THE ITO, WARD - 1(4), Visakhapatnam V. Sri CH.Surya Rao, Visakhapatnam

ITA 374/VIZ/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8900 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R S NARAYAN
• Keywords: Depreciation; Cost of acquisition; Revised return; Unabsorbed depreciation
• Section: 143(3); 139(5); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HONBLE ACCOUNTANT MEMBER ITA NO. 374/VIZ/2013 (ASST. YEAR : 2009-10) ITO, WARD-3(3), VISAKHAPATNAM. VS. CH. SYAMALA L/R OF LATE CH.SURYA RAO, D.NO. 9-29-20, BALAJINAGAR, SIRIPURAM, VISAKHAPATNAM. PAN NO. ABXPC 5029 P (APPELLANT) (RESPONDENT) C.O.NO.97/VIZ/2013 (ITA NO. 347/VIZ/2013) (ASST. YEAR : 2009-10) CH. SYAMALA L/R OF LATE CH.SURYA RAO, D.NO. 9-29-20, BALAJINAGAR, SIRIPURAM, VISAKHAPATNAM. VS. ITO, WARD-3(3), VISAKHAPATNAM. PAN NO. ABXPC 5029 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADVOCATE. DEPARTMENT BY : SHRI S.R.S. NARAYAN SR.DR DATE OF HEARING : 30/05/2017. DATE OF PRONOUNCEMENT : 30/06/2017. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE AND THE C.O. BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VISAKHAPATNAM, DATED 27/03/2013 FOR THE ASSESSMENT YEAR 2009-10. 2 ITA NO.374/VIZ/2013 & C.O.NO. 97/VIZ/2013 ITA NO. 374/VIZ/2013 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVED INCOME FROM PROPERTY, BUSINESS AND OTHER SOURCES, FILED HIS RETURN OF INCOME ON 31/03/2010, ADMITTING TOTAL INCOME OF 8,41,610/- THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER FOLLOWING DUE PROCEDURE, ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BY MAKING ADDITIONS. THE ASSESSEE, INITIALLY, FILED A RETURN OF INCOME ON 31/03/2010 DECLARING TOTAL INCOME OF 8,41,610/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A REVISED RETURN WAS FILED ON 30/09/2011 BY DECLARING TOTAL INCOME OF 29,23,110/-. IT WAS STATED THAT THE REVISED INCOME WAS FILED TO OFFER REVISED CAPITAL GAIN THAT AROSE, ON SALE OF LAND BELONGING TO HIS WIFE, OFFERED IN HIS HANDS UNDER SECTION 64 DUE TO INCREASE IN CONVERSION OF LAND INTO BUSINESS ASSET, THE SALE CONSIDERATION WAS FROM KAKARLA ENCLAVE PROPERTY AND SALE OF AGRICULTURAL LAND. IN THE REVISED RETURN, THE ASSESSEE HAD ALSO CLAIMED SET OFF OF BROUGHT FORWARD DEPRECIATION LOSS OF 15,24,200/-. THE ASSESSING OFFICER FOUND THAT THE REVISED RETURN WAS NOT VALID AS IT WAS FILED BEYOND THE TIME LIMIT PRESCRIBED IN SECTION 139(5) OF THE ACT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY DISALLOWING SET OFF OF BROUGHT FORWARD LOSS OF 15,24,200/-. 3 . ON APPEAL, LD. CIT(A) ALLOWED THE BROUGHT FORWARD DEPRECIATION BY OBSERVING THAT IT IS EVIDENT FROM THE ASSESSMENT ORDER FOR ASSESSMENT 3 ITA NO.374/VIZ/2013 & C.O.NO. 97/VIZ/2013 YEAR 2008-09 THAT THE ASSESSING OFFICER HAD ARRIVED AT THE UNABSORBED DEPRECIATION AND BUSINESS LOSS OF EARLIER YEARS FOR CARRY FORWARD TO SUBSEQUENT YEARS. THEREFORE, THE ASSESSEE IS ENTITLED TO CARRY FORWARD THE UNABSORBED DEPRECIATION FOR THE PURPOSE OF SET OFF, EVEN THOUGH SUCH A CLAIM WAS NOT MADE IN THE ORIGINAL RETURN. 4. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT THE LD. CIT(A) HAS CORRECTLY ALLOWED UNABSORBED CARRY FORWARD DEPRECIATION BY CONSIDERING THE ASSESSMENT YEAR 2008-09. WE FIND THAT THOUGH ASSESSEE HAS NOT CLAIMED IN THE ORIGINAL RETURN OF INCOME, THE SAME IS CLAIMED IN THE REVISED RETURN. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A). THUS, THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. C.O.NO.97/VIZ/2013 5. GROUND NO.1 RAISED IN THIS CROSS OBJECTION IS IN SUPPORT OF THE ORDER PASSED BY THE LD. CIT(A), HENCE, NO SEPARATE ADJUDICATION IS REQUIRED. 6. GROUND NO.2 RAISED IN THIS CROSS OBJECTION IS RELATING TO SUSTENANCE OF ADDITION MADE BY THE ASSESSING OFFICER BY ADOPTING A DIFFERENT METHOD OF APPORTIONMENT OF COST AND VALUATION OF CLOSING STOCK IN RESPECT OF KAKARLA ENCLAVE. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT DURING THE YEAR, THE ASSESSEE HAS SOLD CERTAIN PLOTS BEING DEVELOPED UNDER THE PROJECT OF KAKARLA ENCLAVE. IT WAS SUBMITTED THAT THE ASSESSEE ACQUIRED 7066 SQ.YARDS ON THE LAND ON 07/06/2006 ALONG WITH ONE K. SATYANARAYANA. THE COST OF THE LAND 4 ITA NO.374/VIZ/2013 & C.O.NO. 97/VIZ/2013 TOGETHER WITH CONSTRUCTION OF COMPOUND WALL EXPENSES AT 65,83,667/- AND THE ASSESSEES SHARE WAS 32,91,833/-. THE PROPOSAL FOR CONSTRUCTION OF 14 VILLAS WITH BUILT UP AREA OF 2700 SQ.FT. EACH AND PLOT AREA OF 270 SQ.YARDS. THUS, 14 PLOTS EACH OF AN EXTENT OF 270 SQ.YARDS WAS DEVELOPED. DURING THE YEAR, 4 PLOTS WERE SOLD FOR 44 LAKHS AND THE ASSESSEES SHARE OF CONSTRICTION WAS 22 LAKHS. IT IS SEEN THAT THE ASSESSEE FAILED TO DISCLOSE THE SALE CONSIDERATION IN HIS ORIGINAL RETURN OF INCOME, AND HAS DISCLOSED IT IN THE REVISED RETURN. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT, HE HAS ASSESSED THE ENTIRE INCOME OF 22 LAKHS. THE ASSESSEE HAS OBJECTED BEFORE THE ASSESSING OFFICER THAT THE ENTIRE SALE CONSIDERATION CANNOT BE ASSESSED WITHOUT CONSIDERING THE COST OF ACQUISITION OF LAND. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, RECTIFIED THE MISTAKE UNDER SECTION 154 VIDE ORDER DATED 15/03/2012 AND RECOMPUTED THE PROFIT BY CONSIDERING THE COST OF LAND SOLD AT 931/- PER SQ.YARD. THE CASE OF THE ASSESSEE IS THAT THE COST HAS TO BE COMPUTED AT 1,742/- PER SQ.YARD TAKING INTO ACCOUNT OF THE SALEABLE AREA FOR DETERMINING THE COST. HOWEVER, THE ASSESSING OFFICER HAS NOT CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. 7 . ON APPEAL, LD. CIT(A) BY CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS OBSERVED AS UNDER:- 10.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE. THE FACTUAL POSITION IS BRIEFLY STATED AS UNDER:- TOTAL APPELLANTS SHARE TOTAL AREA OF LAND 7066 SQ. YARD 3533 SQ.YARD TOTAL COST TOWARDS LAND 65,83,667/- 32,91,833/- 5 ITA NO.374/VIZ/2013 & C.O.NO. 97/VIZ/2013 TOTAL AREA OF PLOTS (14 X 270 SQ.YARDS) 3780 SQ.YARDS 1890 SQ.YARDS TOTAL SALE CONSIDERATION ON SALE OF 4 PLOTS 44,00,000/- 22,00,000/- COST PER SQ.YARD BY AO IS 931 PER SQ.YARD 32,91,833/- COST PER SQ.YARDS CLAIMED BY APPELLANT IS 3533 32,91,833 1742 PER SQ.YARD 1890 10.4 I FIND THAT THE COMPUTATION ARRIVED BY TAKING INTO ACCOUNT THE TOTAL SQ.FT. IS APPROPRIATE AS IT COULD BE SAID THAT THE APPELLANT HAS NO INTEREST IN THE REMAINING PORTION OF THE LAND. AS THE PROJECT IS STILL INCOMPLETE IT COULD NOT BE CONCLUDED THAT THE APPELLANT HAS NO INTEREST IN THE REMAINING PORTION OF THE LAND. HENCE, THE AO'S COMPUTATION IS CONFIRMED. 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSING OFFICER HAS COMMITTED AN ERROR BY TAKING INTO CONSIDERATION OF THE ENTIRE LAND SOLD WITHOUT CONSIDERING THE SALEABLE AREA OF LAND SOLD BY THE ASSESSEE, THE SAME IS CONFIRMED BY THE LD. CIT(A). WE FIND THAT THERE IS A MERIT IN THE ARGUMENTS ADVANCED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT TO ARRIVE THE PROFIT ONLY SALEABLE AREA HAS TO BE CONSIDERED AND NOT ENTIRE LAND SOLD BY THE ASSESSEE. WE FIND THAT THE LD. CIT(A) HAS COMMITTED AN ERROR BY HOLDING THAT THE ASSESSEE IS ALSO HAVING AN INTEREST IN THE REMAINING PORTION OF THE LAND, THEREFORE, HE HAS TAKEN THE ENTIRE LAND SOLD BY THE ASSESSEE TO ARRIVE THE PROFIT. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO RECALCULATE THE INCOME EARNED BY THE ASSESSEE BY KEEPING IN VIEW OF THE ABOVE OBSERVATIONS. 6 ITA NO.374/VIZ/2013 & C.O.NO. 97/VIZ/2013 9 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF JUNE, 2017. SD/- SD/- (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :30 TH JUNE, 2017. VR/- COPY TO: 1. THE ASSESSEE - CH. SYAMALA L/R OF LATE CH.SURYA RAO, D.NO. 9-29-20, BALAJINAGAR, SIRIPURAM, VISAKHAPATNAM. 2. THE REVENUE - ITO, WARD-3(3), VISAKHAPATNAM. 3. THE CIT-1, VISAKHAPATNAM. 4. THE CIT(A), VISAKHAPATNAM. 5. THE D.R., VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR.PS, ITAT, VISAKHAPATNAM.