Shri Bhupinder Singh Kochar, New Delhi V. DCIT, New Delhi

ITA 3043/DEL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6614 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIT SINGH
• Keywords: Capital asset; Business income; Salary income
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3043/DEL./2016 ASSESSMENT YEAR: 2008-09 BHUPINDER SINGH KOCHAR, 5, KASTURBA GANDHI MARG, NEW DELHI. PAN- AAIPK4653K (APPELLANT) VS. DCIT, CENTRAL CIRCLE - 8, NEW DELHI (RESPONDENT) A SSESSEE BY SH. GAUTAM JAIN, ADVOCATE RE VENUE BY SH. SANJIT SINGH, CIT/DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF LD. CIT(A)-29, NEW DELHI DATED 22.03.2016 FOR THE ASSESSMENT YEAR 2008-09 ON THE FOLLOWING GROUNDS : 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)-29, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDI NG THE ADDITION OF RS. 9,05,947/- BY TREATING LONG TERM CAPITAL GAIN AS BU SINESS INCOME. 1.1 THAT WHILE UPHOLDING THE ADDITION THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT S AID CAPITAL ASSET DISINVESTED BY THE APPELLANT IN THE YEAR UNDER CONS IDERATION WAS DISINVESTED AFTER HOLDING FOR A PERIOD CLOSE TO 20 YEARS AND TH EREFORE DECLARED CAPITAL GAIN BY NO ANY STRETCH OF IMAGINATION COULD BE REGA RDED AS BUSINESS INCOME. 1.2 THAT MERE FACT THAT ASSESSEE WAS HOLDING SU BSTANTIAL INVESTMENT IN PROPERTIES COULD NOT BE A GROUND TO REGARD THE DISI NVESTMENT OF CAPITAL ASSET AS BUSINESS INCOME, MORE PARTICULARLY WHEN NATURE O F ASSET STOOD ACCEPTED IN THE WEALTH TAX PROCEEDINGS. DATE OF HEARING 19.07.2018 DATE OF PRONOUNCEMENT 24 .07.2018 ITA NO. 3043/DEL/2016 2 2. THE BRIEF FACTS OF THE CASE ARE BROUGHT OUT BY T HE LD. CIT(A) IN THE IMPUGNED ORDER, WHICH ARE EXTRACTED BELOW FOR READY REFERENCE : 5. THE FACT OF THIS CASE IS THAT A SEARCH UNDER SE CTION 132 OF THE ACT WAS CARRIED OUT ON 05.01.2009 IN M/S TANEJA-PURI GROUP OF CASES AND TH E CASE OF APPELLANT WAS ALSO COVERED UNDER SECTION 132(1) OF THE ACT, NOTICE UND ER SECTION 153A WAS ISSUED ON 23.07.2009. IN COMPLIANCE TO THAT THE APPELLANT SUB MITTED RETURN ON 31.03.2010 DISCLOSING TOTAL INCOME AT RS.24,43,780/-. THE APPE LLANT HAS ALSO FILED E-RETURN EARLIER, ON 31.03.2009, DECLARING TOTAL INCOME OF RS.24,43,7 80/. IT IS OBSERVED THAT THE ORIGINAL RETURN FILED AFTER THE DATE OF SEARCH AND BELATED A S NO RETURN WAS SUBMITTED UPTO THE DUE DATE IN THIS CASE. 5.1 THE APPELLANT HAS DISCLOSED INCOME FROM SALARY, CAPITAL GAINS AND OTHER SOURCES. DURING THE YEAR UNDER CONSIDERATION THE APPELLANT D ECLARED INCOME FROM CAPITAL GAIN DUE TO THE SALE OF VARIOUS PROPERTIES INCLUDING A P ROPERTY AT ASOLA ON 25.01.2008. THE SALE CONSIDERATION FOR THE SAID PROPERTY HAS BEEN S HOWN AT RS.42,50,000/- AND AFTER CLAIMING THE INDEXATION COST AT RS.19,26,182/-, THE LONG TERM CAPITAL GAIN FROM SAID PROPERTY HAS BEEN DISCLOSED AT RS.23, 23,818/-. THE AO OBSERVED THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF PRO PERTIES AND TREATING THE IMMOVABLE PROPERTIES AS HIS CAPITAL ASSETS EARLIER WHICH WERE CONVERTED INTO BUSINESS ASSET (STOCK IN TRADE) WITH EFFECT FROM 01.04.1994. THEREFORE, A LL THE PROPERTIES WERE HELD AS STOCK IN TRADE FOR THE PURPOSE OF BUSINESS. HOWEVER, ,DUR ING THE YEAR UNDER CONSIDERATION THE SAID PROPERTY HELD AS STOCK IN TRADE IS AGAIN C ONVERTED AS A CAPITAL ASSET AND SALE PROCEEDS OF SUCH PROPERTY HAS BEEN TREATED AS CAPIT AL GAINS, TAKING THE BENEFIT OF INDEXATION COST AND LOWER RATE OF TAX. 5.2 DURING ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED BY THE APPELLANT THAT SINCE THE HOLDING PERIOD OF THE PROPERTY WAS MORE THAN 10 YEA RS, THEREFORE, AS PER THE PROVISIONS OF WEALTH TAXI SUCH ASSETS ARE NOT TREAT ED AS STOCK IN TRADE AS THE SAME IS REQUIRED TO BE TAXED AS CAPITAL ASSET UNDER WEALTH TAX ACT. IT WAS ALSO STATED THAT THE SAME HAS BEEN DECLARED AS TAXABLE WEALTH UNDER THE WEALTH TAX ACT. 5.3 THE AO DID NOT CONSIDERED THE SUBMISSIONS OF TH E APPELLANT AND TREATED THE SAME AS BUSINESS INCOME ON THE BASIS THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF PROPERTY AND THEREFORE THE INC OME ARISING OUT OF THE SALE OF PROPERTY IS CHARGEABLE AS BUSINESS INCOME. ACCORDIN GLY, THE BENEFIT OF INDEXATION WAS NOT PROVIDED TO APPELLANT. THE LEARNED CIT(A) UPHELD THE ACTION OF THE ASSESS ING OFFICER VIDE IMPUGNED ORDER BY HOLDING THAT THE SALE OF SAID PROPERTY BY THE ASSESSEE WILL BE TREATED AS BUSINESS INCOME, AS IT WAS ARISING OUT OF THE SALE OF STOCK-IN-TRADE. HE ALSO HELD ITA NO. 3043/DEL/2016 3 THAT THE ASSESSEE IS NOT ENTITLED FOR THE COST INFL ATION INDEX FACTOR. AGGRIEVED BY THE IMPUGNED ORDER, THE ASSESSEE IS IN APPEAL BEFOR E THE ITAT. 3. AT THE OUTSET OF HEARING, THE LD. AR OF THE ASSE SSEE SUBMITTED THAT SIMILAR ISSUE WAS INVOLVED IN ASSESSMENT YEAR 2009-10, WHIC H HAS BEEN DECIDED BY THE ITAT, DELHI BENCHES IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 28.12.2016 (ITA NO. 6085/DEL./2013). THE FACTS REMAIN UNCHANGED DUR ING THE YEAR UNDER CONSIDERATION. 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE LOWER AUTHORITIES. 5. AFTER HEARING BOTH THE SIDES AND PERUSING THE EN TIRE MATERIAL ON RECORD AND THE ORDERS OF THE LOWER AUTHORITIES INCLUDING T HE DECISION OF TRIBUNAL FOR THE ASSESSMENT YEAR 2009-10 IN ASSESSEES OWN CASE, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE A BOVE DECISION. THE FACTS AND CIRCUMSTANCES IN THE PRESENT CASE ARE SAME AS WERE PREVAILING IN ASSESSMENT YEAR 2009-10. THE FINDINGS REACHED BY THE TRIBUNAL READ AS UNDER : 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS UNDISPUTED THAT THE PERIOD OF HOLDING OF THE ASSETS IN QUESTION WAS MORE THAN 12 YEARS IN THE CASE OF PROPERTY 10, CIVIL LIN ES MORE THAN 7 YEARS IN THE CASE OF PROPERTY AT 374, KOHAT AND MORE THAN 20 YEA RS IN THE CASE OF LAND AT ALIPUR. IT IS EQUALLY UNDISPUTED THAT THE ASSESSEE HAD EXERCISED HIS RIGHT TO CONVERT THE STOCK IN TRADE TO CAPITAL ASSET ON 31.3 .2007 AND THAT THERE IS NO BAR UNDER THE INCOME TAX ACT ON SUCH CONVERSION. IT IS AGAIN UNDISPUTED THAT THE CAPITAL GAIN DECLARED BY THE ASSESSEE ON THE SA LE OF ASSETS HAS BEEN ACCEPTED BY THE DEPARTMENT IN ASSESSMENTS FOR AYS 2 010-11 AND 2011-12 VIDE ASSESSMENT ORDERS FRAMED U/S. 143(3) OF THE AC T. AGAIN, THE ASSETS IN QUESTION HAVE BEEN ACCEPTED AS CAPITAL ASSETS IN WE ALTH TAX ASSESSMENTS OF THE ASSESSEE. IT IS SETTLED LAW THAT ONCE AN ASSESS EE HAS BEEN ASSESSED UNDER WEALTH TAX ACT WHEREIN HIS CLAIM HAS BEEN ACCEPTED T HAT THE ASSET IS NOT ITA NO. 3043/DEL/2016 4 STOCK IN TRADE, THE REVENUE CANNOT ADOPT INCONSISTE NT POSITION IN THE INCOME TAX PROCEEDINGS. MERE FACT THAT THE ASSESSEE PURCHA SES AND SELLS PROPERTIES EVERY YEAR DOES NOT IMPLY THAT THE ASSESSEE IS ENGA GED IN BUSINESS AND THE NATURE OF ASSETS ON THE DATE OF TRANSFER IS A RELEV ANT CONSIDERATION IN SUCH CASES. IT IS FURTHER SEEN THAT THE NUMBER OF PROPER TIES HELD BY THE ASSESSEE DURING THE AY 2006-07 IS THE SAME AS IN AY 2009-10 WHICH POINTS OUT THAT THE ASSESSEE HAS NOT ENTERED INTO VOLUMINOUS TRANSA CTIONS. IN THE LIGHT OF THE FACTUAL CIRCUMSTANCES, WE ARE UNABLE TO CONCUR WITH THE FINDINGS OF THE AUTHORITIES BELOW THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PURCHASE AND SELLING OF PROPERTY AND THAT THE RESULTANT INCO ME SHOULD BE TAXED UNDER THE HEAD BUSINESS INCOME. THEREFORE, IT IS OUR CON SIDERED OPINION THAT THE CONCLUSION REACHED BY THE AUTHORITIES BELOW ARE INC ONSISTENT WITH THE FACTS OF THE CASE AND WE ALLOW ASSESSEES APPEAL BY HOLDI NG THAT THE RESULTANT INCOME IS TAXABLE UNDER THE HEAD CAPITAL GAINS. 6. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINA TE BENCH, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JULY, 2018. SD/- SD/- (BHAVNESH SAINI) ( L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24 TH JULY, 2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI