Shri. Makam Adinarayana Sridhar, Bangalore V. The Assistant Commissioner Of Income Tax, Circle- 3(2)(1), Bangalore

ITA 333/BANG/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7469 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-08-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 11-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KANNAN NARAYANAN J
• Keywords: Business income; Period of limitation; Capital Gains
• Section: 54F; 142(1); 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.333/BANG/2020 ASSESSMENT YEAR : 2013-14 SHRI MAKAM ADINARAYANA SRIDHAR, NO.948, ESHWARI ENTERPRISES, UTTARAHALLI MAIN ROAD, DWARAKANAGAR LAYOUT, BENGALURU-560 061. PAN AHWPS 5670 B VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-3(2)(1), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI SURESH MUTHUKRISHNAN, ADVOCATE REVENUE BY : SHRI KANNAN NARAYANAN, JCIT(DR) DATE OF HEARING : 23-08-2021 DATE OF PRONOUNCEMENT : 31-08-2021 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE A GAINST ORDER DATED 13/01/2020 PASSED BY THE LD.CIT(A)-3, BANGALO RE FOR ASSESSMENT YEAR 2013-14 ON FOLLOWING GROUNDS OF APP EAL: 1. THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, EQUITY, WEIGHT OF EVID ENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. PAGE 2 OF 7 ITA NO.333/BANG/2020 2. THE LEARNED A.O. IS NOT JUSTIFIED IN DENYING THE DEDUCTION CLAIMED BY THE APPELLANT U/S. 54F OF THE ACT UNDER THE FACTS A ND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 3. THE APPELLANT CRAVES LEAVE OF YOUR HONOUR TO ADD , ALTER, AMEND, RECTIFY, AND DELETE ANY OF THE GROUNDS URGED ABOVE. 4. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. THE ASSESSEE IS A RETAIL TRADER OF CEMENT FILED ITS RETURN OF INCOME FOR YEAR UNDER CONSIDERATION ON 25/09/2013 D ECLARING TOTAL INCOME OF RS.36,16,000/-. THE RETURN WAS PROC ESSED UNDER SECTION 143(1) OF THE ACT AND CASE WAS SELECTED FOR SCRUTINY. NOTICE UNDER SECTION 143(2) WAS ISSUED ALONG WITH N OTICE UNDER SECTION 142(1) OF THE ACT, CALLING FOR VARIOUS DETA ILS. IN RESPONSE TO THE STATUTORY NOTICES, THE REPRESENTATIVE OF ASS ESSEE APPEARED BEFORE THE LD.AO AND FILED REQUISITE DETAILS AS CAL LED FOR. 3. DURING THE ASSESSMENT PROCEEDINGS LD. AO OBSERVE D THAT, ASSESSEE PURCHASED AGRICULTURAL LAND OF 3 ACRES AND 39 GUNTAS AT THE DODDABALLAPURA TALUK ON 02/05/1986. THE ASSE SSEE APPLIED FOR CONVERSION OF THE LAND FROM AGRICULTURA L TO RESIDENTIAL WITHIN 2 YEARS OF PURCHASE OF LAND. SHE WAS ISSUED THE LAND CONVERSION CERTIFICATE ON 27/06/1988. THE LD.AO OBS ERVED THAT THE LAND WAS DEVELOPED INTO RESIDENTIAL LAYOUT OF A PPROXIMATELY 60 SITES AFTER CONVERGENT AT THE SITES WERE SOLD FR OM 1991 ONWARDS TILL 2011. THE BALANCE 12 SITES WERE SOLD D URING FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATIO N. PAGE 3 OF 7 ITA NO.333/BANG/2020 4. THE ASSESSEE CLAIMED PROFIT ON SALE OF APPROXIMA TELY 12 SITES AMOUNTING TO RS.61,00,000/- AS LONG TERM CAPI TAL GAIN, THE DETAILS OF WHICH ARE AS UNDER: SL.NO. DATE OF SALE SITE NO SIZE NAME OF THE PURCHASER AMOUNT 1 04 - 06 - 2012 34 60 X 40 VISION DEVELOPERS 7,80,000/- 2 04 - 06 - 2012 9 60 X 40 SMT. K.S.LAKSHMI 7,80,000/- 3 06-03-2013 48,49,50 60 X 85 VISION DEVELOPERS 18,24,000/ - 4 06-03-2013 45,46,47 40 X 85 VISION DEVELOPERS 12,16,000/ - 5 06-03-2013 43,52 100 X 30 SMT.MEENA D LAKHANI 9,75,000/ - 6 F 06 - 03 - 2013 44, 51 100 X 30 SMT. MEENA D LAKHANI 97,75,000/ - 5. THE LD.AO REJECTED THE SUBMISSIONS BY HOLDING TH AT ASSESSEE CLAIMED LONG TERM CAPITAL GAIN ON SALE OF PLOTS WHICH WERE DEVELOPED IN 1990 AND THE SALE COMMENCED FROM 1990-91. HE OBSERVED THAT TOTAL OF 120 PLOTS WERE CARVED OUT FROM THE AGRICULTURAL LAND AND SOLD OVER THE YEARS WHICH AMO UNTS TO BUSINESS CARRIED OUT BY ASSESSEE AND THE SALE OF PL OTS DURING THE YEAR WAS BROUGHT TO TAX AS BUSINESS INCOME. PAGE 4 OF 7 ITA NO.333/BANG/2020 6. THE LD.AO FURTHER DENIED THE EXEMPTION CLAIMED B Y ASSESSEE UNDER SECTION 54F DUE TO RECLASSIFICATION OF LONG TERM CAPITAL GAINS AS BUSINESS INCOME. 7. AGGRIEVED BY THE ORDER OF LD.AO, ASSESSEE WAS IN APPEAL BEFORE THE LD.CIT(A). 8. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE GRANTED THE SALE PROCEEDS FOR RS.61 LACS RECEIVED O N SALE OF 12 PLOTS TO BE COMPUTED AS LTCG. HOWEVER, FOR CONSIDER ING THE CLAIM OF EXEMPTION UNDER SECTION 54F THE LD.CIT(A) WAS OF THE VIEW THAT ASSESSEE DID NOT COMPLY WITH THE REQUIREM ENT OF PROVISIONS TO BE ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 54F. 9. AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE IS IN APPEAL BEFORE US NOW. THE ONLY ISSUE THAT IS ALLEGED BY TH E LD.AR IS IN RESPECT OF DENIAL OF CLAIM OF EXEMPTION UNDER SECTI ON 54F IN RESPECT OF INVESTMENT IN PURCHASE OF FLAT MADE BY A SSESSEE ON SALE OF THE 12 RESIDENTIAL PLOTS. 10. IT HAS BEEN SUBMITTED BY THE LD.AR THAT ASSESSE E HAD ADVANCED PAYMENTS OF RS.50 LACS TOWARDS PURCHASE OF 2 FLATS THAT DID NOT MATERIALISE AND THE AMOUNT WAS INVESTE D IN PURCHASE OF SITE. HE SUBMITTED THAT THE CANCELLATIO N AGREEMENT WAS ENTERED INTO BETWEEN THE PARTIES ON 24/06/2014. IT WAS ALSO SUBMITTED THAT THE PURCHASE OF NEW SITE TOOK PLACE AFTER ONE YEAR AFTER THE DATE OF TRANSFER OF ORIGINAL ASSET AND NO CONSTRUCTION COMMENCED TILL THE DATE. IT HAS BEEN SUBMITTED THAT ASSESSEE HAD INVESTED THE SUM TOWARDS PURCHASE OF SITE WITHIN TH E LIVE PERIOD OF LIMITATION WHICH CANNOT BE OVERLOOKED. PAGE 5 OF 7 ITA NO.333/BANG/2020 11. ON THE CONTRARY THE LD.SR.DR SUBMITTED THAT ASS ESSEE HAS FAILED TO COMPLY WITH THE REQUIREMENTS OF SECTION 5 4F AND THEREFORE HAS BEEN RIGHTLY DENIED BY THE AUTHORITIE S BELOW. 12. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 13. WE NOTE THAT LD.CIT(A) HAS NOT VERIFIED THE SUB MISSIONS MADE BY ASSESSEE IN RESPECT OF PURCHASE OF SITE. ME RELY ON SURMISES, THE DEDUCTION IS DENIED. IN OUR OPINION I T IS A FIT CASE TO BE REMANDED TO LD.CIT(A) TO CARRY OUT NECESSARY VER IFICATION. ASSESSEE IS DIRECTED TO FILE ALL RELEVANT DOCUMENTS IN RESPECT OF PURCHASE OF SITE IN SUPPORT OF ITS CLAIM. THE LD.CI T(A) IS DIRECTED TO VERIFY ALL THE RELEVANT DOCUMENTS AND TO CONSIDE R THE CLAIM IN ACCORDANCE WITH LAW. ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS A LLOWED FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2021 SD/- SD/- (CHANDRA POOJARI) (BEEN A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMB ER BANGALORE, DATED, THE 31 ST AUG, 2021. /VMS/ PAGE 6 OF 7 ITA NO.333/BANG/2020 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE PAGE 7 OF 7 ITA NO.333/BANG/2020 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -8- 2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -8- 2021 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -8- 2021 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -8- 2021 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -8- 2021 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -8- 2021 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -8- 2021 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS