M/s. G.M. Pens International Ltd., CHENNAI V. DCIT, CHENNAI

ITA 3451/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6564 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 19-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HOMI RAJVANSH
• Keywords: Capital asset; Capital Gains

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.3451/CHNY/2018 ( )( / ASSESSMENT YEAR :2015-16 M/S G.M. PENS INTERNATIONAL PVT. LTD., JANAKPURI, NO.2, VELACHERRY BYPASS ROAD, VELACHERRY, CHENNAI - 600 042. PAN : AAACG 1150 E V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(1), CHENNAI. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI N. QUADIR HOSEYN, ADVOCATE SH. S.M. KHAJA MUYEENUDDEEN, ADV OCATE -.+, / 0 / RESPONDENT BY : SHRI HOMI RAJVANSH, CIT 1 / 2% / DATE OF HEARING : 10.04.2019 3') / 2% / DATE OF PRONOUNCEMENT : 30.04.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -6, CHENNAI, D ATED 28.09.2018 AND PERTAINS TO ASSESSMENT YEAR 2015-16. 2 I.T.A. NO.3451/CHNY/18 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DENIA L OF THE CLAIM OF THE ASSESSEE TO SET OFF CAPITAL OF 19,19,257/- AGAINST THE LONG TERM CAPITAL GAINS. 3. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE ASSESSEE HAS SOLD AN AGRICULTURA L LAND OF ABOUT 53 ACRES ALONG WITH A FARM HOUSE DURING THE YEAR 2013- 14. ACCORDING TO THE LD. COUNSEL, THE COST OF THE LAND WAS CLAIMED AS AG RICULTURAL INCOME EXEMPTED FROM TAXATION. THE LOSS IN THE FARM HOUSE WAS CLAIMED AS CAPITAL LOSS. FOR THE ASSESSMENT YEAR 2013-14, ACC ORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER ACCEPTED THE CLAIM O F THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE C LAIMED THE CAPITAL LOSS TO SET OFF AGAINST THE LONG TERM CAPITAL GAINS ARISING DURING THIS YEAR. HOWEVER, ACCORDING TO THE LD. COUNSEL, THE ASSESSIN G OFFICER REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE DESCRI PTION OF THE PROPERTY WAS OVER-WRITTEN IN THE PURCHASE DEED AS WELL AS SA LE DEED. THE LD.COUNSEL FURTHER CLARIFIED THAT THE FARM HOUSE WA S TO FACILITATE THE CULTIVATION OF THE ABOVE SAID LAND. SINCE THE CAPI TAL LOSS WAS ADMITTED DURING THE ASSESSMENT YEAR 2013-14, ACCORDING TO TH E LD. COUNSEL, IT HAS TO BE SET OFF AGAINST THE LONG TERM CAPITAL GAINS W HICH ARISES DURING THE YEAR UNDER CONSIDERATION. 3 I.T.A. NO.3451/CHNY/18 4. ON A QUERY FROM THE BENCH WHEN THE AGRICULTURAL LAND TO THE EXTENT OF 53 ACRES WAS SOLD ALONG WITH FARM HOUSE, WHICH WAS TO FACILITATE THE CULTIVATION, HOW THE LAND AND BUILDING CAN BE S EGREGATED FOR THE PURPOSE OF CLAIMING EXEMPTION IN RESPECT OF THE LAN D AND CAPITAL LOSS IN RESPECT OF THE BUILDING? THE LD.COUNSEL FOR THE AS SESSEE SUBMITTED THAT IT WAS DONE DURING THE ASSESSMENT YEAR 2013-14, THE REFORE, IT HAS TO BE CARRIED FORWARD. THE LD.COUNSEL FURTHER CLARIFIED THAT THE ISSUE IS COMING BEFORE THIS TRIBUNAL FOR THE FIRST TIME. FOR AN AN OTHER QUERY FROM THE BENCH IN CASE THE ASSESSING OFFICER COMMITTED A MIS TAKE IN SEGREGATING THE COST OF LAND AND BUILDING, IS IT NECESSARY TO C ONTINUE THE MISTAKE BY THE TRIBUNAL DURING THE YEAR UNDER CONSIDERATION AL SO? THE LD.COUNSEL COULD NOT CLARIFY THE LEGAL POSITION. AFTER REFERR ING TO THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2013-14, THE LD.COUNS EL CLARIFIED THAT THE CAPITAL LOSS WAS NOT QUANTIFIED BY THE ASSESSING OF FICER SEPARATELY. HOWEVER, THE ASSESSEE CLARIFIED THE SAME WITH THE C OMPUTATION STATEMENT FILED BEFORE THE ASSESSING OFFICER. 5. WE HEARD SHRI HOMI RAJVANSH, THE LD. DEPARTMENTA L REPRESENTATIVE ALSO. ADMITTEDLY, M/S FINE POINT IN DUSTRIES LTD. SOLD THE AGRICULTURAL LAND TO THE EXTENT OF 53.08 ACRES DURI NG THE FINANCIAL YEAR 2012-13 RELEVANT TO ASSESSMENT YEAR 2013-14 FOR A T OTAL CONSIDERATION OF 43,29,750/-. M/S FINE POINT INDUSTRIES LTD. MERGED WITH THE ASSESSEE- COMPANY. THE ASSESSING OFFICER AFTER VERIFYING THE PURCHASE DEED, 4 I.T.A. NO.3451/CHNY/18 FOUND THAT THE LAND AND BUILDING WERE PURCHASED FOR A TOTAL COST OF 2,38,572/-. THE ASSESSING OFFICER ALSO FOUND THAT THERE WAS OVER- WRITTEN IN RESPECT OF THE DESCRIPTION OF THE PROPER TY. THE ASSESSING OFFICER FURTHER FOUND THAT THE AGE OF THE BUILDING WAS 76 YEARS AND IT WAS USED AS POULTRY AND STORE SHED. THE COPIES OF PURC HASE DEED AND THE SALE DEED WERE NOT PRODUCED BEFORE THIS TRIBUNAL BY THE ASSESSEE. THE FACT REMAINS THAT ADMITTEDLY THE GAIN ARISING OUT O F SALE OF 53.08 ACRES OF LAND BY M/S FINE POINT INDUSTRIES LTD. ALONG WITH T HE BUILDING WHICH WAS CALLED AS FARM HOUSE BY THE ASSESSEE AND POULTRY AND STORE SHED BY THE ASSESSING OFFICER WAS CLAIMED BY THE ASSESSEE A S PROFIT FROM SALE OF AGRICULTURAL LAND AND CAPITAL ASSET. IN OTHER WORD S, IN RESPECT OF THE AGRICULTURAL LAND, THE ASSESSEE CLAIMS AGRICULTURAL INCOME AND ON SEGREGATING THE COST OF THE BUILDING, CLAIMS THE SA ME AS CAPITAL GAIN. 6. THE QUESTION ARISES FOR CONSIDERATION IS WHEN AN AGRICULTURAL LAND TO THE EXTENT OF 53.08 ACRES WAS SOLD ALONG WITH BU ILDING WHICH WAS ADMITTEDLY CONSTRUCTED TO FACILITATE THE CULTIVATIO N OF LAND, CAN THE BUILDING BE SEGREGATED AND CLAIMED AS CAPITAL ASSET / LOSS? THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE LAND AND OTHER FIXTURES TO THE AGRICULTURAL LAND, WHICH WAS TO FACILITATE THE CULTIVATION, HAS TO BE TREATED AS PART OF AGRICULTURAL LAND AND GAIN ARISING OUT OF SALE OF L AND ALONG WITH BUILDING, FIXTURES, ETC. HAS TO BE TREATED AS PROFIT ON SALE OF AGRICULTURAL LAND AND EXEMPTED FROM TAXATION. THE ASSESSEE TAKING ADVANT AGE OF LOSS SAID TO 5 I.T.A. NO.3451/CHNY/18 BE ARISING ON THE BUILDING, CLAIMS TO SET OFF OF TH E SAME AGAINST THE LONG TERM CAPITAL GAIN ARISING DURING THE YEAR UNDER CON SIDERATION. THE ASSESSING OFFICER FOUND THAT WHEN THE ASSESSEE ENJO YED THE BENEFIT OF TAX EXEMPTION FOR AGRICULTURAL INCOME AND INCOME AR ISING OUT OF SALE OF AGRICULTURAL LAND, THE COST OF THE BUILDING CANNOT BE BIFURCATED INTO CAPITAL GAIN. 7. NOW THE LD.COUNSEL FOR THE ASSESSEE CLAIMS THAT IT WAS QUANTIFIED BY THE ASSESSING OFFICER AS CAPITAL LOSS FOR THE AS SESSMENT YEAR 2013-14. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT EAC H ASSESSMENT YEAR IS INDEPENDENT AND SEPARATE. NO MATERIAL IS PRODUCED BEFORE THIS TRIBUNAL TO INDICATE THAT THE ASSESSING OFFICER QUANTIFIED T HE CAPITAL LOSS FOR THE ASSESSMENT YEAR 2013-14, AND NO MATERIAL IN RESPECT OF THE SALE OF SO- CALLED FARM HOUSE / POULTRY SHED AS CAPITAL LOSS WA S PRODUCED BEFORE THIS TRIBUNAL. THE LD.COUNSEL FOR THE ASSESSEE FAIRLY A DMITTED THAT THE ASSESSING OFFICER HAS NOT SPECIFICALLY QUANTIFIED T HE CAPITAL LOSS IN THE ASSESSMENT ORDER, THEREFORE, NO QUESTION OF CARRY F ORWARD OF LOSS WOULD ARISE FOR CONSIDERATION. THIS TRIBUNAL BEING FINAL FACT FINDING AUTHORITY, HAS EVERY AUTHORITY TO LOOK INTO THE REAL FACT AND FIND OUT WHETHER THE ASSESSEE HAS SUFFERED ANY CAPITAL LOSS AND ELIGIBLE TO CARRY FORWARD SUCH LOSS. IN THE ADMITTED FACTS AND CIRCUMSTANCES OF T HE CASE, THE BUILDING BEING A PART OF AGRICULTURAL LAND, WHICH WAS SOLD, HAS TO BE TREATED AS PROFIT ON SALE OF AGRICULTURAL LAND. THEREFORE, TH E ASSESSING OFFICER FOR THE 6 I.T.A. NO.3451/CHNY/18 ASSESSMENT YEAR 2013-14 HAS RIGHTLY ALLOWED THE EXE MPTION. HENCE, NOTHING REMAINS TO BE CARRIED FORWARD AND SET OFF F OR THE YEAR UNDER CONSIDERATION. THEREFORE, THIS TRIBUNAL DO NOT FIN D ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES AND ACCORDI NGLY THE SAME IS CONFIRMED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 30 TH APRIL, 2019 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R .S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 30 TH APRIL, 2019. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-6, CHENNAI 4. PRINCIPAL CIT-2, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.