Appeal details
Counselvise Citation
192319914 RSA 2007
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 2 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-05-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
H
Next Hearing Date
11-05-2011
Assessment Year
2003-2004
Appeal Filed On
05-03-2007
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1922/MUM/2007 (ASSESSMENT YEAR: 2003-04) MR. GOVINDRAO W. ADIK (HUF), 1201, VAINGANGA WORLI CHS LTD., DR. POCHKANWALA ROAD, WORLI, MUMBAI -400 025 ....... APPELLANT VS DCIT, CIRCLE -3(1), ROOM NO.607, AAYAKAR BHAVAN, MUMBAI -400 020 ..... RESPONDENT PAN: AAAHG 5043 F ITA NO.1923/MUM/2007 (ASSESSMENT YEAR: 2003-04) MRS. ANURADHA G. ADIK 1201, VAINGANGA WORLI CHS LTD., DR. POCHKANWALA ROAD, WORLI, MUMBAI -400 025 ....... APPELLANT VS DCIT, CIRCLE -3(1), MUMBAI -400 020 ..... RESPONDENT PAN: AADPA 3573 D APPELLANT BY: SHRI Y.P. TRIVEDI RESPONDENT BY: SHRI SAMPAT KUMAR O R D E R PER R.S. PADVEKAR, JM THESE TWO APPEALS BY THE DIFFERENT ASSESSE S ARE FILED CHALLENGING THE IMPUGNED ORDERS OF THE LD. CIT (A) 28, MUMBAI D ATED 15.12.2008 FOR THE A.Y. 2003-04. WE FIRST TAKE THE APPEAL IN THE CASE OF MR. GOVINDRAO W. ADIK (HUF) IN ITA 1922 OF 2007. THE A SSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS:- ITA NO.1922/MUM/2007 ITA NO.1923/MUM/2007 MR. GOVINDRAO W. ADIK (HUF) 2 2. THE LEARNED C.I.T. (A) HAS ERRED, IN LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING AN ADDI TIONS OF RS 11,546/- ON ACCOUNT OF LONG TERM CAPITAL GAIN WI THOUT CONSIDERING THE COMPUTATION OF TOTAL INCOME FILED B Y THE APPELLANT. THE APPELLANT SUBMITS THAT THE ADDITION MADE ON THIS ACCOUNT MAY KINDLY BE DELETED. 3. THE LEARNED C.I.T. (A) HAS ERRED, IN LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADD ITIONS OF RS 1,78,96,181/- ON ACCOUNT OF MESNE PROFIT FROM PLANTATION TREES EVEN THOUGH THE SAME WAS CAPITAL R ECEIPT AS CLAIMED BY THE APPELLANT. THE APPELLANT SUBMITS THAT THE ADDITION MADE ON THIS ACCOUNT MAY KINDLY BE DEL ETED. 2. SO FAR AS GROUND NO.1 IS CONCERNED, IT IS IN RES PECT OF THE LONG- TERM-CAPITAL-GAINS ON THE SALE OF THE LAND WHICH IS CLAIMED TO BE AGRICULTURAL LAND. THE ASSESSEE HUF WAS OWNING AGR ICULTURAL LAND AT HATNE WHICH WAS SOLD FOR RS 10,12,244/-. THE COST OF THE LAND WAS SHOWN AT RS 1,10,689/- AND THE SAME WAS CLAIMED AS AN EXEMPT ON THE GROUND THAT THE LAND IS AGRICULTURAL LAND AND I T IS NOT A CAPITAL ASSET. THE ASSESSEE ALSO RECEIVED A COMPENSATION T OWARDS MESNE PROFIT FROM PLANTATION OF TREES LIKE CHICKOO, MANG OES, COCONUT & CASH-NUT OTHERS ETC. OF RS 1,78,96,181/-. IT WAS C LAIMED THAT THE TREES ARE 10 TO 15 YEARS OLD AND HAVE THE FURTHER L IFE OF 50 TO 60 YEARS. THE SAID COMPENSATION AMOUNT WAS ALSO CLAIMED EXEMP T FROM IT AS PARTAKE CHARACTER OF AN AGRICULTURAL INCOME. 3. NOW, LET US DEAL WITH THE FIRST ISSUE I.E. IN RE SPECT OF THE SALE OF THE AGRICULTURAL LAND. IN THE ASSESSMENT ORDER, TH E A.O. HAS OBSERVED THAT THE ASSESSEE OWNED TWO PLOTS OF LAND I.E. 4.45 .0 AND 4.30.8 HECTORS I.E. 11.05 & 10.30 = 21.35 ACRES WHICH WERE HELD ALONG WITH TWO CO-OWNERS NAMELY MS ANJALI AND MRS. ANURADHA AD IK. THE ASSESSEE SOLD THE SAID LAND TO M/S. UNIVERSAL EDUCA TIONAL ACADEMY WHICH IS A TRUST. THE ASSESSEE IS ONE OF THE TRU STEES ALONG WITH OTHER ITA NO.1922/MUM/2007 ITA NO.1923/MUM/2007 MR. GOVINDRAO W. ADIK (HUF) 3 FIVE TRUSTEES. AS NOTED BY THE A.O., AS PER THE ME MORANDUM OF UNDERSTANDING (MOU) BETWEEN THE ASSESSEE AND THE SA ID TRUST ON 16.10.2002 THE PLOT WAS SOLD TO THE TRUST SALE DEED WAS REGISTERED ON 21.11.2002. AFTER EXAMINING THE TERMS OF MOU BETWE EN THE PARTIES DATED 16.12.2002, THE A.O. CAME TO THE CONCLUSION T HAT THE TRUST HAS BEEN CREATED WITH AN INTENTION FOR PROMOTION OF EDU CATION FOR CONSTRUCTING SCHOOL, COLLEGES ETC. AND FOR CONDUCTI NG EDUCATIONAL INSTITUTIONS. THE TRUST HAS NO AGRICULTURAL OBJECT S. AS OBSERVED BY THE A.O., THE TRUST PURCHASED THE SAID LAND FOR NON -AGRICULTURAL PURPOSE FOR PROMOTING THE EDUCATION AND ACADEMICS. THE A.O., THEREFORE, REJECTED THE CLAIM OF THE ASSESSEE THAT A CAPITAL GAIN CANNOT BE BROUGHT TO TAX AS A LAND IN QUESTION WAS AGRICUL TURAL LAND AND IT IS NOT A CAPITAL ASSET. THE A.O., THEREFORE, WORKED O UT THE LONG-TERM- CAPITAL-GAIN AND LEVIED THE TAX ON IT. 4. SO FAR AS THE SECOND GROUND IS CONCERNED, IT IS IN RESPECT OF THE ADDITION OF MESNE PROFIT OF RS 1,78,96,181/-. 5. IN THE MEMORANDUM OF UNDERSTANDING (MOU), THOUGH THE TOTAL CONSIDERATION WAS SHOWN AT RS 3 CRORES BY THE PARTI ES, BUT AN AMOUNT OF RS 2,76,25,000/- (ASSESSEES SHARE RS. 1,78,96,1 81/-) WAS SHOWN AS A COMPENSATION FOR MESNE PROFIT FROM THE TREES LIKE CHICKOO, MANGOES, COCONUT & CASH-NUT OTHERS ETC. STANDING ON THE SAID PLOTS OF LAND. THE ASSESSEE CLAIMED THE SAID AMOUNT AS A N EXEMPT TAKING THE STAND THAT THE MESNE PROFIT WAS NOTHING BUT I T IS THE COST OF THE AGRICULTURAL PRODUCT, WHICH THE ASSESSEE WOULD HAVE RECEIVED IN FUTURE. AFTER DISCUSSING THE SOME CASE LAWS, THE A .O. CAME TO THE CONCLUSION THAT AS THE LAND WAS NOT USED FOR THE AG RICULTURAL PURPOSE NOR THE PURCHASER TRUST HAS ANY INTENTION TO PUT TH E LAND FOR AGRICULTURAL USE, AS PER THE MOU, HENCE, THE COMPEN SATION AMOUNT RECEIVED BY THE ASSESSEE AS MESNE PROFIT DOES NOT CONSTITUTE AGRICULTURAL INCOME WITHIN THE MEANING OF SECTION 1 0(1) OF THE ACT. THE A.O., THEREFORE, BROUGHT TO TAX THE ENTIRE AMOU NT OF RS ITA NO.1922/MUM/2007 ITA NO.1923/MUM/2007 MR. GOVINDRAO W. ADIK (HUF) 4 1,78,96,181/- AS NON-AGRICULTURAL INCOME. THE ASSE SSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A) BUT WIT HOUT SUCCESS. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE LD. SR. COUNSEL MR. Y.P. TRIVEDI T OOK US THROUGH THE COPY OF THE SALE DEED PAGE NO.1 TO 8 (IN THE TRANSL ATED COPY OF ORIGINAL SALE DEED AS WELL AS ORIGINAL SALE DEED). HE ALSO TOOK US THROUGH THE REVENUE RECORD IN THE FORM OF 7 X 712 ABSTRACT (PAG ES 9 TO 13). HE SUBMITS THAT THERE IS AMPLE OF EVIDENCE TO PROVE TH AT THE ASSESSEE HAS THE AGRICULTURAL LAND WHICH WAS SOLD TO THE TRUST. HE ALSO TOOK US THROUGH THE ASSESSMENT ORDER AND SUBMITTED THAT BOT H THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE EVIDENCE FILED BY THE ASSESSEE TO PROVE THAT THE LAND IN QUESTION WHICH IS SOLD TO THE TRUS T WAS AGRICULTURAL LAND AND HENCE IT CANNOT BE TREATED AS A CAPITAL AS SET. HE FURTHER ARGUES THAT THE ASSESSEE H.U.F. HAS NOT CONVERTED S AID LAND AS NON- AGRICULTURE LAND PRIOR TO SALE AND HENCE, AT POINT OF TRANSFER IT WAS CLEAR AGRICULTURE LAND AND GAIN ON SALE OF SAID LAN D CAN NOT BE TAX SAME IS EXEMPT UNDER SEC.10(1) OF ACT. HE ARGUES TH AT THE ASSESSEE APPLIED FOR GETTING PERMISSION TO SALE SAID AGRICUL TURE LAND TO COMPETENT AUTHORITY PROVES THAT SAID LAND WAS AGRIC ULTURE LAND ONLY AND ALSO SUPPORT CLAIM OF THE ASSESSEE. 7. IN RESPECT OF NEXT GROUND, HE SUBMITS THAT MESN E PROFIT MAY BE THE WRONG NOMENCLATURE USED BY THE PARTIES IN RESPE CT OF THE PROFITS OF THE AGRICULTURAL PRODUCE IN FUTURE, BUT, AS PER THE DOCUMENTS ON RECORD, LIKE MOU, IT IS VERY CLEAR THAT MESNE PROFI T HAS DIRECT NEXUS WITH THE TREES PLANTED BY THE ASSESSEE ON THE SAID LAND. THE INCOME FROM SAID TREES IN FUTURE PLANTED BY THE ASSESSEE P ARTAKES THE CHARACTER OF THE AGRICULTURAL INCOME. HE ALSO TOOK US THROUGH SOME OF THE DECISIONS. HE SUBMITS THAT EVERY YEAR THE ASSE SSEE HUF IS DECLARING THE AGRICULTURAL INCOME WHICH IS ACCEPTED BY THE A.O. WITHOUT ANY CONTROVERSY. HE ARGUES THAT THE REVENU E RECORD MAY NOT BE DISCARDED, WHICH SUPPORTS THE PLEA OF THE ASSESS EE THAT THE LAND ITA NO.1922/MUM/2007 ITA NO.1923/MUM/2007 MR. GOVINDRAO W. ADIK (HUF) 5 SOLD IS PURELY AGRICULTURAL LAND. HE ALSO SUBMITS THAT BOTH THE AUTHORITIES HAVE NOT PROPERLY EXAMINED THE EVIDENCE ON RECORD. PER CONTRA, THE LD. D.R. SUPPORTED THE ORDERS OF THE AU THORITIES BELOW. 8. WE FIND FORCE IN THE ARGUMENT OF THE LD. COUNSE L. AS PER THE EVIDENCE FLED BEFORE US, WHICH IS IN THE FORM OF TH E REVENUE RECORD, WE FIND THAT THE NATURE OF THE LAND IS DESCRIBED AS AG RICULTURAL LAND. WE, FURTHER FIND THAT ON THE 7/12 EXTRACT OF THE SAID L AND, NOTINGS IN RESPECT OF THE TREE PLANTATION ARE ALSO MADE. AS P ER THE MOU, THE ASSESSEE HUF AND THE TRUST AND MESNE PROFIT OR COMP ENSATION FOR THE LOSS OF THE AGRICULTURAL INCOME IN FUTURE. WE FIND THAT BOTH THE AUTHORITIES HAVE NOT PROPERLY EXAMINED THE ISSUE NO R THEY HAVE CONSIDERED THE REVENUE RECORD OF THE ASSESSEE. THE LD. COUNSEL HAS NO OBJECTION FOR SENDING THE ENTIRE MATTER BACK TO THE FILE OF THE A.O. TO DECIDE THE SAME DE NOVO . IN OUR OPINION, BOTH THE AUTHORITIES BELOW HAVE NOT ADJUDICATED BOTH THE ISSUES BY DISCARDING THE EVIDENCE IN THE FORM OF THE REVENUE RECORD FILED BY THE ASSESSEE. WE, THEREFORE, RESTORE ENTIRE MATTER TO THE FILE OF THE A.O. FOR F RESH ADJUDICATION DE NOVO . SO FAR AS THE ADDITIONAL GROUNDS ARE CONCERNED, THE ASSESSEE IS AT LIBERTY TO RAISE THE SAME BEFORE THE A.O. THE A .O. SHOULD CONSIDER THE REVENUE RECORD OF THE ASSESSEE AND OTHER EVIDEN CE, WHICH WOULD BE FILED BEFORE HIM AND DECIDE BOTH THE ISSUES AFRESH. NEEDLESS TO SAY THE A.O. SHOULD GIVE REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. ACCORDINGLY, BOTH THE GROUNDS ARE SET AS IDE. 9. NOW WE TAKE-UP THE APPEAL IN ITA NO.1923 OF 2007 OF MRS. ANURADHA G. ADIK. THE ASSESSEE HAS TAKEN FOLLOWING EFFECTIVE GROUNDS:- 2. THE LEARNED C.I.T. (A) HAS ERRED, IN LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING AN ADDI TIONS OF RS 9,228/- ON ACCOUNT OF LONG TERM CAPITAL GAIN ON SALE OF LAND WITHOUT CONSIDERING THE COMPUTATION OF TOTAL I NCOME FILED BY THE APPELLANT. THE APPELLANT RESPECTFULLY SUBMITS THAT THE ADDITION LEVIED MAY KINDLY BE DELETED. ITA NO.1922/MUM/2007 ITA NO.1923/MUM/2007 MR. GOVINDRAO W. ADIK (HUF) 6 3. THE LEARNED C.I.T. (A) ERRED, IN LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITIO NS OF RS 37,67,657/- ON ACCOUNT OF MESNE PROFIT FROM PLANTAT ION TREES EVEN THOUGH THE SAME WAS CAPITAL RECEIPT AS C LAIMED BY THE APPELLANT. THE APPELLANT SUBMITS THAT THE A DDITION MADE ON THIS ACCOUNT MAY KINDLY BE DELETED. 4. THE LEARNED C.I.T. (A) ERRED, IN LAW AND THE FAC TS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITIO NS OF RS 6,76,000/- HOLDING THE SAME AS UNDISCLOSED INCOME E VEN THOUGH THE SAME WAS AGRICULTURAL INCOME AS DECLARED BY THE APPELLANT. THE APPELLANT SUBMITS THAT THE ADDI TION MADE ON THIS ACCOUNT MAY KINDLY BE DELETED. 10. THE FACTS AND ISSUES ARE IDENTICAL IN THIS CASE AS THE ASSESSEE IS A CO-OWNER OF THE LAND SOLD BY THE MR. GOVINDRAO W. ADIK (HUF) TO THE TRUST. IN THIS CASE ALSO THE A.O. BROUGHT TO TAX T HE CAPITAL-GAIN ON THE SALE OF THE LAND REJECTING THE PLEA OF THE ASSESSEE THAT THE LAND IS AGRICULTURAL LAND. SAME WAY, THE ASSESSEE ALSO BRO UGHT TO TAX THE MESNE PROFIT/COMPENSATION OF RS 37,67,657/- TREATIN G THE SAME AS A NON-AGRICULTURAL INCOME. THE A.O. ALSO MADE ADDITI ON OF RS 6,76,000/- TOWARDS UNDISCLOSED INCOME. 11. THE FACTS ARE IDENTICAL AS IN THE CASE OF MR. GOVINDRAO W. ADIK (HUF). THE LD. SENIOR COUNSEL SUBMITS THAT THIS CA SE MAY ALSO BE RESTORED TO THE FILE OF THE A.O. FOR FRESH ADJUDICA TION AND HIS ARGUMENT ADVANCED IN THE CASE OF MR. GOVINDRAO W. ADIK (HUF) MAY BE TREATED AS HIS ARGUMENTS IN THIS CASE ALSO. LD D.R. HAS NO OBJECTION TO RESTORE THIS MATTER TO THE A.O. ALSO. WE, THEREFORE, CONS IDER IT FIT IN THIS CASE ALSO TO RESTORE THE ENTIRE MATTER TO THE FILE OF TH E A.O. FOR FRESH ADJUDICATION KEEPING ALL THE ISSUES OPEN. THE A.O. IS DIRECTED TO DECIDE THE ENTIRE MATTER DE NOVO IN THE LIGHT OF OUR DIRECTIONS GIVEN IN THE CASE OF MR. GOVINDRAO W. ADIK (HUF). NEEDLESS TO SAY THAT THE ITA NO.1922/MUM/2007 ITA NO.1923/MUM/2007 MR. GOVINDRAO W. ADIK (HUF) 7 A.O. SHOULD GIVE REASONABLE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. 12. IN THE RESULT BOTH THE APPEALS OF THE ASSE SSES ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 6 TH MAY 2011. SD/- SD/- ( B. RAMAKOTAIAH ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 16 TH MAY 2011 COPY TO:- 1) THE APPLICANT. 2) THE RESPONDENT. 3) THE CIT (A)28, MUMBAI. 4) THE CIT CITY-18, MUMBAI. 5) THE D.R. H BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA NO.1922/MUM/2007 ITA NO.1923/MUM/2007 MR. GOVINDRAO W. ADIK (HUF) 8 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 13.05.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 14.05.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER
