The ITO, Ward-3, Bharuch V. Shri Nitinkumar Hiralal Modi, Ankleshwar

ITA 2875/AHD/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9414 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 14-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Business income; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, A HMEDABAD , (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) ( , !'# $ , ! %& ) ITA NO. 2875/AHD/2010 (ASSESSM ENT YEAR: 2007-08) INCOME TAX OFFICER, WARD 3, ABOVE BANK OF BARODA, STATION ROAD, BHARUCH VS. NITINKUMAR HIRALAL MODI C/O. KETAN H. SHAH, ADVOCATE 903, SAPPHIRE COMPLEX, C. G. ROAD, NAVRANGPURA, AHMEDABAD PAN NO. ADFPM4365E (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. SONIA KUMAR, SR. D.R. RESPONDENT BY : NONE DATE OF HEARING : 01 -03-201 6 DATE OF PRONOUNCEMENT : 02 -03-2016 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-VI, BARODA DATED 02.07.2010 FOR A.Y. 2007-08. 2. THE GROUND RAISED BY THE REVENUE IN THE PRESENT APPEAL READS AS UNDER:- 1(I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE INCOME OF RS. 16,45, 356/- ON ACCOUNT OF SALE OF LAND AS LONG TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME. ITA NO.2875/AHD/10 A.Y. 2007-08 (ITO VS. NITINKUMAR H. MODI) 2 1(II) THE CIT(A) ERRED IN NOT APPRECIATING THE FACT S THAT THE ASSESSEE DEVELOPED AND CONVERTED THE LAND RECEIVED FROM HIS FATHER AND JOI NTLY OWNED BY THE ASSESSEE AND HIS BROTHER INTO COMPOSITE RESIDENTIAL UNIT BY CONVERTING THIS LAND INTO SEVERAL SMALL RESIDENTIAL PLOTS ALONG WITH ROAD AND OTHER RESIDENTIAL AMENITIES. THE SAID PLOTS WERE SOLD FOR RS. 34,34,449/- AND AFTER CONSIDERING THE COST PRICE AND OTHER INCOME, NET IN COME IS SHOWN AT RS. 32,90,172/- WHICH IS EQUALLY DISTRIBUTED BETWEEN THE ASSESSEE AND HIS BR OTHER AT RS. 16,45,356/- AND BOTH OF THEM HAVE INDIVIDUALLY SHOWN THE SAME AS LONG TERM CAPIT AL GAIN. SINCE THE ASSESSEE ALONG WITH HIS BROTHER, AFTER RECEIVING THE LAND, VENTURED INTO AC TIVITY OF SELLING OF PLOT OF LAND, THE ENTIRE ACTIVITY CAN BE TERMED AS TRADE AND THEREFORE PROFI T EARNED DURING THE YEAR FROM SALE OF PLOT IS NOTHING BUT ADVENTURE IN THE NATURE OF TRADE AND SH OULD BE TAXED AS BUSINESS PROFIT ESPECIALLY BECAUSE THE ASSESSEE IS INVOLVED IN THE ACTIVITY OF PURCHASE, SALE AND DEVELOPMENT OF LAND AS WELL AS CONSTRUCTION THROUGH THE TWO FIRMS, IN WHIC H ASSESSEE IS PARTNER, INVOLVED IN SUCH ACTIVITY. HAVING REGARDS TO ALL THESE FACTS THE ACT IVITY OF SALE OF PLOTS UNDERTAKEN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION CAN BE CLEARLY TERMED AS ADVENTURE IN NATURE OF TRADE OR BUSINESS. THE ENTIRE PROFIT OF RS. 16,45,356/-, WAS THEREFORE, RIGHTLY TREATED BY THE A.O. AS BUSINESS INCOME. 3. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF ASSESSEE BUT HOWEVER THE LD. D.R. FAIRLY ADMITTED THAT THE TAX EFFECT ON THE IMPUGNED ADDITIONS IS LESS THAN THE LIMIT PRESCRIBED BY THE CBDT CIRCULAR OF 1 0.12.2015 BEARING NO. 21 OF 2015. 4. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATER IAL ON RECORD. ON PERUSING THE GROUNDS OF APPEAL RAISED BY THE REVENU E, WE FIND THAT REVENUE IS AGGRIEVED BY THE ADDITION OF RS.16,45,356/-, THE TA X EFFECT OF WHICH IS BELOW RS.10 LACS. AS PER THE ANNOUNCEMENT OF CENTRAL BOA RD OF DIRECT TAXES (CBDT) DATED 10.12.2015 (CIRCULAR NO. 21 OF 2015), NO DEPA RTMENT APPEALS ARE TO BE FILED AGAINST RELIEF GIVEN BY LD. CIT(A) BEFORE THE INCOME TAX TRIBUNAL UNLESS THE TAX EFFECT, EXCLUDING INTEREST EXCEEDS RS. 10 LACS AND IT FURTHER STATES THAT THE INSTRUCTIONS WILL APPLY RETROSPECTIVELY TO THE PEND ING APPEALS. IN THE PRESENT CASE, SINCE IT IS AN UNDISPUTED FACT THAT ON THE ADDITION S WHICH ARE IN DISPUTE, THE TAX EFFECT IS LESS THAN RS. 10 LACS AND IN THE ABSENCE OF ANY MATERIAL ON RECORD BY THE REVENUE TO DEMONSTRATE THAT THE ISSUE IN THE PRESEN T APPEAL IS COVERED BY EXEMPTIONS SPECIFIED IN CLAUSE (8) OF THE AFORESAID CBDT CIRCULAR, WE ARE OF THE VIEW THAT THE MONETARY LIMIT PRESCRIBED BY THE INST RUCTIONS OF THE AFORESAID CBDT ITA NO.2875/AHD/10 A.Y. 2007-08 (ITO VS. NITINKUMAR H. MODI) 3 CIRCULAR WOULD BE APPLICABLE TO THE PRESENT APPEAL OF THE DEPARTMENT AND THEREFORE THE PRESENT APPEAL IS NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT. IN SUCH CIRCUMSTANCES, WE DISMISS THE APPEAL OF REVENU E WITHOUT EXPRESSING ANY OPINION ON MERITS OF THE CASE. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 02 - 03 - 2016. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 02/03/2016 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD