Sabari Properties Pvt Ltd., CHENNAI V. ITO, CHENNAI

ITA 1390/CHNY/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0734 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 30-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NETHRA PAL
• Assessee Lawyers: R SIVARAMAN
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Cost of acquisition; Date of conversion; Fair market value; Set aside
• Section: 143(3)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHE NNAI . , . , ! ' BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER # ./ I.T.A.NO.1390/CHNY/2017 !$ %$ / ASSESSMENT YEAR :2012-13 M/S. SABARI PROPERTIES PVT. LTD., NO.15, TRADE CENTRE, WALLAJAH ROAD, CHENNAI 600 002. [PAN: AABCP 9848H] VS. THE INCOME TAX OFFICER, CORPORATE WARD-6(1), CHENNAI. ( /APPELLANT ) ( / RESPONDENT ) # &' ( ) / APPELLANT BY : SHRI R. SIVARAMAN, ADVOCATE *+&' ( ) / RESPONDENT BY : SHRI NETHRAPAL, JCIT , ( -. / DATE OF HEARING : 16.05.2019 / % ( -. /DATE OF PRONOUNCEMENT : 07.08.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNA I DATED 31.03.2017 RELEVANT TO THE ASSESSMENT YEAR 2012-13. THE GROUN DS RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX - APPEALS [CIT (A)] IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, EQUITY AND LAW. 2. THE LD. CIT (A) ERRED IN LAW IN ADDING THE INCO ME FROM THE SALE OF AGRICULTURAL LAND AMOUNTING TO RS.1 ,25,60, 095/- AS INCOME FROM BUSINESS. I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.1390 1390 1390 1390/ // /CHNY CHNY CHNY CHNY/ // /1 11 17 77 7 2 3. THE CIT (A) ERRED IN LAW IN HOLDING THAT THE LA NDS IN QUESTION DURING THE RELEVANT ASSESSMENT YEAR IS NOT AGRICULT URAL LAND AND THEREFORE COULD ONLY BE TREATED AS BUSINESS FRO M INCOME. 4. THE LD. CIT (A) ERRED IN LAW IN HOLDING THAT TH E PROFIT EARNED BY THE APPELLANT FROM THE SALE OF THE PLOTS IS TO B E TREATED AS BUSINESS INCOME OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. 5. THE LD. CIT (A) ALSO ERRED IN TREATING THE AGRI CULTURAL INCOME OF RS.1,57,884/- AS INCOME FROM OTHER SOURCES INSTE AD OF BUSINESS INCOME. 6. FOR THE AFORESAID GROUNDS AND FOR OTHER GROUNDS TO BE RAISED AT THE TIME OF HEARING, THE ORDER OF CIT(A) AND THE ASSESSING OFFICER MAY BE SET ASIDE AND JUSTICE BE RENDERED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 26.03.2013 ADMITTING TOTAL LOSS OF .52,680/-. THE CASE WAS SELECTED FOR SCRUTINY. AFTE R EXAMINATION OF THE DETAILS FURNISHED AGAINST THE STATUTORY NOTICES AS WELL AS CONSIDERING THE SUBMISSIONS, THE ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT] WAS COMPLETED BY ASSESSING TO TAL INCOME OF THE ASSESSEE AT .1,25,07,420/- AFTER MAKING VARIOUS ADDITIONS. ON A PPEAL, THE LD. CIT(A) CONFIRMED THE ADDITIONS. 3. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL B EFORE THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW INCLUDING PAPER BOOK FILED BY THE ASSESSEE. BY FILING AN AFFIDAVIT CONTAINING THE TRANSLATED I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.1390 1390 1390 1390/ // /CHNY CHNY CHNY CHNY/ // /1 11 17 77 7 3 COPY OF VALUATION DETAILS PROVIDED BY THE SUB-REGIS TRAR OF GUMMIDIPOONDI, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT FROM THE DATE OF PURCHASE TO DATE OF CONVERSION OF PROPERTY, THE IMP UGNED LAND IS AN AGRICULTURAL LAND. IT WAS THE SUBMISSION THAT THE P ROFIT FROM THE SALE OF LAND SHOULD BE CALCULATED AS PER THE FAIR MARKET VALUE O F PROPERTY FIXED BY THE REVENUE DEPARTMENT, WHICH WAS NOT DONE BY THE ASSES SING OFFICER AND PRAYED FOR THE SAME. WE FIND FORCE IN THE ARGUMENT OF THE LD. COUNSEL. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT DIS CUSSED THE BASIS FOR ADOPTING THE COST OF ACQUISITION AT .8,71,906/-. ACCORDINGLY, WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO DETERMINE THE COST OF ACQUISITION AS PER THE FAIR MARKET VALUE OF PROPERT Y FIXED BY THE REVENUE DEPARTMENT AND ASSESS THE BUSINESS PROFIT IN ACCORD ANCE WITH LAW AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. 5. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASS ESSEE RELATES TO CONFIRMATION OF ADDITION OF .1,57,884/-. THE ASSESSEE HAS ADMITTED .1,57,884/- AS AGRICULTURAL INCOME. SINCE THE ASSES SEE COULD NOT SUBSTANTIATE THE SAME, THIS INCOME WAS ASSESSED UND ER INCOME FROM OTHER SOURCES. VIDE REPLY DATED 16.03.2015 AT POINT NO. 5, IT WAS THE SUBMISSION THAT AGRICULTURAL OPERATIONS WERE CARRIED ON THE LA ND EARLIER, BUT WAS TEMPORARILY SUSPENDED BECAUSE OF INADEQUATE WATER A VAILABILITY. MOREOVER, I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.1390 1390 1390 1390/ // /CHNY CHNY CHNY CHNY/ // /1 11 17 77 7 4 FROM THE PLANS ATTACHED TO THE SALE DEED AND PART O F THE ASSESSMENT ORDER, WE HAVE NOTED THAT IT IS IMPOSSIBLE TO CARRY OUT AN Y AGRICULTURAL OPERATION IN A PUCCA LAY OUT WITH ROADS AND STREETS WERE FORMED BY THE ASSESSEE BEFORE SELLING THE LAND, WHERE IN THIS CASE, THE SALES COM MENCED IN JULY, 2011 ONWARDS. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT BEFORE PLOTTING THE LAND FOR NON-AGRICULTURAL PURPO SES, VARIOUS TREES STOOD IN THE LAND OF 3 ACRES AND 30.5 CENTS WERE CUT AND SOL D AND THEREBY, THE ASSESSEE EARNED INCOME OF .1,57,884/- AND THUS, THE SAID INCOME HAS TO BE ALLOWED AGRICULTURAL INCOME. HOWEVER, THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN THIS REGARD. ANYWAY, IN CASE, IF THE AS SESSEE FURNISHES ANY COGENT EVIDENCE, THE SAME MAY BE EXAMINED AND ALLOW ED. IN CASE THE ASSESSEE FAILED TO FURNISH COGENT EVIDENCE, THE ORD ERS OF AUTHORITIES BELOW STAND SUSTAINED. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 07 TH AUGUST, 2019 AT CHENNAI. SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 07.08.2019 VM/- I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.1390 1390 1390 1390/ // /CHNY CHNY CHNY CHNY/ // /1 11 17 77 7 5 0 ( *!-1 2# 32%- /COPY TO: 1. # &' / APPELLANT, 2. *+&' / RESPONDENT, 3. 4- ( # ) /CIT(A), 4. 4- /CIT, 5. 256 *!-!7 /DR & 6. 6$ 8, /GF. I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.1390 1390 1390 1390/ // /CHNY CHNY CHNY CHNY/ // /1 11 17 77 7 6