SHRI KANWARLAL H. PUROHIT, Yavatmal V. ITO-WARD-2, Yavatmal

ITA 260/NAG/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1319 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 06-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: S C THAKAR; C J THAKAR
• Keywords: Business income
• Section: 54F; 54; 139

Judgement Text

1 ITA NO. 260/NAG/2014. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 260/NAG/2014 ASSESSMENT YEAR : 20 10 - 11. SHRI KANWARLAL H. PUROHIT, THE INCOME - TAX OFFICER, YAVATMAL. VS. WARD - 2, YAVATMAL. APPELLANT. RESPONDENT. APPELLANT BY : S/ SHRI C.J. THAKAR & S. C. THAKAR. RESPONDENT BY : SHRI A.R. NINAWE. DATE OF HEARING : 20 - 09 - 2016 DATE OF PRONOUNCEMENT : 24 TH OCT., 2016 O R D E R. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APP EALS) - I, NAGPUR DATED 23 - 12 - 2013 AND PERTAINS TO ASSESSMENT YEAR 2010 - 11. THE GROUNDS OF APPEAL READ AS UNDER : 1] THE LEARNED C.LT . CA) ERRED IN DISALLOWING THE CLAIM OF APPELLANT U / S.54F OF I . T . ACT ON THE GROUND THAT THE RETURN OF INCOME IS NOT FILED UNDER SUB - SECTION 1 OF SECTION 139 OF I. T.ACT . 2] THE LEARNED C.LT . CA) ERRED IN DISALLOWING THE CLAIM IN RESPECT OF AMOUNT DEPOSITED IN CAPITAL GAIN ACCOUNT BEFORE FILING OF RETURN AS PER PROVISIONS OF SECTION 54F. 3] THE LEARNED C. I T. ( A) ERRED IN C ONFIRMING THE ADDITION MADE BY THE A.O. REGARDING DIFFERENCE IN SALE PRICE AND PURCHASE PRICE OF LAND AS BUSINESS INCOME. 4] THE LEARNED C.LT . CA) ERRED IN CONFIRMING THE ADDITION MADE BY THE A.O. REGARDING NOT ALLOWING DEDUCTION OF PURCHASE PRICE OF L AND WHILE DETERMINING INCOME FROM IT'S SALE. 5] THE LEARNED C.LT . CA) ERRED IN NOT PROPERLY CONSIDER ASSESSEE'S SUBMISSION AND VARIOUS DOCUMENTS FILED BEFORE HIM. 6] T H E LEARNED C.1 . T . ( A) ERRED IN NOT CONSIDER VARIOUS CASE LAWS CITED BEFORE HIM . 2 ITA NO. 260/NAG/2014. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2010 - 11 DISCLOSING TOTAL INCOME AT RS.3,89 ,780/ - ON 05 - 02 - 2011. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF LIME. IN THE RETURN OF INCOME THE ASSESSEE HAS DISCLOSED LONG TERM CAPITAL GAIN AT RS. NIL ON ACCOUNT OF RESALE OF PLOT AT CHIKHALGAON TQ. WANI WHICH WAS SOLD ON 16 - 07 - 2009 FOR A CONSIDERATION OF RS.44,12,750/ - . THE LAND IN QUESTION WAS PURCHASED BY THE ASSESSEE ON 29 - 06 - 1999 FO R RS.4,27,000/ - FROM SHRI C.A. MORE WHICH WAS THE HALF PORTION OF AGRICULTURAL LAND AT SURVEY NO. 2/7 OF CHIKHALGAON TAL. WANI. THE ASSESSEE HAS ALSO CLAIMED EXPENSES OF RS. 3,45,832/ - TOWARDS DEVELOPMENT OF THE SAME. THE LAND IN QUESTION WAS SOLD ON 16 - 07 - 2009 TO SHRI GANESH PARMESHWARDAS GUPTA AND SHRI ANIL P. GUPTA FOR RS.88,25,500/ - . THE ASSESSEES STAKE IN THIS TRANSACTION WAS OF RS.44,12,750/ - I.E. 50%. THE ASSESSEE CALCULATED CAPITAL GAIN AT RS.33,73,180/ - AND CLAIMED EXEMPTION U/S 54F OF THE I.T. AC T AS UNDER : SALE CONSIDERATION RS. 44,12,750/ - LESS : INDEXED COST RS. 6,93,738/ - NON - AGRIL. TAX RS. 13,440/ - DEMARCATION FEES RS. 43,000/ - GRAM PANCHAYAT TAX RS. 2,89,392/ - ------------------- RS. 10,39,570/ - ------------------ RS. 33,73,180 LESS: EXEMPTION U/S 54F (PURCHASE OF HOUSE AT JODHPUR) RS. 14,18,077/ - -------- ------------ RS. 19,55,103/ - INVESTMENT IN BANK OF INDIA (CAPITAL GAIN A/C) RS. 20,00,000/ - ---------------------- TAXABLE GAIN RS. NIL. 3 ITA NO. 260/NAG/2014. 3. IN THIS REGARD THE AO OBSERVED AS UNDER : FOR CLAIMING EXEMPTION U/S 54F OF THE I.T. ACT, 1961 ONE OF THE CONDITIONS WHICH IS MENTIONED IN THE PROVISO TO SECTION 54F IS AS UNDER : - NOTHING CONTAINED IN THIS SECTION SHALL APPLY WHERE THE ASSESSEE OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET ON THE DATE OF TRANSFER OF THE ORIG INAL ASSET; IN THIS CASE, ON VERIFICATION OF THE BALANCE SHEET OF THE ASSESSEE IT IS SEEN THAT ASSESSEE OWNS TWO HOUSES ONE AT BIKAMPUR AND ONE AT NAGPUR. THE ASSESSEE HAS NOW INVESTED RS.14,18,077/ - IN PURCHASING PLOT /RESIDENTIAL HOUSE NO. 127 AT SECTOR A JODHPUR. AS SUCH THE CONDITION LAID DOWN ABOVE IS NOT SATISFIED FOR CLAIMING EXEMPTION U/S 54F. 4. THE ASSESSEES RESPONSE IN THIS REGARD WAS AS UNDER : 'THE HOUSE AT NAGPUR WAS PURCHASED BY MY FATHER SHR I H ARIKI SA NJI PU RH OH I T ON 30 . 10.1969 FOR RS. 16000/ - AND IT IS STILL IN H I S NAME. IT WAS DEB I TED IN H I S BOO KS AND SINCE THEN IT I S APPEARING IN HIS BALANCE SHEET . AFTER HIS DEATH I HAVE CO N T I NUED H I S BOOKS OF ACCOUNTS AND HIS ONLY HEIR. THE SAID HOUSE I S IN A VERY DELIPIDATED CONDITION AND NOT WOR TH LIVING . THERE IS NO INCOME FROM HIS HOUSE NOR ANYBODY W I LL TA K E I T O N RENT . MOREOVER IT IS NOT IN MY NAME . IT I S CONT I NUED IN THE BALANCE SHEET SINCE BE F O R E I HAVE TAKEN OVER THE BUS I NESS WITH ALL I TS ASSETS AND LIAB I L I TIES A S A SUCCESS OR _ OF MY L ATE FATHER. AT BHIKAMPUR WE HAVE ONE ANCESTRAL HOUSE AND THAT TOO I S CONTINUED IN THE . BALANCE SHEET SINCE BEFORE I HAVE TAKEN OVER HIS BUSINESS ALONG W I TH H I S BOOKS OF ACCOUNTS. ACTUALLY IT IS NOT OWNED BY ME AND IT IS MERELY COM I NG I N BALANCE SHEET S INCE I HAVE TAKEN THIS BUSINESS AS SUCCESSOR AS MENTIONED ABOVE. S I NCE BOTH THESE H OUSES ARE N OT AC T UAL L Y OWNED BY ME BUT THEY ARE SIMPLY CONTINUED I N THE BALANCE SHEE T AS TA K EN OVER BY ME ON DEATH OF MY FATHER. ' ASSESSEE ' S CONTENT I ON I S NOT ACCEPTABLE S I NCE ASSESSEE HAS TA K EN OVE R THE B U S I NESS OF H I S FATHER ALONG WITH ALL L I AB I LITIES AND ASSETS AS ONLY HEI R . TH I S MEANS T HAT THE ASSESSEE OWNS A RESIDENTIAL HOUSE THOUGH IT IS OWNED BY HIM AS A CAPACITY O F ON LY LEGAL HEIR . IT I S SEEN THAT BOTH THE HOUSES ARE RESIDENT I AL HOUSES WHICH ARE I N POS S ES SI ON OF THE ASSESSEE IN THE CAPACITY OF LEGAL HEIR. SINCE AS PER ASSESSEE ' S ABOVE S A I D L ETTER THERE IS NO LEGAL HEIR EXCEPT HIM . THE OWNERSHIP NATURA LL Y VESTS W I TH THE ASSESSEE . THEREFORE , THE EXEMPTION CLAIMED BY THE ASSESSEE I S HEREBY REJECTED . 