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

ITA 2876/AHD/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9427 (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; Audit objection; Tax effect

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2876/AHD/2010 ( / ASSESSMENT YEAR : 2007-08) THE ITO WARD-3 BHARUCH / VS. SHRI HARESHKUMAR HIRALAL MODI SHIV BUNGALOW NO.1 JAI SHREE KRISHNA NAGAR HANSOT ROAD, ANKLESHWAR ' ./ ./ PAN/GIR NO. : ADFPM 4364 F ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( / APPELLANT BY : SMT. SONIA KUMAR, SR.DR &''% ) ( / RESPONDENT BY : -NONE- * ) / DATE OF HEARING 01/03/2016 +,-. ) / DATE OF PRONOUNCEMENT 02/03/2016 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARODA [CIT(A) IN SHORT] DATED 02/07/2010 PERTAINING TO ASSESSMENT YEAR (AY) 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- ITA NO.2876 /AH D/2010 ITO VS. HARESHKUMAR HIRALAL MODI ASST.YEAR 2007-08 - 2 - 1 ( I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE INCOME OF RS. 16,45,35 6/- ON ACCOUNT OF SALE OF LAND AS LONG TERM CAPITAL GAIN INSTEAD OF BUSINESS INCOME. 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 JOINTLY OWNED BY THE ASSESSEE AND HIS BROTHER INTO COMPOSITE RESI DENTIAL UNIT BY CONVERTING THIS LAND INTO SEVERAL SMALL RESIDENTIAL PLOTS ALON G 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 TH E ASSESSEE AND HIS BROTHER AT RS. 16,45,356/- AND BOTH OF THEM HAVE INDIVIDUAL LY SHOWN THE SAME AS LONG TERM CAPITAL GAIN. SINCE THE ASSESSEE ALONG WITH HI S BROTHER, AFTER RECEIVING THE LAND, VENTURED INTO ACTIVITY OF SELLING OF PLOT OF LAND, THE ENTIRE ACTIVITY CAN BE TERMED AS TRADE AND THEREFORE PROFIT EARNED DURI NG THE YEAR FROM SALE OF PLOT IS NOTHING BUT ADVENTURE IN THE NATURE OF TRAD E AND SHOULD BE TAXED AS BUSINESS PROFIT ESPECIALLY BECAUSE THE ASSESSEE IS INVOLVED IN THE ACTIVITY OF PURCHASE, SALE AND DEVELOPMENT OF LAND AS WELL AS C ONSTRUCTION THROUGH THE TWO FIRMS, IN WHICH ASSESSEE IS PARTNER, INVOLVED I N SUCH ACTIVITY. HAVING REGARDS TO ALL THESE FACTS THE ACTIVITY 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. FURTHER, AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF ITO. VS. MURLIDHAR BHA GWANDAS (1964) 52 ITR 335, 342 (SC), FOR INCOME TAX PURPOSES, EACH YEAR W AS SELF-CONTAINED UNIT AND THE DECISION OF THE ITO GIVEN A PARTICULAR YEAR DID NOT OPERATE AS RES JUDICATA IN THE MATTER OF ASSESSMENT OF THE SUBSEQU ENT YEAR. THE ENTIRE PROFIT OF RS. 16,45,356/-, WAS THEREFORE, RIGHTLY TREATED BY THE A.O. AS BUSINESS INCOME. 2. THE APPELLANT CRAVES TO ADD TO, AMEND OR ALTER T HE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL. THE ORDER OF THE CIT(A) ON THE ABOVE ISSUE BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. WE HAVE HEARD THE LD.SR. DEPARTMENTAL REPRESENTA TIVE AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT PRIMA-FACI E THIS APPEAL OF THE REVENUE ITA NO.2876 /AH D/2010 ITO VS. HARESHKUMAR HIRALAL MODI ASST.YEAR 2007-08 - 3 - IS NOT MAINTAINABLE IN VIEW OF CBDT CIRCULAR NO. 21 /2015 IN F.NO.279/MISC. 142/2007-ITJ (PT) DATED 10 TH DECEMBER 2015, VIDE WHICH IT HAS BEEN PROVIDED THAT IF THE TAX EFFECT BY VIRTUE OF THE COMMISSIONE R OF INCOME-TAX (APPEALS)S ORDER IS BELOW RS.10,00,000/-, THEN THAT ORDER WOUL D NOT BE CHALLENGED BEFORE THE TRIBUNAL IN FURTHER APPEAL. THE BOARD HAS PROV IDED EXEMPTIONS AT CLAUSE (8) OF THE INSTRUCTIONS WHEREIN IT HAS BEEN PROVIDE D THAT THESE INSTRUCTIONS WILL NOT BE APPLICABLE, IF VIRES OF ANY PROVISIONS HAS B EEN QUASHED BY IMPUGNED ORDER OR ADDITION WAS MADE ON SOME AUDIT OBJECTIONS OR THE ADDITION RELATES TO UNDISCLOSED FOREIGN ASSETS/BANK ACCOUNTS, ETC. WE FIND THAT THE PRESENT CASE DOES NOT FALL WITHIN THE EXEMPTION CLAUSE AND THE T AX EFFECT IS LESS THAN RS.10,00,000/-. THEREFORE, THE PRESENT APPEAL OF THE REVENUE IS NOT MAINTAINABLE AND, HENCE, DISMISSED. 3. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 2 ND DAY OF MARCH, 2016 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 02/ 03 /2016 2.., .../ T.C. NAIR, SR. PS ITA NO.2876 /AH D/2010 ITO VS. HARESHKUMAR HIRALAL MODI ASST.YEAR 2007-08 - 4 - !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-VI, BARODA 5. 7 8 &45 , 45. , 3 / DR, ITAT, AHMEDABAD 6. 8:; <* / GUARD FILE. ! / BY ORDER, '7 & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 1.3.16(COVERED CASE TAX E FFECT < RS.10 LACS) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1.3.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.2.3.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2.3.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER