Mohd Israil Sheikh, Nagpur V. Dy.Commissioner of Income Tax-8, Nagpur

ITA 261/NAG/2012

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7434 (ITAT-NAGPUR)
• Duration Of Justice: 7 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Set aside; Capital Gains
• Section: 201

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL BENCH, NAGPUR (AT E - COURT, PUNE) BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / I TA NO. 261 /NAG /20 12 / ASSESSMENT YEAR : 2008 - 09 MOHD ISRAIL SHEIKH, 604/2, N.I. MANSION, N.M.V. LAYOUT, BYRAMJI TOWN, JARIPATKA ROAD, NAGPUR - 440014. PAN : AFJPS3192K ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 8, NAGPUR. / RESPONDENT A SSESSEE BY : SHRI KAILASH JOGANI REVENUE BY : DR. MILIND BHUSARI / DATE OF HEARING : 15 .10 .2019 / DATE OF PRONOUNCEMENT : 16 .10 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS) - II, NAGPUR DATED 19.03.2012 FOR THE ASSESSMENT YEAR 2008 - 09 AS PER THE GROUNDS OF APPEAL ON RECORD. 2 ITA NO. 261 /NAG /20 12 A.Y. 2008 - 09 2. THE ASSESSEE HAS FILED GROUNDS OF APPEAL IN APPEAL MEMO AS WELL AS ADDITIONAL GROUNDS. HOWEVER, THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WHETHER THE SALE OF RURAL AGRICULTURAL LAND WAS ASSESSED IN THE HANDS OF THE ASSESSEE AS BUSINESS INCOME OR NOT. 3. AT THE TIME OF HEARING THROUGH E - COURT, THE LD. AR OF THE ASSESSEE SUBMITTED THAT T HE ASSESSEE EARNED INCOME ON SALE OF FOUR LAND AT FRIENDS COLONY, SOMALWADA, ANCESTRAL LAND AND ONE RURAL AGRICULTURE LAND SITUATED AT ZARI (RITHI) & DISCLOSED SAME UNDER THE HEAD OF CAPITAL GAIN S . THE ASSESSING OFFICER A SSESSED INCOME O N ALL THE FOUR LANDS AS BUSINESS INCOME. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) WHILE DECIDING THE ISSUE TREATED THE ANCESTRAL LAND AS CAPITAL GAINS, TWO LANDS AT FRIENDS COLONY AND SOMALWADA AS BU SINESS INCOME AS THE INCOME FROM BOTH THE LANDS ARE LIKE COMMISSION AS NO CONVEYANCE DEED OR SALE DEED WERE EXECUTED IN THE NAME OF THE ASSES S EE WHEREAS SALE OF FOURTH LAND I.E A RURAL AGRICULTURE LAND AS BUSINESS INCOME SINCE THE AGRICULTURAL ACTIVITIES W ERE NOT CARRIED OUT ON THE LAND. THE LD. AR FURTHER CONTENDED THAT ADDITION IN RESPECT OF TWO LANDS (I.E. FRIE NDS COLONY AND SOMALWADA) BY LD. CIT(A) IS ACCEPTED AND HENCE THE GROUNDS WERE REVISE D AND ONLY ISSUE RAISED BEFORE HON'BLE BENCH PERTAINS TO ADDI TION OF R S.56,42,320/ - , AS WORKED OUT BY ASSESSING O FFICER & UPHELD BY THE LD. CIT(A), TOWARDS GAIN ON SALE OF RURAL AGRICULTURE LAND SITUATED AT ZARI (RITHI) IN THE HANDS OF THE ASSESSEE AS BUSINESS INCOME . 3.1 . THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE LD. CIT(A) HAD UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS LAND STATING 3 ITA NO. 261 /NAG /20 12 A.Y. 2008 - 09 THAT NO AGRICULTURAL ACTIVITY WAS CARRIED OUT AND HENCE, THE LAND IS NOT AGRICULTURAL LAND. THE CONTENTIONS OF THE LD. AR I S THAT THE LAND WAS RECORDED AS AGRICULTURE LAND IN REVENUE RECORDS AND FOR TIME BEING IF NO AGRICULTURE ACTIVITY IS CARRIED - OUT WILL NOT CHANGE THE NATURE OF THE LAND AND THEREAFTER, T HE LD. CIT(A) IGNORED THE FACT THAT THE SAID LAND WAS PURCHASED FROM TH E SPECIAL RECOVERY OFFICER OF SAMATA SAHAKARI BANK LTD AS AGRICULTURE LAND AND WAS HELD FOR ABOUT ONE YEAR. THE ASSESSEE WAS FORCED TO SELL THE LAND IN THE LIGHT OF GOOD APPRECIATION IN VALUE OF LAND IN SHORT SPAN OF TIME AND PRESSURE FROM THE OTHER PARTNE R. THE DEALS IN THE LAND ARE OF CAPITAL IN NATURE AND NOT THE REGULAR BUSINESS ACTIVITIES OF THE ASSESSEE. THE ASSESSEE IS A CONTRACTOR BY PROFESSION /BUSINESS AND IT WAS ONLY IN ASSESSMENT YEAR 2008 - 09 AND ASSESSMENT YEAR 2007 - 08 THAT THE ASSESSEE DISCLOSE D THE GAIN ON SALE OF LANDS UNDER THE HEAD CAPITAL GAINS . THE LD. AR FURTHER SUBMITTED THAT THEIR CASE IS EXACTLY IDENTICAL TO THE FACTS IN THE CASE OF NITISH RAMESHCHANDRA CHORDIA VS. ACIT, CENTRAL CIRCLE 2(2), NAGPUR IN ITA NO.113/NGP/2012 WHICH FURTHER WAS EVEN SUPPORTED BY THE VIEW OF THE HONBLE NAGPUR BENCH OF BOMBAY HIGH COURT IN INCOME TAX APPEAL NO.120 OF 2013. 4. PER CONTRA, THE LD. DR HAS PLACED RELIANCE ON THE ORDERS OF THE SUB - ORDINATE AUTHORITIES. 5. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS. THE CASE OF THE REVENUE IS BASED ON THE PREMISE THAT NO AGRICULTURAL ACTIVITIES WERE CONDUCTED ON THE SAID LAND AND THEREFORE, THE SALE OF LAND AND THE RECEIPTS THEREOF AS BUSINESS INCOME SH OULD BE TAXED ACCORDINGLY. 4 ITA NO. 261 /NAG /20 12 A.Y. 2008 - 09 HOWEVER, THE ASSESSEE HAS ALL THROUGHOUT CONTENDED THAT AS PER THE REVENUE RECORDS, THE LAND IS AN AGRICULTURAL LAND AND THAT THEY HAVE PURCHASED THE LAND FROM SPECIAL RECOVERY OFFICER OF SAMANTA SAHAKARI BANK LTD. AS AGRICULTUR AL LAND. IT WAS ALSO SUBMITTED THAT THIS PARTICULAR TRANSACTION IS SOLITARY TRANSACTION IN THE CASE OF ASSESSEE SINCE THE ASSESSEE IS A CONTRACTOR BY PROFESSION. IT IS ONLY FOR THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 THAT THE ASSESSEE HAS SHOWN CAPITAL GA IN ON SALE OF LAND. WE HAVE ALSO PERUSED THE ORDER OF THE LD. CIT(A) WHERE THE LD. CIT(A) HAS SUPPORTED THE FINDINGS OF THE ASSESSING OFFICER. HOWEVER, A DETAIL ED VERIFICATION OF FACTS NEEDS TO BE DONE IN THIS CASE. THERE ARE MANY POINTS WHICH HAVE TO BE A SCERTAINED VIZ. (I) WHETHER THE LAND IS AGRICULTURAL OR NOT; (II) WHETHER AGRICULTURAL ACTIVITIES WERE PERFORMED IN THAT LAND OR NOT; AND (III) IS IT A BUSINESS DEALING OF THE ASSESSEE OR AS CLAIMED BY HIM THAT HE IS A CONTRACTOR AND THE SALE OF LAND IS SOLITARY TRANSACTION? THE ABOVEMENTIONED FACTS NEED S TO BE VERIFIED IN DETAIL. THAT AFTER ASCERTAINING THE ACCURATE FACTUAL MATRIX OF THE ASSESSEES CASE THEN THE QUESTION ARISES WHETHER THE FACTS ARE PARAMATERIA TO THE FACTS OF THE CASE DECIDED BY THE HONBLE BOMBAY HIGH COURT SO TO APPLY THAT RATIO DECENDI AS CLAIMED BY THE ASSESS EE. THEREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO VERIFY THE AFORESAID FACTORS AND BRING ON RECORD THE ACTUAL FACTS OF THE CASE AND ALSO ADJUDICATE THE MATTE R IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO.120 OF 2013 (SUPRA.) AS 5 ITA NO. 261 /NAG /20 12 A.Y. 2008 - 09 HEAVILY RELIED ON BY THE LD. AR OF THE ASSESSEE. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL GRANT REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN ACCORDANCE WITH LAW. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRO NOUNCED ON 16 TH DAY OF OCTOBER , 201 9 . SD/ - SD/ - D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 16 TH OCTOBER, 2019. SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - II, NAGPUR. 4. THE CIT - IV, NAGPUR. 5 . , , / DR, ITAT, NAGPUR. 6. / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 6 ITA NO. 261 /NAG /20 12 A.Y. 2008 - 09 DATE 1 DRAFT DICTATED ON 1 5 . 10 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 1 6 .10 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER