Assistant Commissioner of Income-tax, V. Smt. Sulochana Pradep Agarwal, Pune

ITA 296/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7216 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDHRA NINAVE
• Assessee Lawyers: KRISHNA V GUJARATHI
• Keywords: Capital asset; Business income; Earning of tax free income
• Section: 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.P. TOLANI, JM AND SHRI ANIL CHATURVEDI, AM / ITA NO.296/PUN/2015 / ASSESSMENT YEAR : 2008-09 ASST.COMMISSIONER OF INCOME TAX CIRCLE 9, PRATYAKSHA KAR BHAVAN, DR. AMBEDKAR MARG, NEAR AKURDI RAILWAY STATION, AKURDI, PUNE 411 044. . / APPELLANT V/S SMT. SULOCHANA PRADEEP AGARWAL, PLOT NO.388, SECTOR NO.24, PRADHIKARAN, NIGIDI, PUNE 411044. PAN : AAPPA5912L. . / RESPONDENT / APPELLANT BY : SHRI HITENDHRA NINAVE / RESPONDENT BY : SHRI KRISHNA V. GUJARATHI / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 6, PUNE DT.19.12.2 014 FOR THE ASSESSMENT YEAR 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- / DATE OF HEARING :22.12.2016 / DATE OF PRONOUNCEMENT: 27.01.2017 2 ITA NO.296/PUN/2015 AY.NO.2008-09 2.1 ASSESSEE IS AN INDIVIDUAL, WHO ELECTRONICALLY FILED HER RETU RN OF INCOME FOR A.Y. 2008-09 ON 05.11.2008 DECLARING TOTAL INCOME OF RS.7,85,960/-. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT. THEREAFTER, AFTER RECORDING REASONS, THE ASSESSMENT WAS REOPENED U/S 148 AND NOTICE WAS ISSUED ON 03.05.2011 ASKING THE A SSESSEE TO FILE THE RETURN OF INCOME. IN RESPONSE OF THE NOTICE, ASS ESSEE SUBMITTED THAT THE RETURN OF INCOME FILED BE TREATED AS R ETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THEREAFTER T HE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS FRAMED U/S 143(3 ) R.W.S. 147 VIDE ORDER DT.01.03.2013 AND THE TOTAL INCOME WAS DETERMIN ED AT RS.1,49,07,510/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE C ARRIED THE MATTER BEFORE LD. CIT(A), WHO VIDE ORDER DT.19.12.2014 (IN APP EAL NO.PN/CIT(A)-6/DCIT, CIR.9/80/13-14) ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), RE VENUE IS NOW IN APPEAL AND HAS FILED THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE A DDITION OF RS.1,41,21,550/- WHEN THE ASSESSEE HAS WRONGLY CLAI MED IN AGRICULTURAL INCOME AS EXEMPT AND BY IGNORING THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF G. VENKATASWAM I NAIDU & CO. 35 ITR 894 (SC) ? 2. THE APPELLANT CRAVES TO LEAVE TO ADD, AMEND OR A LTER ANY OF THE ABOVE GROUNDS OF APPEAL. 3. WITH RESPECT TO THE IMPUGNED ISSUE, AO NOTED THAT A SSESSEE HAD PURCHASED AGRICULTURAL LAND SITUATED AT DHAMNI (LONI), TA LUKA KHED DISTRICT PUNE ALONG WITH ONE SHRI KRISHNAUMAR K. GOYA L AND THE SALE DEED WAS EXECUTED ON 10.05.2006 AND ASSESSEES SH ARE IN LAND WAS 50%. IT WAS NOTICED THAT WITHIN A SHORT SPAN OF ONE AND HALF YEARS, THE LANDS WERE SOLD BY THE ASSESSEE AT AN AGREE D PRICE OF 3 ITA NO.296/PUN/2015 AY.NO.2008-09 RS3,07,00,000/- WHEREAS, MARKET PRICE OF THE LAND IS RS.36,47 ,280/- AS PER THE SUB-REGISTRARS VALUATION AND THE INCOME AR ISING FROM THE SALE OF LAND WAS NOT OFFERED TO TAX AS ACCORDING TO THE A SSESSEE THE LAND WAS AGRICULTURAL LAND AND THAT THE LAND WAS NOT A C APITAL ASSET AS PER THE DEFINITION OF SEC.2(14) OF THE I.T. ACT AND THEREFORE THE ENTIRE AMOUNT OF SALE PROCEEDS WAS EXEMPT AND NOT TAXABLE. TH E SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO. HE CONCLUDED THAT ASSESSEE HAD PURCHASED THE PROPERTY JOINTLY WITH KRISHNAKUMAR K. GOYAL WITH THE PURPOSE OF RE-SELLING THE SAME AND THE TRANSACTION OF PURCHASE / SALE OF LAND WAS IN NATURE OF TRADE AND THE REFORE THE INCOME OF SALE OF LAND WAS BUSINESS INCOME. HE ALSO NOTED T HAT IN THE CASE OF KRISHNAKUMAR K. GOYAL, THE TRANSACTION OF TRANSFER OF LAND WAS TREATED BY AO OF KRISHNAKUMAR K. GOYAL AS TAXABLE AND THE VIEW OF AO WAS UPHELD BY APPELLATE AUTHORITIES. AO THEREFORE CON SIDERED THE GAINS ARISEN FROM THE SALE OF LAND AS BUSINESS INCOME OF THE ASSESSEE AND ACCORDINGLY, MADE ADDITION OF RS.1,41,21,550/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DELETED THE ADDITION BY HOLDING AS UNDER : 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E AS WELL AS REPLY OF THE APPELLANT. IT IS SEEN THAT THE HON'BLE PUNE TRIBUNAL IN THE CASE OF SHRI. KRISHNAKUMAR GOYAL, CO-OWNER I N ITA NO. 1299/PN/2012 IN IT'S ORDER DATED 15.09.2014 HAS DEL ETED THE ADDITION MADE ON THIS ACCOUNT. FOR THE SAKE OF CLAR ITY, THE RELEVANT PORTION OF THE ORDER IS REPRODUCED AS UNDE R: 17. IN THE PRESENT CASE, IN OUR VIEW, THE FACTUAL MATRIX CLEARLY ESTABLISHES THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND WHICH IS SO RECOGNIZED IN THE LAND REVENUE RECORDS AT THE TIME OF PURCHASE BY THE ASSESSEE AND NOTHING HAS BEEN DONE BY THE ASSESSEE FOR PUTTING IT TO NON- AGRICULTURAL USE. THEREFORE, THE SALE OF SUCH LAND CANNOT BE TREATED AS SALE OF STOCK-IN-TRADE MERELY BECAUSE ASSESSEE IS OTHERWISE ENGAGED IN THE BUSINESS OF SALE/DEVELOPMENT OF LANDS. IN-FACT, IN OUR CONSIDERED OPINION, THE LOWER AUTHORITIES HAVE BEEN OVERTLY INFLUENCED BY THE FACT THAT ASSESSEE IS IN THE BUSINESS OF PURCHASE AND SALE OF LANDS. NO DOUBT, THE ONUS UNDER SUCH CIRCUMSTANCES IS 4 ITA NO.296/PUN/2015 AY.NO.2008-09 ON THE ASSESSEE TO SHOW THAT THE IMPUGNED PURCHASE OF AGRICULTURAL LAND WAS AN INVESTMENT ACTIVITY AND NOT AN ACTIVITY OF ACQUIRING STOCK-IN- TRADE. IN OUR VIEW, IN THE PRESENT CASE, SUCH ONUS HAS BEEN APTLY DISCHARGED BY THE ASSESSEE. EVIDENTLY, THE ASSESSEE HAS SHOWN THE LAND IN QUESTION AS A 'PERSONAL ASSETS AS DISTINCT FROM 'BUSINESS ASSETS' IN THE BALANCE SHEETS. THE CIRCUMSTANCES IN WHICH THE LAND HAS BEEN SOLD IS ALSO NOT FOUND TO BE FALSE. OTHERWISE, THE A. Y. : 2008-09 AGRICULTURAL LANDS HELD BY THE ASSESSEE ARE FOR A SUBSTANTIAL PERIOD OF TIME AND ASSESSEE HAS BEEN SHOWING SUCH ASSETS AS A PART OF HIS 'PERSONAL ASSETS', BEING INVESTMENTS' AND NOT AS BUSINESS ASSETS IN THE BALANCE SHEET FILED ALONGWITH THE RESPECTIVE RETURNS OF INCOME. AT THIS POINT, WE MAY ALSO MAKE A REFERENCE TO A PLEA RAISED BEFORE THE LOWER AUTHORITIES WHICH IS TO THE EFFECT THAT ASSESSEE WAS UNDERTAKING AGRICULTURAL ACTIVITIES. IN THIS CONTEXT, ASSESSEE FURNISHED AN AGREEMENT WITH THE MILITARY FARM KIRKEE, PUNE FOR THE PERIOD 07.07.2005 TO 06.01.2008, A COPY OF WHICH HAS BEEN PLACED AT PAGES 381 TO 392 IN THE PAPER BOOK. IN TERMS OF THE SAID AGREEMENT, ASSESSEE WAS LEASED OUT THE SOWING RIGHTS OF CROPS IN THE LANDS OWNED BY MILITARY FARM KIRKEE. ASSESSEE FURTHER SUBMITTED THAT DUE TO CERTAIN DIFFICULTIES THE AFORESAID AGREEMENT COULD NOT BE COMPLETED BUT THE SAME WAS FURNISHED BEFORE THE LOWER AUTHORITIES TO DEMONSTRATE THAT ASSESSEE WAS INDEED UNDERTAKING AGRICULTURAL ACTIVITIES ALSO. 18 CONSIDERING THE AFORESAID FACTORS AND HAVING REGARD TO THE JUDGEMENTS OF THE HONBLE BOMBAY HIGH COURT IN THE CASES OF BAGUIO INVESTMENT PVT. LTD. (SUPRA) AND MINGUEL CHANDRA PAIS & ANR. (SUPRA), WE HOLD THAT THE LOWER AUTHORITIES ERRED IN TREATING THE INCOME ARISING ON THE SALE OF LAND AT VILLAGE DHAMANE TO BE SALE OF STOCK-IN-TRADE. IN OU R VIEW, THE INCOME ARISING ON THE SALE OF LAND AT VILLAGE DHAMANE WAS ON ACCOUNT OF SALE OF INVESTMENT. SINCE, THERE IS NO DISPUTE THAT THE LAN D IN QUESTION CARRIED THE FEATURES PRESCRIBED IN SECTION 2(14)(IIII) OF THE ACT, AND, THEREFORE IT QUALIFIES TO BE AN AGRICULTURAL LAND EXCLUDIBLE FROM THE EXPRESSION 'CAPITAL ASSET'. IN THIS VIEW OF THE MATTER, WE THEREFORE SET-ASIDE THE ORDERS OF TH E AUTHORITIES BELOW AND RESTORE THE RETURN OF INCOME FILED BY THE ASSESSEE QUA THE SURPLUS ON SALE OF AGRICULTURAL LAND AT VILLAGE DHAMANE. AS A RESULT, THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 7. SHRI. KRISHNAKUMAR K. GOYAL WAS ON MUCH STRONGER FOOTING AS HE WAS ENGAGED IN THE BUSINESS OF SALE AND PURCH ASE OF PLOTS. EVEN THEN HONBLE ITAT CONSIDERED IT FIT TO DELETE THE ADDITION ON THE BASIS OF FACTS ENUMERATED ABOVE. CO NSIDERING THE FACT OF THE CASE. IT IS SEEN THAT THE APPELLANT 'S CASE IS ON BETTER FOOTING IN THE SENSE THAT THE APPELLANT IS N OT ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF LAND. THIS BEI NG SO, IT IS HELD THAT THE ISSUE IS FULLY COVERED IN FAVOR OF TH E APPELLANT AS 5 ITA NO.296/PUN/2015 AY.NO.2008-09 DECIDED BY HON'BLE PUNE TRIBUNAL IN THE CASE OF CO- OWNERS. THEREFORE, RELYING UPON THE ABOVE DECISION IN THE C ASE OF CO- OWNER SHRI. KRISHNAKUMAR K. GOYAL, THE ASSESSING OF FICER IS DIRECTED TO DELETE THE ADDITION OF RS.1,41,21,550/ -. THUS, THE GROUND IS ALLOWED. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPE AL BEFORE US. 5. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF AO. ON THE O THER HAND, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD. CIT(A) AND FURTHER SUBMITTED THAT THE MAIN REASON FOR MAK ING THE IMPUGNED ADDITION IN CASE OF ASSESSEE WAS THAT IN THE CASE OF CO-OWN ER THE AO HAD TREATED THE TRANSACTION AS A BUSINESS INCOM E. HE SUBMITTED THAT WHEN THE MATTER WAS CARRIED BEFORE THE HONBLE ITAT, THE CO-ORDINATE BENCH OF THE TRIBUNAL VIDE ORDER IN ITA NO.1299/PN/2012 DT.15.09.2014 HAS DELETED THE ADDITION MA DE IN THE CASE OF CO-OWNER. HE PLACED ON RECORD THE COPY OF THE AFORESAID DECISION AND POINTED OUT TO THE RELEVANT FINDINGS IN THE O RDER. HE THEREFORE SUBMITTED THAT ONCE IN THE CASE OF CO-OWNER, T HE INCOME ON SALE OF LAND IS TREATED AS EXEMPT INCOME, THE ORDER OF LD. CIT(A) NEEDS TO BE UPHELD AND THE APPEAL OF REVENUE NEEDS TO BE DISMISSED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO TAXABILITY OF THE GAINS ARISING ON SALE OF LAND. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAS PURCHASED AGRICULTURAL LAND JOINTLY WITH SHR I KRISHNAKUMAR K. GOYAL AND ASSESSEES SHARE WAS 50%. ON SALE OF LAND, THE PROFITS WERE CONSIDERED BY ASSESSEE AS EXEMPT INCOME. AS AGAINST THE STAND OF THE ASSESSEE THAT THE GAINS ARISING ON SALE PROCEEDS IS EXEMPT FROM TAX AS IT IS NOT A CAPITAL ASSET WITHIN THE 6 ITA NO.296/PUN/2015 AY.NO.2008-09 MEANING OF SEC.2(14), IT WAS REVENUES STAND THAT THE A CTIVITY OF PURCHASE AND SALE OF LAND IS TO BE CONSIDERED AS BUSINESS OF THE ASSESSEE AND THEREFORE THE INCOME WAS TAXABLE AS BUSINE SS INCOME. WE FIND THAT IN THE CASE OF KRISHNAKUMAR K. GOYAL, THE CO -OWNER OF LAND, AO HAD ALSO TREATED THE GAINS ARISING FROM SALE OF LAND AS BUSINESS INCOME. WHEN THE MATTER WAS CARRIED BEFORE TRIB UNAL, WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DECIDE D THE ISSUE IN FAVOUR OF THE ASSESSEE IN ITA NO.1299/PN/2012 ORDER DT.15.09.2014. THE LD. CIT(A) HAD RELIED ON THE AFORESAID DEC ISION OF TRIBUNAL IN THE CO-OWNERS CASE WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. WE FURTHER FIND LD. CIT(A) HAS GIVEN A FINDING THAT ASSESSEES CASE WAS OF A MUCH BETTER FOOTING AS ASSESS EE WAS NOT ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF LAND. BEFO RE US, REVENUE HAS NEITHER PLACED ANY MATERIAL TO CONTROVERT T HE FINDINGS OF LD. CIT(A) NOR HAS PLACED ANY MATERIAL ON RECORD TO DEMONS TRATE THAT AFORESAID DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNA L IN THE CASE OF CO-OWNER HAS BEEN SET ASIDE BY HIGHER JUDICIAL AUTHORIT IES. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH T HE ORDER OF LD. CIT(A) AND THUS, THE GROUND OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON THE 27 TH OF JANUARY, 2017. SD/- SD/- (R.P. TOLANI) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; ! DATED : 27 TH JANUARY, 2017. YAMINI 7 ITA NO.296/PUN/2015 AY.NO.2008-09 '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. THE COMMISSIONER OF INCOME TAX (A) -6, PUNE. THE COMMISSIONER OF INCOME TAX 5, PUNE. #$% &&'( , ) '( , / DR, ITAT, B PUNE; %*+ , / GUARD FILE / BY ORDER, // //// // TRUE COPY // T // // TRUE // //COPY // // TRUE COPY // - ./01 / ASSISTANT REGISTRAR, ) '( , / ITAT, PUNE.