ACIT, Coimbatore V. Dr.S.Balasundaram, Coimbatore

ITA 1832/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2522 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-04-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 08-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Additional evidence
• Section: 54B; 54

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 1 832/MDS/2012 ASSESSMENT YEAR : 2009-10 & C.O. NO. 179/MDS/2012 [IN I.T.A. NO. 1832/MDS/2012] THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1) COIMBATORE. VS. DR. S. BALASUNDARAM, C/O KOVAI MEDICAL CENTER AND HOSPITAL LTD., 3209, AVINASHI ROAD, COIMBATORE 14. [PAN: ACQPB7361R] (APPELLANT) (RESPONDENT / CROSS OBJECTOR ) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI G. BASKAR, ADVOCATE DATE OF HEARING : 10.04.2013 DATE OF PRONOUNCEMENT : 27.05.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION AT T HE BEHEST OF THE ASSESSEE, EMANATE FROM THE ORDER OF THE COMMISSIONE R OF INCOME TAX (APPEALS) VI, CHENNAI DATED 27.07.2012 RELEVANT TO THE ASSESSMENT YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A MEDICAL PRACTIONER, FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 17.02.2010 I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 183 8383 832 22 2/M/ /M/ /M/ /M/1 11 12 & 2 &2 & 2 & C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 2 DECLARING TOTAL INCOME OF ` .2,70,52,240/-. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX AC T AND SELECTED FOR SCRUTINY. NOTICE UNDER SECTION 143(2) DATED 26.08.2 010 WAS DULY SERVED ON THE ASSESSEE. 3. THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH M/S. LOTUS EYE CARE HOSPITALS LTD., COIMBATORE TO SELL THE AGRICUL TURAL LAND FOR A CONSIDERATION OF ` .11,00,00,000/- ON 27.03.2008. IN PURSUANT TO THE A BOVE AGREEMENT, THE ASSESSEE WAS PAID ` .50.00 LAKHS ON 27.03.2008, ` .4.00 CRORES ON 17.07.2008, ` .1.50 CRORES ON 27.08.2008 AND REMAINING BALANCE OF ` .5.00 LAKHS WAS PAID ON 30.12.2008 AND SALE DEED WA S EXECUTED. 4. THE ASSESSEE, OUT OF THE SALE PROCEEDS RECEIVED FROM THE PURCHASER OF THE ABOVE LAND, HAD PURCHASED PROPERTIES VIDE DO CUMENT NO. 8547/2008 ON 18.09.2008 FOR ` .47,53,223/-, DOCUMENT NO. 8743/2008 ON 04.10.2008 FOR ` .51,47,014/- AND DOCUMENT NO. 8295/2008 ON 24.09.20 08 FOR ` .28,68,302/-. THE TOTAL AMOUNT PAID BY THE ASSESSEE TO VARIOUS PU RCHASERS OF THE LAND AMOUNTING TO ` .1,27,68,537/-. ACCORDING TO THE ASSESSING OFFICER, THE AMOUNT OF ` .1,27,68,537/- IS NOT ELIGIBLE FOR CLAIMING EXEMPTI ON UNDER SECTION 54B OF THE ACT FOR THE REASON THAT THESE AB OVE PROPERTIES WERE PURCHASED BY THE ASSESSEE BEFORE TRANSFER OF THE PR OPERTY WHICH HE SOLD TO M/S. LOTUS EYE CARE HOSPITAL SINCE THE ACTUAL TRANS FER OF THE PROPERTY WAS EFFECTED ONLY DURING DECEMBER, 2008. THEREFORE, THE ASSESSING OFFICER I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 183 8383 832 22 2/M/ /M/ /M/ /M/1 11 12 & 2 &2 & 2 & C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 3 DENIED THE CLAIM OF ASSESSEE. ON BEING AGGRIEVED, T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(APPEALS). 5. IT WAS SUBMITTED BEFORE THE CIT(APPEALS) THAT A N AGREEMENT WAS ENTERED INTO ON 27.03.2008 AND THE ASSESSEE RECEIVE D AN AMOUNT OF ` .50.00 LAKHS. SUBSEQUENTLY, AS PER THE AGREEMENT, SALE DEE D HAS TO BE EXECUTED ON OR BEFORE EXPIRY OF FOUR MONTHS. HOWEVER, BOTH P ARTIES HAVE AGREED TO EXTEND THE SALE AGREEMENT UPTO 31.12.2008. IN THE M EANWHILE, THE ASSESSEE RECEIVED ` . 4.00 CRORES ON 17.07.2008, ` . 1.50 CRORES ON 27.08.2008 AND WITH THESE AMOUNTS, THE ASSESSEE PURCHASED THREE PR OPERTIES AMOUNTING TO ` .1,27,68,537/- AND SUBMITTED THAT HE IS ELIGIBLE FO R CLAIMING EXEMPTION UNDER SECTION 54B OF THE ACT. THE LD. CIT(APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSE SSING OFFICER HAS NOT BROUGHT ON RECORD THAT THE ASSESSEE HAS NOT UTILIZE D THE SALE PROCEEDS FOR THE PURCHASE OF AGRICULTURAL LAND TO CLAIM DEDUCTIO N UNDER SECTION 54B OF THE ACT. HE FURTHER OBSERVED THAT M/S. LOTUS EYE CARE H OSPITAL LTD., WHO PURCHASED THE PROPERTY ENJOYED THE POSSESSION OF TH E LAND FROM 10.09.2008 DIRECTED THE ASSESSING OFFICER TO ALLOW EXEMPTION C LAIMED BY THE ASSESSEE UNDER SECTION 54B OF THE ACT. ON BEING AGGRIEVED, T HE REVENUE PREFERRED AN APPEAL. 6. THE LD. DR STRONGLY CONTENDED THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IF HE HAS PURCHASES THE LAND FOR AGRICULT URAL PURPOSE WITHIN A I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 183 8383 832 22 2/M/ /M/ /M/ /M/1 11 12 & 2 &2 & 2 & C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 4 PERIOD OF TWO YEARS AFTER TRANSFER OF AGRICULTURAL LAND. IN THE PRESENT CASE, THE ASSESSEE PURCHASED THE LAND PRIOR TO THE TRANSFER O F THE LAND AND HE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 54B OF THE ACT . HE FURTHER SUBMITTED THAT EVEN THOUGH SALE AGREEMENT WAS ENTERED INTO ON 20.0 7.2008, THE PROPERTY WAS TRANSFERRED ONLY IN DECEMBER, 2008. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 54B OF THE ACT . HE ALSO SUBMITTED THAT AS PER REGISTRATION ACT, 1908 INSERTED BY ACT 48 OF 20 01 SECTION 3A WITH EFFECT FROM 24.09.2001, THE DOCUMENTS CONTAINING CONTRACT TO TRANSFER FOR CONSIDERATION, ANY IMMOVABLE PROPERTY FOR THE PURPO SE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON OR AFTER THE COMMENCEMENT OF THE R EGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001 AND IF SUCH DOCU MENTS ARE NOT REGISTERED ON OR AFTER SUCH COMMENCEMENT, THEN THEY SHALL HAVE NO EFFECT FOR THE PURPOSES OF THE SAID SECTION 53A. THE LD. DR RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF K. MANI V. M.D. JAYAVEL & SEVEN OTHERS DATED 10.06.2011 AND SUBMITT ED THAT THE TRANSFER IN THE PRESENT CASE TOOK PLACE ONLY ON 28.12.2008, THE AMOUNT RECEIVED PRIOR TO THE DATE OF TRANSFER IS NOT ELIGIBLE FOR DEDUCT ION UNDER SECTION 54B OF THE ACT. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE HAS RELIED ON THE CIRCULAR NO. 359 AND ALSO RELIED ON THE DECISION OF THE PUNE BENCH OF ITAT I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 183 8383 832 22 2/M/ /M/ /M/ /M/1 11 12 & 2 &2 & 2 & C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 5 IN THE CASE OF RAMESH NARHARI JAKHADI V. ITO 41 ITD (PN) 368. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORD ER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND PRAYED FOR AFFIRMING THE SAME. 8. WE HAVE HEARD BOTH PARTIES, PERUSED THE MATERIA LS AVAILABLE ON RECORD AND ALSO GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH M/S. LOTUS EYE CARE HOSPITAL LTD. TO SELL THE PROPERTY FOR ` .11,00,00,000/- ON 27.03.2008. THE ASSESSEE HAS INI TIALLY RECEIVED AT THE TIME OF SALE AGREEMENT ` .50,00,000/-. THEREAFTER HE HAS RECEIVED ` .4.00 CRORES ON 17.07.2008, ` .1.50 CRORES AND THE SALE WAS EXECUTED AFTER RECEIVING ` .5.00 CRORES ON 30.12.2008. BEFORE EXECUTION OF SALE DEED, THE ASSESSEE HAS RECEIVED ` .6.00 CRORES. 9. THE ASSESSEE BEFORE EXECUTION OF THE SALE DEED PURCHASED THE PROPERTIES VIDE DOCUMENT NO. 8547/2008 ON 18.09.200 8 FOR ` .47,53,223/-, DOCUMENT NO. 8743/2008 ON 04.10.2008 FOR ` .51,47,014/- AND DOCUMENT NO. 8295/2008 ON 24.09.2008 FOR ` .28,68,302/- AND THE TOTAL AMOUNT PAID BY THE ASSESSEE TO VARIOUS PURCHASERS OF THE LAND AMOUNTIN G TO ` .1,27,68,537/-. ACCORDING TO THE ASSESSING OFFICER, THE PURCHASE CO NSIDERATION PAID BY THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTIO N 54B OF THE ACT. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE SALE CON SIDERATION RECEIVED BY THE ASSESSEE UNDER USE FOR THE PURPOSE OF PURCHASE OF T HE PROPERTY. THE ONLY DISPUTE IS THE ASSESSEE HAS PURCHASED THE PROPERTY BEFORE TRANSFER OF THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 183 8383 832 22 2/M/ /M/ /M/ /M/1 11 12 & 2 &2 & 2 & C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 6 PROPERTY. THEREFORE, THE ASSESSING OFFICER HAS DENI ED THE CLAIM OF THE ASSESSEE. FROM THE RECORD, WE FIND THAT THE ASSESSE E HAD ENTERED INTO AN AGREEMENT TO SELL THE PROPERTY FOR ` .11,00,00,000/-. AS IT IS A FACT THAT THE SALE DEED WAS EXECUTED ON 30.12.2008, BUT THE ASSES SEE PURCHASED THREE PROPERTIES WITH THE SALE CONSIDERATION RECEIVED FRO M M/S. LOTUS EYE CARE HOSPITAL LTD. THE INTENTION OF THE LEGISLATURE IS T HAT THE ASSESSEE HAS TO USE THE SALE CONSIDERATION RECEIVED FOR THE PURPOSE OF BUYING AGRICULTURAL LAND. IN THE PRESENT CASE, THE ASSESSEE SOLD AGRICULTURAL LA ND IS NOT DISPUTED BY THE ASSESSING OFFICER AND ALSO PURCHASED AGRICULTURAL L AND. THE LD. CIT(APPEALS) IN HIS ORDER HAS GIVEN A CATEGORICAL FINDING THAT T HOUGH THE SALE DEED WAS EXECUTED ON 30.12.2008, BUT THE POSSESSION WAS GIVE N ON 10.09.2008. HE HAS ALSO OBSERVED THAT THE SALE DEED HAS TO BE EXEC UTED ON OR BEFORE FOUR MONTHS FROM THE DATE OF AGREEMENT. THERE ARE CERTAI N DISPUTE BETWEEN THE ASSESSEE AND THE PURCHASER. THEREFORE, THE EXECUTIO N OF SALE DEED WAS DELAYED AND THE SALE DEED WAS EXECUTED IN DECEMBER, 2008. SO FAR AS THE FIRST OBJECTION RAISED BY THE LD. DR IS CONCERNED, THE PROPERTY WAS ONLY TRANSFERRED IN DECEMBER, 2008, THEREFORE, THE PROPE RTY PURCHASED BEFORE THAT DATE IS NOT ELIGIBLE FOR CLAIMING DEDUCTION UN DER SECTION 54B. IN OUR OPINION, THIS IS ONLY A HYPER TECHNICAL OBJECTION R AISED BY THE LD. DR, BECAUSE, THE ASSESSEE HAS RECEIVED SUBSTANTIAL AMOU NT FROM THE PURCHASER BEFORE EXECUTING SALE DEED. SO FAR AS REGISTRATION OF THE SALE AGREEMENT IS CONCERNED, IF BOTH THE PARTIES PROCEEDED TO CARRY T HE EXECUTION OF THE SALE AS I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 183 8383 832 22 2/M/ /M/ /M/ /M/1 11 12 & 2 &2 & 2 & C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 7 PER THE AGREEMENT WHETHER IT IS REGISTERED AGREEMEN T OR NOT, THERE IS NO EFFECT SO FAR AS TRANSFER IS CONCERNED. THEREFORE, THE CASE LAW RELIED ON BY THE LD. DR IS ALTOGETHER ON A DIFFERENT CONTEXT AND HAVE NO APPLICATION TO THE FACT OF THE PRESENT CASE. IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE CIT(APPEALS) AND THE GROUND RAI SED BY THE REVENUE IS DISMISSED. 10. THE NEXT GROUND RAISED BY THE REVENUE IN THE G ROUNDS OF APPEAL IS THAT THE CIT(APPEALS) ERRED IN DIRECTING THE ASSESS ING OFFICER TO GIVE RELIEF OF 50% OF ` .47,18,010/- ON THE STRENGTH OF FRESH EVIDENCES PRO DUCED BEFORE HIM AT THE TIME OF APPELLATE PROCEEDINGS. THE LD. D R HAS VEHEMENTLY ARGUED THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE BEFO RE THE ASSESSING OFFICER FOR THE CLAIM OF ` .47,18,010/- DURING ASSESSMENT PROCEEDINGS AND THE CIT(APPEALS) GRANTED THE RELIEF WITHOUT GIVING AN O PPORTUNITY TO THE ASSESSING OFFICER BY VIOLATING RULE 46A OF THE INCO ME TAX RULES. 11. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT CON TROVERT THE SUBMISSIONS OF THE LD. DR. 12. AFTER HEARING BOTH PARTIES, WE FIND THAT THE A SSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HA S SHOWN EXPENSES IN CONNECTION WITH THE PURCHASE OF PROPERTIES AND MANY OF THE PAYMENTS/ EXPENSES ARE NOT BACKED UP BY PROPER VOUCHERS AND T DS WAS NOT DEDUCTED I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 183 8383 832 22 2/M/ /M/ /M/ /M/1 11 12 & 2 &2 & 2 & C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 8 AND THE GENUINENESS WAS NOT PROVED. THEREFORE, THE TOTAL AMOUNT OF EXPENSES OF ` .47,18,010/- INCURRED BY THE ASSESSEE WAS DENIED FO R ELIGIBILITY UNDER SECTION 54 OF THE ACT. ON APPEAL, THE CIT(APP EALS) OBSERVED THAT THE AR OF THE ASSESSEE PRODUCED CERTAIN BILLS SHOWING T HAT LEVELLING WAS DONE AND ALSO FENCING WAS PUT AROUND THE ACQUIRED LAND. ACCORDINGLY, THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO REST RICT THE DISALLOWANCE TO 50% OF ` .47,18,010/- ON THE STRENGTH OF FRESH EVIDENCES PRO DUCED WITHOUT REMANDING THE EVIDENCES TO THE ASSESSING OFFICER FO R VERIFICATION OR OBTAINED ANY REPORT FROM THE ASSESSING OFFICER. THIS, IN OUR OPINION, AMOUNTS TO VIOLATION OF RULE 46A OF THE INCOME TAX RULES WHICH ELUCIDATES THAT BEFORE ANY ADDITIONAL EVIDENCE IS ACCEPTED, THE OTHER PART Y HAS TO BE GIVEN AN OPPORTUNITY OF HEARING. FACED WITH THIS SITUATION, WE DEEM IT APPROPRIATE THAT THE MATTER REQUIRES RE-EXAMINATION BY THE ASSESSING OFFICER. ACCORDINGLY, WE RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER, WHO SHALL PASS A FRESH ORDER IN ACCORDANCE WITH LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. 14. COMING TO THE CROSS OBJECTION FILED BY THE ASS ESSEE, MAINLY IT RELATES TO DISALLOWANCE OF 50% OF ` .47,18,010/- TOWARDS LAND I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 183 8383 832 22 2/M/ /M/ /M/ /M/1 11 12 & 2 &2 & 2 & C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 C.O. NO. 179/M/12 9 DEVELOPMENT EXPENSES IN CONNECTION WITH PURCHASE OF PROPERTIES. SINCE, IN THE REVENUES APPEAL, THE SAME VERY ISSUE HAS BEEN RAISED AND WE HAVE SET ASIDE THE ORDER OF THE CIT(APPEALS) ON THIS ISSUE AND REMITTED THE MATTER BACK TO THE FILE OF THE ASSESSI NG OFFICER FOR DECIDING IT AFRESH AFTER RE-EXAMINATION, THE OBJECTION RAISE D BY THE ASSESSEE IN THE CROSS OBJECTION CARRY ACADEMIC SIGNIFICANCE ONLY . 15. IN THE RESULT, THE CO FILED BY THE ASSESSEE ST ANDS DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 27 TH OF MAY, 2013 AT CHENNAI. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 27.05.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.