BHANWAR LAL GEHLOT, Jaipur V. ITO, Kishangarh

ITA 495/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5392 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 02-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Cost of acquisition; Capital receipt
• Section: 80C; 50C; 2(14); 148

Judgement Text

1 ITA NO.495/JP/2014 IN THE INCOME TAX APPELLATE TRIBUNAL: JAIPUR BENCH [SMC] : JAIPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER I.T.A. NO. 495/JP/2014 ASSESSMENT YEAR: 2008-09 SHRI BHANWAR LAL GEHLOT, VINAYAK NAGAR C, JAIPUR ROAD, MADANGANJ, KISHANGARH, AJMER PAN:AHHOG5494J VS THE INCOME TAX OFFICER, KISHANGARH (APPELLANT) (RESPONDENT) APPELLANT BY SHRI MANISH AGARWAL, AR RESPONDENT BY SHRI RAJ MEHRA, JCIT DATE OF HEARING: 03-03-2016 DATE OF PRONOUNCEMENT: 9-03-2016 O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M THE ORDER OF THE LEARNED CIT (A), AJMER DATED 30-04-2014 FOR ASSESSM ENT YEAR 2008-09. THE GROUNDS RAISED ARE REPRODUCED BELOW:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.5,95 ,000/- ON ACCOUNT OF INCOME FROM SHORT TERM CAPITAL GAIN ARBITRARILY WIT HOUT APPRECIATING THE FACTS AND SUBMISSION MADE BY THE ASSESSEE, THUS THE ADDITION SO SUSTAINED DESERVES TO BE DELETED IN TOTO. 1.1 THAT THE LD. CIT (A) HAS FAILED TO APPRECIATE T HE FACT THAT LAND UNDER QUESTION WAS HELD AS STOCK IN TRADE AND NOT A CAPIT AL ASSETS WITHIN THE MEANING OF SECTION 2(14) AND RECEIPTS FROM SALE OF LAND WAS TRADING RECEIPTS ON WHICH PROVISIONS OF SECTION 50C ARE NOT APPLICABLE THEREFORE SHORT TERM CAPITAL GAIN SO COMPUTED DESERVES TO BE HOLD BAD IN LAW AND ADDITION SUSTAINED DESERVES TO BE DELETED. 1.2 THAT THE LD. CIT (A) HAS IGNORED THE FACT THAT ASSESSEE IS PROPERTY DEALER AND EARNING INCOME FROM SALE AND PURCHASE OF PROPERTIES AND EARNING COMMISSION INCOME AND EVEN A SINGLE AND ISO LATED TRANSACTION 2 ITA NO.495/JP/2014 IN THE ASSESSEES LINE OF BUSINESS CAN BE HELD TO B E CAPABLE OF FALLING WITHIN THE DEFINITION OF BUSINESS, THEREFORE TREATI NG THE BUSINESS RECEIPTS AS CAPITAL RECEIPTS MERELY ON ASSUMPTION AND PRESUM PTIONS DESERVES TO BE HOLD BAD IN LAW AND CONSEQUENT ADDITION SUSTAINE D DESERVES TO BE DELETED. 1.3 THAT THE LD. CIT (A) HAS FURTHER FAILED TO APP RECIATE THAT THE LAND WAS SOLD WITHIN A SHORT PERIOD OF SIX MONTHS AND THE IN TENTION FOR PURCHASE THE SAME WAS TO DO BUSINESS THUS THE TRANSACTION IS IN THE NATURE OF ADVENTURE IN THE NATURE OF TRADE AND THEREFORE CORR ESPONDING SALE IS BUSINESS ACTIVITY AND THE PROFIT DESERVES TO BE ASS ESSED AS BUSINESS INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CA SE THE LD. CIT (A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE LD. A O IN TREATING THE 50% OF THE AGRICULTURE INCOME OF RS.28,060/- AS INCOME FROM OTHER SOURCES MERELY ON ASSUMPTION AND PRESUMPTIONS ARBITRARILY W ITHOUT APPRECIATING THE FACTS AND SUBMISSION MADE BY THE A SSESSEE, THUS THE ADDITION SO SUSTAINED DESERVES TO BE DELETED IN TOT O. 2. THE FACTS IN BRIEF AS EMERGED FROM THE CORRESPON DING ASSESSMENT ORDER PASSED U/S 143 (3)/147 OF THE IT ACT DATED 31-10-20 11 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY HAD SOLD AGRICULTURAL LAND FOR A DECLARED CONSIDERATION OF RS.8,00,000/-, HOWEVER, THE REGISTRAR HAS VALUED T HE PROPERTY FOR STAMP DUTY PURPOSE AT RS.12,12,000/-. THE PROCEEDINGS WERE INI TIATED BECAUSE OF THE REASON THAT THE ASSESSEE HAD NOT FILED THE INCOME TAX RETU RN TO DISCLOSE CAPITAL GAIN. THE AO HAS ALSO MENTIONED THAT IN SOME OTHER CASE, THE AGRICULTURAL LAND WAS HELD AS CAPITAL ASSET. IN COMPLIANCE OF THE NOTICE U/S 14 8 OF THE ACT A RETURN WAS FILED DECLARING THE INCOME AS UNDER:- THE ASSESSEE HAS NOT FILED HIS RETURN OF INCOME U/ S 139(1) OF THE I. T. ACT, 196. AFTER RECEIVING NOTICE U/S 148 OF THE I. T. ACT, 1961, THE ASSESSEE HAS FILED RETURN OF INCOME ON 22/12/2010 DECLARING INCOME AT RS.56,520/- UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS AND P ROFESSION AND AGRICULTURAL INCOME OF RS.56,120/-. THE ASSESSEE HA S SHOWN INCOME AS UNDER:- PROFITS AND GAINS FROM BUSINESS AND PROFESSION 97,375 INCOME FROM BROKERAGE AND PROPERTY DEALING 97,375 97,375 INCOME FROM OTHER SOURCES 9,140 GROSS TOTAL INCOME 1,06,515 3 ITA NO.495/JP/2014 LESS: DEDUCTION UNDER CHAPTER VI-A 50,000 TOTAL INCOME 56,515 TOTAL INCOME ROUNDED OFF U/S 288A 56,520 AGRICULTURAL INCOME 56,120. THE ASSESSEE HAS ALSO FURNISHED THE TRADING ACCOUNT AND PROFIT & LOSS ACCOUNT ALONG WITH THE RETURN AS UNDER: THE ASSESSEE HAS SHOWN TRADING ACCOUNT AND PROFIT AND LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION AS UNDER:- TRADING ACCOUNT PARTICULARS AMOUNT PARTICULARS AMOUNT TO OPENING STOCK 7,05,950 BY SALE OF PROPERTY 8,00,000 TO GROSS PROFIT 1,44,020 BY INCOME FROM BROKERAGE 49,970 TOTAL 8,49,970 TOTAL 8,49,970 PROFIT AND LOSS ACCOUNT PARTICULARS AMOUNT PARTICULARS AMOUNT TO CONVEYANCE EXPENSES 8,445 BY GROSS PROFIT 1,44,020 TO GENERAL EXPENSES 7,700 TO INTEREST AND OTHERS 1,680 TO PETROL EXPENSES 17,355 TO TELEPHONE EXPENSES 5,480 TO TRAVELLING EXPENSES 5,985 TO NET PROFIT 97,375 TOTAL 1,44,020 TOTAL 1,44 ,020 THE ASSESSEE HAS CLAIMED THAT HE WAS DEALING IN PUR CHASE AND SALE OF LAND AS A PROPERTY DEALER. IN SUPPORT OF PURCHASE AND SALE OF LAND FOLLOWING DETAILS WERE FURNISHED:- S. NO. DATE DETAILS OF PROPERTY PURCHASE /SALE AMOUNT (RS.) 1. 12/01/200 7 AGRICULTURAL LAND 10 BIGHA AND 10 BISWANSI KHASRA NO.683, TABJI, AJMER PURCHASE 6,15,000/- 2. 04/06.200 7 AGRICULTURAL LAND 10 BIGHA AND 10 BISWANSI KHASRA NO.683 TABJI, AJMER SALE 8,00,000/- 3. 07/06/201 0 AGRICULTURAL LAND RAKBA 0-08-00 KHASRA NO.813/2 BANJAD DOYAM UDAIPUR KALAN (SILORA) PURCHASE 1,00,000/- 4. 03/12/201 0 INDUSTRIAL CONVERED LAND RAKBA 08 BISWA (647.50 SQ. MTRS.), KHASRA NO.813/2, UDAIPUR KALAN (SILORA), TEHSIL-KISHANGARH SALE 2,59,000/- 4 ITA NO.495/JP/2014 THEREFORE, THE CONTENTION WAS THAT ON ONE HAND, THE ASSESSEE HAS CLAIMED THAT THE TRANSACTION IN QUESTION WAS THE BUSINESS TRANSA CTION BECAUSE THE ASSESSEE HAD CARRIED THE BUSINESS AS PRESCRIBED U/S 2(13) OF THE ACT, HOWEVER, ON THE OTHER HAND, THE AO HAS HELD THAT THE LAND IN QUESTI ON WAS A CAPITAL ASSET AS PRESCRIBED U/S 2 (14) OF THE ACT. THEREFORE, THE AS SESSEE WAS SUBJECTED TO TAX AS CAPITAL GAIN ON THE SAID TRANSACTION. FINALLY THE A O HAS COMPUTED THE SHORT TERM CAPITAL GAIN AS UNDER:- IN REPLY, THE ASSESSEE HAS STATED SOME WRONG FACTS BECAUSE THE RETURN WAS NOT FILED SU-MOTO. THEREFORE, THE SUBMISSION OF THE ASSESSEE THAT THE PROPERTY WAS SHOWN IN STOCK IN TRADE IS WRONG. THE ASSESSEE IS NOT MAINTAINING ANY OFFICE; NO DETAILS OF COMMISSION RE CEIPTS ARE FILED. ONLY AFFIDAVITS OF SH. BALJEET MUSALMAN S/O OF SH. ANOOP KHAN ARE FILED. CONSIDERING THE FACTS OF THE CASE IT IS CLEAR THAT THE ASSESSEE HAS PURCHASED THE PROPERTY FOR INVESTMENT PURPOSE AND S OLD THE SAME AFTER PERIOD OF FIVE MONTHS. THEREFORE, THE PROPERTY IS T REATED AS CAPITAL ASSET AND NOT STOCK IN TRADE. THE CAPITAL GAIN IS COMPUTE D AS UNDER- SALES CONSIDERATION RECEIVED AS ON 04/06/2007 RS.8, 00,000/- VALUE ADOPTED BY STATE AUTHORITIES U/S 50C RS.12,10,000/ - LESS: PURCHASE COST AS ON 12/01/2007 RS.6,15,000/ - SHORT TERM CAPITAL GAIN RS.5,95,000/- 8. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, THE LEARNED CIT (A) HAS CONFIRMED THE FINDINGS OF THE A O. 9. IN THE LIGHT OF THE ABOVE BRIEF BACKGROUND I HAV E HEARD BOTH THE SIDES. THE LEARNED AR, MR. MANISH AGARWAL HAS FURNISHED A WRITTEN SUBMISSION. THE RELEVANT PORTION IS EXTRACTED HEREIN BELOW:- BRIEF FACTS PERTAINING TO THESE GROUNDS OF APPEAL ARE THAT, DURING THE F. Y. 2006-07(RELEVANT TO A. Y. 2007-08) ON 12.01.2007 , THE ASSESSEE HAD PURCHASED AN AGRICULTURAL LAND ADMEASURING 3 BIGHA BISWA SITUATED AT KHASRA NO.683, VILLAGE TABIJI, AJMER FOR A CONSIDER ATION OF RS.6,15,000/- WITH THE INTENTION TO HOLD IT AS STOCK-IN-TRADE AND ACCORDINGLY, THE SAME WAS SHOWN AS STOCK IN TRADE WHICH FACT EMERGES FROM THE ASSESSMENT ORDER AS WELL WHEREIN, IT HAS BEEN ADMITTED BY THE LD. AO THAT THE 5 ITA NO.495/JP/2014 ASSESSEE HAS TREATED THE SAID LAND AS OPENING STOCK . THEREAFTER, DURING F. Y. 2007-08 (RELEVANT TO YEAR UNDER APPEAL), ON 04.0 6.2007 I.E. AFTER A GAP OF JUST 6 MONTHS, ASSESSEE SOLD THE SAID LAND FOR A CONSIDERATION OF RS.8,00,000/- AND FURTHER EARNED BROKERAGE OF RS.49 ,970/- AND AFTER CLAIMING CERTAIN INCIDENTAL EXPENSES DECLARED BUSIN ESS PROFIT OF RS.97,375/-. HOWEVER, UNDER THE BONA FIDE BELIEF TH AT THE INCOME OF ASSESSEE BEING BELOW TAXABLE LIMIT, THERE WAS NO NE ED TO FILE RETURN OF INCOME THE ASSESSEE DID NOT FILE RETURN OF INCOME. HOWEVER, AS AND WHEN THE NOTICE U/S 148 WAS RECEIVED BY ASSESSEE, IN COM PLIANCE TO THE SAME, THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING I NCOME OF RS.56,120/- (GROSS INCOME RS.1,06,515/- LESS DEDUCTION U/S 80C RS.50,000/-) AND FURTHER DECLARED AGRICULTURAL INCOME OF RS.56,120/ -. RELIANCE WAS ALSO PLACED ON THE DECISION OF VENKATA SWAMI NAIDU & CO (G) VS. CIT 35 ITR 594 AND CIT VS ALLU ARVIND BABU 350 ITR 387. 10. FROM THE SIDE OF THE REVENUE, THE LEARNED DR, M R. RAJ MEHRA APPEARED AND PLACED RELIANCE ON THE ORDERS OF THE REVENUE AU THORITIES AND PLEADED THAT AN ISOLATED TRANSACTION OF PURCHASE AND SALE OF LAN D WHICH WAS HELD AS AN INVESTMENT WAS NOTHING BUT A CAPITAL ASSET. ACCORDI NG TO THE LEARNED DR, THE TRANSACTION WAS RIGHTLY TAXED AS CAPITAL GAIN. 11. IN MY CONSIDERED OPINION ONCE THE ADMITTED FACT UAL POSITION IN RESPECT OF THE IMPUGNED TRANSACTION WAS THAT THE PROPERTY IN Q UESTION WAS HELD FOR A BRIEF PERIOD OF ABOUT SIX MONTHS AND THE ASSESSEE HAS FUR NISHED DETAILS OF VARIOUS OTHER LAND PURCHASED IN THE PAST AS WELL AS IN THE SUBSEQUENT YEAR, THEREFORE, PRIMA FACIE, IT IS DIFFICULT TO HOLD THAT THE ASSES SEE WAS NOT DEALING IN LAND TRANSACTION. AS DEFINED U/S 2(13) OF THE ACT BUSINE SS INCLUDES ANY TRADE, COMMERCE OR ANY ADVENTURE IN NATURE OF TRADE. AT TH IS POINT IT IS ALSO WORTH TO MENTION THAT THE DEFINITION AS PRESCRIBED U/S 2(13) OF THE ACT IS AN INCLUSIVE DEFINITION, THEREFORE, ALL SUCH ACTIVITIES WHICH PR IMA FACIE APPEARS TO BE IN THE NATURE OF TRADE CAN BE HELD AS BUSINESS ACTIVITY. I T IS ALSO WORTH TO MENTION THAT ON ONE HAND THE AO HAS REJECTED THE CLAIM OF BUSINE SS ACTIVITY OF THE ASSESSEE AND SIDE BY SIDE ALSO REJECTED THE SALE CONSIDERATI ON DECLARED BY THE ASSESSEE BY 6 ITA NO.495/JP/2014 INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. SUCH TYPE OF ISSUES ALWAYS REMAINS CONTROVERSIAL AND, THEREFORE, IT IS NECESSA RY TO DECIDE EACH CASE ON ITS OWN FACTS. SUCH TYPE OF CONTROVERSY CAN ALSO BE DEC IDED AFTER CONSIDERING THE INTENTION OF THE ASSESSEE AND THE CIRCUMSTANCES OF THE CASE SO AS TO EXAMINE WHETHER IT WAS IN THE NATURE OF TRADE OR NOT. I AM OF THE CONSIDERED OPINION THAT UNDER THE TOTALITY OF THE FACTS AS DISCUSSED ABOVE, THE ASSESSEE CAN BE HELD AS A DEALER IN PURCHASE AND SALE OF LAND. RELIANCE IS PL ACED ON THE DECISION CITED BY THE ASSESSEE. AS A RESULT, THE VIEW TAKEN BY THE RE VENUE AUTHORITIES IS HEREBY REVERSED AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF MARCH, 2016. SD/- (MUKUL K. SHRAWAT) JUDICIAL MEMBER JAIPUR, DATED: 9 TH MARCH, 2016 LAK LAK LAK LAKSHMIKANT DEKA/SR. PS SHMIKANT DEKA/SR. PS SHMIKANT DEKA/SR. PS SHMIKANT DEKA/SR. PS COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T., CONCERNED 4. CIT ( APPEALS), JAI PUR. 5. D.R., ITAT, JAIPUR. 6. GUARD FILE TRUE C OPY BY ORDER ASSISTANT REGISTRA R, INCOME TAX APPELLATE TRIBUNA L, JAIPUR BENCH, JAIPUR.