5. CONSIDERING THE ASSESSEES RESPONSE THE AO HELD AS UNDER : 6. IT IS FURTHER TO BE NOTED THAT UNUSED PORTION OF CONSIDERATION OF RS.20,00,000/ - WAS DEPOSITED BY THE ASSESSEE IN BANK OF INDIA ON 31.12.2010. THE AMOUNT SO DEPOSITED IS ALSO LATE BECAUSE SEC. 54F(4) WHICH IS MEANT FOR DEPOSIT OF UNUSED AMOUNT OF CAPITAL GAIN WHICH READS AS UNDER : THE AMOUNT OF THE NET CONSIDERATION WHICH IS NOT APP R OP RI ATED BY THE ASSESSEE TOWARDS THE PURCHASE OF NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTILIZED BY HIM FOR 4 ITA NO. 260/NAG/2014. THE PURCHASE OR CONST R UCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SEC . 139 , SHALL BE DEPOSITED BY HIM BEFO RE FURNISHING SUCH RETURN(SUCH DEPOSIT BE I NG MADE IN AN Y CASE NOT L ATER THAN THE DUE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISH I NG THE RETURN OF I NCOME UNDER SUB SECTION (1) OF SEC . 139) IN AN ACCOUNT IN ANY SUCH BANK ....... 7 . IN THIS CASE THE ASSESSEE HAS FILED RETURN OF INCOME LATE I . E . O N 5 . 2 . 11 THE R EFORE T HE RETURN IN QUESTION IS NOT FILED UNDER SEC. 139(1) OF THE I . T.ACT,1961 AS SUCH THE AMOUNT DEPOSITED IS ALSO LATE. 8. IN THE CIRCUMSTANCES, THE CONDITION FOR DEPOS I TING THE AMOUNT I S NOT S AT I SF I ED AND THUS THE EXEMPTION CLAIMED BY THE ASSESSEE U/S 54F IS DISALLOWED . 6. THEREAFTER THE AO CONSIDER ED THE CONSIDERATION OF RS.44,12,750/ - BEING THE SALE CONSIDERATION FOR SALE SHOWN BY THE ASSESSEE. THE AO OPINED AS UNDER : S I NCE THE LAND IN QUESTION WAS OR I G I NALLY AN AGRICULTURAL LAND WHICH WAS LATER ON CONVERTED INTO NON AGRICULTURAL LAND AND SOLD AFTER CONVERTING IT I NTO NON - AGRICULTURAL RESIDENTIAL PLOTS , THE TRANSACT I ON WAS TO BE TREATED AS ADVENTU RE IN NATURE OF T R ADE . THE ASSESSEE WAS ASKED AS TO WHY THIS TRANSACTION SHOULD NOT BE TREATED AS ADVENTURE IN NATU R E OF T R ADE . THE ASSESSEE RESPONDED AS UNDER : ' THE LONG TERM CAPITAL GAIN SHOWN IS PROPER AND CORRECT . YOUR HONOR WIL L PLEASE SE E T H A T I HAD PURCHASED AGRICULTURAL LAND ON 26.9.1999, AS IN I NVESTMENT OF MY SURPLUS FUNDS AND NOT AS A STOCK I N TRADE . I AM DOING BUSINESS OF PURCHASE AND PRODUCTION OF LIME STONE , MANUFACTU R E AND SALE OF LIME AND NO OTHER BUSINESS. I AM NOT A DEALER IN REAL ES TATE OR ANY I M M OVAB L E PROPERTY. IT WILL BE SEEN THAT I HAD PURCHASED AGRICULTURAL LAND IN 1999 REMAINED IN TH E SAME CONDITION FOR TWO YEARS. I GOT IT CONVERTED TO RESIDENT I AL PLOTS IN 2001 . THEN AGAIN IT WA S WITH ME FOR 8 YEARS WITHOUT DOING IN DEVELOPMENT I . E. ROADS, NA I L , ELECTRIFICATION O R A N Y OTHER I MPROVEMENT IN THE SAID LAND. THIS ENTIRE LAND IS SOLD IN A SINGLE TRANSACTION IN 2009. THUS I T WILL BE SEEN THAT THERE I S A LONG SPAN OF TIME I.E . MORE THAN TEN YEARS BETWEEN P U RCH AS E AND SALE OF SAID LAND . FURTHER IT IS A SOLE TRANSACTION . THERE IS NO REPEATED TRANSACTION OF THIS TYPE. MERELY BECAUSE I HAVE GA I N PROFIT OUT OF THIS SALE, I T DOES NOT BECOME INCOME FR O M B USI NE S S. IT WILL BE THUS SEEN THAT IN ANY VIEW OF THE CASE THE ABOVE T RANSACTION CANNOT B E TREATED AS ADVENTURE IN NATURE OF TRADE. THE ASSESSEE FURTHER REFERRED TO SEVERAL CASE LAWS. HOWEVER, THE AO WAS NOT 5 ITA NO. 260/NAG/2014. CONVINCED. HE HELD AS UNDER : 18. THE ASSESSEE HAS PURCHASED THE LAND AS AGRICULTURE LAND AND LATER ON DEVELOPED THE SAME BY MAKING IT NON - AGRICULTURAL LAND AND RESIDENTIAL PLOTS. THUS THE INTENTION OF THE ASSESSEE WAS VERY CLEAR. THE PRESENCE OF SUCH INTENTION IS NO DOUBT A RELEVANT FACTOR AND UNLESS IT IS OFFSET BY THE PRESENCE OF OTHER FACTORS IT WOULD RAISE A STRONG IMPRESSION THAT THE TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE. IT IS CLEAR THAT THIS PURCHASE WAS THE FIRST STEP TA K EN BY THE ASSESSEE I N EXECUT I ON OF A WE L L CON SI DERED P L AN TO C ONV ER T THE L A N D I NTO RESIDENTIAL PLOTS , H O LD THE PLOTS UNTIL THE APPROPRIATE TIME RI PES AND SELL THE S AID PLOT S TO THE BUYER FOR A PROFITABLE CONSIDERATION . THEREFORE THE CONDUCT O F A PURCHASER OF A COMMODITY IN IMPROVING OR CONVERTING THE LAND TO MAKE IT READILY RESALABLE IS A RELEVANT FACTOR IN DETERM I NIN G THE CHARACTER OF THE TRANSACTI ON . THE CONDUCT OF THE ASSESSEE IN REGARD TO THIS TRANSACTION I . E . PURCHASE OF AGRICULTURAL LAND, MAKING DEVELOPMENT WORK ON IT, MAKE IT SALEABLE CLEARLY S HOW S THAT THE ASSESSEE WAS NOT INTERESTED IN OBTAINING ANY RETURN FROM AGRICULTURAL LAND . IF THE LAND HAD BEEN PURCHASED AS A MATTER OF INVESTMENT IT WOULD HAVE TRIED EITHER TO CULT I VATE THE L A ND, OR TO BU I LD ON IT ; BUT THE ASSESSEE DID NEITHER GOT IT CULT I VATED NOR U T I LI Z ED IT FOR AN Y OTHER PURPOSE EXCEPT TO EARN PROFIT 19 . THE MOST IMPORTANT , THOUG H NOT CONCLUSIVE TEST IS TO DETERMINE W HETHER OR NOT A PARTICULAR TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE IS TO ASK WHETHER THE PURCHA S E WAS MADE WITH AN INTENTION . TO RESELL COMMODITY SO PURCHASED AT A PROFIT . I F IT IS FOUND THAT THERE WAS NO SUCH INTENTION OR IF IT WAS FOUND THAT THERE WAS A POSITIVE INTENTION T O HOLD ON TO THE A CQUISITION, THEN THE TRANSACTION IS CLEARLY IN THE NATURE OF AN INVESTMENT . I T WOU L D NOT MAKE AN Y DIFFERENCE IF THE COMM O D I TY SO PURCHASED IS SOLD SUBSEQUENTLY A S IT COULD H A V E FOU N D IT INEXPEDIENT TO HOLD ON TO IT . ANY EXCESS REALIZED IN SUCH A TRANSACTION W OULD ONLY BE A C APIT A L APPRECIATION. ON THIS ACCOUNT ALSO IT CAN BE CLEARLY HELD THAT THE LAND WAS PURCH A S E D AN D S OLD WITH THE INTENTION TO EARN IMMEDIATE PROFIT A ND HENCE HELD A S ADVENTURE IN NATURE OF T RA D E . 20. WHEN A PERSON ACQUIRES LAND W I TH A VIEW TO SELLING IT LATER AFTER DE V ELOPIN G I T , HE IS CARRY I NG ON AN ACT I VITY RESULTING IN PROFIT , AND THE ACTIV I TY CAN ONLY B E DE S CR I B ED AS A BUSINESS VENTURE . WHERE THE PERSON GOES FURTHER AND D I V I DE S THE LAND INTO PLOT S, DEV E LOP S TH E AREA TO MAKE IT MORE ATTRACTIVE AND SELLS THE LAND NOT AS A S INGLE UNIT AND A S HE BOU G HT I T B U T I N PACELS , HE IS DEALING AS HIS STOCK IN TRADE; HE CARRIES ON BU S INES S AND MA KI N G A PROFIT . T H E ACQUISIT I ON OF THE LAND, THE DEVELOPMENT OF THE LAND , THE LAYING OUT OF PLOTS A ND THEI R SUBSEQUENT SALE IS DEFINITELY AN ADVENTURE IN NATURE OF TRADE . 21 . IN VIEW OF T HE ABOVE , THE EXEMPTION CLAIMED U/S 54F OF TH E I . T .A C T I S D I S A LL O WE D AND THE NET CONSIDERATION OF RS . 4412750/ - WILL BE TREATED A S BUS I NE SS I NCOM E. TH E EXPEN D IT U RE MADE O N IT FOR RS . 345832/ - FO R MAKING THE LAND NON - AG RI CULTURE AN D D EM AR CATIO N E T C . I S ALLOWED . THE AMOUNT OF RS . 4 0 66918/ - IS THEREFORE TREATED AS BUSINES S INCOME OF THE A S S E SS E E AND AD D ED TO THE TOTAL INCOME OF THE ASSESSEE . 7. UPON ASSESSEES APPEAL, LEARNED C IT(APPEALS) AF FIRMED THE AOS ACTION. 6 ITA NO. 260/NAG/2014. 8. AGAINST THE ABOVE ORDER, ASSESSEE HAS FILED APPEAL BEFORE THE ITAT. 9 . I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSE D THE RECORDS. I FIND THAT THE ASSESSMENT ORDER IS CAPTIONED A S DRAFT ASSESSMENT ORDER. IN THE INITIAL PART OF THE ORDER THE AO HAD CONSIDERED THE CAPITAL GAIN CLAIM OF THE ASSESSEE AND DISALLOWED THE EXEMPTION U/S 54F. THEREAFTER THE AO HAS DEALT WITH THE SALE CONSIDERATION REFERRED IN THE CAPITAL GAIN COMPUTATION OF THE ASSESSEE AND HELD THAT THE SAME WAS NOT A CASE OF CAPITAL GAIN BUT IT WAS AN ADVENTURE IN NATURE OF TRADE. THE ABOVE HEADING IN THE ASSESSMENT ORDER AND THE SEQUENCE OF CONSIDERATION SHOW THAT THE ASSESSMENT ORDER HAS BEEN PASSED WITHOUT PROPER APPLICATION OF MIND. THE BASIC FACT OF THE CASE IS THAT THE ASSESSEE WAS THE OWNER OF HALF SHARE IN AGRICULTURAL LAND PURCHASED ON 29 - 06 - 1999. THEREAFTER THE ASSESSEE CARRIED AGRICULTURE FOR A COUPL E OF YEARS. NOT FINDING AGRICULTURAL ACTIVITY PROFITABLE, THE ASSESSEE AND THE ANOTHER CO OWNER GOT THE SAID LAND CONVERTED INTO PLOT ON 06 - 10 - 2001. THE LAND SO REMAINED TILL 16 - 02 - 2009. IN THIS REGARD THE ASSESSEES CONTENTION IS THAT THE PLOTTING WAS ON PAPER. NO GRAMPANCHAYAT TAX ETC. WAS PAID. NO ACTUAL DEVELOPMENT ON LAND ON SITE WAS DONE. THEREAFTER, AFTER ALMOST EIGHT YEARS THE ENTIRE LAND WAS SOLD TO SHRI GANESH PARMESHWARDAS GUPTA AND SHRI ANIL P. GUPTA . IN THIS REGARD IT IS THE CONTENTION OF THE ASSESSEE THAT THE SALE IS NOT PLOT BY PLOT. AFTER NON AGRICULTURAL ORDER THE LAND REMAINED AS IT FOR 10 YEARS. THAT IT WAS SOLD IN WHOLE LOT ONLY AND NOT PLOT BY PLOT. THE ASSESSEE FURTHER SUBMITTED THAT NO DEVELOPMENT OF LAND IS AT ALL DONE. LAYOUT WAS ON PAPER. ASSESSEE HAS ONLY PAID N.A. TAX. DEMARCATION FEES AND GRAM PANCHAYAT TAX IN ALL AMOUNTING TO RS.3,45,832/ - . NO