ITO, CHENNAI V. S.A.Bhimaraja, CHENNAI

ITA 408/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4600 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S RAJAKUMAR
• Keywords: Earning of tax free income
• Section: 143(3)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 408 /MDS/2013 ASSESSMENT YEAR: 2009-10 THE INCOME TAX OFFICER, SALARY WARD VI(2), 121, M.G. ROAD, CHENNAI - 34. VS. SHRI S.A. BHIMARAJA, FLAT NO.A-1, WHISPERING HEIGHTS, 132, ST. MARYS ROAD, ALWARPET, CHENNAI 600 018. [PAN:AEFPB5660J] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL.CIT RESPONDENT BY : SHRI S. RAJAKUMAR, ADVOCATE DATE OF HEARING : 13 .0 8 .2013 DATE OF PRONOUNCEMENT : 30.08.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) VI, CHENNAI DA TED 22.11.2012 RELEVANT TO THE ASSESSMENT YEAR 2009-10. 2. FACTS OF THE CASE ARE THAT THE ASSESSEE IS RETI RED EMPLOYEE OF RAMCO INDUSTRIES LTD. AND FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008- 09 ADMITTING TOTAL INCOME OF ` .84,76,770/-. SUBSEQUENTLY, ASSESSMENT WAS REOPENED AFTER FOLLOWING DUE PROCESS. ASSESSMENT WA S COMPLETED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.408 408408 408/M /M/M /MDS/1 DS/1 DS/1 DS/13 33 3 2 3. THE FIRST GROUND OF APPEAL PERTAINING TO DISALL OWANCE OF LOSS RELATES TO INTEREST INCOME. THE CASE OF THE ASSESSEE IS THAT H E HAS BORROWED FUND FROM THE BANK AND THE SAME WAS DEPOSITED IN THE BANK ACC OUNT AGAIN. THE INTEREST PAYMENT MADE TO THE BANK ON THE FUNDS BORR OWED IS MORE THAN WHATEVER THE INTEREST HE HAD RECEIVED FROM THE FIXE D DEPOSITS AND SAME WAS SHOWN AS LOANS. THE ASSESSING OFFICER HAS NOT ALLOW ED THE LOSSES CLAIMED BY THE ASSESSEE. 4. ON APPEAL, THE LD. CIT(APPEALS) WITHOUT EXAMINI NG THE ISSUE IN DETAIL, DIRECTED THE ASSESSING OFFICER TO DELETE THE LOSS O F INTEREST INCOME OF ` .3,92,458/-. 5. AT THE TIME OF HEARING, BOTH PARTIES BEFORE US HAVE AGREED THAT THIS ISSUE WAS NOT CLEARLY DISCUSSED BY THE EITHER THE A SSESSING OFFICER OR THE LD. CIT(APPEALS) AND THEREFORE, REQUESTED TO REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. 6. AFTER CAREFUL CONSIDERATION OF THE ASSESSMENT O RDER AS WELL AS LD. CIT(APPEALS)S ORDER, WE FIND THAT THE FACTS ARE N OT CLEAR IN THE ORDERS OF AUTHORITIES BELOW AND ALSO BY CONSIDERING THE REQUE ST OF BOTH PARTIES, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(APPEALS) ON T HIS ISSUE AND DIRECT THE ASSESSING OFFICER TO EXAMINE THE ISSUE IN DETAIL AN D DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH AND PASS A DETAILED SPEAKING ORD ER BY BRINGING ALL THE PARTICULARS ON RECORD. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.408 408408 408/M /M/M /MDS/1 DS/1 DS/1 DS/13 33 3 3 7. SO FAR AS NEXT ISSUE RAISED BY THE REVENUE IS C ONCERNED, WHETHER THE INCOME IS AN AGRICULTURAL INCOME OR NOT. IN THE ASS ESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT AS PER THE BANK ACCOUNT OF THE ASSESSEE, A SUM OF RS. 5.00 CRORES WAS CREDITED AS SALE PROCEEDS OF PADUR LAND AND THE ASSESSEE CLAIMED THE PROFITS ARISING O UT OF THE SALE AS AN EXEMPT INCOME SINCE IT WAS ONLY AN AGRICULTURAL LAN D. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSIONS OF THE ASSESSEE FOR THE REASONS THAT (A) THE LAND IS SITUATED IN OMR, WHERE NO AGRICULTURE IS BEING DONE FOR THE PAST SEVERAL YEARS; (B) THE ASSESSEE I S IN THE HABIT OF PURCHASING AND SELLING OF LAND VERY FREQUENTLY, FOR EXAMPLE, HE HAS PURCHASED IMMOVABLE PROPERTY AT KODAIKANAL, TIRUNEL VELI, VELACHERY, THANDALAM, CHENGALPET, THIRUPPUR, SIRUKUNDRAM, PUDU PAKKAM, UTTANDI, AIYAMPALAYAM, KOVALAM, ETC. HE HAS ALSO SOLD THE LA ND PURCHASED BY HIM AT PADUR. HENCE, THE NATURE OF THE TRANSACTION CAN AT BEST BE TREATED AS BUSINESS IN THE REAL ESTATE. THE ASSESSING OFFICER TREATED THE PROFIT ARISING FROM THE SALE OF PADUR LAND AS INCOME FROM BUSINESS . 8. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE LD. CIT(APPEALS). 9. IT WAS SUBMITTED BEFORE THE LD. CIT(APPEALS) TH AT THE ASSESSEE ALONG WITH HIS WIFE HAVE PURCHASED THE ABOVE MENTIONED LA ND TO THE EXTENT OF 11.32 ACRES, OUT OF WHICH 1.96 ACRES WERE REGISTERE D IN THE NAME OF THE ASSESSEE AND THE LANDS WERE PURCHASED IN JANUARY, 2 006 THROUGH REGISTERED I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.408 408408 408/M /M/M /MDS/1 DS/1 DS/1 DS/13 33 3 4 POWER OF ATTORNEY IN THE NAME OF HIS WIFE. LATER, T HE LANDS WERE TRANSFERRED TO THE ASSESSEE HAS ON 04.05.2007 AND THE ASSESSEE SOLD THE SAME ON 23.07.2007. THE SELLER WAS DOING AGRICULTURE FOR A LONG TIME. THE ASSESSEE HAD PURCHASED THE LAND WITH WELL AND BORE CONNECTIO NS WITH ALL ELECTRICAL EQUIPMENTS. IT WAS ALSO SUBMITTED BEFORE THE LD. CI T(APPEALS) THAT THE ASSESSING OFFICER HAS WRONGLY HELD THAT THE ASSESSE E IS IN THE HABIT OF PURCHASING AND SELLING OF LAND VERY FREQUENTLY AND ALSO SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO EXAMINE AND VERIFY THE PURCHASE AND SALE DOCUMENTS. IT WAS ALSO SUBMITTED THAT SOME AGRICULT URAL LAND TO THE EXTENT OF 9.36 ACRES AT THE SAME PLACE IN THE SAME ASSESSMENT YEAR WERE SOLD BY HIS WIFE AND THE SALE CONSIDERATION WAS EXEMPT FROM CAP ITAL GAINS. 10. THE LD. CIT(APPEALS), AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE HAS OBSERVED THAT IN THE CASE OF SMT. B. SULOCHANA, WHO IS WIFE OF THE ASSESSEE, HAS SOLD THE MAJOR PORTION OF THE LAND AND THE AMOUNT IS HELD AS AGRICULTURAL LAND AND SALE PROCEEDS OF THE SALE OF THE SAME WAS EXEMPT FROM TAXATION. THEREFORE, THERE IS NO REASO N FOR THE ASSESSING OFFICER TO TREAT THE TRANSACTION AS A BUSINESS TRAN SACTION. THE LD. CIT(APPEALS), WITH THE ABOVE OBSERVATION AND ALSO B Y MENTIONING THAT FOLLOWING ORDER OF THE ITAT, WITHOUT GIVING ANY APP EAL NUMBER OR DATE OF ORDER/CITATION, DIRECTED THE ASSESSING OFFICER TO D ELETE THE ADDITION BY TREATING THE INCOME AS AGRICULTURAL INCOME. 11. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.408 408408 408/M /M/M /MDS/1 DS/1 DS/1 DS/13 33 3 5 12. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREE D THAT THE ISSUE MAY BE REMITTED BACK TO THE ASSESSING OFFICER TO CONSIDER ALL THE FACTS AND DECIDE THE ISSUE AFRESH. 13. IN THIS CASE, THE ASSESSEE AND HIS WIFE PURCHA SED THE LAND FROM AN AGRICULTURIST. ACCORDING TO THE ASSESSEE, THE LAND SOLD BY THE ASSESSEE IS AN AGRICULTURAL LAND AND EXEMPT FROM TAXATION. HOWEVER , THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE SAID LAND IS SITUATED IN OMR AND NO AGRICULTURAL OPERATI ONS ARE BEING CARRIED OUT IN THAT AREA AND ALSO GAVE A FINDING THAT DURING TH E ASSESSMENT YEAR THE ASSESSEE HAD PURCHASED VARIOUS PROPERTIES AT KODAIK ANAL, TIRUNELVELI, VELACHERY, THANDALAM, CHENGALPET, THIRUPPUR, SIRUKU NDRAM, PUDUPAKKAM, UTTANDI, AIYAMPALAYAM, KOVALAM, ETC. AND SOLD THE S AME. THEREFORE, THE ASSESSING OFFICER HAS DENIED THE CLAIM OF THE ASSES SEE THAT THE LAND SOLD BY THE ASSESSEE IS NOT AN AGRICULTURAL LAND. THE LD. C IT(APPEALS), BY CONSIDERING THE SALE MADE BY ASSESSEES WIFE, DIREC TED THE ASSESSING OFFICER TO TREAT THE LAND SOLD BY THE ASSESSEE ALSO AN AGRICULTURAL LAND BY FOLLOWING SOME DECISIONS OF THE TRIBUNAL WITHOUT QU OTING ANY CITATION. IN THE ASSESSING ORDER, THE ASSESSING OFFICER HAS NOT EXAM INED THE LAND OF THE ASSESSEE INDEPENDENTLY WHETHER, IT IS AN AGRICULTUR AL LAND OR NOT. HE HAS ALSO FAILED TO EXAMINE WHETHER THE ASSESSEE HAS CAR RIED OUT ANY AGRICULTURAL ACTIVITIES AND ALSO SHOWN ANY INCOME FROM THE AGRIC ULTURAL OPERATIONS, WHERE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.408 408408 408/M /M/M /MDS/1 DS/1 DS/1 DS/13 33 3 6 THE LAND IS SITUATED AND WHAT ARE THE STATUS OF SUR ROUNDING LAND AND WITHOUT EXAMINING ANYTHING, SIMPLY JUST BECAUSE THE LAND SO LD BY THE ASSESSEE IS SITUATED IN OMR, THE ASSESSING OFFICER DENIED THE C LAIM OF THE ASSESSEE. THE LD. CIT(APPEALS) HAS ALSO WITHOUT EXAMINING THE PROPERTY, WHERE THE ASSESSING OFFICER HAS GIVEN A SPECIFIC FINDING THAT THE ASSESSEE IS BUYING AND SELLING THE PROPERTY FREQUENTLY AND WITHOUT MEN TIONING ANY DETAIL OF THE PROPERTY SOLD BY THE WIFE OF THE ASSESSEE AND ASSIG NING COMPLETE DETAIL OF THE ITAT ORDER DIRECTED THE ASSESSING OFFICER TO AL LOW THE CLAIM OF THE ASSESSEE. IN VIEW OF THE ABOVE AND IN THE ABSENCE OF ANY CLEAR FACTS AND FINDINGS OF LOWER AUTHORITIES, WE SET ASIDE THE ORD ER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND REMIT THE MATTER BACK TO THE ASSE SSING OFFICER WITH A DIRECTION TO EXAMINE ALL THE DETAILS AS STATED ABOV E INCLUDING THE LAND SOLD BY WIFE OF THE ASSESSEE AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 30 TH OF AUGUST, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 30.08.2013 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.