Vasantha Rajamanickam, CHENNAI V. ACIT Non Corporate Circle 3, CHENNAI

ITA 2664/CHNY/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8044 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 17-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G CHANDRABABU
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Business income; Capital Gains
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 2664/CHNY/2018 / ASSESSMENT YEAR : 2012-13 MS. VASANTHA RAJAMANICKAM, B-7, 75, C.P. RAMASWAMY ROAD, ALWARPET, CHENNAI 600 018. [PAN: AAAPR 8190G] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE -3, CHENNAI. ( / APPELLANT) ( / RESPONDENT) ' ( / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE +,' ( / RESPONDENT BY : SHRI. G. CHANDRABABU, ADDL. CIT ( /DATE OF HEARING : 24.11.2020 ( /DATE OF PRONOUNCEMENT : 06.01.2021 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 4, CHENNAI, IN ITA NO. 120/2 017-18/AY 2012-13/CIT(A)- 4 DATED 23.07.2018 FOR ASSESSMENT YEAR 2012-13. :-2-: ITA NO.2664/CHNY/2018 2. THE ASSESSEE FILED HER RETURN OF INCOME FOR ASSE SSMENT YEAR 2012-13 AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) DATED 02.1 0.2014 BY ACCEPTING THE RETURNED INCOME. SUBSEQUENTLY, THE AO RE-OPENED TH E ASSESSMENT AND COMPLETED THE RE-ASSESSMENT IN WHICH THE CAPITAL GA INS ADMITTED BY THE ASSESSEE IN RESPECT OF SUCH PROPERTY AND ASSESSED AS SUCH IN THE ORIGINAL ASSESSMENT WAS RE-ASSESSED AS BUSINESS INCOME. AGGRIEVED, THE ASS ESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) DISMISSED THE APPEAL. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED THIS APPEAL. 3. THE CASE WAS HEARD THROUGH VIDEO CONFERENCING. THE LD. AR SUBMITTED THAT THOUGH THE ASSESSEE CHALLENGED THE RE-OPENING OF THE ASSESSMENT, WITHOUT PRESSING IT, HE WOULD PRESENT THE CASE ON MERITS. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD PURCHASED 15,900 SQ.FT. OF LAND AT VEL ACHERY ON 22.01.1996 AND THE PROPERTY AT RAYAPURAM WAS PURCHASED IN OCTOBER, 199 5, WHICH WAS GIVEN ON JOINT DEVELOPMENT TO M/S. VASANTH BUILDERS. THE AG REEMENT ENTERED BY THE ASSESSEE PROVIDED FOR REALISATION OF SERVICE CHARG ES IN ADDITION TO SALE OF UDS IN LAND TRANSFERRED BY THE ASSESSEE. BASED ON THIS TRANSFER OF UDS IN LAND, THE ASSESSEE HAD OFFERED THE INCOME UNDER THE HEAD BUSI NESS FROM THE ASSESSMENT YEAR 1998-99 UNTIL 2001-02. OUT OF THESE FLATS, T WO FLATS COULD NOT FIND ITS INTENDED BUYERS TILL FINANCIAL YEAR 31.03.2000 AS T HE LOCALITIES WERE NOT DEVELOPED. CONSEQUENTLY, THE ASSESSEE HERSELF DECI DED TO BEAR THE COST OF CONSTRUCTION OF THE UNSOLD PORTIONS ON HER OWN. TH E COST OF ASSESSEES UNDIVIDED SHARE IN THE LAND AND THE COST OF CONSTRUCTION IN T HESE FLATS WERE RECORDED AND :-3-: ITA NO.2664/CHNY/2018 TREATED AS FIXED ASSET IN HER BOOKS FOR FINANCIAL Y EAR 2000-01 RELEVANT TO THE ASSESSMENT YEAR 2001-02. FROM THEN ONWARDS, THE CO RRESPONDING RENTAL INCOME IS ADMITTED AND ASSESSED ACCORDINGLY. THE CORRESPO NDING ASSETS WERE ADMITTED AND ASSESSED UNDER WEALTH TAX ALSO. THE ASSESSEE S OLD THESE FLATS ON 24.12.2011 AND ADMITTED CAPITAL GAINS WHICH WAS ORI GINALLY EXAMINED BY THE ASSESSING OFFICER AND ACCEPTED IN THE SCRUTINY ASSE SSMENT. SUBSEQUENTLY, THE ASSESSING OFFICER RE-OPENED THE ASSESSMENT AND TREA TED SUCH CAPITAL ASSETS AS BUSINESS ASSETS AND ASSESSED THE INCOME UNDER BUSIN ESS HEAD. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). TH E LD. CIT(A) WITHOUT EXAMINING THE FACTS AND CIRCUMSTANCES DISMISSED THE APPEAL. THEREFORE, THE LD. AR PLEADED THAT THE ASSESSEES APPEAL BE ALLOWED. PER CONTRA, THE LD. DR SUBMITTED THAT THE ASSESSEE PURCHASED THE LAND IN O CTOBER 1995 & ON 22.01.1996 THROUGH DIFFERENT AGREEMENTS AND POWER O F ATTORNEY. THE CORRESPONDING SALE DEEDS WERE NEVER EXECUTED IN FAV OUR OF THE ASSESSEE. THE ASSESSEE CARRIED OUT CONSTRUCTION OF RESIDENTIAL AP ARTMENTS THROUGH M/S. VASANTH BUILDERS, THE ASSESSEES FIRMLY CONCERN. INITIALLY , SHE ADMITTED THE INCOME UNDER THE HEAD BUSINESS. THE RENT REALISED FROM THE REMA INING FLATS WERE OFFERED AND ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY FROM ASSESSMENT YEAR 2000-01 UNTIL 2012-13. THE ASSESSEE SOLD THEM ON 2 4.12.2001 AND ADMITTED CAPITAL GAINS IN THE ORIGINAL RETURN. SINCE THE AS SESSEE DID NOT ACQUIRE THESE ASSETS AND WAS HOLDING THEM THROUGH THE POWER OF AT TORNEY RIGHT FROM THE DATE OF ITS ACQUISITION, THE AO HAS CORRECTLY TREATED TH EM AS BUSINESS ASSETS. ON A :-4-: ITA NO.2664/CHNY/2018 DUE CONSIDERATION, THE LD. CIT(A) HAS CORRECTLY UPH ELD THE RE-ASSESSMENT. THEREFORE, HE SUPPORTED THE ORDERS OF THE LOWER AUT HORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. THE ASSESSEE PURCHASED LAND IN 1995 & 1996, GIVEN O N JOINT DEVELOPMENT AND ADMITTED INCOME UNDER THE HEAD BUSINESS TILL ASSESS MENT YEAR 2001-02 AND THE BALANCE SITES, FLATS WERE CONSTRUCTED BY THE ASSESS EE AND SHE RETAINED THEM UNDER THE HEAD FIXED ASSETS. THE COST OF CONSTRUCT ION INCURRED BY HER WERE ALSO ACCOUNTED IN THE BOOKS OF ACCOUNT. THE ASSESSEE HA S BEEN TREATING THE IMPUGNED PROPERTY AS FIXED ASSETS, THE INCOME EARNE D FROM THEM WAS ADMITTED AS RENTAL INCOME FROM HOUSING PROPERTY AND SUCH ASS ETS WERE SHOWN IN THE WEALTH TAX RETURNS FILED BY THE ASSESSEE AND ASSESS ED ACCORDINGLY. DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2012-13, SHE SOLD THEM AND ADMITTED THE DUE CAPITAL GAINS IN HERE ORIGINAL RETURN, WHICH WA S SUBJECTED TO THE SCRUTINY ASSESSMENT AND WAS ACCEPTED. SUBSEQUENTLY, THE ASS ESSING OFFICER RE-OPENED THE ASSESSMENT, RE-ASSESSED THE INCOME ALREADY ASSE SSED UNDER THE HEAD CAPITAL GAINS AS BUSINESS INCOME. IN THE ABOVE FACTS AND C IRCUMSTANCES, WE DO NOT FIND ANY REASONING IN THE RE-ASSESSMENT ORDER FOR CHANGI NG THE INCOME FROM THE HEAD CAPITAL GAINS TO THE HEAD BUSINESS INCOME. THEREFO RE, WE FIND MERIT IN THE ASSESSEES SUBMISSION THAT THE AO MADE THE RE-ASSES SMENT WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION AND HENCE IT CANT BE UPHELD. WE DIRECT THE AO TO DELETE THE ADDITION MADE IN THE RE-ASSESSMENT OR DER. :-5-: ITA NO.2664/CHNY/2018 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLO WED. ORDER PRONOUNCED ON 06 TH JANUARY, 2021 AT CHENNAI. SD/- ( . ' ) (DUVVURU RL REDDY) $% /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) % /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 06 TH JANUARY, 2021 JPV (+3454 /COPY TO: 1. ' / APPELLANT 2. +,' /RESPONDENT 3. 6 ) ( /CIT(A) 4. 6 /CIT 5. 4+ /DR 6. 9 /GF