Banarsidas Ramkishan Jindal, Jalna V. ACIT, Aurangabad

ITA 1251/PUN/2012

• Counselvise Citation: 125124514 RSA 2012
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 11-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PRAVEENA
• Keywords: Sale consideration of property below Jantri Value; Business income; Cost of acquisition; Revised return
• Section: 43CA; 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER I.T.A. NO. 1251/PN/2012: A.Y. 2006-07 BANARASIDAS R. JINDAL JINDAL HOUSE SAMBHAJINAGAR, BHOKARDAN ROAD, JALNA PAN AAQPJ 5372 C APPELLANT VS. ASSTT. CIT (CENT. CIR) AURANGABAD RESPONDENT APPELLANT BY: SHRI J.P. BAIRAGRA RESPONDENT BY: MS. S. PRAVEENA DATE OF HEARING: 22-04-2013 DATE OF PRONOUNCEMENT: 29-5-2013 ORDER PER R.S. PADVEKAR, JM IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE IMP UGNED ORDER OF THE LEARNED CIT(A) AURANGABAD DATED 14-5-2012 FOR THE A.Y. 2006 -07. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS. 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS. 36,00,000/- BEING DIFFERENCE BETWEEN SALE PRICE AND STAMP DUTY VALUATION OF THE PLOT OF LAND SOLD DURING THE YEAR. 2. THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING T HE ACTION OF THE AO IN HOLDING THAT PROVISIONS OF SEC. 50C OF THE ACT ARE APPLICABLE IN RESPECT OF SALE OF PLOT OF LAND WHICH WAS HELD BY THE APPELLAN T FOR TRADING AND NOT INVESTMENT. 3. THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING T HE ACTION OF THE AO IN MAKING THE ADDITION ON ACCOUNT OF DIFFERENCE BETWEE N SALE PRICE AND STAMP DUTY VALUATION OF THE PLOT OF LAND SOLD DURIN G THE YEAR WHEN NO INCRIMINATING MATERIALS OR EVIDENCES ON THIS ISSUE WERE FOUND DURING THE COURSE OF THE SEARCH. 4. THE LEARNED CIT(A) FURTHER ERRED IN HOLDING THAT THE PROVISIONS OF SEC. 50C ARE APPLICABLE MERELY BECAUSE THE APPELLANT HIMSELF HAS DECLARED THE SAID SURPLUS ON SALE OF PLOT OF LAND AS SHORT TERM CAPIT AL GAIN IN THE RETURNS OF INCOME FILED, INSTEAD OF BUSINESS INCOME, INADVERTE NTLY, 2. THE ASSESSEE HAS PURCHASED LAND AT NAGEWADI ON 1 2-4-2005 FOR A CONSIDERATION OF RS. 16,00,000/-. HE SOLD THE SAID LAND ON 25-10 -2005 FOR RS. 20,00,000/-. IN THE RETURN FILED, THE ASSESSEE DECLARED SHORT TERM CAPI TAL GAIN OF RS. 1,33,800/- IN RESPECT OF SALE TRANSACTION OF THE LAND AT NAGEWADI. DURING T HE COURSE OF ASSESSMENT PAGE 2 OF 5 ITA NO. 1251/PN/2012 BANARASIDAS R JINDAL A.Y. 2006-07 PROCEEDINGS, THE ASSESSEE CONTENDED THAT HE HAS PUR CHASED THE SAID LAND FOR THE PURPOSE OF TRADING AND NOT FOR THE PURPOSE OF INVES TMENT. THE ASSESSEE ALSO CLAIMED THAT IT IS A MISTAKE OF HIS CONSULTANT THAT INSTEAD OF DECLARING THE PROFIT ON THE SALE OF SAID LAND UNDER THE HEAD BUSINESS INCOME IT WAS WRONGL Y SHOWN UNDER THE HEAD CAPITAL GAIN. THE ASSESSEE ALSO CONTENDED BEFORE THE AO T HAT IN THE SUBSEQUENT YEAR, THE ASSESSEE HAS DECLARED THE PROFIT FROM THE SALE OF L AND AS BUSINESS INCOME AND THAT HAS BEEN ACCEPTED BY THE DEPARTMENT. THE A.O DID NOT A CCEPT THE CONTENTION OF THE ASSESSEE. THE AO HAS OBSERVED THAT THE ASSESSEE HI MSELF HAS OFFERED THE INCOME UNDER THE HEAD INCOME FROM CAPITAL GAIN AND HENCE THE SAME HAS TO BE TAXED AS A CAPITAL GAIN BY APPLYING THE PROVISIONS OF SEC. 50- C OF THE ACT. HE ACCORDINGLY APPLIED THE PROVISIONS OF SEC. 50-C AND THE SALE VALUE WAS ADOPTED AT RS. 56,00,000;/- AS PER THE VALUE DECLARED FOR THE PAYMENT OF STAMP DUTY AS AGAINST RS. 20,00,000/- DECLARED BY THE ASSESSEE IN THE CONVEYANCE DEED AND DIFFEREN CE OF RS. 36,00,000/- WAS BROUGHT TO TAX. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARN ED CIT(A) BY REITERATING THE CONTENTION TAKEN BEFORE THE AO. THE ASSESSEE CONTE NDED THAT HE SOLD THE LAND WITHIN A SHORT SPAN OF SIX MONTHS. THERE WAS NO INTENTION T O PURCHASE THE SAID LAND AS INVESTMENT FOR APPRECIATION OF ITS VALUE. IN FACT, THE LAND WAS PURCHASED TO DO THE TRADING AND TO EARN THE PROFIT AND HENCE, THE ACTIO N OF THE ASSESSEE FOR SELLING THE SAID LAND WITHIN THE SHORT SPAN PERIOD SUPPORTS THE CONT ENTION THAT INTENTION OF THE ASSESSEE WAS TO DO THE TRADING IN THE LAND. THE ASSESSEE DI D NOT GET ANY FAVOURABLE RESPONSE FROM THE LEARNED CIT(A) AS THE LEARNED CIT(A) PUT A STAMP OF HIS APPROVAL ON THE VIEW TAKEN BY THE AO TREATING THE PROFIT AS CAPITAL GAI N ON THE SALE OF THE SAID LAND AND IS TO BE ASSESSED UNDER THE HEAD CAPITAL GAIN AND PROVI SIONS OF SEC. 50-C ARE APPLICABLE. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE LEARNED COUNSEL SUBMITS THAT THE ASSESSEE HAD NO IN TENTION TO PURCHASE THE SAID LAND FOR THE PURPOSES OF INVESTMENT. HE SUBMITS THAT IT WAS A MISTAKE OF HIS TAX CONSULTANT PAGE 3 OF 5 ITA NO. 1251/PN/2012 BANARASIDAS R JINDAL A.Y. 2006-07 WHO DECLARED THE PROFIT ON THE SALE OF SAID LAND UN DER THE HEAD CAPITAL GAIN. OTHERWISE ALSO, IT HAS NO OTHER CONSEQUENCES IN RESPECT OF EL IGIBLE DEDUCTION. HE REFERRED TO PAGE 14 OF THE PAPER BOOK AND SUBMITS THAT ASSESSEE HAS DECLARED PROFIT ON THE SALE OF SAID LAND IN THE P & L A/C ALONG WITH THE PROFIT ON THE ONION TRADING. HE FURTHER SUBMITS THAT THE ASSET LIKE LAND CANNOT BE SOLD IN SHORT SP AN OF SIX MONTHS UNLESS THE ASSESSEE HAS INTENTION TO PURCHASE THE SAID LAND NOT FOR THE PURPOSE OF APPRECIATION IN ITS VALUE BUT FOR EARNING THE PROFIT. HE SUBMITS THAT IN THE A.Y. 2007-08, ASSESSEE HAS DECLARED THE PROFIT ON THE PLOT TRADING AS BUSINESS INCOME A ND THAT PROFIT IS ON THE SALE OF PLOT AT ADITYANAGAR AS DECLARED IN THE P & L A/C. HE SUBMI TS THAT IN THE A.Y. 2003-04, ALSO ASSESSEE HAS DONE TRADING IN THE LAND AND DECLARED PROFIT AS BUSINESS INCOME. IN SUM AND SUBSTANCE HIS ARGUMENT IS THAT THERE MAY BE SOL ITARY INSTANCES OF THE SALE OF LAND BUT BASICALLY THE NATURE OF TRANSACTION WAS TRADIN G AND NOT AS INVESTMENT. HE FURTHER SUBMITS THAT AS THE ASSESSEES TRANSACTION IS A BUS INESS TRANSACTION, SEC. 50-C IS NOT APPLICABLE. FOR THAT PROPOSITION, HE RELIED ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT II VS. KAN CONSTRUCTION AN D COLONIZERS PVT. LTD. (20 TAXMANN.COM 381 (ALL). HE PLEADED FOR TREATING THE PROFIT/GAIN ON THE SALE OF LAND AT NAGEWADI AS PROFIT ARISING FROM TRADING/BUSINESS. 6. PER CONTRA, THE LEARNED DR PLACED HEAVY RELIANC E ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS . CIT (2006) 284 ITR 323 (SC). HE SUBMITS THAT THE ASSESSEE DID NOT FILE REVISED RETU RN AND ASSESSEE CANNOT CLAIM CHANGE OF HEAD FOR ASSESSING A PARTICULAR INCOME DURING TH E COURSE OF ASSESSMENT PROCEEDINGS. HE SUBMITS THAT IF ANY DEDUCTION IS MISSING AND NOT CONSIDERED WHILE FILING OF THE RETURN AT THE MOST THAT CAN BE CONSIDERED. HE ALSO ARGUED THAT THE ASSESSEE HAS ONLY A SINGLE TRANSACTION DURING THE YEAR AND THE ASSESSEE IS NOT IN THE LAND TRADING. HE SUPPORTS THE ORDER OF THE LEARNED CIT(A). 7. THE ISSUE IN CONTROVERSY IS IN A VERY NARROW COM PASS. SO FAR AS THE PLOT OF LAND IS CONCERNED, IT IS NOT IN DISPUTE THAT IT WAS PURC HASED BY THE ASSESSEE ON 12-4-2005 AND THE SAME WAS SOLD ON 25-10-2005 WITHIN A SHORT SPAN OF SIX MONTHS. THE ASSESSEE PAGE 4 OF 5 ITA NO. 1251/PN/2012 BANARASIDAS R JINDAL A.Y. 2006-07 HAS FILED THE BALANCE SHEET. IN THE BALANCE SHEET, THE SAID PLOT OF LAND IS NOT APPEARING AS THE TRANSACTION IS IN THE SAME FINANCIAL YEAR I. E. PURCHASES AS WELL AS SALE. IT IS ALSO NOT DISPUTED THAT IN THE RETURN FILED BY THE ASSESS EE, THE PROFIT/GAIN ON THE SAID PLOT OF LAND WAS DECLARED UNDER THE HEAD CAPITAL GAIN. S O FAR AS THE SHORT TERM CAPITAL GAIN IS CONCERNED, THE ONLY COST OF ACQUISITION AND OTHER R ELATED EXPENDITURE IS DEDUCTIBLE. THE ASSESSEE TOOK CONTENTION BEFORE THE AO THAT BY MIST AKE THE PROFIT/GAIN WAS DECLARED UNDER THE HEAD CAPITAL GAIN AND ASSESSEE HAD NEVE R INTENDED TO PURCHASE THE SAID PLOT AS INVESTMENT. WE FIND THAT IN THE A.Y. 2003- 04 AND 2007-08, ASSESSEE HAD ENTERED INTO SOLITARY TRANSACTION OF THE LAND AND D ECLARED THE PROFIT UNDER THE HEAD BUSINESS INCOME. SO FAR AS THE WORKING OF THE SH ORT TERM CAPITAL GAIN AND BUSINESS PROFIT, DEDUCTIONS ARE SAME. THE ONLY CONTROVERSY IS APPLICABILITY OF SEC. 50-C. SO THE FIRST QUESTION BEFORE US IS ON THAT GROUND, CAN THE CLAIM OF THE ASSESSEE BE REJECTED AND OUR ANSWER IS NO. IN THE CASE OF GOETZE (I) LTD. (SUPRA), THE HONBLE SUPREME COURT HAS EXAMINED THE POWER OF THE AO NOT TO ADMIT ANY C LAIM WITHOUT FILING REVISED RETURN BUT AT THE SAME TIME IT IS MADE CLEAR THAT, NO LIMI TATION IS PUT ON THE POWER OF TRIBUNAL U/S 254(1) OF THE ACT. IN SUM AND SUBSTANCE, EVEN ON THE PLEA RAISED WHICH OTHERWISE ALL THE FACTS ON RECORD, THE TRIBUNAL CAN CONSIDER THE SAID PLEA AS HELD IN THE CASE OF NATIONAL THERMAL POWER COMPANY LTD. VS. CIT (1998) 229 ITR 383 (SC). 8. WE FIND THAT THE ASSESSEE RAISED THE CLAIM AT TH E VERY STAGE OF THE ASSESSMENT PROCEEDINGS. WE FIND THAT THE ASSESSEE SOLD THE LA ND WITHIN A SPAN OF LESS THAN SIX MONTHS. THE LAW IS WELL SETTLED THAT THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF A PARTICULAR ASSET IS DETERMINATIVE WH ETHER IT IS INVESTMENT OR IT IS A TRADING TRANSACTION. WE FIND FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL THAT THE LAND IS SOLD WITHIN A SHORT SPAN OF SIX MONTHS. THE LAND DID NO T APPEAR EITHER AS A CLOSING STOCK OR ASSET IN THE BALANCE SHEET BECAUSE SAID LAND WAS PU RCHASED AS WELL AS SOLD IN THE SAME YEAR. IN THE P & L A/C FILED ALONG WITH THE R ETURN, (PAGE 14 OF THE PAPER BOOK), THE ASSESSEE HAS DECLARED THE PROFIT ON SALE OF THE SAI D LAND ALONG WITH THE PROFIT ON TRADING OF ONION. WE ALSO FIND THAT IN SUBSEQUENT YEAR 200 7-08, THE ASSESSEE HAD DECLARED PROFIT FROM THE TRADING OF THE LAND AND ALSO IN THE ASSESSMENT YEAR 2003-04. WE PAGE 5 OF 5 ITA NO. 1251/PN/2012 BANARASIDAS R JINDAL A.Y. 2006-07 THEREFORE, HOLD THAT THE TRANSACTION OF THE LAND AT NAGEWADI IS A TRADING TRANSACTION AND PROFIT IS TO BE ASSESSED AS BUSINESS INCOME. 9. THE NEXT QUESTION WHETHER THE PROVISION OF SEC. 50-C ARE APPLICABLE IF THE PROFITS/GAINS CONSISTED THE VALUE OF THE BUSINESS I NCOME. THIS STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION ALLAHABAD HIGH COUR T IN THE CASE OF KAN CONSTRUCTION & COLONIZERS PVT. LTD (SUPRA). NOW, NEW SECTION 43CA IS INTRODUCED IN THE INCOME-TAX ACT BY THE FINANCE ACT, 2013 BUT THE SAID AMENDMENT IS PROSPECTIVE AND THEREFORE, NOT APPLICABLE TO THE ASSESSMENT YEAR 2006-07 WHICH IS SEIZED BEFORE US. WE THEREFORE, HOLD THAT THE PROFIT ON SALE OF LAND AT NAGWADI IS TO BE ASSESSED AS BUSINESS INCOME WITHOUT APPLYING THE PROVISIONS OF SEC. 50-C. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 29 TH MAY 2013. SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 29 TH MAY 2013 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT- (A) AURANGABAD 4. THE CIT- AURANGABAD 5. THE D.R, B BENCH, PUNE BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE