGLY JOURNAL ENTRY WAS PASSED IN THE BOOKS OF ACCOUNTS OF THE AS SESSEE. HOWEVER THE ASSESSEE HAD NOT FURNISHED ANY EVIDENCE WITH RESPECT TO SUCH EXPENSES INCURRED BY M/S. EXIM RAJA THI INDIA PVT. LTD. ON BEHALF OF THE ASSESSEE. SINCE THERE WA S NO BASIS FOR INCURRING SUCH EXPENDITURE BY THE ASSESSEE, THE LD. AO OPINED THAT IT IS A MODUS OPERANDI TO DIVERT THE PROFIT OF THE ASSESSEE TO M/S. EXIM RAJATHI INDIA PVT. LTD. HENCE THE LD.AO T REATING THE TRANSACTION TO BE SHAM AND THEREBY DISALLOWED THE E XPENDITURE OF RS.2,40,00,000/- BOOKED IN THE PROFIT & LOSS ACC OUNT OF THE ASSESSEE. HOWEVER ON APPEAL THE LD.CIT(A) AFTER EXA MINING THE ISSUE IN DETAIL SUSTAINED THE ADDITION FOR RS.34,00 ,000/- BY OBSERVING AS UNDER:- 6.2 ON PERUSAL OF GENERAL EXPENSES CLAIMED BY THE APPELLANT IT IS UNDERSTANDABLE THAT THERE IS SOME I NCREASE WHEN COMPARED TO LAST YEAR EXPENSE. BUT THE INCREAS E IN THE GENERAL EXPENSES AS A PERCENTAGE ON THE TURNOVER FR OM 14% (FINANCIAL YEAR 05-06) TO 21.53% (FINANCIAL YEAR 6- 07) IS QUITE HIGH EVEN AFTER CONSIDERING THE FACT THAT THE RE IS AN INCREASE IN FREIGHT CHARGES PER METRIC TONNE FROM U S $ 16(FY 05-06) TO US $ 17(FY 06-07) AND THE RATE OF EXCHANGE PER US $ IN INR HAS INCREASED FROM RS.45 ( FY 05- 06) TO RS.47 (FY 06-07). I THEREFORE TAKE THE VIEW THAT A PERCENTAGE OF 19 ON TURNOVER WOULD BE FAIR GENERAL EXPENSES WHICH COMES TO RS.2.54 CRORES WHEREAS THE APPELLANT HAS CLAIMED RS.2.88 CRORES AS GENERAL EXP ENSES. I 11 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 RESTRICT THE DISALLOWANCE OF RS.2,40,00,000 TO RS.3 4,00,000. THE APPELLANT GETS A RELIEF OF RS.2,06,00,000/-. 7.1 SINCE THE LD.CIT(A) HAS EXAMINED THE ISSUE IN D ETAIL AND HAD MADE A CATEGORICAL FINDING THAT THE ASSESSEE HA D REIMBURSED THE GENUINE EXPENSES INCURRED BY M/S. EX IM RAJATHI PVT. LTD., ON BEHALF OF THE ASSESSEE AND HAD ONLY S USTAINED THE ADDITION TO THE EXTENT OF RS.34,00,000/- AFTER ANAL YZING THE ISSUE WITH PLAUSIBLE REASONS, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH HIS ORDER. ACCORDINGLY THIS GROUND RAISED BY T HE ASSESSEE IS DEVOID OF MERITS. 8. GROUND NO.2 (IV) : SALE OF AGRICULTURAL LAND:- DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSME NT YEAR THE ASSESSEE HAD SOLD 5 ACRES OF AGRICULTURAL LAND TO M/S. CARMEN BUILDERS AND CONSTRUCTIONS PVT. LTD., NEW DE LHI FOR SALE CONSIDERATION OF RS.11,50,00,000/- VIDE SALE DEED N O.8845/2006 DATED 05.10.2006. THE AGRICULTURAL LAND WAS PURCHAS ED BY THE ASSESSEE ON 19.05.2005 AT THE COST OF RS.1,38,00,00 0/-. THE DETAILS OF THE LAND ARE AS FOLLOWS:- SURVEY NO.178/2 OF THAZHAMBUR VILLAGE, CHENGALPATTU TALUK, KANCHEEPURAM DISTRICT. 12 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 8.1 THE LD.AO TREATED THE AGRICULTURAL LAND SOLD BY THE ASSESSEE AS NON-AGRICULTURE CITING VARIOUS REASONS WHICH IS RECORDED IN HIS ORDER AND THEREBY ASSESSED THE GAIN ARISING OUT OF IT AS SHORT TERM CAPITAL GAIN AMOUNTING TO RS.10,12 ,00,000/- (RS.11,50,00,000 1,38,00,000) IN THE HANDS OF THE ASSESSEE. ON APPEAL THE LD.CIT(A) CONFIRMED THE ORDER OF THE LD. AO BY OBSERVING AS UNDER:- 7.22 FROM THE ABOVE DISCUSSION, THE FOLLOWING INFE RENCES ARE DRAWN. (A) THE APPELLANT HAS NOT CARRIED OUT ANY AGRICULTU RAL OPERATION IN SURVEY NO. 178/2. (B) ADJACENT SURVEY NUMBERS 176/2, 177/1, 177/2, 17 5, 180/1 & 180/2 AND 176/1 HAVE ALREADY BEEN CONVERTED INTO HO USING SITES BY THE COMPETENT AUTHORITY. (C) CONTRADICTORY CLAIM MADE BY THE APPELLANT THAT SHE HAS RAISED CASUARINA PLANTS WHEREAS THE BOCL COMPANY CLAIMED T HAT THEY HAVE PLANTED JETROPA THROUGH JOINT VENTURE FORMING ENTERED BETWEEN BOCL AND SHRI J.SRINIVASAN WHO WAS THE ORIG INAL OWNER OF SURVEY NO. 178/2. (D)IN THE SALE DEED, THERE WAS NO MENTION OF IRRIGA TION FACILITY. (E) THE AO HAS REPORTED THAT ABOUT 25 YEARS THERE W AS NO AGRICULTURAL OPERATION IN THE SURVEY NO. 178/2. 13 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 (F) AS PER THE JOINT VENTURE FORMING DATED 7.7.2004 ALSO THE LAND IS SUPPOSED TO BE VACANT ONLY AS THE APPELLANT AND THE BOCL GIVE A CONTRADICTORY STATEMENT. (G) BEFORE THE SALE OF THE LAND ON 5.10.2006 ABOUT MORE THAN 2 YEARS THE LAND WAS NOT PUT IN AGRICULTURAL OPERATIO N ATLEAST. ABOVE ALL, THE FOLLOWING CASE LAWS ARE RELIED UPON. I) SARIFABIBI MOHMED IBRAHIM AND OTHERS. VS COMMISS IONER OF INCOME-TAX 204 ITR 631 II) ABDUL BASHEER (M) V. ITO (1995) 54 ITO 336 (HYD . TRIB.) III) FAZALBHOY INVESTMENT CO. LTD. VS. CIT(BOM) 176 ITR 523 IV) STATE OF UTTAR PRADESH VS NAND AGGARWAL AIR 199 8, CS, 473, 476 V) GUJARAT HIGH COURT DECISION IN THE CASE OF CIT V S SIDDHARTH J OESAI (1983) 139 ITR 628 (GUJ) CONSIDERING ALL TH E ABOVE FACTS AND THE CASE LAWS MENTIONED ABOVE, THE FACT R EMAINS THAT THE LAND UNDER SURVEY NO. 178/2 BELONG TO THE APPEL LANT IS NOT FOUND TO BE AN AGRICULTURAL LAND AT THE TIME OF SAL E I.E. ON 5.10.2006 AND THEREFORE I AM OF THE OPINION THAT TH E SALE TRANSACTION MADE BY THE APPELLANT IS NOT AN EXEMPTE D ONE BUT A CAPITAL ASSET ONLY AND THEREFORE EXEMPTION IS DENIE D AND THE ADDITION MADE BY THE AO OF RS. 10,12,00,000/- IS CO NFIRMED. 8.2 AT THE OUTSET WE FIND THE ISSUE IS COVERED IN F AVOUR OF THE ASSESSEE BY THE DECISION OF THIS BENCH OF THE TRIBU NAL IN THE REVENUES APPEAL IN ITA NO.1196 OF 2011 FOR THE ASS ESSMENT YEAR 2007-08 VIDE ORDER DATED 13.11.2017 IN THE CAS E OF SMT. JAYANTHI BALAJI, WHEREIN THE LAND OF SMT. JAYANTHI BALAJI WHICH IS 14 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 ADJACENT TO THE LAND SOLD BY OTHER ASSESSEES WAS TR EATED AS AGRICULTURE LAND FALLING OUTSIDE THE AREA SPECIFIED U/S.2(14)(III)(A&B) OF THE ACT AND THEREFORE THE GA IN ARISING OUT OF IT WAS HELD NOT TO ATTRACT CAPITAL GAIN TAX. THE RELEV ANT PORTION OF THE ORDER IS EXTRACTED HEREIN BELOW FOR REFERENCE: 4.4 DURING THE COURSE OF SCRUTINY PROCEEDINGS IT WA S REVEALED FROM THE DOCUMENTS PRODUCED BY THE ASSESSEE THAT THE ASSESSE E HAD PURCHASED LAND MEASURING 5 ACRES AT THAZHAMBUR VILLAGE FROM S MT. SAMTYUKTHA PARAMAHAMSAN VIDE SALE DEED DATED 18.05.2005 FOR A SALE CONSIDERATION OF RS.66 LAKHS AND ALSO VIDE CONSENT LETTER DATED 20.05.2005, THE ASSESSEE HAD ACCEPTED TO CONTINUE W ITH THE JOINT VENTURE FARMING AGREEMENT EXECUTED EARLIER BETWEEN THE VENDOR SMT. SAMTYUKTHA PARAMAHAMSAN AND M/S. BHAVANI DISTILLERI ES & CHEMICALS LIMITED (M/S. BDCL) DATED 11.06.2004. 4.5 IT WAS FURTHER OBSERVED THAT AT THE TIME OF THE SALE OF LAND, THE ASSESSEE HAD ENTERED INTO A TRIPARTITE AGREEMENT WI TH M/S. BDCL AND M/S. CARMEN BUILDERS (A UNIT OF DLF) WHEREIN M/S. B DCL AGREED TO FOREGO THE FARMING RIGHTS HELD BY IT AGAINST A CONS IDERATION OF RS.5,25,00,000/- TO BE RECEIVED FROM M/S. CARMEN BU ILDERS OUT OF WHICH 60% WAS PAID TO THE ASSESSEE AMOUNTING TO RS. 3,15,00,000/-. 4.6 THE LD.AO QUERIED THE ASSESSEE, AS TO WHY THE S ALE PROCEEDS OF THE 5 ACRES LAND SOLD FOR RS.12.25 CRORES SHOULD NO T BE TREATED AS SALE OF CAPITAL ASSET U/S.2(14) OF THE IT ACT. IN RESP ONSE, THE LD.AR OF THE ASSESSEE HAD PRODUCED THE FOLLOWING DETAILS TO ESTA BLISH THAT THE LAND SOLD BY HER IS AGRICULTURAL LAND AND THEREFORE DOES NOT FALL WITHIN THE AMBIT OF CAPITAL ASSET U/S. 2(14) OF THE ACT. A) COPY OF THE WEB EXTRACT OF PATTAS, CHITA/ADANGAL, K IST RECEIPTS ETC. B) DISTANCE OF THE LAND FROM MUNICIPAL LIMITS AND POPU LATION CERTIFICATE ISSUED BY THE CONCERNED AUTHORITIES. C) EVIDENCE FOR LANDS SITUATED OUTSIDE THE CMDA LIMITS . D) INCOME-TAX RETURN FOR THE PAST YEARS WHERE THE ASSE SSEE HAD ADMITTED INCOME FROM AGRICULTURE. E) COPY OF JOINT VENTURE FARMING AGREEMENT ENTERED INT O WITH M/S. BDCL FOR CULTIVATION F) COPY OF SWORN STATEMENT MADE BY TWO OF VILLAGE ADMI NISTRATIVE OFFICERS BEFORE THE INCOME-TAX OFFICER, COMPANY WAR D I(2). 15 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 G) COPY OF APPEAL ORDER NO.ITA/667/2009-10/A-III DATED 31.03.2010. H) LATEST PHOTOGRAPH SHOWING EVIDENCE OF CULTIVATION I N AND AROUND THE SUBJECT LAND. I) OPINION FROM SHRI S RAJARATINAM, RETIRED HONORABLE ITAT MEMBER. J) CASE LAW OF MS SRINIVASA NAICKER VS. INCOME TAX OFF ICER, 2007 292 ITR 482 MDS. THE LD.AR FURTHER MADE THE FOLLOWING SUBMISSION BEF ORE THE LD.AO TO JUSTIFY THE STAND OF THE ASSESSEE:- 1. THE LAND SOLD BY THE ASSESSEE WAS SUBJECT TO AGRICU LTURAL OPERATIONS TILL THE DATE OF SALE. 2. THE LAND WAS NOT SITUATED WITHIN THE NOTIFIED AREA DECLARED BY THE CENTRAL GOVERNMENT. 3. JOINT VENTURE AGREEMENT BETWEEN THE PARTIES ESTABLI SHES THE FACT THAT THE LAND WAS UNDER CULTIVATION. 4. THE ASSESSEE IS AN AGRICULTURISTS CARRYING ON AGRIC ULTURAL OPERATION FOR NUMBER OF YEARS AND CONTINUE TO DO SO TILL DATE . 5. THE IT RETURN FILED BY THE ASSESSEE DURING THE PAST FEW YEARS REVEALS THAT THE ASSESSEE WAS EARNING AGRICULTURAL INCOME. 6. THE DOCUMENTARY EVIDENCE WITH RESPECT TO REVENUE RE CORDS ALSO ESTABLISHES THE FACT THAT THE LAND SOLD BY THE ASSE SSEE WAS UNDER CULTIVATION. 7. RELIANCE WAS ALSO PLACED IN THE CASE OF M/S. BDCL W HEREIN THE LD.CIT(A) IN ITA NO./667/09-10/A-III HAD HELD THAT THE LAND IN QUESTION WAS AGRICULTURE LAND AND AGRICULTURAL OPER ATIONS WERE CARRIED OUT IN THE LAND. AFTER HEARING THE LD.AR AND FURTHER DELIBERATION, T HE LD.AO REJECTED THE SUBMISSION MADE BY HIM DUE TO THE FOLLOWING REA SONS: I. ON INSPECTION IT WAS FOUND THAT THE LAND COMES UNDE R THE TIRUPORUR UNION PANCHAYAT WHICH IS ONLY 3KMS AWAY FROM SHOLI NGANALLUR TOWN PANCHAYAT. II. THOUGH THE PHOTOGRAPHS REVEALED THAT AGRICULTURAL O PERATIONS WERE BEING CARRIED OUT IN AND AROUND THE LAND, THE PURCH ASER OF THE LAND HAD BUILT VERY HUGE MULTISTORIED FLATS IN THE LAND. III. THEREFORE IT WAS EVIDENT THAT THE INTENTION OF THE BUYER WAS TO DEPLOY THE LAND FOR NON-AGRICULTURE PURPOSES. IV. THE LAND WAS SITUATED WITHIN 2 KMS FROM OLD MAHABAL IPURAM ROAD, A SOFTWARE HUB AND THE AREA HAD LOST ITS AGRICULTUR AL CHARACTERISTICS LONG BACK. V. THOUGH THE SALE DEED MENTIONED THAT THE LAND SOLD B Y THE ASSESSEE WAS AGRICULTURAL LAND, IT DOES NOT CARRY A NY SIGNIFICANCE BECAUSE GENERALLY THE SUB-REGISTRAR REFERS TO THE C HARACTERISTICS OF LAND FROM THE PREVIOUS DOCUMENTS. 16 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 VI. THE SALE CONSIDERATION OF THE LAND IS ABNORMALLY HI GH AND NO PRUDENT AGRICULTURISTS WILL PAY SUCH HUGE PRICE TO PURCHASE LAND FOR AGRICULTURE PURPOSE. VII. THE DEVELOPMENTS IN THE LOCALITY SUBSEQUENT TO THE SALE OF THE LAND SHOW THAT LARGE SCALE CONSTRUCTIONS HAVE TAKEN PLAC E. VIII. SUBSEQUENT TO THE PURCHASE OF THE LAND, AGRICULTURA L OPERATIONS HAVE BEEN SEIZED TO TAKE PLACE. IX. EVEN DURING THE PERIOD OF LONG GAP, WHEN THE CONVER SION OF THE LAND TO NON-AGRICULTURAL LAND TOOK PLACE, AGRICULTU RAL OPERATIONS SEIZED TO EXIST. X. SINCE THE BUSINESS OF THE ASSESSEE WAS NOT PURCHASE AND SALE OF LAND, THE GAIN ON SALE OF LAND HAS TO BE NECESSARIL Y ASSESSED UNDER THE HEAD CAPITAL GAINS. 4.7 THEREAFTER THE LD.AO REJECTED THE DECISION OF T HE HONBLE MADRAS HIGH COURT IN THE CASE OF SRINIVASA NAICKAR VS. ITO REPORTED IN 482 ITR, CITED BY THE AR AS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AND RELIED ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE SARIFABIBI MD. IBRAHIM REPORTED IN 204 ITR 631 AND ASSESSED TH E GAIN ARISING OUT OF THE SALE OF THE LAND UNDER THE HEAD SHORT TERM CAPITAL GAIN AMOUNTING TO RS.14,74,00,000/- IN THE HANDS OF THE ASSESSEE. 4.8 WHILE DOING SO, THE LD.AO ACCEPTED THE CONTENTI ON OF THE ASSESSEE THAT THE ADDITIONAL SALE CONSIDERATION RECEIVED FRO M M/S. BDCL AMOUNTING TO 40% OF THE COMPENSATION RECEIVED BY IT , WHICH WORKS OUT TO RS.3,15,00,000/- IS TAXABLE IN HER HANDS. 4.9 ON APPEAL, THE LD.CIT(A) AFTER HEARING BOTH THE PARTIES, EXAMINING THE ISSUE IN DETAIL AND VERIFYING THE PAT TA PASSBOOK, KIST RECEIPT, TRIPARTITE AGREEMENTS, IT RETURN OF THE EA RLIER YEARS, DISTANCE/POPULATION CERTIFICATE, CERTIFICATE FROM V AO THAT THAZHAMPUR IS NOT WITHIN SHOLINGANALLUR TOWN PANCHAYAT, JVFA WITH M/S. BDCL, COPY OF DLF AGREEMENT SHOWING THAT THE APPROVAL FOR CONSTRUCTION WAS SANCTIONED IN NOVEMBER 2008, ETC., HELD THAT THE LA ND SOLD BY THE ASSESSEE IS AGRICULTURE LAND AS PER THE PROVISIONS OF SECTION 2(14)(III) OF THE ACT BY OBSERVING AS UNDER:- (I) THE CHITTA, PATTA AND ADANGAL REVEALS THE FACT THAT AGRICULTURAL OPERATIONS WERE CARRIED OUT IN THE LAND DURING THE EARLIER YEARS & UP TO THE DATE OF SALE. (II) THE ASSESSEE HAD ALSO DISCLOSED HER AGRICULTURAL IN COME AND EXPENDITURE IN HER RETURN OF INCOME, WHICH CANNOT B E DECRIED WITHOUT VALID REASON. (III) ON VERIFYING IT WAS REVEALED THAT THE LAND IS SITUA TED AT A DISTANCE BEYOND 8 KMS FROM THE CITY LIMIT. 17 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 (IV) AS PER THE CERTIFICATE ISSUED BY THE VAO, IT WAS EV IDENT THAT THE DISTANCE OF THAZHAMPUR VILLAGE FROM THE NEAREST MUN ICIPALITY I.E., CHENNAI CORPORATION IS 18.3 KMS. (V) BECAUSE OF THE AFORE STATED REASONS, IT IS EVIDENT THAT THE LAND IN QUESTION IS AGRICULTURAL LAND AS PROVIDED U/S.2(14) (III) OF THE ACT. (VI) THE FACT IN THE CASE SARIFABIBI MD. IBRAHIM SUPRA D ECIDED BY THE HONBLE SUPREME COURT IS NOT IDENTICAL TO THE CASE OF THE ASSESSEE DUE TO THE FOLLOWING REASONS AND THEREFORE NOT APPL ICABLE:- THE FACTS IN THE CASE OF SARIFABIBI MD. IBRAHIM ARE AS FOLLOWS:- A) THE LAND SOLD WAS NON-AGRICULTURE LAND AT THE TIME OF SALE. B) THE LAND SOLD WAS @RS.23 PER SQ.YARD. C) THE LAND WAS WITHIN 1 KM FROM SURAI RAILWAY STATION . D) APPLICATION FOR CONVERSION OF LAND TO NON-AGRICULTU RAL PURPOSES WAS MADE BEFORE THE SALE. E) THE CONSTRUCTION ACTIVITY STARTED IMMEDIATELY AFTER THE SALE. HOWEVER, IN THE CASE OF THE ASSESSEE THE FACTS ARE AS FOLLOWS: A) THE LAND SOLD BY THE APPELLANT WAS MEASURED IN ACRE S. B) AT THE TIME OF SALE, THE LAND WAS AGRICULTURAL LAND . C) AGRICULTURAL ACTIVITIES WERE CARRIED OUT IN THE LAN D FOR SEVERAL YEARS CONSISTENTLY UP TO THE DATE OF SALE. D) ALL THE DOCUMENTARY EVIDENCES AND REVENUE RECORDS E STABLISHES THE ABOVE FACT. E) THE APPELLANT HAD NOT MADE ANY REQUEST FOR RE-CLASS IFICATION OF THE LAND BEFORE THE SALE. F) ALL THE COMMERCIAL ACTIVITIES WITH RESPECT TO THE L AND WAS CARRIED OUT BY THE PURCHASER OF THE LAND SUBSEQUENT TO THE SALE INCLUDING REQUEST FOR RECLASSIFICATION OF THE LAND. G) THE LAND WAS SITUATED BEYOND 18 KMS FROM THE CHENNA I CORPORATION LIMIT. H) NONE OF THE PROVISIONS OF SECTION 2(14)(III) OF THE ACT BRINGS THE LAND OF THE ASSESSEE WITHIN THE AMBIT OF CAPITAL A SSET. FOR THE ABOVE STATED REASONS, THE RATIO LAID OUT IN TH E CASE SARIFABIBI MD. IBRAHIM SUPRA IS NOT APPLICABLE IN THE C ASE OF THE ASSESSEE. (VII) FURTHER RELIANCE WAS PLACED IN THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE CIT VS. ALL INDIA TEA & TRADING C O. LTD. REPORTED IN 219 ITR 544, WHEREIN IT WAS HELD THAT THE DETERMINI NG FACTOR WITH REGARD TO SALE OF LAND IS THE CHARACTERISTIC OF THE LAND AT THE TIME OF SALE. (VIII) THE LD.AO HAD RELIED ON THE FACT THAT THE LAND IS S ITUATED AT A DISTANCE OF 3 KMS FROM SHOLINGANALLUR WHICH IS A T OWN PANCHAYAT, HOWEVER SHOLINGANALLUR IS NEITHER A MUNICIPALITY NO R A CANTONMENT OR A NOTIFIED AREA. (IX) RELIANCE WAS PLACED IN THE DECISION OF THE HONBLE JURISDICTIONAL MADRAS HIGH COURT IN THE CASE CIT VS. PJ THOMAS REP ORTED IN 211 18 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 ITR 897, WHEREIN IT WAS HELD THAT PANCHAYATS ARE EX CLUDED FROM THE LIST OF LOCALITY ENUMERATED IN THE SECTION. (X) THE CERTIFICATE ISSUED BY THE VAO CERTIFIES THAT TH E DISTANCE OF THAZHAMPUR VILLAGE FROM THE NEARBY MUNICIPALITY I.E ., CHENNAI CORPORATION IS 18.3 KMS. THEREFORE THE PROPERTY DO ES NOT FALL IN THE CLASSIFICATION OF CAPITAL ASSET DEFINED IN SECTIO N 2(14)(III)(A) OR (B) OF THE ACT. (XI) RELIANCE WAS ALSO PLACED IN THE DECISION OF THE HON BLE JURISDICTIONAL MADRAS HIGH COURT IN THE CASE M.S SRINIVASA NAICKAR VS. ITO REPORTED IN 292 ITR 482, WHEREIN AFTER CONSIDERING VARIOUS OTHER DECISIONS INCLUDING THE DECISION OF THE HONBLE APE X COURT IN THE CASE SARIFABIBI MD. IBRAHIM SUPRA, IT WAS HELD THAT THE CHARACTERISTIC OF THE LAND AS ON THE DATE OF SALE OF LAND SHOULD O NLY BE TAKEN INTO CONSIDERATION WHILE DETERMINING WHETHER THE LAND SO LD FALLS WITHIN THE AMBIT OF CAPITAL ASSET AS PER SECTION 2(14)(I II) OF THE ACT. 4.10 BEFORE US THE LD.DR VEHEMENTLY ARGUED IN SUPPO RT OF THE ORDER OF THE LD.AO BY REITERATING THE DISCUSSIONS M ADE THEREIN AND FURTHER RELIED ON THE DECISION OF THE CASE SARIFABI BI MD. IBRAHIM & OTHERS REPORTED IN 204 ITR 631 AND PLEADED FOR REIN STATING THE ORDER OF THE LD.AO. THE LD.AR ON THE OTHER HAND SUBMITTED A PAPER-BOOK CONSISTING OF THE FACTUAL DETAILS OF THE CASE AND A LL THE RELEVANT AGREEMENTS AND ANOTHER PAPER-BOOK CONSISTING OF TWE NTY FOUR DECISIONS OF VARIOUS JUDICIAL AUTHORITIES INCLUDING THAT OF THE HONBLE APEX COURT IN SUPPORT OF HIS CONTENTION THAT THE LA ND SOLD BY THE ASSESSEE IS AGRICULTURAL LAND. HE FURTHER ARGUED I N SUPPORT OF THE ORDER OF THE LD.CIT(A) AND REQUESTED FOR SUSTAINING HIS O RDER. 5.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE ORDERS OF BOTH THE REVENUE AUTHORITIES AND THE DOCUMENTS PRODUCED BEFORE US, T HE FOLLOWING UNDISPUTABLE FACTS ARE REVEALED:- (I) FROM PAGE NO.28 OF THE PB, IT IS EVIDENT THAT THE L AND IN SURVEY NO.182, PATTA NO.984 OF THAZHAMPUR VILLAGE IS CLASS IFIED AS AGRICULTURE LAND. (II) FROM PAGE NO.30 OF PB, IT IS EVIDENT THAT THE ASSES SEE HAS PAID LAND REVENUE TAX WITH RESPECT TO THE AGRICULTURE LA ND IN PATTA NO.984. (III) FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS F ILED INCOME TAX RETURN WHEREIN SHE HAS DISCLOSED AGRICULTURAL I NCOME OF RS.1,55,500/- AS FOUND IN PAGE NO.39 TO 41 OF THE P B. THE LD.CIT(A) HAS ALSO ACCEPTED THE SAME. (IV) ON PAGE NO. 33 OF THE PB, THE CERTIFICATE OF THE V AO OF THAZHAMPUR VILLAGE IS ENCLOSED, WHEREIN IT IS STATE D THAT THAZHAMPUR VILLAGE IS SITUATED BEYOND 19 KMS FROM T AMBARAM MUNICIPAL LIMIT AND THE POPULATION OF THAZHAMPUR VI LLAGE IS 2950. 19 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 (V) THUS THE FINDING OF THE LD.CIT(A) THAT THE LAND IN QUESTION IS AGRICULTURAL LAND WHICH IS SITUATED OUTSIDE THE LIM IT PRESCRIBED UNDER SECTION 2(14)(III)(A) OR (B) OF THE ACT, IS U NCHALLENGEABLE. (VI) PAGE 10 OF THE PB REVEALS THAT THE LAND SOLD BY THE ASSESSEE IS AGRICULTURE LAND BECAUSE THE SALE DEED EXECUTED FOR THE SALE OF LAND DATED 14.06.2006 MENTIONS IT SO AND THE SAME I S ACCEPTED BY THE SUB-REGISTRAR, THIRUPORUR. (VII) THE COMMERCIAL TRIPARTITE AGREEMENT EXECUTED BETWEE N THE ASSESSEE AND THE OTHER PARTIES ALSO REVEALS THAT TH E LAND SOLD BY THE ASSESSEE IS AGRICULTURE LAND. (VIII) THE LD.CIT(A) HAS VERIFIED THE CHITTA, PATTA AND AD ANGAL WHICH STATES THAT THE LAND IS AGRICULTURAL LAND AND THERE IS NO REASON TO DOUBT THE SAME. (IX) IT IS ALSO APPARENT THAT THE LAND SOLD IS MEASURED BY ACRES AND NOT IN SQ.FT., WHICH ESTABLISHES THE FACT THAT THE LAND IS NOT A COMMERCIAL LAND. 5.2 MOREOVER, THE FINDING OF THE LD.AO FOR TREATING THE LAND SOLD BY THE ASSESSEE AS NON-AGRICULTURAL LAND DOES NOT HAVE ANY MERIT BECAUSE OF THE FOLLOWING REASON:- (I) THE MAIN GRIEVANCE OF THE LD.AO WAS THAT THE PURCHA SER OF THE LAND HAD BUILT A HUGE MULTISTORIED FLAT. HOWEVER T HE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE M .S SRINIVASA NAICKER VS. ITO SUPRA, IT HAS BEEN HELD THAT WHEN THE ASSESSEE HAD USED THE LAND FOR AGRICULTURAL OPERATIONS TILL THE DATE OF SALE, IT HAS TO BE TREATED AS AGRICULTURAL LAND AND NOT A CA PITAL ASSET IRRESPECTIVE OF THE FACT THAT THE PURCHASER INTEND TO PUT THE LAND TO A TOTALLY DIFFERENT USE. (II) THE FINDING OF THE LD.AO THAT ABNORMAL SALE CONSIDE RATION WAS RECEIVED BY THE ASSESSEE THEREFORE THE NATURE OF LA ND SOLD BY THE ASSESSEE CANNOT BE CLASSIFIED AS AGRICULTURAL LAND ALSO DOES NOT HAVE ANY MERIT. THIS BENCH OF THE TRIBUNAL IN ITA NO.2067/MDS/2015 FOR THE ASSESSMENT YEAR 2012-13 IN THE CASE M/S. A.V. THOMAS LEATHER & ALLIED PRODUCTS PVT. LTD . VS. DCIT VIDE ORDER DATED 05.02.2016 RELYING ON THE REVENUE RECOR DS HELD THAT THE LAND HAS TO BE TREATED AS AGRICULTURAL LAND THO UGH IT WAS SOLD FOR EXORBITANT PRICE. (III) THE FINDING OF THE LD.AO THAT THE LAND IS SITUATED IN TIRUPORUR UNION PANCHAYAT WHICH IS ONLY 3 KMS AWAY FROM SHOL INGANALLUR TOWN PANCHAYAT ALSO DO NOT HAVE ANY MERIT BECAUSE T HE HONBLE JURISDICTIONAL MADRAS HIGH COURT IN THE CASE CIT VS . P.J. THOMAS REPORTED IN 211 ITR 897 AS CATEGORICALLY HELD THAT THE EXCLUSION IN S.2(14)(III) OF THE ACT, DOES NOT APPLY TO AGRICULT URAL LAND SITUATED WITHIN PANCHAYAT LIMITS AND WHERE SUCH LAND IS AGRI CULTURE LAND, CAPITAL GAIN TAX IS NOT ATTRACTED. 20 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 (IV) THE FINDING OF THE LD.AO THAT THE LAND IS SITUATED IN DEVELOPED / DEVELOPING AREA AND THEREFORE HAS LOST THE CHARACTE RISTIC OF AGRICULTURAL LAND, ALSO DOES NOT HAVE ANY MERIT BEC AUSE IN THE CASE ITO VS. MRS. CHITRA RAJENDRAN REPORTED IN 81 TAXMAN N.COM 155, THIS BENCH OF THE TRIBUNAL HAS HELD OTHERWISE. 5.3 CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE C ASE, WE FIND MERIT IN THE ORDER OF THE LD.CIT(A) WHO HAS ELABORATELY D ISCUSSED THE ISSUE AT LENGTH AND BASED ON THE DOCUMENTARY EVIDENCE AND VARIOUS DECISIONS OF THE HIGHER JUDICIARY HAS HELD THAT THE LAND SOLD BY THE ASSESSEE IS AGRICULTURAL LAND AND THEREFORE CAPITAL GAIN TAX WILL NOT BE ATTRACTED. FURTHER THE REASON STATED BY THE LD.AO FOR ARRIVING AT A CONTRARY CONCLUSION DOES NOT HAVE ANY MERIT AS DISC USSED HEREIN ABOVE. HENCE, WE DO NOT FIND IT NECESSARY TO INTER FERE WITH THE ORDER OF THE LD.CIT(A) WHO HAS TREATED THE LAND SOLD BY T HE ASSESSEE AS AGRICULTURAL LAND FALLING OUTSIDE THE AREA SPECIFIE D U/S.2(14)(III) (A)&(B) OF THE ACT AND THE GAIN ARISING OUT OF THE SAME WIL L NOT ATTRACT CAPITAL GAIN TAX. HOWEVER, WE ALSO MAKE IT CLEAR THAT THE ADDITIONAL COMPENSATION RECEIVED BY THE ASSESSEE (OTHER THAN W HAT IS RETAINED BY THE POWER OF ATTORNEY HOLDER) FOR CANCELLING THE TR IPARTITE AGREEMENT WITH M/S. BDCL AND M/S. CARMEN BUILDERS TO FOREGO T HE FARMING RIGHT OF M/S. BDCL HAS TO BE NECESSARILY BROUGHT TO TAX U NDER THE HEAD CAPITAL GAINS BECAUSE IT ARISES OUT OF EXTINGUISH MENT OF A COMMERCIAL RIGHT WHICH IS AN INTANGIBLE ASSET AND NOT ATTRIBUT ABLE TOWARDS SALE OF AGRICULTURAL LAND. NEEDLESS TO MENTION THAT THE COM PENSATION RETAINED BY THE POWER OF ATTORNEY HOLDER WILL BE ASSESSED TO TAX IN HIS HANDS UNDER THE HEAD INCOME FROM OTHER SOURCE BECAUSE I T DOES NOT RELATE TO ANY PARTICULAR HEAD OF INCOME. IT IS ORDERED ACC ORDINGLY. 6. WITH RESPECT TO THE OTHER REVENUES APPEALS MENT IONED HEREIN ABOVE, WE FIND THAT THE ISSUES RELATING TO THE SALE OF THE RESPECTIVE AGRICULTURAL LAND ARE ALL EITHER SITUATED IN THE SA ME LOCALITY ADJACENT TO EACH OTHER OR IN THE LOCALITY OF SIMILAR NATURE HAV ING THE SAME CHARACTERISTICS OF LAND. THE DETAILS OF ALL THE AG RICULTURAL LAND SOLD BY THE ASSESSEES ARE EXTRACTED IN THE CHART HEREIN BEL OW FOR REFERENCE:- REVENUE APPEAL NO, ASSESSEE & SALE DEED LAND DETAILS AREA OF LAND SALE CONSIDERA TION IN CRORES. (RS.) COMPEN SATION IN CRORES (RS.) IN PAPER BOOK (PAGE NOS.) CLASSIFIC ATION OF LAND IN REVENUE RECORDS AS AGRICULT URE LAND REVE NUE TAX RECEI PT VAO CERTIFICATE BEYOND 18 KMS FROM CORPORATIO N LIMIT, POPULATION 2950 PATTA ADAN GAL WET LAND IT RETURN FOR AY 2006-07 DISCLOSING AGRICULTURAL INCOME (AI) 1198 OF 2011 AY 2007-08 J. BALAJI THAIYUR VILLAGE VARIOUS SURVEY NOS. 9 ACRES 27.00 NIL 26-35 - - 37 - 40 45-48 58 & 59 RS.90,000/- 21 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 S.NO.178, THAZHAMPUR VILLAGE, CHENGALPATTU TALUK, KANCHEEPURAM DISTRICT 1 ACRE 3.00 NIL 36 - 53-54 - - 1602 OF 2012 AY 2007-08 J. SRINIVASAN THAIYUR VILLAGE VARIOUS SURVEY NOS. S. NO.174 31, THAZHAMBUR VILLAGE, CHENGALPATTU TALUK, KANCHEEPURAM DISTRICT - 2 ACRES 12.00 NIL - 25 - 28 - 77 & 78 2-4 26 8-11 - 82 TO 84 RS.60,000/- 1720 OF 2012 AY 2007-08 N. MURUGHASAN (LATE) SALE DEED 8846 & 8847 OF 2016 DT. 05.10.2006 S.NO.179/1 & 179/2 31, THAZHAMBUR VILLAGE, CHENGALPATTU TALUK, KANCHEEPURAM DISTRICT 5 ACRES & 5 ACRES 11.50 & 11.50 7.2 25 26 28 & 29 - - - APPEAL NO, ASSESSEE & SALE DEED LAND DETAILS AREA OF LAND SALE CONSIDERA TION IN RS. COMPEN SATION IN PAPER BOOK CLASSIFIC ATION OF LAND IN REVENUE RECORDS REV ENUE TAX REC EIPT VAO CERTIFICATE PATTA ADAN GAL IT RETURN FOR AY 2006-07 DISCLOSING AGRICULTURAL INCOME (AI) 1377 OF 2012 AY 2007-08 J. SHANTHI (LATE) SALE DEED 5240 OF 2006 DT. 14.06.2006 S.NO.181/1, 182/2A, 183/2A 31, THAZHAMBUR VILLAGE, CHENGALPATTU TALUK, KANCHEEPURAM DISTRICT S.NO.1351/3 & 1351/5 THAIYUR B VILLAGE, CHENGALPATTU TALUK, KANCHEEPURAM DIST. 4.65 ACRES, 3 ACRES & 3.46 ACRES 0.80 ACRES, 1.20 ACRES 27.2 (APPROX.) 6.00 7.00 (APPROX) 31 & 32 45 & 46 35 49 37 & 38 - 33 47 - - 53 & 54 RS.1,00,000/- 1378 OF 2012 AY 2007-08 P. VENKATESAN SALE DEED DT. 13.06.2006 699 OF 2013 AY 2009-10 182/3, 165/21 31, THAZHAMBUR VILLAGE, CHENGALPATTU TALUK, KANCHEEPURAM DISTRICT S.NO. 171/2A 31, THAZHAMBUR VILLAGE, CHENGALPATTU TALUK, 1.82 ACRES 4 ACRES 1.69 ACRES 4.46 (APPROX.) 12.00 2.80 (APPROX.) 1.15 (APPROX.) NIL 16 42 19 44 & 45 21 & 22 11 & 40 15 - 17 - 22 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 KANCHEEPURAM DISTRICT 1379 OF 2012 AY 2007-08 S. ANURADHA SALE DEED 5241 OF 2006 DT. 14.06.2006 S.NO.182/2 31, THAZHAMBUR VILLAGE, CHENGALPATTU TALUK, KANCHEEPURAM DISTRICT 6 ACRES 14.70 3.78 28 31 32 & 33 29 - 38 & 39 RS.60,000/- 1380 OF 2012 AY 2007-08 S. SRINIVASAN SALE DEED DT. 13.06.2006 S.NO.138 THAZHAMBUR VILLAGE, CHENGALPATTU TALUK, KANCHEEPURAM DISTRICT 1 ACRE 3.00 NIL 7 - 10 & 11 8 - 15 & 16 RS.50,000/- 6.1 SINCE THE REVENUE HAS NOT RAISED ANY DOUBT ON T HE AUTHENTICITY OF THE DOCUMENTS PRODUCED BEFORE US AN D THE ISSUE IN THE ABOVE MENTIONED APPEALS BEING IDENTICAL TO THE APPEAL DECIDED BY US IN ITA NO.1196 OF 2011 IN THE CASE OF SMT. JAYAN THI BALAJI, HEREIN ABOVE, THE SAME DECISION HOLDS GOOD IN ALL THESE AP PEALS ALSO. THEREFORE WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) WHO HAS HELD THAT THE LAND SOLD BY TH E ASSESSEES IS AGRICULTURAL LAND FALLING OUTSIDE THE AREA SPECIFIE D U/S.2(14)(III) (A)&(B) OF THE ACT AND THE GAIN ARISING OUT OF THE SAME WILL NOT ATTRACT CAPITAL GAIN TAX. 8.3 SINCE THE CHARACTERISTICS OF THE AGRICULTURAL L AND SOLD BY THE ASSESSEE IS SIMILAR/IDENTICAL AND ADJACENT TO THE L AND SOLD BY SMT. JAYANTHI BALAJI WHICH WAS TREATED BY THIS BENCH OF THE TRIBUNAL IN THE REVENUES APPEAL IN ITA NO.1196 OF 2011 FOR THE ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 13.11.2017 AS AGRICUL TURE LAND AND THEREFORE HELD TO BE EXEMPT FROM TAX, IN THE CASE O F THE ASSESSEE WE DO NOT FIND ANY REASON TO DEFER. HENCE WE HEREBY HOLD THAT IN THE CASE OF THE ASSESSEE WHO HAS SOLD HER AGRICULTU RAL LAND IN SURVEY NO.178/2 OF THAZHAMBUR VILLAGE, CHENGALPATTU TALUK, 23 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 KANCHEEPURAM DISTRICT, CAPITAL GAIN TAX WILL NOT BE ATTRACTED BECAUSE THE LAND FALLS OUTSIDE THE AREA SPECIFIED U/S.2(14)(III)(A)&(B) OF THE ACT. REVENUES APPEAL IN ITA NO.1387 OF 2011 FOR THE ASS ESSMENT YEAR 2007-08: 9. GROUND NO.3(I): DISALLOWANCE OF CLAIM OF FOREIGN EXCHANGE DURING THE COURSE OF SCRUTINY ASSESSMENT, IT WAS OB SERVED BY THE LD.AO THAT THE ASSESSEE HAD DEBITED AN AMOUNT O F RS.61,15,180/- WITH RESPECT TO THE LOSS ON FOREIGN EXCHANGE IN THE FORWARD CONTRACT TRANSACTIONS. THE ASSESSEE HAD EXP LAINED BEFORE THE LD.AO THAT SINCE SHE WAS ENGAGED IN EXPORT TRAD E INVOLVING SUBSTANTIAL FOREIGN EXCHANGE, SUCH CONTRACTS ARE ES SENTIAL AND IT IS AN INTEGRAL PART OF THE BUSINESS WHICH CANNOT BE TREATED AS SPECULATION IN NATURE. HOWEVER THE LD.AO WAS OF THE VIEW THAT THE LOSS CLAIMED IN THE FORWARD CONTRACT IS IN THE NATU RE OF SPECULATION LOSS AND NOT BUSINESS LOSS AS CLAIMED BY THE ASSESS EE. HOWEVER ON APPEAL, THE LD.CIT(A) RELYING ON THE DECISIONS O F HONBLE HIGH COURT HELD THE ISSUE IN FAVOUR OF THE ASSESSEE BY O BSERVING AS UNDER:- 24 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 4.4 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AR GONE THROUGH THE RECORDS AND VARIOUS DETAILS AVAILA BLE ON RECORD AND THE DETAILED SUBMISSIONS MADE BY THE AR. I HAVE ALSO CAREFULLY CONSIDERED THE TWO DECISIONS RE NDERED HIGH COURT IN 261 ITR 256 RELIED ON BY THE APPELLAN T IN SUPPORT OF HER CASE. I FIND THAT THE APPELLANT'S CA SE IS SQUARELY COVERED BY THE PRINCIPLES LAID DOWN IN THE TWO DECISIONS. I ALSO AGREE WITH THAT THE AR'S SUBMISSI ON THAT THE PRESENT CASE THE APPELLANT IS NOT CARRYING ON A SEPARATE AND INDEPENDENT BUSINESS OF DEALING IN FOR EIGN EXCHANGE. BUT THE FORWARD CONTRACTS IN FOREIGN EXCH ANGE WERE ENTERED INTO BY THE APPELLANT FACTUALLY ONLY F OR THE PURPOSE OF PROTECTING HER EXPORT BUSINESS AND CONSEQUENTLY THE FORWARD TRANSACTION IS NEITHER INDEPENDENT NOR SPECULATIVE IN NATURE CONSTITUTES A N INTEGRAL AND NECESSARY PART OF THE ACTIVITY OF EXPO RT BUSINESS AND HENCE THE APPELLANT IS ENTITLED TO SUC CEED ON THIS POINT. IT IS ALSO PERTINENT TO NOTE THAT THE P ERMISSION OF RBI IS A PREREQUISITE UNDER FOREIGN EXCHANGE MANAGEMENT ACT TO BE A DEALER IN FOREIGN EXCHANGE A ND IT IS NOT THE CASE OF THE AO THAT THE PRESENT APPELLAN T AT NO POINT OF TIME APPLIED FOR AND OBTAINED ANY SUCH LIC ENCE. THEREFORE THE ASSUMPTION OF THE AO THAT THE APPELLA NT IS CARRYING ON THE BUSINESS OF DEALING IN FOREIGN EXCH ANGE IS WITHOUT ANY BASIS OR FACTUAL MATERIAL TO SUPPORT SU CH VIEW AND IS NOT SUSTAINABLE EITHER IN LAW OR ON FACTS. M EANWHILE THE AR PLEADED THAT FOR EARLIER YEARS PROFIT WAS OF FERED FOR TAXATION IN THE SAME TRANSACTION. RESPECTFULLY FOLL OWING THE DECISIONS IN THE CASES OF 261 ITR 256 AND 129 I TR 169, I AM OF THE OPINION THAT THE ADDITION OF RS. 61,15,180/- IS NOT JUSTIFIABLE AND THE AD IS DIRECT ED TO DELETE THE ABOVE ADDITION. 9.1 AT THE OUTSET WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE LD.CIT(A) BECAUSE IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS IN THE BUSINESS OF EXPORT OF CHILLY AND THE TURNOVE R IS SUBSTANTIAL 25 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 CONSIDERING THE FORWARD CONTRACT ENTERED INTO BY TH E ASSESSEE. THE LD.CIT(A) AFTER EXPLAINING THE FACTS OF THE CAS E AND ANALYZING THE DECISION OF THE HONBLE HIGH COURT IN THE CASE CIT VS. BADRIDAS GAURIDU PVT. LTD. REPORTED IN 261 ITR 256 HAS HELD THAT IN THE CASE OF THE ASSESSEE WHO HAS SUBST ANTIAL EXPORT BUSINESS THE LOSS INCURRED BY THE ASSESSEE O N FORWARD CONTRACT OF FOREIGN EXCHANGE IS NOT A SPECULATION L OSS BUT BUSINESS LOSS. IN THIS SITUATION WE DO NOT FIND IT NECESSARY TO INTERFERE IN HIS ORDER. 10. GROUND NO.3(II) : DELETING THE ADDITION OF RS.3,86, 56,582/- TOWARDS GENERAL EXPENSES :- THE ASSESSEE HAD DEBITED RS.3,86,56,582/- BEING GEN ERAL EXPENSES REIMBURSABLE TO M/S. EXIM RAJATHI INDIA PV T. LTD., SINCE M/S. EXIM RAJATHI INDIA PVT. LTD., HAD INCURRED THE EXPENDITURE ON ACCOUNT OF THE ASSESSEES EXPORT BUSINESS. THIS TRA NSACTION WAS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE F OR THE RELEVANT ASSESSMENT YEAR BY WAY OF JOURNAL ENTRY. THE LD.AO OPINED THAT THE TRANSACTION IS A MODUS-OPERANDI TO DIVERT THE P ROFIT OF THE ASSESSEE COMPANY TO M/S. RAJATHI INDIA PVT. LTD., B ECAUSE NO 26 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 DETAILS, EXPLANATIONS OR EVIDENCE WERE PRODUCED TO ESTABLISH THAT THE EXPENSES ARE GENUINE. THEREFORE THE LD.AO DISAL LOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE AS ALLOWABLE DE DUCTION. ON APPEAL, THE LD.CIT(A) DELETED THE ADDITION. HOWEVER ON PERUSING THE ORDER OF THE LD.CIT(A) WE DO NOT FIND ANY CONVI NCING EVIDENCE RECORDED BY THE LD.CIT(A) IN ORDER TO JUSTIFY HIS S TAND. THEREFORE IN THE INTEREST OF JUSTICE WE HEREBY REMIT BACK THE MATTER TO THE FILE OF LD.CIT(A) SO AS TO ARRIVE AT A CONCRETE FINDING ON THE ISSUE AFTER OBTAINING THE REMAND REPORT FROM THE LD.AO AND THER EAFTER PASS APPROPRIATE ORDER AS PER MERIT AND LAW PROVIDING PR OPER OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 11. GROUND NO.3(III) : DELETING THE DISALLOWANCE OF RS.2,06,00,000/- TOWARDS GENERAL EXPENSES IN RESPEC T OF CHILLY EXPORTS:- SINCE WE HAVE HELD IN THE ASSESSEES APPEAL IN PA RA NO.7.1 HEREIN ABOVE THAT THE LD.CIT(A) HAS EXAMINED THE ISSUE IN DETAIL AND HAD MADE A CATEGORICAL FINDING THAT T HE ASSESSEE HAD REIMBURSED THE EXPENSES INCURRED BY M/S. EXIM RAJAT HI PVT. LTD., ON BEHALF OF THE ASSESSEE AND HAD ONLY SUSTAINED TH E ADDITION ONLY TO THE EXTENT OF RS.34,00,000/- AFTER ANALYZIN G THE ISSUE WITH 27 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 PLAUSIBLE REASONS, WE DO NOT FIND IT NECESSARY TO I NTERFERE WITH HIS ORDER. ACCORDINGLY THIS GROUND RAISED BY THE ASSESS EE IS DEVOID OF MERITS., THIS GROUND RAISED BY THE REVENUE DOES NOT SURVIVE. ACCORDINGLY THIS ISSUE IS DECIDED AGAINST THE REVEN UE. 12. GROUND NO.3(IV) : DELETING THE DISALLOWANCE OF INTEREST AMOUNTING TO RS.1,37,90,526/- OUT OF THE TOTAL ADDI TION OF RS.1,38,00,156/- DURING THE COURSE OF SCRUTINY ASSESSMENT IT WAS OBS ERVED BY THE LD.AO THAT THE ASSESSEE HAD EXTENDED INTERES T-FREE ADVANCES TO M/S. EXIM RAJATHI INDIA PVT. LTD. RS.16 ,00,04,787/-, OTHERS RS.23,50,000/- AGGREGATING TO RS.16,23,54,78 7/- WHILE AS THE ASSESSEE HAD BORROWED SUBSTANTIALLY FROM BANKS AMOUNTING TO RS.4.97 CRORES FROM ICICI BANK AND RS.22 CRORES FRO M IOB @ 8.5% PER ANNUM. THEREFORE THE LD.AO WAS OF THE VIEW THAT THE ASSESSEE HAD DIVERTED ITS INTEREST BEARING FUNDS TO NON-BUSINESS PURPOSES AND HENCE DISALLOWED THE INTEREST ELEMENT OF RS.1,38,00,156/- (RS.16,23,54,787*8.5/100). ON APPE AL THE LD.CIT(A) DELETED THE DISALLOWANCE OF INTEREST TO T HE EXTENT OF RS.1,37,90,526/-, RELYING ON THE DECISION OF THE HO NBLE APEX COURT IN THE CASE SA BUILDERS VS. CIT REPORTED IN 2 88 ITR 1 AND THE DECISION OF THE HONBLE MADRAS HIGH COURT IN TH E CASE HOTEL 28 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 SAVERA REPORTED IN 239 ITR 795. WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD.CIT(A) ON THIS ISSUE BECAUSE HE HAS GIVEN RELIEF TO THE ASSESSEE ON THE ASSUMPTION THAT THE REVENUE HAS NOT ESTABLISHED THE FACT THAT THE ADVANCES WERE MADE OU T OF INTEREST BEARING FUND. FURTHER SINCE THE BALANCE SHEET AND T HE FINANCIAL STATEMENTS OF THE ASSESSEE IS NOT BEFORE US, WE ARE ALSO UNABLE TO ASCERTAIN WHETHER THE ASSESSEE HAS ADVANCED THE AMO UNT OUT OF ITS INTEREST BEARING FUND OR NON-INTEREST BEARING F UND. THEREFORE IN THE INTEREST OF JUSTICE THIS ISSUE IS ALSO REMITTED BACK TO THE FILE OF LD.CIT(A) WITH A DIRECTION TO OBTAINING REMAND REP ORT FROM THE LD.AO AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AND MERIT. REVENUES APPEAL IN ITA NO.1124 OF 2012 FOR THE ASS ESSMENT YEAR 2008-09 13. GROUND NO.3 (B) (I) : DELETING THE ADDITION OF RS.5 ,00,000/- TOWARDS INADEQUATE DRAWINGS: DURING THE COURSE OF SCRUTINY ASSESSMENT, IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAD WITHDRAWN ONLY RS.19,73,000/- AS HER DRAWINGS. THE LD.AO OPINED TH AT CONSIDERING THE AFFLUENT LIFE STYLE OF THE ASSESSEE WHO IS IN 29 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 POSSESSION OF HIGH END CARS, THE DRAWINGS DISCLOSED BY HER IS INSUFFICIENT AND THEREFORE MADE AN ADDITION OF RS.5 ,00,000/- TOWARDS DRAWINGS FROM UNDISCLOSED INCOME. ON APPEAL THE LD.CIT(A) CONSIDERING THE FACT THAT THE ASSESSEE WH O IS UNMARRIED IS LIVING WITH HER PARENTS DELETED THE ADDITION OF RS.5,00,000/- MADE TOWARDS INSUFFICIENT DRAWING. AT THE OUTSET WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS FAIRLY COME TO THE CONC LUSION ON THE ISSUE AND THEREFORE WE DO NOT FIND IT NECESSARY TO INTERFERE WITH HIS ORDER ON THIS ISSUE. 14. GROUND NO.3(B)(II) : DELETING THE ADDITION OF RS.1,44,00,000/- MADE U/S.40(A)(IA) OF THE ACT:- IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAD DEBITED IN HER P&L ACCOUNT AN AMOUNT OF RS.1,44,00, 000/- BEING PAYMENT MADE TOWARDS FREIGHT AND TRADING EXPENSES W ITHOUT DEDUCTING TAX AT SOURCE. THEREFORE INVOKING THE P ROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE LD.AO DISALLOWED THE EXPENSES AMOUNTING TO RS.1,44,00,000/-. ON APPEAL THE LD.CIT (A) DELETED THE ADDITION BECAUSE THE ASSESSEE / HER REPRESENTAT IVE-SISTER CONCERNS HAD MADE THE PAYMENT TO NON-RESIDENT SHIPP ING COMPANIES IN MALAYSIA AND SINGAPORE AND THE DOUBLE TAXATION 30 ITA NO.1242&1387/MD S/2011 & ITA 1124/MDS/2012 AVOIDANCE AGREEMENTS BETWEEN INDIA, MALAYSIA AND SI NGAPORE SPECIFIES THAT TAX NEED NOT BE DEDUCTED AT SOURCE O N SUCH PAYMENTS. BEFORE US THE LD.DR COULD NOT CONTROVERT TO THE FACTS BROUGHT BY THE LD.CIT(A) OR HIS DECISION. THEREFORE WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDERS OF THE LD .CIT(A) ON THIS ISSUE. 15. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO. 1242 OF 2011 IS PARTLY ALLOWED, REVENUES APPEALS IN ITA NO .1387 OF 2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDIC ATED HEREIN ABOVE AND IN ITA NO. 1124 OF 2012 IS DISMISSED. ORDER PRONOUNCED ON THE 30 TH JANUARY, 2018 AT CHENNAI. SD/- SD/- ( ! ' . #$ ) ( . ) ( DUVVURU RL REDDY ) ( A . MOHAN ALANKAMONY ) % & /JUDICIAL MEMBER & / ACCOUNTANT MEMBER '% /CHENNAI, (& /DATED 30 TH JANUARY, 2018 RSR & *+ ,+ /COPY TO: 1. /ASSESSEE 2. /REVENUE 3. / ( )/CIT(A) 4. / /CIT 5. +01 2 /DR 6. 13 /GF