ITO, Tiruppur V. Shri S. Ramachandran, Tiruppur

ITA 2883/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4763 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 13-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 06-10-2016
• Court: TRIBUNAL
• Department Lawyers: AWIJIT RAKSHIT
• Keywords: Business income

Judgement Text

, C/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ I.T.A.NO.2883 /MDS./2016 ( / ASSESSMENT YEAR :2012-13) THE INCOME TAX OFFICER, WARD 1(1), ADAMS PLAZA, NO.121, SIXTY FEET ROAD, TIRUPUR 641 602. VS. MR.S.RAMACHANDRAN , 8/829, VIGNESHWAR NAGAR, POOLUVAPATTI POST, TIRUPUR 641 602. PAN AKMPR 7876 H ( / APPELLANT ) ( / RESPONDENT ) ! ' # / APPELLANT BY : MR.AWIJIT RAKSHIT, JCIT, D.R $% ! ' # / RESPONDENT BY : MR.Y.SRIDHAR, C.A & ' ' ( ) / DATE OF HEARING : 13.03.2017 *+ ' ( ) /DATE OF PRONOUNCEMENT : 26.04.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE , AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-3, COIMBA TORE DATED 15.07.2016 PERTAINING TO ASSESSMENT YEAR 2012-13 . ITA NO. 2883/MDS/2016 2 2. THE FIRST GROUND IN THIS APPEAL IS WITH REGARD TO DELETION OF ADDITION OF ` 95 LAKHS ON THE REASON THAT THE ASSESSEE IS NOT CAR RIED ON THE BUSINESS OR ADVENTURE IN THE NATURE OF TRADE . 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE OWNING 20 ACRES OF LAND , OUT OF THIS THE ASSESSEE MADE A LAYOUT IN ONE ACRE OF LAND IN THE N AME OF AYYAPPA NAGAR EXTENSION AND THERE WERE 15 PLOTS, WHICH WERE SOLD TO 13 DIFFERENT PEOPLE BY MEANS OF 13 DIFFERENT DOCUMENTS . THE ASSESSEE CLAIMED INCOME ARISES OUT OF THIS TRANSACTION AS CA PITAL GAINS AND CLAIMED DEDUCTION U/S.54F OF THE ACT. THE AO CONSI DERED THE TOTAL CONSIDERATION AT ` 95 LAKHS ON THE BASIS OF STATEMENT BY THE ASSESSEE THAT HE HAS SOLD THE PROPERTY AT ` 95,000/- PER CENT IS NOT CORRECT, SINCE IN JANUARY, 2014, ASSESSEES WIFE SO LD 30 CENTS FOR CONSIDERATION OF ` 6,00,500/-. THE COST PER CENT WORKS OUT TO ` 20,016/- AND NOT ` 95,000/- PER CENT. FURTHER, THE LD.CIT(A) OBSERVED THAT THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE WAS OWNING BUSINESS OF REAL ESTATE TO SAY THAT THE ASSESSEE INVOLVED IN ADVENTURE IN NATURE ITA NO. 2883/MDS/2016 3 OF TRADE. ACCORDINGLY, LD.CIT(A) DELETED THE ADDITI ON. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. BEFORE US, LD.A.R SUBMITTED THAT THE ASSES SEE IS HAVING NO INTENTION TO CARRY ON THE BUSINESS IN LAND. THE AS SESSEE INHERITED THE PROPERTY FROM HIS ANCESTORS AND OUT OF 20 ACRES, HE HAS SOLD ONE ACRE LAND BY SPLITTING INTO PLOTS SO AS TO FETCH HIGHER PRICE AND THIS KIND OF TRANSACTION CANNOT BE CONSIDERED AS ADVENTURE IN NA TURE OF TRADE SO AS TO DENY THE ORIGINAL CLAIM OF ASSESSEE U/S.54F O F THE ACT. ACCORDING TO HIM, THIS IS AN ISOLATED TRANSACTION A ND THERE WAS NO REGULAR ACTIVITIES OF PURCHASING AND SELLING FOR TR ADING AS SUCH IN BUSINESS ACTIVITY. HE RELIED ON BUNDLE OF DECISION S WHICH WERE KEPT ON RECORD. IN OUR OPINION, THE FACTS GOT ON RECOR D NOT ENOUGH TO HOLD THAT ASSESSEE IS CARRYING ON REGULAR BUSINESS IN RE AL ESTATE. THIS IS AN ISOLATED TRANSACTION AND THERE IS NO OBSERVATION BY THE ASSESSING AUTHORITIES THAT THE ASSESSEE IS ENGAGED IN CONTINU OUSLY IN DIVIDING HIS TOTAL PROPERTY INTO PLOTS AND ASSESSEE HAS SYST EMATICALLY CARRIED ON DEVELOPING ANY LAND FREQUENTLY IN LARGE VOLUME. IN SUCH CIRCUMSTANCES, IT IS NOT APPROPRIATE TO HOLD THAT A SSESSEE IS ENGAGED ITA NO. 2883/MDS/2016 4 IN BUYING AND SELLING THE IMPUGNED PROPERTY. AS RI GHTLY POINTED OUT BY THE LD.A.R , THE ASSESSEE WAS OWNING THE LAND FOR A CONSIDERABLE PERIOD, WHICH WAS ACQUIRED FROM ANCESTORS AND ASSES SEE HAS TREATED THE PROPERTY AS A FIXED ASSETS AND THERE WAS NO INT ENTION OF THE ASSESSEE TO CONVERT INTO STOCK-IN-TRADE AND THE AO WAS NOT BROUGHT ON RECORD ANYTHING TO SHOW THAT THE ASSESSEE HAS VE NTURED TRADING IN LAND. THE NATURE OF BUSINESS CARRIED ON BY THE ASS ESSEE WAS NOT ESTABLISHED BY THE AO AS HELD BY THE TRIBUNAL IN T HE CASE OF ITO VS. SMT.AYISHA FATHIMA IN [2016] 144 DTR 113 THAT WHA T WAS THE INTENTION OF THE ASSESSEE AT THE TIME OF ACQUIRING THE LAND OR INTERVAL ACTION BY THE ASSESSEE BETWEEN THE PERIOD FROM PURC HASE AND SALE OF THE LAND AND THE RELEVANT IMPROVEMENT/DEVELOPMENT T AKEN PLACE DURING THIS TIME IS RELEVANT FOR DECIDING THE ISSUE , WHETHER TRANSACTION WAS IN THE NATURE OF TRADE OR NOT. ONE OF THE ESSEN TIAL ELEMENTS IN ADVENTURE IS THE INTENTION TO TRADE; THAT INTENTION MUST BE PRESENT AT THE TIME OF PURCHASE. THE INTENTION OF THE ASSESSE E FROM THE INCEPTION WAS TO CARRY ON AGRICULTURAL OPERATIONS A ND EVEN THERE WAS NO INTENTION TO SELL THE LAND IN FUTURE AT THAT POI NT OF TIME. THEREFORE, THE TRANSACTION OF SALE OF LAND WAS NOT AN ADVENTUR E IN THE NATURE OF ITA NO. 2883/MDS/2016 5 TRADE SO AS TO TAX THE INCOME ARISING OUT OF THE TR ANSACTION AS BUSINESS INCOME. 5. IN OUR OPINION, THE ABOVE JUDGEMENT IS SQUARELY APPLICABLE TO THE PRESENT CASE. ACCORDINGLY, WE ARE INCLINED TO HOLD THAT GAINS ARISING OUT OF SALE OF LAND IS TREATED AS CAPITAL G AINS ONLY AND NOT AS INCOME FROM BUSINESS. 6. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. ORDER PRONOUNCED ON 26 TH APRIL, 2017 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 26 TH APRIL, 2017 . K S SUNDARAM. , ' $(-. /.( / COPY TO: 1 . ! / APPELLANT 3. & 0( () / CIT(A) 5. .3 4 $(5 / DR 2. $% ! / RESPONDENT 4. & 0( / CIT 6. 4 6 7 ' / GF