Viswanadhapalii Venkateswara Rao, Vijayawada V. THE CIT, Guntur

ITA 414/VIZ/2014

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9627 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 19-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M NARAYANA RAO
• Keywords: Capital asset; Assessment record
• Section: 143(3); 2(14); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HONBLE JUDICIAL MEMBER & SHRI G. MANJUNATHA, HONBLE ACCOUNTANT MEMBER ITA NO. 414/VIZ/2014 (ASST. YEAR : 2009-10) SRI VISWANADHAPALLI VENKATESWARA RAO, C/O S. PULLARAO & D.L. NARASIMHA RAO, ADV., D.NO. 33-7-3, IJJADAVARI VEEDHI, SEETHARAMPURAM, VIJAYAWADA - 02. V. CIT, GUNTUR. PAN NO. ADAPV 9928 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.L. NARASIMHA RAO ADV. DEPARTMENT BY : SHRI RAJAGOPAL & SHRI M. NARAYANA RAO DR DATE OF HEARING : 07/12/2016. DATE OF PRONOUNCEMENT : 23/12/2016. O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX, GUNTUR DAT ED 18/03/2014 UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 FOR T HE ASSESSMENT YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVES INCOME FROM BUSINESS, FILED HIS RETURN OF I NCOME FOR THE ASSESSMENT YEAR 2009-10 DECLARING TOTAL INCOME OF R S. 1,96,340/-, BESIDES AGRICULTURAL INCOME OF RS. 1,50,000/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 27/12/ 2011 DETERMINING TOTAL INCOME OF RS. 51,39,808/-, INTER ALIA MAKING ADDITIONS TOWARDS LONG TERM CAPITAL GAIN, TOWARDS TRANSFER OF CERTAIN LANDS TO M/S. VANPIC PVT. LTD. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE CARRIED THE 2 ITA NO. 414/VIZ/2014 MATTER TO THE FIRST APPELLATE AUTHORITY. THE COMMI SSIONER OF INCOME TAX (APPEALS) FOR THE REASONS RECORDED IN HIS ORDER DATED 12/06/2012, DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS LONG TERM CAPITAL GAINS BY HOLDING THAT THE LANDS TRANSFERRED BY THE ASSESSEE ARE NOT CAPITAL ASSETS WITHIN THE MEANING OF SECTION 2( 14) OF THE ACT. AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEAL S)S ORDER, THE REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRI BUNAL. THE TRIBUNAL IN ITA NO. 296/VIZ/2012, DATED 11/12/2015 DISMISSED THE APPEAL FILED BY THE REVENUE BY HOLDING THAT THE LANDS TRANSFERRE D BY THE ASSESSEE ARE AGRICULTURAL LANDS, USED FOR AGRICULTURAL PURPO SES CANNOT BE HELD AS CAPITAL ASSETS WITHIN THE MEANING OF SECTION 2(14) OF THE ACT EXIGIBLE FOR CAPITAL GAINS. 3 . THE COMMISSIONER OF INCOME TAX, GUNTUR ISSUED A SHOW-CAUSE NOTICE UNDER SECTION 263 OF THE ACT DATED 31/01/201 4 AND ASKED THE ASSESSEE AS TO WHY THE ASSESSMENT ORDER PASSED BY T HE ASSESSING OFFICER SHALL NOT BE REVISED UNDER THE PROVISIONS O F SECTION 263 OF THE ACT. THE COMMISSIONER OF INCOME TAX PROPOSED TO REV ISE THE ASSESSMENT ORDER FOR THE REASON THAT ON EXAMINATION OF THE ASSESSMENT RECORD, CERTAIN OMISSIONS AND COMMISSIONS WERE NOTI CED, WHICH RENDERED THE ASSESSMENT ORDER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IN TERMS OF SECTION 263 OF THE ACT. THE COMMISSIONER OF INCOME TAX IN THE SAID SHOW-CAUSE N OTICE OBSERVED THAT THE CONSIDERATION RECEIVED BY THE ASSESSEE TOW ARDS TRANSFER OF LANDS TO M/S. VANPIC PVT. LTD. SHOULD HAVE BEEN TRE ATED AS INCOME FROM OTHER SOURCES AND SHOULD HAVE BEEN TAXED AT N ORMAL RATES, WHEREAS THE ASSESSING OFFICER HAS CONSIDERED THE SA ME UNDER THE HEAD INCOME FROM CAPITAL GAINS. THE COMMISSIONER OF I NCOME TAX FURTHER OBSERVED THAT THE ASSESSEE HAS TRANSFERRED CERTAIN LANDS WHICH WERE ACQUIRED BY VIRTUE OF SALE AGREEMENT BY PAYING CONS IDERATION AS PER AGREEMENT. SINCE THE LANDS WERE ASSIGNED LANDS FRO M THE GOVERNMENT UNDER THE ANDHRA PRADESH ASSIGNED LANDS (PROHIBITIO N OF TRANSFERS) ACT, 3 ITA NO. 414/VIZ/2014 1997 ALIENATION OF ASSIGNED LANDS EVEN BY THE ASSIG NEES PROHIBITED. AS SUCH CONSIDERATION RECEIVED BY THE ASSESSEE TOWARDS TRANSFER OF LANDS IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCE S, BUT NOT UNDER THE HEAD INCOME FROM CAPITAL GAINS. THE ASSESSIN G OFFICER WITHOUT CONSIDERING THE RELEVANT FACTS TAXED THE RECEIPTS U NDER THE HEAD INCOME FROM CAPITAL GAINS WHICH RENDERED THE ASSESSMENT O RDER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. IN RESPONSE TO THE SHOW-CAUSE NOTICE DATED 31/01/2 014, THE ASSESSEE NEITHER APPEARED NOR FURNISHED ANY DETAILS . AS THERE WAS NO RESPONSE FROM THE ASSESSEE, ANOTHER LETTER DATED 10 /03/2014 WAS ISSUED POSTING THE CASE FOR HEARING ON 14/03/2014. ON THAT DAY ALSO NO RESPONSE FROM THE ASSESSEE AND HENCE, THE COMMIS SIONER OF INCOME TAX FINALIZED THE PROCEEDINGS, INITIATED UNDER SECT ION 263 OF THE ACT EX-PARTE AS PER THE MATERIAL AVAILABLE ON RECORD. THE COMM ISSIONER OF INCOME TAX OBSERVED THAT THE ASSESSEE HAS TRANSFERR ED CERTAIN LANDS AND THE OWNERSHIP OF WHICH WAS REST WITH THE GOVERN MENT AND THE ASSESSEE HAS TRANSFERRED ONLY POSSESSIONARY RIGHTS, BUT NOT ACTUAL OWNERSHIP RIGHTS ON THE LANDS. SINCE THE ASSESSEE HAD TRANSFERRED POSSESSIONARY RIGHTS, RESULTANT CONSIDERATION IS TA XABLE UNDER THE HEAD INCOME FROM OTHER SOURCES, BUT NOT UNDER THE HEAD INCOME FROM CAPITAL GAINS. SINCE THE ASSESSING OFFICER HAS NO T BROUGHT THIS INCOME TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES I N THE ASSESSMENT MADE UNDER SECTION 143(3), THE ASSESSMENT ORDER PAS SED BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PRE JUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, SET ASIDE THE ORDER P ASSED BY THE ASSESSING OFFICER AND DIRECTED HIM TO TAX THE SALE CONSIDERATION UNDER THE HEAD INCOME FROM OTHER SOURCES AND MAKING FRE SH ASSESSMENT AS PER THE PROVISIONS OF LAW. AGGRIEVED BY THE COMMIS SIONER OF INCOME TAXS ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4 ITA NO. 414/VIZ/2014 5. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBM ITTED THAT THE ISSUE IN APPEAL HAS ALREADY BEEN CONSIDERED BY THE ITAT IN PREVIOUS PROCEEDINGS IN ITA NO. 296/VIZ/2012 WHEREIN THE TRI BUNAL HELD THAT THE LANDS TRANSFERRED BY THE ASSESSEE ARE AGRICULTURAL LANDS, USED FOR AGRICULTURAL PURPOSES CANNOT BE HELD AS CAPITAL ASS ETS WITHIN THE MEANING OF SECTION 2(14) OF THE ACT EXIGIBLE FOR CA PITAL GAINS. SINCE THE ISSUE HAS ALREADY BEEN CONSIDERED BY THE TRIBUNAL, THE COMMISSIONER OF INCOME TAX ERRED IN ASSUMING THE JURISDICTION UNDER SECTION 263 TO REVISE THE ASSESSMENT ORDER. 6 . DEPARTMENTAL REPRESENTATIVE, ON THE OTHER SIDE, S UBMITTED THAT THE COMMISSIONER OF INCOME TAX RIGHTLY ASSUMED THE JURISDICTION TO REVISE THE ASSESSMENT ORDER AS THE ASSESSING OFFIC ER FAILED TO EXAMINE THE ISSUE OF TAXATION OF CONSIDERATION RECEIVED TOW ARDS TRANSFER OF LANDS UNDER THE HEAD INCOME FROM OTHER SOURCES. SINCE THE ASSESSEE HAS TRANSFERRED ONLY RIGHT ON THE LANDS, THE RESULTANT GAIN SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES, BUT NOT UNDER THE HEAD INCOME FROM CAPITAL GAINS. 7 . HAVING HEARD BOTH THE PARTIES AND CONSIDERED THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE OF TAXATION OF CONSI DERATION RECEIVED TOWARDS TRANSFER OF LANDS HAS BEEN CONSIDERED BY TH IS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 296/VIZ/2012 DATED 1 1/12/20105 AND HELD THAT THE LANDS TRANSFERRED BY THE ASSESSEE ARE AGRICULTURAL LANDS USED FOR AGRICULTURAL PURPOSES CANNOT BE CONSIDERED AS CAPITAL ASSETS WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. TH EREFORE, WE ARE OF THE VIEW THAT THE COMMISSIONER OF INCOME TAX WAS ERRED IN ASSUMING THE JURISDICTION TO REVISE THE ASSESSMENT ORDER UNDER T HE PROVISIONS OF SECTION 263 OF THE ACT, AS THE ASSESSMENT ORDER PAS SED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDIC IAL TO THE INTEREST OF THE REVENUE. THE ASSESSING OFFICER HAS CONSIDERED C ONSIDERATION RECEIVED TOWARDS TRANSFER OF LANDS UNDER THE HEAD C APITAL GAINS, WHICH 5 ITA NO. 414/VIZ/2014 IS, IN OUR OPINION, IN ACCORDANCE WITH LAW. SINCE THE ASSESSING OFFICER HAS TAKEN ONE OF THE PLAUSIBLE VIEW, WHICH WAS EXAM INED BY THIS TRIBUNAL AND TAKEN A VIEW THAT THE LANDS ARE AGRICU LTURAL LANDS NOT LIABLE FOR TAX, THERE IS NO PREJUDICE CAUSED TO THE REVENU E. HENCE, WE SET ASIDE THE ORDER PASSED BY THE COMMISSIONER OF INCOM E TAX UNDER SECTION 263 OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 8 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE STAND S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 23 RD DAY OF DECEMBER, 2016. SD/- SD/- (V. DURGA RAO) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD DECEMBER, 2016. VR/- COPY TO: 1. THE ASSESSEE. SRI VISWANADHAPALLI VENKATESWARA RAO, C/O S. PULLARAO & D.L. NARASIMHA RAO, ADVOCATE, D.NO. 33-7-3, IJJADAVARI V EEDHI, SEETHARAMPURAM, VIJAYAWADA - 02. 2. THE REVENUE - CIT, GUNTUR. 3. THE CIT, GUNTUR 4. THE CIT(A), GUNTUR. 5. THE D.R. 6. GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY I.T.A.T., VISAKHAPATNAM.