ACIT, Kottayam V. M/s Nilagiri Tea Estates Ltd, Kottayam

ITA 377/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58328 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 04-06-2010
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: SONY MATHEW
• Keywords: Capital asset; Capital receipt
• Section: 2(14); 115JB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NO.377/COCH/2010 ASSESSMENT YEAR:2007-08 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM. VS. NILGIRI TEA ESTATES LTD., ANCHERIL BANK BUILDINGS, P.O. BOX NO. 1, BAKER JUNCTION, KOTTAYAM-686 001 [PAN: AAACN 7290G] (REVENUE-APPELLANT) (ASSESSEE- RESPONDENT) ASSESSEE BY SHRI SONY MATHEW, FCA REVENUE BY MS. S. VIJAYAPRABHA, DR DATE OF HEARING 27/12/2011 DATE OF PRONOUNCEMENT 29//02/2012 O R D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOTTAYAM (CIT(A) FOR SHO RT) DATED 12-03-2010, AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2007-08. 2. THE SOLE ISSUE ARISING IN APPEAL IS THE VALIDITY IN LAW OF THE ADDITION ON ACCOUNT OF SALE OF AGRICULTURAL LAND AS BOOK PROFIT U/S. 115JB OF THE INCOME-TAX ACT, 1961 ('THE ACT', HEREINAFTER), SINCE UPHELD BY THE FIRST APPELLATE A UTHORITY. THE BASIS OF THE REVENUES CLAIM IS THAT THOUGH S. 115JB MAKES AN EXCLUSION IN RESPECT OF INCOME TO WHICH PROVISION OF SEC. 10, I.E., INCOMES NOT INCLUDED IN THE TOTAL INCOME, IS MADE PER THE PROVISION, THERE IS NO CORRESPONDING PROVISION FOR THE PROFIT ON THE SALE OF AGRICULTURAL LAND, WHICH STANDS EXCLUDED FROM THE PURVIEW OF TAXATION ONLY BY VIRTU E OF S. 2(14) R.W.S. 45 OF THE ACT, I.E., ON THE BASIS THAT THE SAID AGRICULTURAL LAND IS NOT A `CAPITAL ASSET AND, ACCORDINGLY, NO I.T.A. NO. 377/COCH/2010 ACIT, KOTTAYAM VS. NILGIRI TEA ESTATES LTD. 2 CHARGEABLE CAPITAL GAINS ARISES ON ITS TRANSFER. T HE LD. CIT(A) HAS ALLOWED THE ASSESSEES APPEAL CONTESTING THE SAME FOLLOWING THE DECISION B Y THE TRIBUNAL AS IN THE CASE OF HARRISONS MALAYALAM LTD. VS. ACIT , 315 ITR (AT) 1 (COCHIN); ITO VS. DR. KOSHY GEORGE , 317 ITR (AT) 116 (COCHIN), AS WELL AS CIRCULAR NO . 550 DATED 01/01/1990 ISSUED BY CBDT. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. THE REVENUES STAND IS THAT PROFIT OR LOSS ON THE DISPOSAL OF AN ASSET IS TO BE DULY INCORPORATED IN THE PROFIT & LOSS ACCOUNT OF A COMPANY PREPARED IN ACCO RDANCE WITH PARTS II & III OF SCHEDULE VI TO THE COMPANIES ACT, 1956, THE NET PRO FIT PER WHICH IS TO BE ADOPTED BY IT FOR COMPUTING THE `BOOK PROFIT UNDER THE MAT PROVI SIONS, INCLUDING S. 115JB. AS SUCH, THERE IS NO BASIS FOR EXCLUDING THE PROFIT DERIVED ON THE SALE OF ITS AGRICULTURAL LAND BY THE ASSESSEE. FURTHER, THERE IS NO QUESTION OF THE SAME BEING EXIGIBLE FOR DEDUCTION ON ACCOUNT OF SEC. 10 OF THE ACT, WHICH MAKES NO REFER ENCE TO THE SAID INCOME. THE ASSESSEE, ON THE OTHER HAND, RELIES ON THE DECISION BY THE TR IBUNAL IN THE CASE OF HARRISONS MALAYALAM LTD. VS. ACIT (SUPRA), PER WHICH THE SAID PROFIT HAS BEEN HELD A S NOT LIABLE TO BOOK PROFIT TAX U/S. 115JB. THE REVENUE, HOWEVER, P REFERS WITH ITS VIEW AS THE MATTER HAS BEEN, AS STATED, CARRIED BY IT IN APPEAL BEFORE THE HONBLE HIGH COURT. THE TRIBUNAL HAS, IN RENDERING ITS SAID DECISION, RELIED ON THE DECISION S BY THE APEX COURT IN THE CASE OF SINGHAI RAKESH KUMAR V. UNION OF INDIA (2001) 247 ITR 150 (SC) AND CIT V. ALL INDIA TEA AND TRADING CO. LTD . (1996) 219 ITR 544 (SC), HOLDING THAT THE INCOME ARISING ON THE TRANSFER OF AGRICULTURAL LAND IS NOT EXIGIBLE TO CA PITAL GAINS TAX, BEING IN THE NATURE OF AGRICULTURAL INCOME. FIRSTLY, AS SUCH, THERE IS COM PLETE PARITY OF FACTS, SO THAT WE FIND NO REASON TO TAKE A DIFFERENT VIEW OF THE MATTER. SECO NDLY, THE REVENUES OBJECTION IS TECHNICAL IN NATURE INASMUCH IT CONCEDES THAT THE I NCOME IS OTHERWISE NOT CHARGEABLE TO TAX UNDER THE REGULAR PROVISIONS OF THE ACT. THE PR OVISIONS OF CHAPTER XII-B OF THE ACT DO NOT, IN OUR VIEW, OPERATE TO EXTEND THE SCOPE OF `TOTAL INCOME PER SECTION 5 ON WHICH THE CHARGE TO TAX U/S. 4 IS ATTRACTED, BUT IS ONLY TOWARD PROVIDING AN ALTERNATIVE BASIS FOR COMPUTING THE SAME. REFERENCE BY THE LD. CIT(A) TO THE CIRCULAR NO. 550 BY THE BOARD IN THIS REGARD IS IN OUR VIEW APPOSITE; THE RECEIPT BE ING ADMITTEDLY A CAPITAL RECEIPT. WE I.T.A. NO. 377/COCH/2010 ACIT, KOTTAYAM VS. NILGIRI TEA ESTATES LTD. 3 THEREFORE FOLLOWING THE DECISION BY THE TRIBUNAL IN THE CASE OF HARRISONS MALAYALAM LTD. VS. ACIT (SUPRA), DELETE THE INCLUSION OF PROFIT OF RS. 23. 69 LAKHS ON ACCOUNT OF SALE OF AGRICULTURAL LAND, ADMITTEDLY NOT A CAPITAL ASSET U /S. 2(14), IN THE COMPUTATION OF BOOK PROFIT U/S. 115JB OF THE ACT. WE DECIDE ACCORDINGLY . 4. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . SD/- SD/- 15/ 2/2012 (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 29TH FEBRUARY, 2012 GJ COPY TO: 1. M/S. NILGIRI TEA ESTATES LTD., ANCHERIL BANK BUI LDINGS, P.O. BOX NO. 1, BAKER JUNCTION, KOTTAYAM-686 001 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, KOTTAYAM.2(1), 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) ITAT, COCHIN