ACIT, CHENNAI V. Shri T. Aruprakash, CHENNAI

ITA 3191/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5985 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 21-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PALANICHAMY
• Assessee Lawyers: S SRIDHAR
• Keywords: Business income; Benefit of exemption

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . , ' , % & BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO.3191/MDS/2016 %' ' /ASSESSMENT YEAR: 2012-13 THE ASST. COMMISSIONER OF- INCOME TAX, NON-CORPORATE CIRCLE-15, 121, M.G.ROAD, AAYAKAR BHAWAN, NEW BUILDING, ROOM NO.208, 2 ND FLOOR, CHENNAI-34. VS. SHRI T.ARUPRAKASH, NO.6, 7 TH CROSS STREET EXTN., ADYAR, CHENNAI-600 020. [PAN: AEEPT 8489 A ] ( ( /APPELLANT) ( )*( /RESPONDENT) ASSESSEE BY : MR.S.SRIDHAR, ADV. DEPARTMENT BY : MR.PALANICHAMY, JCIT , /DATE OF HEARING : 11.10.2017 , /DATE OF PRONOUNCEMENT : 11.10.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.3191/MDS/2016 IS AN APPEAL FILED BY THE REV ENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-15 , CHENNAI, IN ITA NO.110/CIT(A)-15/2015-16 DATED 18.08.2016 FOR T HE AY 2012-13. 2. MR.PALANICHAMY, JCIT REPRESENTED ON BEHALF OF TH E REVENUE AND MR.S.SRIDHAR, ADV., REPRESENTED ON BEHALF OF THE AS SESSEE. ITA NO.3191/MDS/2016 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.DR THAT THE ASSESSEE IS AN INDIVIDUAL WHO IS A PRACTICING DOCTOR AND IS ALSO PARTNER IN T HE PARTNERSHIP FIRM. IT WAS A SUBMISSION THAT THE ASSESSEE HAD PURCHASED AG RICULTURAL LAND BETWEEN 18.05.2005 AND 23.04.2007. THE ASSESSEE AL ONG WITH THE THREE OTHER LAND OWNERS HAD JOINED TOGETHER AND APPLIED T O THE DIRECTORATE OF TOWN AND COUNTRY PLANNING, CHENGALPATTU ON 28.06.20 06 FOR THE CONVERSION OF THEIR CONTIGUOUS LANDS TO RESIDENTIAL PURPOSES. AFTER OBTAINING THE SAID APPROVALS, THE ASSESSEE ALONG WI TH THREE OTHERS HAD DIVIDED THE LAND INTO PLOTS, DEVELOPED A LAYOUT AND HAD SOLD THE PLOTS TO VARIOUS DOCTORS THROUGH THE TAMIL NADU DOCTORS HOUS ING WELFARE TRUST WITH WHOM THE ASSESSEE HAD ENTERED INTO AN AGREEMEN T TO SELL AT RS.850/- PER SQUARE FEET. IT WAS A SUBMISSION THAT THE ASSE SSEE HAD OFFERED CAPITAL GAINS IN RESPECT OF THE SAID TRANSACTION AND ALSO C LAIMED A BENEFIT OF EXEMPTION U/S.54F OF THE ACT. IT WAS A SUBMISSION THAT THE AO HAS TREATED THE SAME AS ADVENTURE IN THE NATURE OF TRAD E AND ASSESSED THE SAME AS BUSINESS INCOME OF THE ASSESSEE. IT WAS A SUBMISSION THAT ON APPEAL, THE LD.CIT(A) HAD UPHELD THE STAND OF THE A SSESSEE AND HAD FOLLOWED THE DECISION OF THE HONBLE MADRAS HIGH CO URT IN THE CASE OF A.MOHAMMED MOHIDEEN REPORTED IN176 ITR 393 TO HOLD THAT THE INCOME OF THE ASSESSEE FROM THE SAID TRANSACTION WAS LIABLE T O BE ASSESSED UNDER THE HEAD CAPITAL GAINS AND THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF DEDUCTION U/S.54F OF THE ACT. IT WAS A SUBMISSION THAT THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE REVERSED. ITA NO.3191/MDS/2016 :- 3 -: 4. IN REPLY, THE LD.AR SUBMITTED THAT THE LD.CIT(A) HAD ALSO CONSIDERED THE DECISION OF THE HONBLE MADRAS HIGH COURT IN TH E CASE OF KASTURI ESTATES PVT. LTD. REPORTED IN 62 ITR 578 TO HOLD TH AT THE TRANSACTION ITSELF SHOULD BE LOOKED AT TO SEE WHETHER IT IS ESSENTIALL Y OF A COMMERCIAL CHARACTER. IT WAS A SUBMISSION THAT THIS IS ONE OF F TRANSACTIONS DONE BY THE ASSESSEE. IT WAS A SUBMISSION THAT THE ASSESSE E WAS A DOCTOR AND THE ASSESSEE HAD DESIRED TO DO AGRICULTURAL WORK. HOWE VER, AFTER PURCHASE OF THE LAND, IT WAS FOUND THAT THE ASSESSEE WOULD NOT BE ABLE TO GIVE ADEQUATE TIME TO DO AGRICULTURAL ACTIVITIES DUE TO HIS PROFESSION AND FAMILY REQUIREMENTS. CONSEQUENTLY TO GET A BETTER PRICE, THE ASSESSEE ALONG WITH THE LAND OWNERS OF CONTIGUOUS LANDS GOT THE LAND CO NVERTED AND HAD THEN SOLD THE SAME TO HIS COLLEAGUE DOCTORS THROUGH THE MEDIA OF THE TAMIL NADU DOCTORS HOUSING WELFARE TRUST. IT WAS A SUBMI SSION THAT IN VIEW OF THE DECISION OF THE HONBLE MADRAS HIGH COURT IN TH E CASE OF KASTURI ESTATES PVT. LTD. REFERRED TO SUPRA AS ALSO THE DEC ISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF A.MOHAMMED MOHIDEE N REFERRED TO SUPRA WHEREIN IT HAS BEEN HELD THAT PLOTTING, DEVELOPING OF THE LAND BEFORE SALE BY ITSELF WOULD NOT ESTABLISH THAT THE PERSON CONCE RNED WAS ENGAGED IN TRADING ACTIVITY, THE FINDINGS OF THE LD.CIT(A) WAS LIABLE TO BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAS TREATED THE TRANSACTION ENTERED INTO BY THE ASSESSEE AS LIABLE TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND NOT UNDER THE HEAD CAPITAL GAINS AS CL AIMED BY THE ASSESSEE ITA NO.3191/MDS/2016 :- 4 -: ON THE GROUND THAT THE ASSESSEE AND OTHERS HAD POOL ED UP THEIR LAND TO ECONOMIZE THE BENEFIT DUE TO LOSS ON ACCOUNT OF STR EETS, LANES, PASSAGES AND PATHWAYS, ETC., TOGETHER AND HAD APPLIED FOR AN APPROVAL FOR HOUSING PLOTS. JUST BECAUSE, THE ASSESSEE JOINED WITH OTHE R OWNERS TO POOL UP THEIR LAND TO ECONOMIZE THE BENEFIT AND TO GET BETT ER PRICE FOR THEIR LAND IF NECESSARY THROUGH GETTING THE APPROVALS AND SELLING THE LAND AS HOUSING PLOTS, THE SAME WOULD NOT MAKE THE TRANSACTION AS O NE OF BUSINESS. A PERUSAL OF THE DECISION OF THE LD.CIT(A) SHOWS THAT THE LD.CIT(A) HAS FOLLOWED THE PRINCIPLES ENUNCIATED BY THE HONBLE M ADRAS HIGH COURT IN THE CASE OF KASTURI ESTATES PVT. LTD. AS ALSO THE DECIS ION IN THE CASE OF A.MOHAMMED MOHIDEEN REFERRED TO SUPRA. THE REVENUE HAS NOT BEEN ABLE TO SHOW ANY ERROR IN RECORDING OF THE FACTS BY THE LD.CIT(A) OR ANY ERROR IN THE FINDINGS AS ARRIVED AT BY THE LD.CIT(A). THIS BEING SO, WE FIND NO REASON TO INTERFERE IN THE FINDINGS OF THE LD.CIT(A ). CONSEQUENTLY RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN IN THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF KASTURI ES TATES PVT. LTD. AS ALSO THE DECISION OF THE HONBLE MADRAS HIGH COURT IN TH E CASE OF A.MOHAMMED MOHIDEEN REFERRED TO SUPRA, THE FINDINGS OF THE LD. CIT(A) STANDS CONFIRMED. ITA NO.3191/MDS/2016 :- 5 -: 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 11, 2017, AT CHENNAI. SD/- SD/- ( . ) ( ABRAHAM P GEORGE ) /ACCOUNTANT MEMBER ( ' ) (GEORGE MATHAN) % /JUDICIAL MEMBER /CHENNAI, 1 /DATED: OCTOBER 11, 2017. TLN , )%23 43 /COPY TO: 1. ( /APPELLANT 4. 5 /CIT 2. )*( /RESPONDENT 5. 3 )%% /DR 3. 5 ( ) /CIT(A) 6. ' /GF