Kirthidhara Infrastructure Pvt Ltd., CHENNAI V. ITO Corporate Circle II(1), CHENNAI

ITA 2584/CHNY/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0117 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 27-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: D ANAND
• Keywords: Capital asset; Benefit of exemption; Set aside
• Section: 143(1)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A. NO. 2584/CHNY/2017 / ASSESSMENT YEAR: 2009-10 M/S. KIRTHIDHARA INFRASTRUCTURE PVT. LTD., 4/318, MARG AXIS, RAJIV GANDHI SALAI, KOTTIVAKKAM, CHENNAI 600 041. [PAN:AADCK0873D] VS. THE INCOME TAX OFFICER, CORPORATE CIRCLE II (1), CHENNAI 600 006. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI D. ANAND, ADVOCATE / RESPONDENT BY : SHRI B. SAGADEVAN, JCIT / DATE OF HEARING : 06.05.2019 /DATE OF PRONOUNCEMENT : 12.06.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 8, CHENNAI, DATED 16.08.2017 RELEVANT TO THE ASSESSMENT YEAR 2009-10. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE TOWARDS SHORT TERM CAPITAL GAINS ON SALE OF LAND. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 28.09.2009 RETURNING A LOSS OF .27,571/-. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE I.T.A. NO. 2584/CHNY/17 2 INCOME TAX ACT, 1961 [ACT IN SHORT]. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED. ON VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SOLD 12.75 ACRES IN MADAYAMBAKKAM VILLAGE FOR A CONSIDERATION OF .5,10,00,000/ -. SIMILARLY THE ASSESSEE HAS SOLD 2.88 ACRES IN ATCHIVILAGAM VILLAGE FOR A CONSIDERATION OF . 86,40,000/-. THE ASSESSEE HAS NOT OFFERED ANY INCOME FROM THE SALE OF THESE TWO LANDS. THE ASSESSING OFFICER HAD CONDUCTED DETAILED VERIFICATIONS AND HAD BROUGHT THE SURPLUS FROM THE SALE OF THESE LANDS AT .3,66,51,552/ - FOR TAXATION AS STCG BY OBSERVING AS UNDER: A) IT WAS NOT AN AGRICULTURAL LAND AS CLAIMED AND IT WAS ONLY A CAPITAL ASSET, LIABLE FOR TAX AS STCG. B) THE ADANGAL REGISTER DOES NOT SHOW IT IS AN AGRICULTURAL LAND. AS PER ADANGAL REGISTER, A CERTIFIED COPY OF WHICH IS OBTAINED FROM THE DY. TANSILDAR, ILLATUR BY THE INSPECTOR, THE LAND WAS NOT IN AGRICULTURAL OPERATION EVEN IN THE FINANCIAL YEAR 2007-08 NOT TO SPEAK OF THE FINANCIAL YEAR 2008-09. AS PER LAND RECORDS, IT WAS SHOWN ONLY AS 'BANJAR'. C) THE ASSESSEE COMPANY HAS OFFERED THE AGRICULTURAL INCOME FROM THESE LANDS ONLY TO MISLEAD THE DEPARTMENT TO SHOW IT AS AN AGRICULTURAL LAND. IN FACT, THERE WAS NO AGRICULTURAL ACTIVITY AT ALL AT THE SAID LAND DURING THE FINANCIAL YEAR 2008-09. WHEN THERE WAS NO AGRICULTURAL OPERATION DURING THE PERIOD IN QUESTION AS PER ADANGAI, WHERE IS THE QUESTION OF OFFERING AGRICULTURAL INCOME. D) SINCE IT WAS NOT AN AGRICULTURAL LAND DURING THE PERIOD IN QUESTION, LIABILITY TO CAPITAL GAIN TAX IS ATTRACTED. I.T.A. NO. 2584/CHNY/17 3 E) TILL THE DATE OF SALE, NO AGRICULTURAL OPERATIONS WERE CARRIED OUT. THE ASSESSEE HELD THE LAND ONLY FOR A PERIOD OF 3 MONTHS. THE LAND WAS A DRY LAND WITHOUT ANY AGRICULTURAL OPERATIONS EVEN RIGHT FROM THE YEAR 2007-08 AS PER REVENUE RECORDS OBTAINED. F) THE LAND WAS NOT UNDER ACTUAL CULTIVATION TILL IT WAS SOLD AS EVIDENCE BY THE RECORDS OBTAINED AND KEPT IN THIS OFFICE. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE COMPANY HELD THE PROPERTY ONLY FOR A PERIOD OF ABOUT 3 MONTHS. THOUGH THE ASSESSEE HAS SHOWN IN ITS PROFIT AND LOSS ACCOUNT FOR THE YEAR 31.03.2009 THAT IT HAD RECEIVED AGRICULTURAL INCOME OF .55,899/- FROM THE SAID LAND, THE REVENUE RECORDS SHOWS THE OTHER WAY. IN ORDER TO MISLEAD THE DEPARTMENT, THE ASSESSEE HAS SHOWN SOME AGRICULTURAL INCOME FROM THE ABOVE LANDS IN ORDER TO CLAIM EXEMPTION UNDER SECTION 10(1) OF THE ACT. THESE LANDS ARE NOTHING BUT A DRY LAND UNFIT FOR ANY TYPE OF AGRICULTURAL OPERATIONS. SINCE THE ABOVE TRANSACTIONS CANNOT BE TREATED AS A SALE OF AGRICULTURAL LAND AND IT COULD BE TREATED AS NON-AGRICULTURAL LANDS/CAPITAL ASSET, WHICH FALLS WITHIN THE CATEGORY OF TRANSFER OF CAPITAL ASSET LIABLE FOR CAPITAL GAINS TAX, THE ASSESSING OFFICER LEVIED SHORT TERM CAPITAL GAINS ON THE SALE CONSIDERATION AT .3,66,51,552/-. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION OF SHORT TERM CAPITAL GAINS. 3. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AGRICULTURAL LAND SOLD BY THE ASSESSEE IS NOT SITUATED IN AN AREA NOTIFIED BY THE GOVERNMENT AS PER NOTIFICATION NO. 9447. BY REFERRING TO THE SALE DEED DATED 23.12.2008 I.T.A. NO. 2584/CHNY/17 4 EXECUTED IN FAVOUR OF THE ASSESSEE, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT AS PER THE STATEMENT UNDER RULE 3(1) OF THE TAMIL NADU STAMP PREVENTION OF UNDER VALUATION OF INSTRUMENT RULES, 1968, THE NATURE OF THE PROPERTIES MENTIONED ARE AGRICULTURE AND THEREFORE, THE SALE OF SUCH AGRICULTURAL LAND DOES NOT FALL UNDER THE PROVISIONS OF SECTION 2(14)(III) OF THE ACT AND THUS, NOT LIABLE FOR SHORT TERM CAPITAL GAIN AND PRAYED FOR DELETING THE ADDITION. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAD ADMITTEDLY PURCHASED THE AGRICULTURAL LAND [DRY LAND] DURING THE FINANCIAL YEAR 2008-09. THE ASSESSEE HAS PRODUCED A CERTIFICATE DATED 30.12.2008, WHEREIN, THE DY. TAHSILDAR SAYS THAT THE ASSESSEE WAS CARRYING ON THE AGRICULTURAL OPERATIONS WITH REGARD TO PADDY AND GROUNDNUTS AS PER VILLAGE REVENUE LAND RECORDS. HOWEVER, THE STATEMENT DATED 20.12.2011 OBTAINED BY THE INSPECTOR FROM VAO OF MADAYAMBAKKAM AND ATCHIVILAGAM VILLAGE SAYS THAT NO CROPS HAVE BEEN GROWN IN THE ABOVE LANDS FROM THE YEAR 2007-08 TO 2010-11. SINCE THE STATEMENT FURNISHED BY THE INSPECTOR OF THE DEPARTMENT FROM THE VAO AND THE CERTIFICATE OF THE TAHSILDAR FURNISHED BY THE ASSESSEE ARE CONTRARY, WE ARE UNABLE TO TAKE COGNIZANCE OF BOTH THE SAME AND THUS, BOTH ARE HELD AS INVALID. A PERUSAL OF THE ASSESSMENT ORDER I.T.A. NO. 2584/CHNY/17 5 CLEARLY SHOWS THAT THE LANDS SOLD BY THE ASSESSEE WERE DRY LAND. ORDINARILY, THE EXPRESSION AGRICULTURAL LAND WOULD INCLUDE BOTH WET LAND AS WELL AS DRY LAND. A PERUSAL OF THE SALE DEED DATED 23.12.2008, BROUGHT ON RECORD BY THE LD. COUNSEL, SHOWS THAT AS PER THE STATEMENT UNDER RULE 3(1) OF THE TAMIL NADU STAMP PREVENTION OF UNDER VALUATION OF INSTRUMENT RULES, 1968, THE NATURE OF THE PROPERTIES MENTIONED ARE AGRICULTURE. 5. WET LANDS HAVE ORDINARILY A SOURCE OF IRRIGATION WHICH IS A REGISTERED SOURCE, WHILE DRY LANDS DO NOT HAVE SUCH A SOURCE. IT IS COMMON KNOWLEDGE THAT DRY LANDS REMAIN UNCULTIVATED EXCEPT WHEN THERE ARE RAINS THERE BEING NO REGISTERED SOURCE FOR THE IRRIGATION OF DRY LANDS, BUT, THE SAID DRY LAND CAN BE IRRIGATED THROUGH BORE WELL/PUMP SETS, ETC. FOR CULTIVATION. ON PERUSAL OF THE REGISTERED PURCHASE DEED DATED 23.12.2008, IT IS EVIDENT FROM PARA 5 THAT IN THAT PARTITIONED PROPERTY TO THE EXTENT OF 10.10 AC OUT OF 12.10 AC IN SURVEY NO. 54, WITH WELL AND ONE HP ELECTRIC MOTOR PUMP SET, SURVEY NO. 55 TO THE EXTENT OF 2.66 AC WERE ALLOTTED TO THIRU GOVINDASAMY REDDIAR IN THE A SCHEDULE OF THE PARTITION AND THE PARTITION DEED WAS REGISTERED AS DOCUMENT NO. 109/1976 DATED 17.02.1976 BEFORE THE SRO, CHEYYUR. FROM THE ABOVE, IT IS EVIDENT THAT THERE IS A SOURCE FOR THE IRRIGATION OF DRY LAND. 6. THE DRY LAND WOULD NOT PARTAKE AS NON-AGRICULTURAL LAND. FURTHER, WHEN THE LAND WHICH DOES NOT FALL UNDER THE PROVISIONS OF SECTION 2(14)(III) OF THE I.T.A. NO. 2584/CHNY/17 6 ACT AND THE ASSESSEE HAS DECLARED AGRICULTURAL INCOME, AND ALSO BEING SPECIFIED AS AGRICULTURAL LAND IN THE REGISTERED SALE DEED DATED 23.12.2008, THE LANDED PROPERTY CANNOT BE SAID THAT IT IS NON-AGRICULTURAL LAND. MOREOVER, THE LAND IS NOT SUBJECTED TO ANY CONVERSION AS NON-AGRICULTURAL LAND BY THE ASSESSEE OR ANY OTHER CONCERNED PERSON AND THUS, THE TRANSFERS SUCH AGRICULTURAL LAND AS IT IS AND WHERE IT IS BASIS AND SUCH TRANSFER LIKE THE CASE BEFORE US CANNOT BE CONSIDERED AS A TRANSFER OF CAPITAL ASSET. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT WHAT HAS BEEN SOLD BY THE ASSESSEE WAS AN AGRICULTURAL LAND [DRY LAND] AND CONSEQUENTLY THE ASSESSEE IS ENTITLED TO CLAIM THE BENEFIT OF EXEMPTION UNDER SECTION 10(1) OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND THE ASSESSING OFFICER IS DIRECTED TO GRANT THE ASSESSEE THE BENEFIT OF EXEMPTION UNDER SECTION 10(1) OF THE ACT AS CLAIMED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 12 TH JUNE, 2019 IN CHENNAI. SD/ - SD/ - (INTURI RAMA RAO) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 12.06.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.