ITO, CHENNAI V. P.Palaniappan, CHENNAI

ITA 1571/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81133 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2014
• Appeal Filed By: Department
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2014
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Capital asset; Business income
• Section: 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHE NNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 1571/MDS/2014 / ASSESSMENT YEAR : 2008-09 INCOME TAX OFFICER, WARD-IX(3), CHENNAI ( !% /APPELLANT) VS SHRI P.PALANIAPPAN, NO.74, GOUDIA MUTT ROAD, ROYAPETTAI, CHENNAI-600 014 [PAN: AASPP 9457 A] ( &'!% /RESPONDENT) REVENUE BY : SHRI S.DAS GUPTA, JCIT ASSESSEE BY : SHRI M.KARUNAKARAN, ADVOCATE / DATE OF HEARING : 04-09-2014 / DATE OF PRONOUNCEMENT : 04-09-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VII, CHE NNAI DATED 26-02-2014 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 8-09. THE REVENUE HAS IMPUGNED THE FINDINGS OF CIT(APPEALS), IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S.54 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) T O THE ASSESSEE. I.T.A. NO. 1571/MDS/2014 2 2. THE ASSESSEE DURING THE RELEVANT PERIOD SOLD LAN D MEASURING 109728 SQ. FT., AND HAD EARNED LONG TERM CAPITAL GA IN OF ` 44,47,927/-. THE ASSESSEE INVESTED THE ENTIRE AMOU NT IN THE SPECIFIED CAPITAL GAINS ACCOUNT AND CLAIMED THE ENT IRE AMOUNT AS EXEMPT U/S.54 OF THE ACT. HOWEVER, THE ASSESSING O FFICER WAS NOT SATISFIED WITH THE COMPUTATION ON LONG TERM CAPITAL GAINS AND RE-COMPUTED THE INCOME FROM SALE OF LAND AS ` 43,65,320/- AND ASSESSED THE SAME AS BUSINESS INCOME NOT ELIGIBLE F OR DEDUCTION U/S.54. THE ASSESSING OFFICER OBSERVED THAT THE AS SESSEE HAD CONVERTED LAND INTO PLOTS. THE GAIN ARISING FROM S ALE OF HOUSING PLOTS IS A BUSINESS INCOME AND NOT CAPITAL GAIN ARI SING FROM THE SALE OF LONG TERM CAPITAL ASSETS. 3. AGGRIEVED BY THE ASSESSMENT ORDER DATED 30-12-20 10, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS ). THE CIT(APPEALS) VIDE IMPUGNED ORDER REVERSED THE FINDI NGS OF ASSESSING OFFICER AND HELD THAT THE GAINS ARISING F ROM SALE OF LAND IS LONG TERM CAPITAL GAINS ELIGIBLE FOR DEDUCTION U /S.54. THE CIT(APPEALS) REFERRED TO THE PROVISIONS OF SECTION 2(47)(IV) TO EXPLAIN TRANSFER IN RELATION TO CAPITAL ASSETS, WHI CH INCLUDES TRANSFER OF ASSET CONVERTED INTO STOCK-IN-TRADE BY THE OWNER , FOR HIS BUSINESS. THE ASSESSEE CONVERTED THE LAND INTO STO CK-IN-TRADE I.T.A. NO. 1571/MDS/2014 3 AND OFFERED THE GAIN FROM SALE OF LAND AS LONG TERM CAPITAL GAIN IN THE SAME AY. THE ENTIRE CAPITAL GAINS WERE TRAN SFERRED TO THE SPECIFIED CAPITAL GAINS ACCOUNT SCHEME BY THE ASSES SEE WITHIN THE TIME AS ENVISAGED UNDER THE PROVISIONS OF SECTI ON 54 OF THE ACT. THEREAFTER, THE ASSESSEE INVESTED PART OF THE AMOUNT DEPOSITED IN CAPITAL GAIN ACCOUNT ( ` 24,56,370/-) IN RESIDENTIAL PROPERTY. THE CIT(APPEALS) HAS GIVEN A WELL REASON ED FINDINGS IN HOLDING ASSESSEE ELIGIBLE FOR EXEMPTION U/S.54 AND 54F OF THE ACT. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FIN DINGS OF FIRST APPELLATE AUTHORITY. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED AND THE FINDINGS GIVEN IN THE IMPUGNED ORDER ARE CONFIRMED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON THURSDAY, THE 4 TH SEPTEMBER, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) / VICE PRESIDENT ! / JUDICIAL MEMBER '# /CHENNAI, $ /DATED: 04 TH SEPTEMBER, 2014 TNMM #% & '( )#( /COPY TO: 1. *+ /APPELLANT 2. &,*+ /RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. (01 & 2 /DR 6. 13 4 /GF