DEVELOPMENT EXPENSES ARE INCURRED OR CLAIMED. WHEN THE LAND WAS SOLD IT IS CLEARLY STATED IN THE SALE DEED THAT ALL DEVELOPMENT HAS TO BE DONE BY THE BUYER. LEARNED COUNSEL OF THE ASSESSEE HAS FURTHER COUNTE RED THE FINDING OF THE AUTHORITIES BELOW THAT THIS IS NOT A CASE OF BARE SALE OF PIECE OF LAND IN ITS ORIGINAL FORM. LEARNED COUNSEL SUBMITTED THAT THE LAND HAS NOT BEEN 7 ITA NO. 260/NAG/2014. SOLD PLOT BY PL OT TO INDIVIDUALS BUT IT IS SOLD BY ONE LOT TO ONE BUYER. 10 . AFTER CAREFUL CONSIDERATION I FIND THAT IN THIS REGARD THE SUBMISSIONS OF THE ASSESSEE S COUNSEL CAN BE GAINFULLY FURTHER REFERRED TO AS UNDER : (I) THE AGRICULTURAL LAND WAS PURCHASED AS A N INVESTMENT OUT OF SURPLUS FUND, NOT FROM BORROWED FUND NOR AS STOCK - IN - TRADE. 1. ( I I ) A S SE SS EE ' S LINE O F BU S IN ESS IN LIME BUSINESS. HE HAS NEVER DEALT IN B U S I NE S S OF P UR C H ASE A ND SA L E OF LAND , BU ILDI NG OR CONSTRUCTION OR ANYT H I N G A KIN TO IT . ( I I I ) T H E L A ND PUR C H AS ED WAS AG RICULTUR A L L A ND O N W H IC H AGR I C U L T URE W AS CO NTINUOU S L Y CA RRI E D O N B Y T H E SE LL E R S H R I MORE A N D AF T ER P UR CHA S E T H E ASSESSEE CA RRI E D ON AG RI C ULTU RE FO R A YEA R OR SO. HOWEVE R H E W A S N OT S U CCESSF UL A ND H E N CE D E CID E D T O SE LL OFF SA ID AG RI C UL T UR A L L A ND. B UT I F HE H A D SO LD AS AG RI CU LTUR A L L AN D I TSE L F T HEN IT WOU L D NOT HA V E FETC H ED A N Y PRI CE . H E N CE T H E ASSESSEE A ND H IS COP U RCHAS E RS DECIDED TO A PPL Y F OR N.A. U SE FO R R ES ID E NTI A L PUR POSE AN D M AKE L AYO UT P L AN . THE L A N D WAS S HO W N AS F I XE D ASSE T IN B . S . I T REMAINE D AS IT I S FOR YEAR S . ( I V ) AFTE R GET TIN G P E RMI SS I O N F OR N . A. U SE A N D LAYO U T OF P L AN FOR R ES ID E NTI A L U SE NO D EVE LOPM E NT O F AN Y N A TUR E WAS M ADE B Y T H E AS S ESSEE OR HI S CO PURCH ASE R O N TH E SA ID L A ND EXCEPT P AY IN G CONVER S I ON CHAR G E S , L A ND REVE NU E, G R A M P A N C H AYA T TAX ETC . (V ) THE S AID L AND REMA IN E D W I T H TH E ASSESSEE AND HI S C O P URCH A SER A S I T IS F R OM JUNE 200 1 TO 2009. (V I) THE ENTIRE LAND W A S S OLD IN ON E G O AS A W H OLE (AN D NOT PLOT BY P L OT ) TO SH RI GA N ES H P A R MESHWARIDAS GUPT A AND ANIL P . G U PTA BY S A L EDEED DT . 16.07.2009 FOR RS.88,25,500 1 - . (A S S E S S EE' S SHARE B E ING R S . 44,12,750/ - ). IN T H E SALEDEED I T WA S PR OV IDED THAT A N Y D EVE L OP M ENT T O B E D O N E TO SA ID N . A. L AND L IKE ROAD MAK IN G , SEV E R LI NE, E L ECT RI C P O LL , PRO V IDIN G E L EC TRICIT Y , P R OVID I N G WATE R CONNECTION WI LL A L L BE D O N E B Y TH E P U R C H ASERS . T HI S SHOW S THAT TH E LAND WA S S OLD A S IT I S AFTER I T WAS PER MI TTE D FOR N. A. . U SE W ITHOUT DOING AN Y DE V E L OPME NT WO RK AT A LL . (V I I ) C AS E L A W S : - ( I ) C . I T . V S . S H AS HI K UM A R AGRAWA L 195 ITR P. 767 (ALL) ( I I) INDI AN H UM E PIP E VS . C . I. T . 195 ITR P. 386 (BOM.) ( I II) C . I T . VS . S UR ES H C H A ND GOYA L 298 ITR P. 277 (M.P.) ( I V ) C. I T . VS . PRIN C I PA L OFF I CER 202 ITR P. 601 (BOM.) (V) C . L.T . VS. SO H A N KHA N 3 0 4 ITR P.194 ( R A J. ) (VI) C. I T . VS. MOHMME D MOHID E EN 74 CT R ( M A D. ) P .129 IN V IE W OF THE ABO V E THE TR A NSACTION O F SA L E I S A SA L E OF C A PI TA L ASSE T 8 ITA NO. 260/NAG/2014. R ES ULTING IN CAPIT A L GAIN T O TH E A SSESSEE . IT IS NOT A N ADVENTURE IN TH E N A TUR E OF TRADE / 1 1 . UPON CAREFUL CONSIDERATION I FIND CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE LEARNED COUNSEL OF THE ASSESSEE. THE FACTS OF THE CASE CLEARLY INDICATE THAT THE ASSESSEE HAS NEVER BEEN ENGAGED INTO SALE AND PURCHASE OF LAND. THE LAND PURCHASED REMAINED WITH THE ASSESSEE AND THE CO - PURCHASER FROM 2001 TO 2009. THOUGH PERMISSION FOR NON AGRICULTURE USE WAS OBTAINED AND PLOTTING WAS PLAN N ED , THE ENTIRE LAND WAS SOLD NOT AS INDIVIDUAL PLOT BUT AS A WHOLE PIECE OF LAND TO ONE BUYER. IN THES E CIRCUMSTANCES THE CASE LAWS REFERRED ABOVE DULY SUPPORT THE CASE OF THE ASSESSEE AND TRANSACTION CANNOT BE TREATED AS AN ADVENTURE IN THE NATURE OF TRADE. HENCE I HOLD THAT CONSIDERATION OF THE SALE CONSIDERATION OF LAND AS ADVENTURE IN THE NATURE OF T RADE BY THE AUTHORITIES BELOW IS NOT SUSTAINABLE AND HENCE I SET ASIDE THE SAME. 1 2 . ANOTHER ISSUE IN THIS CASE IS THE CONSIDERATION AS TO WHETHER THE ASSESSEE IS ENTITLED TO EX EMPTION U/S 54F. THE AUTHORITIES BELOW HAVE DISALLOWED THE S AME ON TWO GROUND S. FIRSTLY THAT THE ASSESSEE WAS HOLDING MORE THAN ONE HOUSE AND SECONDLY THE RETURN OF INCOME WAS SUBMITTED AFTER THE DUE DATE U/S 139(1). AS REGARDS THE ISSUE OF ASSESSEE HOLDING MORE THAN ONE HOUSE, LEARNED COUNSEL OF THE ASSESSEE HAS MADE APPLICATION UNDER RULE 29 OF APPELLATE TRIBUNAL RULES AS UNDER : I] A PP E LL A NT ABO V E N A M E D CR AVES L EAVE TO F I LE AND RE L Y O N DOC U MENT DT . 1 8 .0 3 .1996 BEIN G MUTU A L AG R EE M E N T A N D FA MI IY SE TT LEME N T BE T W E EN A P PE LL A NT 'S FA TH E R H A RIKI SA N H A N SRAJ PUR OHI T AND A PPE L LANT 'S COU S IN ( UN C LE 'S S ON ) GANP A TL A L SH R I K I SA ND AS PURO H IT W H E REB Y THE PROPERTI E S A T R AJU R MA HAR AS HT RA WE R E O W N E D A ND R TAI N E D B Y HAN S R A J A ND PR O P E RTI E S A T BIK A MPUR RAJ AS TH A N WE R E OW N E D AN D RET A INED B Y G A NP A TL A L . 2 ] IN A B SE NC E O F PROP E R CO MMUNI CAT I ON OF MIND BETWEE N A SS E SSEE A ND ASSES S EE' S COUN S EL W ITH R EGA RD TO I SS U E O F CAP I TA L GA IN A ND CO N S EQU E N T EXE MPTION U / S.54F A ND IT 'S T E CHNIC A L R E QUIR E M E NT AND F AC T S T O B E 9 ITA NO. 260/NAG/2014. PRO VE D ETC. THE ABO VE R E F E RR E D DOCUM E NT W HI C H I S R E L EVA NT T O TH E I S S U E R E M A IN E D TO B E PRODU CE D B EF OR E LO WE R A UT HORI T IE S . 3 ] IT WAS O NL Y W HEN M A TT E R B EF OR E TRIBUN A L WAS BE I NG DI SC U S S ED B Y THE ASSESSEE AND HIS COUN SE L A ND P A P ER B OOK WAS B E IN G P R EPA R ED I N J A N. 20 1 6 I T CA M E TO LI G HT TH A T TH E A BO V E R EF E R R ED OLD DOCUM E NT DT . 1 8 . 03 .1996 I S VE R Y R E L EVA NT A ND NECE S SAR Y FOR DECID I N G TH E I S S UE OF SEC . 5 4 - F CL A IM. AC CO RDIN G L Y TH E ASSESSEE F I LED THE X E R OX COPY OF SA ID DO C UM E NT ALON G W ITH P A P E RBO O K DT . 1 2. 0 1 .2016 A T IT E M 0. 1 6. I T I S A L S O S TATED IN C E RTIFIC A TE B E LO W THE P A P E RB OOK TH A T TH E DOCUM E NT 0 . ] 6 I S F IL E D BEFORE THE TRIBUN A L . 4] SINCE THE SAID DOCUMENT WAS NOT BEFOR E TH E A.O ' / C .I . T . (A) T H E A PPELLANT - AS S ESSEE IS M A KING THI S A PPLICATION UND E R RULE 29 OF I. T . TRIBUNAL RULES 1963 FOR PRODUCTION AND A DMIS S ION OF TH E SAI D DOCUMENT IN THE INTEREST OF JUSTICE A ND WHICH I S R E LE V ANT AND NEC ESSA R Y TO ENABLE THE HON. TRIBUNAL TO PA SS A PPROPRI A T E ORDER . 5] THE SAID DOCUMENT IS AN OLD DOCUM E NT S I G N E D B Y A S S E SS E E' S L A TE FA T HE R AND SHRI GANPATLAL AND IS GE NUIN E A ND I S A L SO A C TE D UPON. A FF ID AV I T I N S UPPORT O F THI S APPLIC A TION I S A L S O F IL E D . 1 3 . UPON CAREFUL CONSIDERATION I FIND THAT THE APPLICATION UNDER RULE 29 OF THE APPELLATE TRIBUNAL RULES BY THE ASSESSEE DESERVES TO BE ADMITTED. SINCE THE SAID DOCUMENT WAS NOT BEFORE THE AUTHORITIES BELOW, I DEEM IT APPROPRIATE TO REMIT THE SAME TO THE FILE OF THE AO. THE AO IS DIRECTED TO CONSIDER THE ISSUE OF ASSESSEES CLAIM OF EXEMPTION U/S 54F AFTER CONSIDERING THE ADDITIONAL DOCUMENTS BEING SUBMITTED BY THE LEARNED COUNSEL OF THE ASSESSEE. 1 4 . ANOTHER GROUND FOR REJECTION OF ASSESSEES CLAIM OF DEDUCTION U/S 54F IS THAT THE RETURN OF INCOME WA S FILED AFTER THE DUE DATE MENTIONED IN SECTION 139(1). I FIND THAT IN THIS REGARD HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. JAGR I TI AGGARWAL 339 ITR 610 HAS HELD THAT THE DUE DATE MENTIONED IN THE CONCERNED SECTION HAVE TO BE CONSIDERED A S THE D U E DATE MENTIONED IN 139(4) OF THE I.T. ACT. SINCE THERE IS NO JURISDICTIONAL HIGH COURT DECISION ON THIS ISSUE, IN MY CONSIDERED OPINION, THE SAME HAS TO BE CONSIDERED. ACCORDINGLY I DIR E CT THE AO TO TAKE INTO ACCOUNT THIS DECISION OF HONBLE PUNJA B & HARYANA HIGH COURT WHILE ADJUDICATING THE ISSUE OF ASSESSEES CLAIM 10 ITA NO. 260/NAG/2014. OF DEDUCTION U/S 54F OF I.T. ACT. 1 5 . IN THE RESULT, THIS APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF OCT., 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 24 TH OCT. , 2016. COPY FORWARDED TO : 1. SHRI KANWARLAL H. PUROHIT, PROP . M/S SWASTIK LIME FACTORY, RAJUR, TAH. WANI, DIST. YAVATMAL. 2. I.T.O., WARD - 2, YAVATMAL. 3. C.I.T. - I, NAGPUR. 4. CIT(APPEALS), - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKOD E.