SHREE DHOOTAPAPESHWAR LTD, MUMBAI V. DCIT 5(3), MUMBAI

ITA 2512/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87998 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Capital asset
• Section: 143(3); 2(14); 115JB; 6

Judgement Text

, , , , , ,, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.2512/MUM/2013 ASSESSMENT YEAR: 2009-10 SHREE DHOOTAPAPESHWAR LTD. C/O- KALYANIWALLA & MISTRY, ARMY & NAVY BUILDING, 3 RD FLOOR, 148, M.G. ROAD, FORT, MUMBAI-400001 / VS. DEPUTY COMMISSIONER OF INCOME TAX,5(3), ROOM NO.583, 5 TH FLOOR, AAYKAR BHAWAN, M.K.ROAD, MUMBAI - 400020 ( #$% /ASSESSEE) ( & / REVENUE) P.A. NO.AAACS7883E #$% ' ( ' ( ' ( ' ( / // / ASSESSEE BY) SHRI M.M.GOLVALA & ' ( ' ( ' ( ' ( / REVENUE BY : SHRI LOVE KUMAR - DR ' %) / / / / DATE OF HEARING : 14 /01/2015 *+, ' %) / DATE OF PRONOUNCEMENT : 14 /01/2015 DATE OF ORDER : - - - - ' %) / 23 /01/2015 - - - - / / / / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) : THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 27/02/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI , CHALLENGING CONFIRMATION OF PENALTY IMPOSED U/S 271(1)(C) OF THE ACT. SHREE DHOOTAPAPESHWAR LTD . 2 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSEE , SHRI M.M. GOLVALA, CONTENDED THAT AGRICULTURAL LAND WAS SOLD WITH FULL DISCLOSURE AND IDENTICAL SUBMISS IONS WERE MADE BEFORE THE ASSESSING OFFICER. IT WAS SUBMITTED THAT LD. ASSESSING OFFICER DID NOT ACCEPT THE CLAIM UNDER MAT AND THE ONLY RECEIPT IS BY WAY OF S ALE OF LAND. CRUX OF THE ARGUMENT IS THAT GAIN ON SALE OF AGRICULTURAL LAND WAS EXEMPT U/S 10(1), THEREFORE, THE ASSESSING OFFICER CORRECTLY EXCLUDED WHILE COMPUTIN G BOOK PROFIT U/S 115JB IN TERMS OF EXPLANATION 1(II) BELOW SECTION 115JB, THUS, NO TAX WAS EVADED BY THE ASSESSEE. IT WAS PLEADED THAT NEITHER THERE IS CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. PLEA WAS ALSO RAISED T HAT IT WAS A LEGAL CLAIM. ON THE OTHER HAND, THE LD. DR, SHRI LOVE KUMAR, STRONGLY DEFENDED THE IMPOSITION AS WEL L AS CONFIRMATION OF PENALTY U/S 271(1)(C) OF THE ACT BY SUBMITTING THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS WITH THE INTENTION TO CONCEAL ITS INCOM E. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACT URING OF AAYURVEDIC DRUGS AND PHARMACEUTICALS, DECLARED INCOME OF RS.41,40,429/- IN ITS RETURN FILED ON 30 TH SEPTEMBER 2009. THE LD. ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) DETERMINING THE BOOK PROF IT OF RS.2,10,08,630/- AFTER MAKING ADDITION OF SALE O F AGRICULTURAL LAND OF RS.1,31,12,650/- ON 27/12/2011 . THE CASE OF THE ASSESSING OFFICER IS THAT EVEN IF C APITAL SHREE DHOOTAPAPESHWAR LTD . 3 PROFITS ARE CREDITED TO THE CAPITAL RESERVES ACCOUN T IN THE BALANCE SHEET, IT HAS TO BE ADDED TO THE BOOK P ROFIT FOR THE PURPOSES OF SECTION 115JB OF THE ACT, CONSEQUENTLY, HE HELD THAT PROFIT FROM SALE OF AGRICULTURAL LAND WAS LIABLE TO TAX U/S 115JB. T HE ASSESSING OFFICER IMPOSED PENALTY OF RS.14,85,660/- WHICH WAS CALCULATED AT THE RATE OF 100% OF THE TAX SOUGHT TO BE EVADED AS ADDITION OF RS.1,31,12,650/- WAS MADE BY THE ASSESSING OFFICER TO THE BOOK PROFI T U/S 115JB OF THE ACT AS CONCEALMENT OF INCOME. ON APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) AFFIRMED THE STAND OF THE ASSESSING OFFICER AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDE R, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD AND THE ASSERTION MADE BY THE L D. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT THE ASSESSEE DECLARED TOTAL INCOME OF RS.41,42,429/- UNDER THE REGULAR PROVISIO N OF THE ACT COMPUTING BOOK PROFIT U/S 115JB AT RS.78,95,981/-, THUS, THE TAX PAYABLE ON TOTAL INCO ME COMPUTED AS PER THE REGULAR PROVISION OF THE ACT IS HIGHER THAN THE BOOK PROFIT U/S 115JB I.E. THE ASSE SSEE PAID TAX ON ITS TOTAL INCOME AS PER THE REGULAR PROVISIONS OF THE ACT. WHILE COMPUTING THE BOOK PR OFIT U/S 115JB, THE ASSESSEE DID NOT CONSIDER THE PROFIT/GAIN ON SALE OF AGRICULTURAL LAND AMOUNTING TO RS.1,31,12,650/- AS THE SAME WAS DIRECTLY CREDITED TO SHREE DHOOTAPAPESHWAR LTD . 4 THE CAPITAL RESERVES IN ITS BALANCE SHEET. IT IS NO TED THAT WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT, THE LD. ASSESSING OFFICER HAS ACCEPTED THAT GAIN ARISIN G ON TRANSFER OF AGRICULTURAL LAND IS NOT TAXABLE UNDER THE REGULAR PROVISIONS OF THE ACT AS AGRICULTURAL LAND IS NOT A CAPITAL ASSET. HOWEVER, THE ASSESSING OFFICER HE LD THAT THE GAIN ON TRANSFER OF AGRICULTURAL LAND IS T O BE INCLUDED WHILE COMPUTING BOOK PROFIT U/S 115JB, HE THEREFORE, COMPUTE THE BOOK PROFIT AT RS.2,10,08,63 0/- AS AGAINST RS.78,95,981/- COMPUTED BY THE ASSESSEE. ADMITTEDLY, THE ASSESSEE DID NOT FILE ANY APPEAL BU T VIDE LETTER DATED 27/01/2012, ADDRESSED TO THE ASSESSING OFFICER, CLAIMED THAT ADDITIONAL TAX BEING PAID UND ER MAT WAS AVAILABLE TO THE ASSESSEE FOR SET OFF IN FU TURE U/S 115JAA AS A TAX CREDIT. IN THE AUDITED ACCOUNT S, THE ASSESSEE HAS CLEARLY DISCLOSED THE GAIN ON SALE OF AGRICULTURAL LAND BY DIRECTLY CREDITING THE SAME TO THE CREDIT RESERVES IN SCHEDULE-2 RESERVES AND SURPLUS OF THE AUDITED ACCOUNT WHICH IS REPRODUCED HEREUNDER:- AS ON MARCH 31 ST , 2009 AS ON MARCH 31 ST , 2008 2. RESERVES AND SURPLUS CAPITAL RESERVE AS PER LAST BALANCE SHEET 13,84,048 13,84,048 ADD: GAIN ON SALE OF AGRICULTURAL LAND 1,31,12,650 ADD: FORFEITED SHARES (NET OF CALL IN ARREARS) 4,036 1,45,00,734 13,84,048 THE ASSESSEE ALSO MADE A FOLLOWING NOTE IN THE COMP UTATION OF TOTAL INCOME FILED WITH THE RETURN:- SHREE DHOOTAPAPESHWAR LTD . 5 DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS SOLD THREE PLOTS OF AGRICULTURAL LAND A DMEASURING IN THE AGGREGATE 7 ACRES. THE SAID AGRICULTURAL LAND I S SITUATED AT VILLAGE SHIRDHON, TALUKA PANVEL, DISTRICT RAIGAD, M AHARASHTRA. THE SAID AGRICULTURAL LAND WAS PURCHASED BY THE ASS ESSEE COMPANY IN FINANCIAL YEAR 1992-93 AND 1994-95. THE PROFIT ON SALE OF THE SAID PLOTS OF LAND AMOUNTING TO RS.1,31 ,12,650/- HAS BEEN CREDITED TO CAPITAL RESERVE. THE ASSESSEE SUB MITS THAT SINCE AN AGRICULTURAL LAND IS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE INCOME-TAX ACT BEI NG SITUATED MORE THAN 9 KMS FROM PANVEL MUNCIPALITY, PROFIT/GAI N ARISING FROM THE SALE/TRANSFER OF THE SAID AGRICULTURAL LAN D IS NOT CHARGEABLE TO TAX UNDER SECTION 45 OF THE INCOME-TA X ACT, WHICH SEEKS TO BRING TO TAX ANY GAIN ARISING FROM TRANSFE R OF A CAPITAL ASSET. THE ASSESSEE COMPANY FURTHER SUBMITS THAT SINCE THE LAND IS AN AGRICULTURAL LAND AND THE PROFITS ON SAL E OF SUCH LAND HAVE BEEN DIRECTLY CREDITED TO CAPITAL RESERVE, SUC H PROFIT NEED NOT BE INCLUDED WHILE COMPUTING BOOK PROFITS UNDE R SECTION 115JB OF THE ACT. 2.3. IF THE AFORESAID NOTE, FILED WITH THE RETURN, IS ANALYZED, WE FIND THAT THE ASSESSEE SOLD THREE PIECES OF AGRICUL TURAL LAND, DURING THE YEAR UNDER CONSIDERATION, FOR A TOTAL CO NSIDERATION OF RS.1,37,11,325/-. NOW QUESTION ARISES, IN VIEW OF THE AFOREMENTIONED NOTE, WHETHER THE ASSESSEE CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE OBVIOUS REPLY IS NO BECAUSE THE ASSESSEE FILED ITS RETURN UNDER REGULAR PROVISIONS OF THE ACT AND COMPUTED THE BOOK PROFIT U/S 115JB OF THE ACT AT RS.78,95,981/-. THE TOTALITY OF FACTS C LEARLY INDICATES THAT THE ASSESSEE NEITHER FURNISHED INACCURATE PART ICULARS NOR CONCEALED ITS INCOME AND MERELY MADE A CLAIM IN ITS RETURN TO THE EFFECT THAT PROFIT/GAIN ON SALE OF AGRICULTURAL LAND IS NOT LIABLE SHREE DHOOTAPAPESHWAR LTD . 6 TO TAX U/S 115JB OF THE ACT, THUS, REJECTION OF CLA IM, ITSELF DOES NOT LEAD TO FURNISHING INACCURATE PARTICULARS, MORE SPECIFICALLY, WHEN IN ITS AUDITED ACCOUNTS THERE WAS A CLEAR DISC LOSURE OF SALE OF AGRICULTURAL LAND BY DIRECTLY CREDITING TO CAPIT AL RESERVE IN SCHEDULE-2 (RESERVE AND SURPLUS) BY DISCLOSING THE SAME BY WAY OF A NOTE WHICH HAS BEEN REPRODUCED IN EARLIER PARA OF THIS ORDER. MERE MAKING A CLAIM, WHICH IS NOT SUSTAINABLE IN LA W, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING INCOME OF THE ASSESSEE AS WAS HELD IN CIT VS RELIAN CE PETRO PRODUCTS (P.) LTD. 322 ITR 158 (SC), THUS NO PENA LTY IS LEVIABLE U/S 271(1)(C) OF THE ACT. FINALLY, APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 14/01/2015. - ' *+, . / 14/01/2015 + ' 5 SD/ - (SANJAY ARORA) SD/ - (JOGINDER SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; . DATED : 23/01/201 5 F{X~{T? P.S/. .. - ' 7%8 98,% - ' 7%8 98,% - ' 7%8 98,% - ' 7%8 98,%/ COPY OF THE ORDER FORWARDED TO : 1. :; / THE APPELLANT 2. 7<:; / THE RESPONDENT. 3. = ( ) / THE CIT, MUMBAI. 4. = / CIT(A)- , MUMBAI 5. 8?5 7% , , / DR, ITAT, MUMBAI 6. 5@# A / GUARD FILE. - - - - / BY ORDER, <8% 7% //TRUE COPY// B BB B/ // /C & C & C & C & (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI