Shri Marthand Singh Mahindra Broadacres Stud Farm Avalahalli Estate , Bangalore V. Assistant Commissioner of Income TAx Circle-6(3)(1), Bangalore

ITA 136/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9977 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-06-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 12-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: C S RAMPRIYADAS
• Keywords: Set aside; Capital Gains
• Section: 143(3); 133A; 250; 201; 143(2); 13; 22; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI A.K. GARODIA , ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO S . 136 & 137 /BANG/2018 (ASSESSMENT YEAR S : 201 2 - 13 & 2013 - 14 ) SHRI MARTHAND SING H MAHINDRA BROADACRES STUD FARM AVALAHALLI ESTATE, YELAHANKA POST, BANGALORE - 560 064 .APPELLANT PAN AAMPM2975N VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 6(3)(1), BANGALOR E. RESPONDENT. ASSESSEE BY: SHRI C.S.RAMPRIYADAS. C.A. REVENUE BY: S MT. R. PREMI, JCIT (D.R) DATE OF HEARING : 29.06 .20 20 DATE OF PRONOUNCEMENT : 30. 06. 20 20 O R D E R PER SHRI PAV AN KUMAR GADALE, JM : THE SE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST DIFFERENT ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) - 6 BANGALORE PASSED U/S 1 4 3 (3 ) AND 250 OF 2 ITA NO S . 136 & 137/BANG/2018 THE INCOME TAX ACT, 1961. SINCE BOTH THE APPEALS HAVE COMMON ISSUES, FOR THE SAKE OF CONVENIEN CE, ARE CLUBBED AND HEARD AND CONSOLIDATED ORDER IS PASSED. 2. WE SHAL L TAKE UP THE ITA NO.136 /BANG/201 8 AND THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND OWNS A STUD FA RM AND MAINTAINS RACE HORSES. THERE WAS A SURVEY OPERATION S U NDER SECTION 133A OF THE ACT CONDUCTED ON 14.12.2011 AND THE INCOME TAX SURVEY TEAM FOUND THE 3 ITA NO S . 136 & 137/BANG/2018 DOCUMENTS RELATING TO SALE OF 22 ACRES OF LAND TO M /S. UNIVAL WILLOWS PVT. LTD. SU BSEQUENTLY N O TICE UNDER S ECTION 143(2) OF THE ACT WAS ISSUED. IN COMPLIANCE, THE LEARNED AUTHORIZED REPRESENTATIVE APPEARED FROM TIME TO TIME AND FURNISHED THE DE TAILS . THE A.O. FOUN D THE SALE CONSIDERATION ADOPTED FOR COMPUTATION OF CAPITAL GAINS ON SALE OF LAND BY THE ASSESSEE IS NOT CORRECT AND HAS ADOPTED RS27,72,06,608/ - AND FURTHER THE ASSESSEE HAD SET OFF LOSS OF RS.67, 77,881 / - INCURRED IN STUD FARM AND CER TAIN CLARIFICATIONS WERE CALLED. DURING THE SAID FINANCIAL YEAR, 11 HORS ES WERE TRANSFERRED TO THE RACING DIVISION AND 5 WERE SOLD OUTSIDE AND ACCOUNTED IN THE SA LES ACCOUNTS. BUT THE ASSESSING OFFICER FOUND THE SALE PROCEEDS OF 11 HORSES ARE ONLY RS.13,19,329 / - AND WHEREAS EXPENSES CLAIMED I N RESPECT OF MAINTENANCE IS MUCH HIGHER, WHICH RESU LTE D IN LOSS OF RS67,77,881/ - T HE ASSESSING OFFICER DEALT ON THE PROVISIONS OF SECTION 74A O F THE ACT AND THE FACTS OF CLAIM AND HIGH EXPENSES INCURRED ON HORSES ACCOUNTED IN THE PROFI T AND LOSS ACCOUNT . THE A.O. IS OF THE OPINION THAT THE EXPENSES INCURRE D O N HORSES IN STUD FARM , TRANSFERRED TO THE RACING DIVISION IS NOT AN ALLOWABLE CLAIM, AND DISALLOWED THE SAME AND ASSESSED THE TOTAL INCOME OF RS.27,91,74,212 / - AND PASSED ORDER UNDER SECTION 143(3) OF THE ACT DT.22.0 7.2014. AGGRIEVED BY THE ORDER, THE ASSE SSEE HAS FILED AN APPEAL BEFORE THE CIT (APPEALS). WHEREAS, THE CIT (APPEALS) HAS CONCURRED WITH THE ACTION OF THE ASSESSING OFFICER IN RESPECT OF THE 4 ITA NO S . 136 & 137/BANG/2018 CLAIM OF SET OFF OF LOSS AND CONFIRMED THE ADDITION AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRI EVED BY THE ORDER OF CIT (APPEALS), THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. 4. AT THE TIME OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE CIT (APPEALS) HAS NOT CONSIDERED THE FACTS AND DETAILS SUBMITTED IN THE COURSE OF HEARING IN RESPECT OF DISPUTED CLAIM , AND SUBSTANTIATED HIS ARGUMENTS WITH FINANCIAL STATEMENTS, COMPU TATION OF INCOME, JUDICIAL DECISION AND THE PAPER BOOK. FURTHER THE LD. AR SUBMITTED THAT THE CIT (APPEALS) HAS NOT PROVIDED ADEQUATE OPPORTUNITY TO SUBMIT CLARIFICATIONS ON MATERIAL FILED AND PRAYED FOR ALLOWING THE APPEAL . C ONTRA, THE LD. DR SUPPORTED THE ORDER S OF CIT (APPEALS). 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, THE WHOLE CRUX OF THE DISPUTED I SSUE IS IN RESPECT OF DISAL LOWANCE OF SET OFF OF EXPENSES. THE A SSESSEE HAS TWO BUSINESS DIVISIONS BEING STUD FARM AND RACE HORSES . D URING THE YEAR THE ASSESSEE HAS TRANSFERRED 11 HORSES TO RACING DIVISION AND 5 HORSES WERE SOLD OUT SIDE AND EXPENSES CLAIMED IN RESPECT OF MAINTENANCE IS MUCH HIGHER AND RESULTING IN LOSS OF RS67,77,881/ - . THE LD.AR DEMONSTRATED THE FINANCIAL STATEMENTS DEPICTING THE FACTS AND CONSIDERATION IN RESPECT OF TRANSFER OF HORSES AND EXPENSES. THE LD. AR EMPHASIZED THAT THE ASSESSEE HA S FILED THE INFORMATION IN APPELLATE PROCEEDINGS AND NO OPPORTUNITY WAS PROVIDED BY THE CIT (APPEALS) AND 5 ITA NO S . 136 & 137/BANG/2018 HAS CONFIRMED THE ADDITION. WE, ON PERUSAL OF THE CIT (APPEALS) ORDER, FOUND THAT THE ASSESSEE HAS SUBMITTED THE INFORMATION , WHICH CANNOT BE DISPUTED AND THERE ARE NO FINDINGS ON THE SUBMISSIONS. F URTHER THE CIT (APPEALS) HAS NOT GIVEN THE CLARITY ON SET OFF OF LOSS AND OVERLOOKED THE NATURE OF THE BUSINESS. CONSIDERING THE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ORDER PASSED BY THE LD CI T (APPEALS) IS CRYPTIC. ACCORDINGLY, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE CIT (APPEALS) AND RESTORE THE ENTIRE DISPUTED ISSUE TO THE FILE OF CIT (APPEALS) TO ADJUDICATE AFRESH AND PASS A SPEAKING AND REASONED ORDER . IT IS NEVERTHELESS TO MENTION THAT, THE ASSESSEE SHALL BE PROVIDE ADEQUATE OPPORTUNITY OF HEARING TO SUBSTANTIATE THE CASE WITH EVIDENCES AND SHALL CO - OPERATE IN SUBMITTING THE INFORMATION FOR EARLY DISPO SAL OF THE APPEAL AND THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. SIMILARLY, THE ASSESSEE HA S FILED APPEAL IN ITA NO.137 /BAN G/2018 FOR THE A.Y. 2013 - 14, WHERE THE ISSUES ARE SIMILAR AND IDENTICAL , AND THE DECISI ON IN ITA NO.136 /BANG/201 8 SHALL EQUALLY APPLY. ACCORDINGLY , WE SET ASIDE THE ORDER OF CIT (APPEA LS) WITH SIMILAR DIRECTIONS AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSE . 6 ITA NO S . 136 & 137/BANG/2018 7. IN THE RESULT, APPEAL S OF THE ASSESSEE FOR THE ASST YEAR 2012 - 13. &2013 - 14 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/ - SD/ - ( A.K. GARODIA ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 .06 . 20 20 . *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE