Debashis Kar, Howrah V. ACIT, Circle - 47, Kolkata, Kolkata

ITA 1645/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1662 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 04-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: MIRAJ D. SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BE NCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM ] I.T.A NO. 1645/KOL/20 17 ASSESSMENT YEAR : 2013-1 4 SHRI DEBASISH KAR -VS.- A.C.I.T., CIRCLE- 47, HALDIA KOLKATA [PAN : AOFPK 6914 E] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT : SMT. RANU BISWAS, ADDL. CIT DATE OF HEARING : 24.01.2018. DATE OF PRONOUNCEMENT : 02.02.2018. ORDER THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 28.04.2017 OF CIT(A)- 14, KOLKATA RELATING TO A.Y.2013-14. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ S AS FOLLOWS :- I. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CJT(A) WAS NOT JUSTIFIED IN LAW IS SUSTAINING 'DISALLOWANCE TO THE TUNE OF RS. 27,44,6001- FOR LAND DEVELOPMENT EXPENSES WITHOUT PROPERLY APPRECIATING THE WRITTEN CLARIFICATION, CASH FLOW STATEMENT AND PAPER BOOK FILED BEFORE HIM. 2. FOR THAT IN ANY EVENT THE AUTHORITIES BELOW ACTE D CAPRICIOUSLY AND UNLAWFULLY IN DISALLOWING THE BONAFIDE EXPENSES OF LAND DEVELO PMENT 'AND BROKERAGE OUT OF MERE SUSPICION AND CONJECTURES. YOUR APPELLANT CRAVES LEAVE TO ADD SUPPLEMENT OR AM END FURTHER GROUND OR GROUNDS AT THE TIME OF HEARING. 3. THE ASSESSEE IS AN INDIVIDUAL. DURING THE PREVI OUS YEAR THE ASSESSEE SOLD A PROPERTY WHICH WAS A VACANT LAND. IT IS NOT IN DISP UTE THAT THE INCOME FROM SALE OF THE PROPERTY WAS CONSIDERED AS INCOME FROM BUSINESS AS THE ASSESSEE WAS IN THE BUSINESS OF PURCHASE AND SALE OF LAND. THE DISPUTE IN THE PRESE NT CASE IS WITH REGARD TO THE CLAIM OF 2 ITA NO.1645/KOL/2017 SHRI DEBASISH KAR A.YR.2013-14 2 THE ASSESSEE FOR DEDUCTION OF A SUM OF RS.31,85,00 0/- ON ACCOUNT OF EXPENDITURE INCURRED FOR EARTH FILLING OF THE LAND WHICH WAS SO LD DURING THE RELEVANT PREVIOUS YEAR. 4. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF EARTH FILLING EXPENSES FOR THE REASON THAT THE EXPENSES CLAIMED B Y THE ASSESSEE TO HAVE BEEN INCURRED WERE INCURRED BY MAKING PAYMENT IN CASH TO VARIOUS PARTIES. THE AO ALSO FOUND THAT OUT OF THE EXPENDITURE OF RS.31,85,000/- THE ASSESSEE H AD PAID A SUM OF RS.8,02,000/- DURING THE RELEVANT PREVIOUS YEAR AND THE REMAINING SUM OF RS.23,85,000/- WAS OUTSTANDING IN THE BOOKS OF ACCOUNTS AS ON 31.03.20 13. THE AO WAS OF THE VIEW THAT THE ASSESSEE DID NOT PRODUCE THE NAME AND PAN OF THE PE RSON I.E. THE CONTRACTOR WHO CARRIED OUT THE EARTH FILLING WORK. THE AO ALSO TOOK NOTE O F THE REPORT OF THE INSPECTOR WHO WAS SENT TO CONDUCT A FIELD ENQUIRY AND WHOSE STATEMENT WAS STATED IN HIS REPORT: AT THE ABOVE ADDRESS I FOUND THAT THE SAID LAND IS SITUATED NEAR RAILWAY LINE ON WHICH SOME EARTH FILING WORK IS GOING ON . THE LAND HAS BEEN PURCHASED FROM SRI DEBASIS KAR. I ASKED ABOUT THE ABOVE SAID LAND FROM THE LOCAL PERSON, THEY SAID THAT THE LAND WAS PURCHASED BY THE BUILDER AND HE STARTE D LAND FILING WORK SINCE LAST TWO YEARS (AFTER PURCHASE OF THIS LAND) AND HE WILL STA RT CONSTRUCTION ON THE SAID LAND SOON. AS PER SPOT ENQUIRY, IT IS FOUND THAT EARTH F ILING WORK IS UNDER PROGRESS. THE WORK IS BEING DONE BY BUILDER. ALL EARTH FILING AND LAND DEVELOPMENT WORK IS DONE AFTER LAND WAS PURCHASED FROM SHRI DEBASIS KAR. WHA TEVER WORK HAS BEEN DONE IS BEEN DONE BY BUILDER ONLY. ' FOR THE REASONS CITED ABOVE THE AO DISALLOWED THE C LAIM OF THE ASSESSEE FOR DEDUCTION OF EARTH FILLING EXPENSES. 5. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED T HE ORDER OF AO. THE CIT(A) APART FROM THE REASONS GIVEN BY THE AO ALSO CITED A NOTHER REASON NAMELY ABSENCE OF EQUIVALENT WITHDRAWAL OF CASH FROM THE ASSESSEES B ANK ACCOUNT. ANOTHER CIRCUMSTANCE CITED BY CIT(A) WAS THAT THE CASH WITHDRAWALS WERE AFTER THE SALE OF THE LAND. THE CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE LIABILITY TO FILL THE LAND AS PER THE AGREEMENT BETWEEN THE PARTIES WAS THAT OF THE ASSES SEE AND THE FACT THAT SUCH ACTIVITY 3 ITA NO.1645/KOL/2017 SHRI DEBASISH KAR A.YR.2013-14 3 WAS CARRIED OUT AFTER THE SALE WAS NOT MATERIAL. T HE CIT(A) HOWEVER RELIED ON THE INSPECTORS REPORT IN WHICH THE INSPECTOR EXPRESSED THE VIEW THAT IT IS ONLY THE BUILDER WHO PURCHASED THE PROPERTY FROM THE ASSESSEE WHO WA S CARRYING OUT THE LAND FILLING ACTIVITY. FOR ALL THE ABOVE REASONS THE CIT(A) CONF IRMED THE ORDER OF THE AO. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. THE STATEMENT OF BILLS AND PAY MENTS FOR LAND FILLING EXPENSES IS PLACED AT PAGES 2 TO 7 OF THE ASSESSEES PAPER BOOK . IT IS CLEAR FROM A PERUSAL OF THE SAME THAT THE TOTAL BILL AMOUNT RAISED BY THE VARIOUS CO NTRACTORS IS A SUM OF RS.31,85,000/-. AS ON 31.03.2013 THE ASSESSEE HAD MADE PAYMENT OF R S.8,02,000/-. THE REMAINING SUM WAS PAID BY THE ASSESSEE IN THE SUBSEQUENT ASSESSME NT YEAR TO THE TUNE OF RS.10,10,000/- LEAVING THE BALANCE OF RS.13,73,000/- WHICH WAS DIS CHARGED IN THE SUBSEQUENT ASSESSMENT YEARS. THE PAYMENT VOUCHERS FOR EARTH FI LLING CHARGES ARE PLACED AT PAGES 8 TO 61 OF THE ASSESSEES PAPER BOOK. THE INSPECTORS REPORT WHICH WE HAVE EXTRACTED IN THE EARLY PART OF OUR ORDER IS NOT OF ANY ASSISTANCE TO THE CASE OF THE REVENUE. WHATEVER HAS BEEN STATED IN THE INSPECTORS REPORT IS PURELY HEA RSAY. THERE IS NO MATERIAL ON RECORD BROUGHT OUT BY THE INSPECTOR OR BY THE REVENUE AUTH ORITIES TO SHOW THAT IT WAS ONLY THE BUILDER WHO CARRIED OUT THE LAND FILLING ACTIVITY A ND INCURRED EXPENSES. THE EVIDENCE ON RECORD CLEARLY DEMONSTRATES THE PLEA OF THE ASSESSE E THAT A SUM OF RS.31,85,000/- WAS LIABILITY OF THE ASSESSEE FOR WHICH THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION IN A.Y.2013-14. THE BILLS OF THE CONTRACTORS RAISED FO R CARRYING OUT THE WORK WERE RAISED DURING THE PREVIOUS YEAR RELEVANT TO A.Y.2013-14. . THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING AN THEREFORE THE PAYMENT OF TH E EXPENDITURE IN THE SUBSEQUENT ASSESSMENT YEARS IS NOT OF ANY CONSEQUENCE. THERE I S NOTHING ON RECORD TO SHOW THAT IT WAS ONLY THE BUILDER WHO INCURRED EXPENSES FOR CARR YING OUT THE LAND FILLING ACTIVITY. ON THE CONTRARY THE EVIDENCE ON RECORD SUGGESTS THAT T HE LAND FILLING ACTIVITY WAS CARRIED OUT OVER THE PROPERTY WHICH WAS SOLD THE ASSESSEE. OTHE R CIRCUMSTANCES CLEARLY SUGGEST THAT IT WAS ONLY THE ASSESSEE WHO INCURRED THOSE EXPENSE S. IN THE GIVEN CIRCUMSTANCES WE ARE 4 ITA NO.1645/KOL/2017 SHRI DEBASISH KAR A.YR.2013-14 4 OF THE VIEW THAT THE EXPENSES IN QUESTION OUGHT TO HAVE BEEN ALLOWED AS A DEDUCTION. WE DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FO R DEDUCTION. 7. IN THE RESULT THE APPEAL BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE COURT ON 02.02.2018. SD/- [ N.V.VASUDEVAN ] JUDICIAL MEMBER DATED :02.02.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1. SHRI DEBASISH KAR, 32/F, HALDERPARA LANE, HOWRAH -711 201. 2. A.C.I.T., CIRCLE-47, KOLKATA. 3. CIT(A)-14, KOLKATA 4. C.I.T-16, KOLKA TA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECR ETARY HEAD OF OFFICE/ D.D.O., ITAT KOLKATA BENCHES