Kirti Manikchand Dugad, Pune V. Deputy Commissioner of Income-tax,

ITA 1543/PUN/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0357 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-03-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 26-11-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Block assessment
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1543/PUN/2015 / ASSESSMENT YEAR : 2012-13 KIRTI MANIKCHAND DUGAD, 27/28, VASANT BAUG, BIBWEWADI, PUNE 411037. PAN : AAQPD6883N. . / APPELLANT V/S THE DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), PUNE. . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK & SHRI SUHAS BORA. REVENUE BY : SHRI SANJEEV GHEI. PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 12, PUNE DATED 14.09.2015 FOR THE ASSESSMENT YEAR 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BU SINESS OF TRADING IN LAND. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2012- 13 ON 09.04.2013 DECLARING TOTAL LOSS OF RS.1,15,20,406/-. THE / DATE OF HEARING : 27.03.2019 / DATE OF PRONOUNCEMENT: 29.03.2019 2 ITA NO.1543/PUN/2015 CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMEN T WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.15.03.2015 AND T HE TOTAL INCOME WAS DETERMINED AT RS.2,52,32,410/-. AGGRIEVED BY T HE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.14.09.2015 (IN APPEAL NO.PN/CIT(A)-12/DCIT, CEN T CIR- 2(1) PUNE/1184/2014-15) DISMISSED THE APPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDI TION OF RS.13712000/- MADE BY THE AO ON THE GROUND THAT THE AMOUNT RECEIVED ON SALE OF AGRICULTURAL LAND AT GAT NO.195 AT LONIKAND BE TAXABLE AS BUSINESS INCOME IN THE HANDS OF THE APPE LLANT. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PRO FIT ON SALE OF AGRICULTURAL LAND IS BUSINESS INCOME ON THE GROUND THAT APPELLANT HIMSELF HAS DISCLOSED IN THE BALANCE SHEET AS STOCK IN TRADE. 3. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING TH E FOLLOWING IMPORTANT FACTORS WHILE MAKING ADDITION :- A. THAT THE APPELLANT IS AN AGRICULTURIST. B. THAT THE APPELLANT HAD PURCHASED THE SAID LAND IN T HE YEAR 1998-99 AND USED IT FOR AGRICULTURAL PURPOSES, NO CONSTRUCTION WAS PERMISSIBLE ON THE SAID LAND AND N OR DID THE APPELLANT TAKE ANY PERMISSION TO CHANGE THE USE R OF THE LAND. C. OTHER LAND OWNED BY THE APPELLANT WERE EITHER IN TH E RESIDENTIAL ZONE OR ON HILL TOP / HILL SLOPE ZONE, WHERE ANY AGRICULTURAL ACTIVITIES WERE NOT CARRIED ON AND CON STRUCTION WAS PERMISSIBLE. D. THE SAID LAND WAS SOLD AFTER 11 YEARS AND RIGHT FRO M INCEPTION THE AGRICULTURAL ACTIVITIES WERE CARRIED OUT ON THE SAID LAND, THEREFORE CONSIDERING THE PERIOD OF HOLD ING AND STATUS OF LAND IT IS QUITE EVIDENT THAT THE INTENTI ON OF THE APPELLANT WAS TO HOLD THE SAID LAND AS AN INVESTMEN T AND NOT AS STOCK IN TRADE. E. REVENUE RECORDS CLEARLY SHOW THAT THE LAND IS AGRIC ULTURAL LAND AND IS SITUATED WITHIN THE AGRICULTURAL ZONE O NLY ON WHICH NO OTHER ACTIVITY OTHER THAN AGRICULTURE IS P ERMITTED. F. THE SAID LAND IS SITUATED IN THE RURAL AREA AND THE POPULATION OF THE VILLAGE IS LESS THAN 10000. 3 ITA NO.1543/PUN/2015 G. THERE WAS NO ATTEMPT ON THE PART OF THE APPELLANT F OR USE OF THE SAID LAND OTHER THAN AGRICULTURE AS NO CONST RUCTION WAS PERMISSIBLE ON THE SAID LAND. H. THE APPELLANT HAD USED THE SAID LAND FOR AGRICULTUR AL PURPOSES AND CROPS LIKE JOWAR, BAJARA ETC .WERE GRO WN. I. THAT EVEN A TRADER CAN HOLD AN ASSET AS INVESTMENT. 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD CLAIMED AN AMOUNT OF RS.1,37,12,000/- RECEIVED ON SALE OF LAND AS EXEMPT FOR THE REASON THAT THE LAND WAS AN AGRICULTURAL LAND. AO NOTICED THAT THE LAND THAT WAS SOLD DURING THE YEAR WAS TRANSFERRED FROM STOCK-IN-TRADE TO FIXED A SSETS AT BOOK VALUE DURING THE YEAR AND ON ITS SALE, ASSESSEE HAD CLAIME D THE PROFIT EARNED ON ITS SALE TO BE EXEMPT CALLING IT TO BE SA LE OF AGRICULTURAL LAND. AO NOTED THAT THE AUDITOR HAD CERTIFIE D THAT ASSESSEE WAS IN THE BUSINESS OF LAND DEALING. ACCORDING TO AO, THE SALE OF LAND BY THE ASSESSEE WAS PART OF STOCK-IN-TRADE AND THE INCOME EARNED ON ITS SALE WAS BUSINESS INCOME. THE SUBMIS SION OF THE ASSESSEE THAT CATEGORIZATION OF THE LAND AS PART OF STOCK-IN-TRADE WAS AN ERROR WAS NOT FOUND ACCEPTABLE TO THE AO IN VIE W OF THE FACT THAT LAND WAS PURCHASED IN THE YEAR 2000 AND WAS CATE GORIZED BY ASSESSEE AS STOCK-IN-TRADE SINCE THE YEAR OF PURCHASE . HE ALSO NOTICED THAT ASSESSEE WAS COVERED U/S 132(4) OF THE ACT TWICE IN THE PAST AND HIS BLOCK ASSESSMENTS WERE COMPLETED BY THE DEPARTMENT AND NO WHERE ASSESSEE IN THE PAST HAD TREATED THE LAN D AS FIXED ASSET. HE THEREFORE DID NOT FIND THE SUBMISSION OF THE AS SESSEE 4 ITA NO.1543/PUN/2015 THAT THE LAND BEING CATEGORIZED AS STOCK-IN-TRADE TO BE MISTAKE. A O THEREFORE CONSIDERED THE INCOME OF RS.1,37,12,000/- AS BUS INESS INCOME AND MADE ITS ADDITION. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO CONFIRME D THE ACTION OF AO. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US. 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSION MADE BEFORE AO AND LD.CIT(A). LD.D.R. ON THE OTHER HAND, SUPPORTED THE O RDER OF AO. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO TREATMENT OF PROFIT EARNED ON SALE OF LAND. IT IS ASSESSE ES CONTENTION THAT THE SALE OF LAND WAS EXEMPT AS IT WAS A N AGRICULTURAL LAND WHEREAS IT IS REVENUES CONTENTION THAT THE PROFITS ARE BUSINESS INCOME. WE FIND THAT LD.CIT(A) WHILE UPHOLDING THE ORDER OF AO HAS GIVEN A FINDING THAT THE LAND IN QUESTION WAS PURCHASED BY THE ASSESSEE ON 29.02.2000 FOR A CONSIDERA TION OF RS.1,50,000/- AND IT WAS INCLUDED IN THE BOOKS AS STOCK-IN -TRADE AND IT WAS CONTINUOUSLY APPEARING AS STOCK-IN-TRADE. HE FURTHER NOTED THAT ON 01.04.2011 IT WAS SHOWN AS OPENING STOCK BUT ASSESSEE TRANSFERRED THE LAND FROM STOCK-IN-TRADE TO FIXED ASSETS AND THEREAFTER SOLD IT FOR A CONSIDERATION OF RS.1.38 CRORE S. LD.CIT(A) HAS ALSO NOTED THAT ASSESSEE HAS NEVER SHOWN INCOME FROM AGRICULTURAL OPERATIONS. HE THEREAFTER RELYING ON THE VARIOUS DECISIONS CITED IN THE ORDER HAS UPHELD THE ORDER OF AO W HEREBY THE PROFITS EARNED WAS HELD TO BE BUSINESS INCOME. BEFORE U S, ASSESSEE HAS NOT POINTED OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). W E 5 ITA NO.1543/PUN/2015 THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF L D.CIT(A). THUS, THE GROUNDS OF THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED ON 29 TH DAY OF MARCH, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 29 TH MARCH, 2019. YAMINI '#$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4 5. 6. THE CIT(A)-12, PUNE. THE PCIT, CENTRAL, PUNE. !,# ! , / DR, ITAT, A PUNE; &'(/ GUARD FILE. / BY ORDER // TRUE COPY // ) *+, - / SR. PRIVATE SECRETARY # ! , / ITAT, PUNE.