MR RAHUL UTTAMCHAND CHOPDA, Pune V. ITO, Pune

ITA 1761/PUN/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0463 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Business income; Additional evidence; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 54F; 153A; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1761/PN/2013 %' ( ')( / ASSESSMENT YEAR : 2009-10 MR. RAHUL UTTAMCHAND CHOPDA, SHOP NO. 1-A, DORABJEE, SALUNKE VIHAR ROAD, KONDHWA KHURD, PUNE-411040 PAN : AGWPC1814A ....... / APPELLANT ' /VS. ITO WARD 2(2), PUNE / RESPONDENT ASSESSEE BY : SHRI S.N. DOSHI REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 22-09-2016 / DATE OF PRONOUNCEMENT : 21-11-2016 * / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 30-0 4-2013 FOR THE ASSESSMENT YEAR 2009-10. 2 ITA NO. 1761/PN/2013, A.Y. 2009-10 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESS MENT YEAR ON 31-07-2009 DECLARING TOTAL INCOME OF ` 8,16,780/-. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS AND AC CORDINGLY NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE ON 25-08-201 0. DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL TH E ASSESSEE HAD SOLD HIS RIGHTS IN PLOT AT MUNDHWA AND DECLARED THE PROCE EDS ARISING THERE FROM AS LONG TERM CAPITAL GAIN. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HELD THAT TH E ASSESSEE HAD ACQUIRED RIGHTS IN THE PLOT THROUGH DEVELOPMENT AGRE EMENT DATED 31-01-1999. THE INTENTION OF THE ASSESSEE WAS TO PURCH ASE THE SHARE IN LAND AND SELL THE SAME ON PROFIT. THE PURCHASE AND SA LE OF DEVELOPMENT RIGHTS IN THE PLOT ARE CLEARLY COMMERCIAL IN N ATURE, THEREFORE GAIN ARISING FROM THE TRANSACTION IS BUSINESS INC OME OF THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDER DATED 12-10-2011, T HE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCO ME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE FINDINGS OF ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE A SSESSEE. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE FINDINGS OF FIRST APPELLATE AUTHORITY. 3. SHRI S.N. DOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBM ITTED THAT THE ASSESSEE ALONG WITH OTHER PERSONS INTENDED T O PURCHASE SHARE IN LAND SITUATED AT MUNDHWA. SEPARATE DEVELOPMENT AGREE MENT ON IDENTICAL TERMS WERE EXECUTED BY THE VENDORS SMT. MANGA LA M. KHARADKAR AND MRUDULA M. KULKARNI WITH ALL THE PURCHASERS. THE 3 ITA NO. 1761/PN/2013, A.Y. 2009-10 ASSESSEE HAD PURCHASED 1/12 TH SHARE IN LAND VIDE DEVELOPMENT AGREEMENT DATED 31-01-1999 FOR TOTAL CONSIDERATION OF ` 5,27,000/-. THE APPELLANT HAD PAID ONLY ` 1,18,750/- AT THE TIME OF EXECUTION OF AGREEMENT STYLED AS DEVELOPMENT AGREEMENT. THE SAID DE VELOPMENT AGREEMENT IS UNREGISTERED DOCUMENT EXECUTED ON A STAM P PAPER OF ` 20/-. THE POSSESSION OF THE LAND WAS NOT GIVEN TO THE ASSESSEE. THE LAND IS AN AGRICULTURAL LAND AND WAS UNDER THE OCCUPATION OF SHRI SHIVRAM BABURAO HAZARE WHO WAS SECURED TENANT IN THE SAID LAND. DESPITE SEVERAL EFFORTS THE ASSESSEE AND THE OTHER 11 P ERSONS WHO HAD AGREED TO PURCHASE THE LAND COULD NOT GET THE LAND VAC ATED FROM THE TENANT. SUBSEQUENTLY, SMT. MANGALA M. KHARADKAR AND MR UDULA M. KULKARNI CREATED THIRD PARTY INTEREST BY ENTERING INTO ME MORANDUM OF UNDERSTANDING (MOU) ON 22-05-2006 WITH M/S. ESTEEM CONS TRUCTION PRIVATE LTD. (HEREINAFTER REFERRED TO AS THE COMPANY). A S PER THE TERMS AND CONDITIONS OF THE MOU ALL THE 12 PERSONS WHO HAD ACQ UIRED RIGHTS IN THE LAND VIDE INDEPENDENT DEVELOPMENT AGREEMENTS DATE D 31-01-1999, M/S. ESTEEM CONSTRUCTION PRIVATE LTD. WOULD NEGOTIATE AND SETTLE THEIR CLAIMS. SINCE, THE LAND WAS UNDER OCCUPAT ION OF TENANT, THE COMPANY ALSO COULD NOT GET THE POSSESSION O F LAND. THE COMPANY FILED SUIT FOR SPECIFIC PERFORMANCE IN CIVIL COURT AGAINS T THE LAND OWNERS AND OTHERS. THE ASSESSEE WAS ONE OF THE D EFENDANTS IN THE SAID CIVIL SUIT. FINALLY, COMPROMISE WAS REACHED BETWEEN THE PARTIES TO THE SUIT. ACCORDING TO COMPROMISE THE ASSESSEE RECEIVED ` 70,83,334/- FROM THE COMPANY FOR RELINQUISHING HIS RIGHT AND INTERESTS IN THE LAND IN QUESTION. THE ASSESSEE OFFERED THE SAID AMOUNT AS LON G TERM CAPITAL GAIN IN HIS RETURN OF INCOME AND FURTHER CLAIMED DEDU CTION U/S. 54F WITH THE INTENTION TO PURCHASE RESIDENTIAL HOUSE. HOWEVER, THE ASSESSEE COULD NOT PURCHASE RESIDENTIAL HOUSE BEFORE THE DUE DATE 4 ITA NO. 1761/PN/2013, A.Y. 2009-10 OF FILING OF RETURN. IN ORDER TO CLAIM THE BENEFIT OF SECTION 54F, THE ASSESSEE DEPOSITED ` 60,50,000/- IN CAPITAL GAIN DEPOSIT ACCOUNT. THE ASSESSEE COULD NOT PURCHASE RESIDENTIAL HOUSE EVEN THER EAFTER WITHIN THE STIPULATED PERIOD, THEREFORE, THE ASSESSEE WITHDREW TH E CLAIM OF EXEMPTION AND OFFERED THE LONG TERM CAPITAL GAIN FOR TAXATIO N IN ASSESSMENT YEAR 2011-12 AND PAID THE DUE AMOUNT OF TAXES THERE ON. 3.1 THE AUTHORITIES BELOW HAVE ERRED IN HOLDING THAT CONSID ERATION RECEIVED FOR RELINQUISHING OF RIGHTS IN THE LAND BY THE ASSES SEE IS BUSINESS INCOME. IT WAS THE SOLITARY TRANSACTION ENTERED INTO BY THE ASSESSEE. ALTHOUGH THE AGREEMENT WAS STYLED AS DEVELOP MENT AGREEMENT, IT WAS IN FACT AGREEMENT FOR SALE. APART FROM T HE ABOVE SAID AGREEMENT THE ASSESSEE HAS NOT ENTERED INTO ANY OTHE R TRANSACTION FOR SALE OR PURCHASE OF LAND. THEREFORE, THE TRANSACTION CANN OT BE VIEWED AS ADVENTURE IN THE NATURE OF TRADE. THE LD. AR IN SUPPO RT OF HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION OF PUNE BENCH O F THE TRIBUNAL IN THE CASE OF ITO VS. SHRI SUBHASH B. SANAS IN IT A NO. 61/PN/2007 FOR ASSESSMENT YEAR 2003-04 DECIDED ON 31- 12-2014 TO CONTEND THAT MERE NOMENCLATURE OF THE AGREEMENT FOR AC QUISITION AS A DEVELOPMENT AGREEMENT BY ITSELF IS NOT CONCLUSIVE TO SAY T HAT THE INTENTION OF THE ASSESSEE WAS TO HOLD THE LAND FOR BUSINESS PURPOSE . 3.2 TO BUTTRESS HIS SUBMISSIONS THAT SINGLE TRANSACTION DO ES NOT CONSTITUTE BUSINESS, THE LD. AR PLACED RELIANCE ON THE FOLLOWIN G DECISIONS : I. SAROJ KUMAR MAZUMDAR VS. CIT, 37 ITR 242 (SC); II. CIT VS. GAJANANA ENTERPRISES, 314 ITR 247 (KAR); 5 ITA NO. 1761/PN/2013, A.Y. 2009-10 3.3 THE LD. AR SUBMITTED THAT COMPENSATION RECEIVED ON RELINQUISHING OF RIGHTS IN A LAND IS ASSESSABLE AS CAPITAL GAIN . TO STRENGTHEN THIS CONTENTION RELIANCE WAS PLACED ON THE DECISION RENDERED IN THE CASE OF CIT VS. ANIL KUMAR REPORTED AS 56 DTR 38 4 (KARNATAKA) AND IN THE CASE OF J.K. KASHYAP VS. DCIT REPORTED AS 302 ITR 255 (DELHI). 3.4 THE LD. AR FURTHER CONTENDED THAT ALL THE OTHER PERS ONS WITH WHOM DEVELOPMENT AGREEMENTS ON SIMILAR LINES WERE EXECUTE D BY THE VENDORS OF THE LAND IN THEIR RESPECTIVE RETURN OF INCOME H AVE DECLARED THE AMOUNT AS CAPITAL GAIN AND THE SAME HAS BEEN ACCE PTED BY THE DEPARTMENT. IT IS ONLY IN THE CASE OF ASSESSEE THAT TH E DEPARTMENT HAS RAISED OBJECTION IN TREATING THE AMOUNT RECEIVED FOR RELINQ UISHING THE RIGHTS IN LAND AS CAPITAL GAIN. THE LD. AR TO REINFORCE HIS SU BMISSIONS PLACED ON RECORD THE ASSESSMENT ORDER IN THE CASE OF S HRI AMIT VILAS BUMB PASSED U/S. 143(3) DATED 29-11-2011 FOR THE ASSESS MENT YEAR 2009-10, AS ADDITIONAL EVIDENCE. 4. SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT FURN ISHED THE DETAILS OF ASSESSMENT ORDERS IN THE CASE OF OTHER 10 PER SONS WHO HAD ENTERED INTO DEVELOPMENT AGREEMENT WITH THE OWNERS OF LA ND. THE LD. DR SUBMITTED THAT IN THE CASE OF ALL SUCH PERSONS THE AS SESSMENT ORDERS WERE EITHER PASSED U/S. 143(3) OR U/S. 143(3) R.W.S. 153A FOR THE ASSESSMENT YEAR 2009-10. THE GAIN ARISING FROM RELINQUISH ING OF RIGHTS IN THE LAND SITUATED AT MUNDHWA HAS BEEN DECLARED AS CA PITAL GAIN BY THE PURCHASERS IN THEIR RESPECTIVE RETURN OF INCOME AND THE DEPARTMENT HAS ACCEPTED THE SAME. 6 ITA NO. 1761/PN/2013, A.Y. 2009-10 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS AND THE DOCUM ENTS FURNISHED BY BOTH THE SIDES. THE ASSESSEE IN APPEAL HAS CHALLENGED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN UPHOLDING TH E ORDER OF ASSESSING OFFICER TREATING THE GAIN ARISING ON RELINQ UISHING OF RIGHTS IN THE LAND AS BUSINESS INCOME. IT HAS BEEN CONTE NDED THAT THE ASSESSEE ALONG WITH OTHER 11 PERSONS HAD AGREED TO PU RCHASE LAND ADMEASURING 1H AND 21 ARES COMPRISING IN SURVEY NO. 83/A , HISSA NO. 4/1 AT MUNDHWA. THE VENDORS OF THE LAND HAD ENTERED INTO SEPARATE DEVELOPMENT AGREEMENTS WITH THE PURCHASERS. THE SAID AGREEME NT WAS EXECUTED ON ` 20/- STAMP PAPER AND IS AN UNREGISTERED AGREEMENT. TH E ASSESSEE AT THE TIME OF EXECUTION OF SAID AGREEMENT PAID A SUM OF ` 1,18,750/- AS AGAINST THE TOTAL CONSIDERATION OF ` 5,27,000/-. IT IS AN ADMITTED POSITION THAT THE POSSESSION OF LAND WAS NEVER HANDEDOVER TO THE ASSESSEE OR ANY OF THE OTHER PURCHASERS. THE LAN D WAS UNDER LITIGATION. THE OWNERS OF THE LAND SUBSEQUENTLY ENTERED IN TO MOU WITH M/S. ESTEEM CONSTRUCTION PRIVATE LTD. IN RESPECT OF SAME LAND ON AS IS WHERE AS BASIS. M/S. ESTEEM CONSTRUCTION PRIVATE LTD. AGREED TO SETTLE/NEGOTIATE WITH THE EARLIER PURCHASERS OF LAND I.E. AS SESSEE AND OTHER 11 PERSONS. SINCE, M/S. ESTEEM CONSTRUCTION PRIVA TE LTD. COULD NOT GET THE POSSESSION OF LAND FROM THE SECURED TENANT , THE COMPANY FILED SUIT FOR SPECIFIC PERFORMANCE AND PERMANENT INJUNCTION IN THE CIVIL COURT, PUNE AGAINST THE OWNERS OF THE LAND AND THE 12 P ERSONS INCLUDING THE ASSESSEE. THE MATTER WAS AMICABLY SETTLED BETWEEN THE PARTIES TO THE CIVIL SUIT. THE COMPANY PAID ` 70,83,334/- TO THE ASSESSEE FOR RELINQUISHING HIS RIGHTS AND INTERESTS IN THE LAND. SIMILARLY, THE COMPANY PAID COMPENSATION TO OTHER 11 PERSONS WHO H AD 7 ITA NO. 1761/PN/2013, A.Y. 2009-10 ENTERED INTO DEVELOPMENT AGREEMENT WITH THE OWNERS IN T HE YEAR 1999. THE CONTENTION OF THE ASSESSEE IS THAT ALL THE PERSONS WHO HAD RECEIVED AMOUNT ON RELINQUISHING THEIR RESPECTIVE RIGHTS HAVE DISCLOSED THE SAME IN THEIR RESPECTIVE RETURN OF INCOME AS CAPITAL GAIN. THE D EPARTMENT HAS ACCEPTED THE SAME AS CAPITAL GAIN IN THE CASE OF ALL T HE PERSONS EXCEPT THE ASSESSEE. 6. THE LD. DR WAS ASKED TO PLACE ON RECORD THE ASSESSM ENT RECORDS OF ALL THE 11 PERSONS. THE REVENUE HAS FURNISHED THE DET AILS OF ASSESSMENT IN THE CASE OF 10 PERSONS NAMELY (I) MR. DEEPA K K. BAMB, (II) MR. BANSILAL B. RAISONI, (III) MR. RAJENDRA B. RAISONI, (IV) MR. SUNIL B. RAISONI, (V) MRS. HEMLATA RAISONI, (VI) MR. PRAVIN B. RAISONI, (VII) MRS. ASHA DEEPAK BAMB. (VIII) MR. BIPIN U. CHOPDA, (IX) MR. AMIT V. BAMB AND (X) MR. MADAM K. BAMB. A PERUSAL OF RECORDS FUR NISHED BY THE DEPARTMENT SHOWS THAT ASSESSMENT IN THE CASE OF A LL AFORESAID PERSONS HAVE BEEN COMPLETED U/S. 143(3) OR U/S. 143(3) R.W .S. 153A OF THE ACT. IN CASE OF ALL THE ASSESSEES THE AMOUNT RECEIV ED ON RELINQUISHING OF RIGHTS IN LAND SITUATED AT MUNDHWA HAS BEEN DECLARED AS CAPITAL GAIN. THE DEPARTMENT HAS ACCEPTED THE SAME. IN SUCH SITUATION, WE DO NOT FIND ANY REASON AS TO WHY IN THE CAS E OF PRESENT ASSESSEE ALONE, THE DEPARTMENT HAS TAKEN A DIFFERENT VIE W. THE CASE OF THE ASSESSEE IS AT PAR WITH ALL THE OTHER AFOREMENTIONED PERSONS. THE REVENUE SHOULD HAVE TAKEN A CONSISTENT VIEW WHILE TREATIN G THE INCOME OF ASSESSEE WHICH IS ARISING FROM IDENTICAL SET OF FACTS AND F ROM SAME SERIES OF TRANSACTION. THE LD. DR HAS NOT BEEN ABLE TO S HOW ANY DISTINGUISHING FEATURE IN THE CASE OF ASSESSEE. THE AUTHOR ITIES BELOW SHOULD HAVE TAKEN A CONSISTENT VIEW WHILE TREATING THE INC OME ARISING FROM THE SAME SERIES OF TRANSACTION. IT IS NOT THE CASE OF REVENUE THAT 8 ITA NO. 1761/PN/2013, A.Y. 2009-10 THE ASSESSEE HAS INDULGED IN SALE-PURCHASE OF LAND/PROPER TY ON REGULAR BASIS. THE CONTENTION OF THE ASSESSEE THAT THE TRANSA CTION IN QUESTION WAS THE SOLE TRANSACTION REMAINS UNREBUTTED. WITHOUT GO ING INTO THE OTHER ARGUMENTS RAISED BY THE LD. AR WE ACCEPT THE APP EAL OF THE ASSESSEE ON THE GROUND OF CONSISTENCY ALONE. 7. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND T HE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 21 ST DAY OF NOVEMBER, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 21 ST NOVEMBER, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-II, PUNE 4. ' / THE CIT-II, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE