Rajeshwari Reddy Baddam , Hyderabad V. Income Tax Officer, Ward-8(2), Hyderabad

ITA 1765/Hyd/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8820 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-01-2021
• Assessment Year: misc
• Appeal Filed On: 05-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SRIKANTH
• Assessee Lawyers: B SHANTI KUMAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Set aside
• Section: 50C; 148

Judgement Text

ITA NO 1765 OF 2019 RAJESHWARI REDDY BADDAM HYDERA BAD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1765/HYD/2019 ASSESSMENT YEAR: 2007-08 SMT.RAJESHWARI REDDY BADDAM, HYDERABAD PAN:CBVPB5025N VS. INCOME TAX OFFICER WARD 8(2) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI B. SHANTI KUMAR REVENUE BY : SRI N. SRIKANTH, DR DATE OF HEARING: 07 /01/2021 DATE OF PRONOUNCEMENT: 12/01/2021 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2007-08 AGAIN ST THE ORDER OF THE CIT (A)-2, HYDERABAD, DATED 25.09. 2019. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, DURING THE RELEVANT FINANCIAL YEAR, HAD SOLD AN IMMOVABLE PROPERTY BEARING NO.5-2-414 & 5-2-414/A S ITUATED AT RISALA ABDULA ADMEASURING 157 SQ. YARDS FOR A CONSI DERATION OF RS.21.00 LAKHS ON 26.06.2006 VIDE SALE DEED NO.2485 /2006. THE AO NOTICED THAT THE SALE VALUE FOR THE PURPOSE OF S TAMP DUTY AMOUNTED TO RS.32.50 LAKHS AND THEREFORE, THE PROVI SIONS OF SECTION 50C WAS ATTRACTED. 3. SINCE THE ASSESSEE DID NOT FILE HER RETURN OF IN COME, THE AO ISSUED A NOTICE U/S 148 OF THE I.T. ACT ON 2 8.3.2014 AND DURING THE ASSESSMENT PROCEEDINGS, BROUGHT THE SHOR T TERM CAPITAL GAIN OF RS.20,34,120/- TO TAX. THE MATTER T RAVELLED UPTO ITA NO 1765 OF 2019 RAJESHWARI REDDY BADDAM HYDERA BAD PAGE 2 OF 4 ITAT AND THE ITAT, VIDE ORDER DATED 25.01.2018 HAD SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR CONSIDERATION AFRES H. DURING THE REMAND PROCEEDINGS, THE AO APPLIED THE PROVISIONS O F SECTION 50C AND TREATED THE SUM OF RS.12,15,880/- AS SHORT TERM CAPITAL GAIN AND BROUGHT IT TO TAX. AGGRIEVED, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE CIT (A) CONTENDING THAT THE HOUSE WAS PU RCHASED BY WAY OF AN AGREEMENT AND WAS IMMEDIATELY SOLD WITHIN A PERIOD OF 3 MONTHS AND THEREFORE, IT IS AN ADVENTURE IN THE N ATURE OF TRADE AND HENCE THE PROVISIONS OF SECTION 50C ARE NOT APP LICABLE. THE CIT (A) HOWEVER, CONFIRMED THE ASSESSMENT ORDER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT (A) ERRED IN SUSTAINING ADDITION OF RS.12,15,880/- 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, WHIL E THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AN D SUBMITTED THAT THE ASSESSEE HAD PURCHASED THE PROPERTY BY VIR TUE OF AGREEMENT OF SALE AND WITHIN TWO MONTHS THEREFROM H AD SOLD THE PROPERTY VIDE REGISTERED SALE DEED AND THEREFORE, I T IS CLEAR THAT THE INTENTION OF THE ASSESSEE WAS TO MAKE PROFIT AN D NOT TO RETAIN THE PROPERTY. THEREFORE, ACCORDING TO ME, THE TRANS ACTION IS AN ADVENTURE IN THE NATURE OF TRADE AND THE INCOME THE REFROM HAS TO BE TREATED AS BUSINESS INCOME AND THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE TO BUSINESS TRANSACTIONS. IN SUP PORT OF THIS CONTENTION THAT THE TRANSACTION IS ADVENTURE IN THE NATURE OF TRADE AND NOT TRANSFER OF THE CAPITAL ASSET. HE PLACED RE LIANCE UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F G. VENKATASWAMI NAIDU & CO. V. CIT (1959) 35 ITR 59 4 (SC). ITA NO 1765 OF 2019 RAJESHWARI REDDY BADDAM HYDERA BAD PAGE 3 OF 4 5. THE LEARNED DR, HOWEVER, SUBMITTED THAT THE ASSE SSEE HAS PURCHASED THE IMMOVABLE PROPERTY AND SOLD THE S AME AND THEREFORE, CAPITAL GAIN ARISES AS THE ASSESSEE HAS NOT DONE ANY OTHER ACTIVITY PRIOR TO OR THEREAFTER. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE ONLY QUESTION BEFORE THE TRIBUNAL IS THE NATURE OF TRANSACTION, WHETHER IT IS TRANSFER OF TH E CAPITAL ASSET OR THE TRANSACTION IS AN ADVENTURE IN THE NATURE OF TR ADE. IN THE CASE OF G. VENKATASWAMI NAIDU & CO. V. CIT (SUPRA), THE HON 'BLE SUPREME COURT HELD THAT IN A CASE WHERE THE PROPERT Y WAS PURCHASED WITH THE SOLE INTENTION OF SELLING IT FOR PROFIT, IT IS AN ADVENTURE IN THE NATURE OF TRADE. IN THE CASE BEFOR E ME ALSO, THE ASSESSEE HAD PURCHASED THE PROPERTY BY WAY OF AN AG REEMENT OF SALE AND THEREFORE, HAS NOT BECOME THE TITLE HOLDER OF THE PROPERTY AND WITHIN TWO MONTHS THEREAFTER, HAS SOLD THE PROP ERTY FOR PROFIT. THIS FACT OF PURCHASE AND SALE OF PROPERTY WITHIN A PERIOD OF TWO MONTHS HAS NOT BEEN REBUTTED BY THE DEPARTMENT. THE REFORE, THE INTENTION OF THE ASSESSEE DOES NOT APPEAR TO BE ACQ UISITION OF THE PROPERTY AND RETAINING THE SAME AS AN INVESTMENT/CA PITAL ASSET BUT IT IS FOR DERIVING PROFIT WITHIN A SHORT SPAN O F TIME AND SINCE THE ASSESSEE HAS NOT DONE ANY SUCH ACTIVITY PRIOR T O THE RELEVANT A.Y, SUCH A TRANSACTION OF EARNING A PROFIT HAS TO BE CONSIDERED AS AN ADVENTURE IN THE NATURE OF TRADE. THEREFORE, I H OLD THAT THE TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE AND PROVISIONS OF SECTION 50C ARE NOT APPLICABLE. ITA NO 1765 OF 2019 RAJESHWARI REDDY BADDAM HYDERA BAD PAGE 4 OF 4 7. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY, 2021. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 12 TH JANUARY, 2021. VINODAN/SPS COPY TO: 1 SMT. RAJESHWARI REDDY BADDAM, 401 KUSHI HOMES, AT TAPUR, RAJENDRANAGAR MANDAL, RANGA REDDY 500048 2 ITO WARD 8(2) 608 SIGNATURE TOWERS, KONDAPUR, HYD ERABAD 500084 3 CIT (A)-2 HYDERABAD 4 PR. CIT 2 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER