Income-tax Officer, Aurangabad V. Shri Rajendra Mathurdas Rathi, Aurangabad

ITA 1610/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9498 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-11-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Business income
• Section: 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1610 /P U N/201 5 / ASSESSMENT YEAR : 20 1 2 - 13 THE INCOME TAX OFFICER, WARD 1(1), AURANGABAD ....... / APPELLANT / V/S. SHRI RAJENDRA MATHURADAS RATHI, B. NO. 15/B, SHIVSHAKTI COLONY, JALNA ROAD, OPP. - SFS SCHOOL, AURANGABAD - 431001 PAN : AAUPR4492B / RESPONDENT ASSESSEE BY : S MT. DEEPA KHARE REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 11 - 01 - 2018 / DATE OF PRONOUNCEMENT : 17 - 01 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 1 , AURANGABAD DATED 0 1 - 09 - 2015 FOR THE ASSESSMENT YEAR 20 1 2 - 13. 2 ITA NO .1610/PUN/2015, A.Y. 2012 - 13 2. THE FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A SALARIED PERSON. THE ASSESSEE AND 13 OTHER PERSONS PURCHASED INDIVIDUAL PLOT OF LAND AT AURANGABAD FROM M/S. FERRY FAX FARMS PVT. LTD. AGREEMENT TO SALE BETWEEN THE VENDOR AND ALL THE VENDEES QUA THE LAND WAS EXECUTED ON 30 - 03 - 2005. THE SALE DEED I N RESPECT OF PLOT PURCHASED BY THE ASSESSEE WAS EXECUTED ON 26 TH APRIL, 2010. SUBSEQUENTLY, THE ASSESSEE SOLD THE PLOT TO M/S. NAVRATNA INFRAESTATE LLP VIDE SALE DEED DATED 14 TH JUNE, 2011. THE ASSESSEE OFFERED GAIN ARISING FROM SALE OF AFORESAID PLOT AS LONG TERM CAPITAL GAIN AND ALSO CLAIMED DEDUCTION U/S. 54F O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER AFTER ANALYZING THE TERMS AND CONDITIONS OF THE AGR EEMENT TO SALE DATED 30 - 03 - 2005 HELD THAT THE ASSESSEE ALONG WITH 13 OTHER PERSONS (FRIENDS AND RELATIVES) HAD PURCHASED LAND WITH AN INTENTION TO TRADE. THEREFORE, THE SUBSEQUENT SALE OF LAND BY THE ASSESSEE IS ADVENTURE IN THE NATURE OF TRADE. THE ASSE SSING OFFICER NOT ONLY DISALLOWED ASSESSEE S CLAIM OF DEDUCTION U/S. 54F BUT ALSO ASSESSED THE GAIN ARISING FROM SALE OF LAND AS BUSINESS INCOME. AGGRIEVED BY THE ASSESSMENT ORDER DATED 23 - 02 - 2015, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) REVERSED THE FINDINGS OF ASSESSING OFFICER AND HELD THAT THE GAIN ARISING FROM SALE OF LAND IS LONG TERM CAPITAL GAIN . THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER HELD ASSESSEE ELIGIBLE FOR CLAIMING DEDUCTION U/S. 54F OF THE ACT. AGAINST THE 3 ITA NO .1610/PUN/2015, A.Y. 2012 - 13 FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTING THE FINDINGS OF ASSESSING OFFIC ER SUBMITTED THAT THE TERMS AND CONDITIONS OF THE AGREEMENT TO SALE DATED 30 - 03 - 2005 EXECUTED BY THE ASSESSEE ALONG WITH OTHER 13 PERSONS CLEARLY INDICATE THAT THE INTENTION OF THE VENDEES WAS TO PURCHASE THE LAND FOR BUSINESS PURPOSE. 4. ON THE OTHER H AND SMT. DEEPA KHARE APPEARING ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN TREATING THE GAIN ARISING FROM SALE OF PLOT OF LAND AS LONG TERM CAPITAL GAIN AND ALSO GRANTING THE BENEFIT OF DEDUCTION U/S. 54F OF THE ACT . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT M/S. FERRY FAX FARMS PVT. LTD. OWNED A LARGE CH UNK OF LAND IN GUT NO. 66, ITKHEDA, AURANGABAD , ADMEASURING 5756 SQ. MTRS. THE ASSESSEE ALONG WITH 13 PERSONS APPROACHED THE SAID COMPANY FOR PURCHASE OF LAND FOR CONSTRUCTION OF RESIDENTIAL HOUSE. AN AGREEMENT TO SALE DATED 30 - 03 - 2005 WAS EXECUTED BETWEEN M/S. FERRY FAX FARMS PVT. LTD. AND THE VENDEES OF THE LAND (1 4 IN NUMBER) . AS PER THE TERMS AND CONDITIONS OF THE SAID AGREEMENT , THE VENDOR WAS TO DIVIDE THE LAND IN SMALL PLOTS AS PER REQUIREMENTS OF VENDEES AND WOULD ALSO PREPARE THE LAYOUT PLAN OF THE RESIDENTIAL AREA. THE SAID COMPANY WAS ALSO REQUIRED TO GET THE LAYOUT PLAN APPROVED FROM AURANGABAD MUNICIPAL CORPORATION. THE TOTAL CONSIDERATI ON FOR PURCHASE OF LAND WAS FIXED AT RS.85,14,650/ - . RS.60,00,000/ - WAS COLLECTIVELY PAID BY THE VENDEES AT THE TIME OF EXECUTION OF AGREEMENT TO SALE AND THE 4 ITA NO .1610/PUN/2015, A.Y. 2012 - 13 BALANCE AMOUNT WAS PAID TO THE COMPANY AT THE TIME OF EXECUTION OF SALE DEED. THE INTENTION OF THE ASSESSEE AND ALL OTHER PERSONS WAS TO CONSTRUCT THE RESIDENTIAL HOUSE AND NOT TO TRADE IN LAND FOR BUSINESS PURPOSE. ALL THE PERSONS EXCEPT THE ASSESSEE AND SHRI SHIVPRASAD HIRALAL JAJU RETAINED THEIR RESPECTIVE PLOTS. THE ASSESSEE SOLD HIS PLOT O F LAND AND OFFERED THE GAIN ARISING FROM SALE OF PLOT AS CAPITAL GAIN. SINCE, THE ASSESSEE HAD MADE INVESTMENT OF THE SAID AMOUNT , HE ALSO CLAIMED EXEMPTION U/S. 54F OF THE ACT. THE AUTHORITIES BELOW HAVE REJECTED THE CLAIM OF ASSESSEE AND HAVE TAXED THE GAIN ON SALE OF PLOT AS BUSINESS INCOME. THE LD. COUNSEL POINTED THAT SHRI SHIVPRASAD HIRALAL JAJU AFTER SALE OF HIS PLOT ALSO OFFERED THE GAIN ARISING FROM SALE OF PLOT AS LONG TERM CAPITAL GAIN AND CLAIMED EXEMPTION U/S. 54F OF THE ACT. THE ASSESSING OFFICER ACCEPTED THE CLAIM IN THE CASE OF SHRI SHIVPRASAD HIRALAL JAJU. THE LD. COUNSEL FOR THE ASSESSEE FURNISHED THE COPY OF ASSESSMENT ORDER DATED 20 - 03 - 2015 PASSED U/S. 143(3) OF THE ACT IN THE CASE OF SHRI SHIVPRASAD HIRALAL JAJU. 5. W E HAVE HEARD T HE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE SOLITARY ISSUE IN APPEAL IS, WHETHER GAIN ARISING FROM SALE OF PLOT BY THE ASSESSEE IS B USINESS I NCOME OR LONG TERM CAPITAL GAIN ELIGIBLE F OR EXEMPTION U/S. 54F OF THE ACT. THE FACTS OF THE CASE AS STATED ABOVE CLEARLY INDICATE THAT THE ASSESSEE ALONG WITH 13 OTHER PERSONS HAD PURCHASED THEIR RESPECTIVE PLOT OF LAND F OR RESIDENTIAL PURPOSE FROM M/S. FERRY FAX FARMS PVT. LTD. IT IS AN UNDISP UTED FACT THAT A COMPOSITE AGREEMENT TO SALE WAS EXECUTED. IT WAS A SINGLE PIECE OF LAND ADMEASURING 5756 SQ. MTRS. THE VENDEES HAD REQUESTED THE VENDO R TO DIVIDE THE LAND IN SMALL PLOTS AS PER THEIR 5 ITA NO .1610/PUN/2015, A.Y. 2012 - 13 REQUIREMENT AND TO GET THE LAYOUT PLAN APPROVED FROM MUNICIPAL CORPORATION, AURANGABAD. THE ENTIRE LAND WAS PURCHASED BY 14 PERSONS INCLUDING THE ASSESSEE WITH CLEARLY DEMARCATED RESIDENTIAL PLOTS. AFTER THE EXECUTION OF SALE DEED ON 26 TH APRIL, 2010 , THE ASSESSEE SOLD HIS PLOT LAND TO M/S. NAVRATNA INFRAE STATE LLP VIDE SALE DEED DATED 14 TH JUNE, 2011. IT WAS AN ISOLATE SALE TRANSACTION CARRIED OUT BY THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) IN PARA 5.6 OF THE IMPUGNED ORDER HAS CATEGORICALLY OBSERVED THAT PRIOR TO THIS TRANSACTION OF SALE O F PLOT AND EVEN THEREAFTER , THE ASSESSEE HA S NOT INDULGED IN SALE - PURCHASE OF PLOT /LAND. THE REVENUE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO CONTROVERT THE FINDINGS OF FIRST APPELLATE AUTHORITY. THE ASSESSEE IS A SALARIED PERSON. A STRAY INCIDENT OF SA LE OF PLOT/LAND IN THE FACTS OF THE CASE DOES NOT CONSTITUTE INTENTION ON THE PART OF ASSESSEE TO TRADE IN LAND. 6. WE FIND THAT ONE SHRI SHIVPRASAD HIRALAL JAJU WHO HAD ALSO PURCHASED PLOT OF LAND FROM M/S. FERRY FAX FARMS PVT. LTD. ALONG WITH THE ASSESSEE HAD ALSO SOLD HIS PLOT OF LAND TO M/S. NAVRATNA INFRAESTATE LLP AND OFFERED THE INCOME ARISING THERE FROM AS LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER IN HIS CASE ACCEPTED THE SAME AND ALLOWED CLAIM OF DEDUCTION U/S. 54F OF TH E ACT. WE FIND THAT THE CASE OF ASSESSEE IS AT PAR WITH SHRI SHIVPRASAD HIRALAL JAJU. THUS, THE FACTS OF CASE DO NOT INDICATE THAT INTENTION OF THE ASSESSEE WAS TO TRADE IN LAND. ACCORDINGLY, WE UPHOLD THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS ) AND DISMISS THE APPEAL OF REVENUE. 6 ITA NO .1610/PUN/2015, A.Y. 2012 - 13 7 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 17 TH DAY OF JANUARY, 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 17 TH JANUARY, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 1 , AURANGABAD 4. THE PR. COMMISSIONER OF INCOME TAX - 1, AURANGABAD 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE