Khan Reshma Nikhat, Aurangabad V. Income-tax Officer,

ITA 507/PUN/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9482 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 23-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N HONAV AR ITA NO PUN; PUN A
• Assessee Lawyers: K SRINIVASAN
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / I TA NO. 1606 /PUN/2014 / ASSESSMENT YEAR : 2010 - 11 ABDULLA MEHBOOB KHAN 11B, KOHINOOR COLONY, PANCHAKKI ROAD, AURANGABAD - 431001 PAN : AUDPK7027J ....... / APPELLANT / V/S. INCOME TAX OFFICER, WARD - 2(3 ), AURANGABAD. / RESPONDENT . / ITA NO. 507/PUN/2016 / ASSESSMENT YEAR : 2010 - 11 KHAN RESHMA NIKHAT W/O - DR. AFZAL NOOR KHAN C/O - M.G.M. HOSPITAL, JALNA ROAD, AURANGABAD - 431 001 PAN : BEMPK9922E ....... / APPELLANT / V/S. INCOME TAX OFFICER, WARD - 2(3), AURANGABAD. / RESPONDENT APPELLANT BY : SHRI K. SRINIVASAN RESPONDENT BY : SHRI A.N HONAV AR 2 ITA NO. 1606 /PUN/2014 & 507/PUN/2016 A.Y. 2010 - 11 / DATE OF HEARING : 23.05.2017 / DATE OF PRONOUNCEMENT : 26. 05.2017 / ORDER PER SUSHMA CHOWLA , JM OUT OF TWO APPEALS, ITA NO. 1606/PUN/2014 IS FILED BY ASSESSEE, ABDULLA MEHBOOB KHAN AGAINST THE ORDER OF CIT(A), AURANGABAD DATED 20.06.2014 RELATING TO ASSESSMENT YEAR 2010 - 11 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). ANOTHER APPEAL BEING ITA NO. 507/PUN/2016 IS FILED BY THE ASSESSEE, KHAN RESHMA NIKHAT AGAINST THE ORDER OF CIT(A) - 2, AURANGABAD DATED 11.02.2016 RELATING TO ASSESSMENT YEAR 2010 - 11 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE AC T). 2. THE ASSESSEE IN ITA NO. 1606/PUN/2014 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ASSESSING OFFICER AND CIT(A) ERRED IN COMING TO THE CONCLUSION THAT INCOME ON TRANSFER OF PROPERTY IS ASSESSABLE AS C APITAL GAINS AND NOT AS PROFITS OF BUSINESS IGNORING EVIDENCES ON RECORD AND SUBMISSION BEFORE THEM AND THEIR ORDERS MAY BE SET ASIDE AND SUITABLE RELIEF GRANTED. 2. THE ASSESSING OFFICER AND CIT(A) HAVE HELD INCOME AS CAPITAL GAINS SOLELY WITH THE INTENTI ON TO INVOKE PROVISION OF SECTION 50C OF THE ACT AND THEIR FINDINGS MAY BE SET ASIDE. 3. WITHOUT PREJUDICE TO ABOVE EVEN IF INCOME WERE TO BE HELD AS CAPITAL GAINS AND SECTION 50C ARE FOUND TO BE APPLICABLE, THE ASSESSING OFFICER ERRED IN NOT REFERRING THE MATTER TO THE DVO AS REQUIRED OF HIM AND HIS ESTIMATING VALUE AND CIT(A) CONFIRMING SUCH ACTION BE HELD AS BAD IN LAW AND SUITABLE DIRECTIONS ISSUED TO GRANT RELIEF TO THE APPELLANT. 3. BOTH THE APPEALS CONNECTED TO THE DIFFERENT ASSESSEE ON SIMILAR ISSUE PER HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO FACTS AND ISSUE IN ITA NO.1606/PUN/2016. 3 ITA NO. 1606 /PUN/2014 & 507/PUN/2016 A.Y. 2010 - 11 4. THE ISSUE RAISED IN THE PRESENT APPEAL IS COMPUTATION OF INCOME ON SALE OF LAND BY THE ASSESSEE. THE GRIEVANCE OF THE ASSESSEE IS THAT THE SAID PROFIT /LOSS IS TO BE ASSESSED AS INCOME FROM BUSINESS BEING ADVENTURE IN THE NATURE OF TRADE W HEREAS THE ASSESSING OFFICER HAS COMPUTED THE INCOME UNDER INCOME FROM SHORT TERM CAPITAL G AIN. THE ASSESSING OFFICER HAS INVOKED THE PROVISION OF SECTION 50C OF THE ACT AND ADOPTED THE STAMP VALUATION OF S ALE CONSIDERATION ON THAT BASIS, COMPUTED GAIN IN THE HANDS OF THE ASSESSEE. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE DECLARED TOTA L INCOME OF RS. 1,46,133/ - . THE ASSESSEE AS AN INDIVIDUAL HAD SHOWN INCOME FROM COACHING CLASSES, COMMISSION AND AGRICULTURAL INCOME DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE ALONG WITH THREE OTHER CO - OWNERS HAD SOLD IMMOVABLE PROPERTY I.E AGRICULT URAL LAND AT AURANGABAD FOR TOTAL CONSIDERATION OF RS.17,00,000/ - . THE STAMP VALUATION AUTHORITY HAD ADOPTED THE MARKET VALUE OF THE PROPERTY AT RS. 68,25,000/ - . THE ASSESSEE EXPLAINED THAT THE SAID LAND WAS PURCHASED ON 28.01 .08 AND WAS SOLD ON 22.07.2009 AND THERE WAS A SHORT TERM CAPITAL LOSS OF RS. 2,320/ - WHICH WAS ON 22.07.2009 AND THERE WAS A SHORT TERM CAPITAL LOSS OF RS. 2,320/ - WHICH WAS SHOWN IN CAPITAL ACCOUNT BUT NOT IN THE COMPUTATION OF INCOME. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE AS TO WHY THE SALE CONSIDERATION SHOULD NOT BE TAKEN AT RS. 68,25,000/ - UNDER SECTION 50C (1) OF THE ACT AND SHORT TERM CAPITAL GAIN SHOULD BE COMPUTED. THE PLEA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE SAID LAND SOLD BY THE ASSESSEE WAS ITS ADVENTURE IN THE NATURE OF TRADE AND HENCE, PROVISION S OF SECTION 50C (1) OF THE ACT WAS NOT APPLICABLE. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSING OFFICER RECORDED STATEMENT OF THE ASSESSEE ON VARIOUS ISSUES AND REJECTED CLAIM OF THE ASSE SSEE. THE PLEA OF THE ASSESSEE WA S THAT THE LAN D PURCHASED BY IT, COULD NOT BE CONVERTED INTO N.A LAND BECAUSE OF THE PR ESENCE OF NALA AND HENCE, NO PER MISSION FROM THE AUTHORITIES . THE ASSESSING OFFICER COMPUTED LONG TERM CAPITAL GAIN BY TAKING SALE CONSIDERATION OF RS. 68,25,000/ - AND WORKED OUT SH ORT TERM CAPITAL GAIN AT RS. 18,85,837/ - . THE CIT(A) 4 ITA NO. 1606 /PUN/2014 & 507/PUN/2016 A.Y. 2010 - 11 UPHELD THE ORDER OF THE ASSESSING OFFICER. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) BEFORE THE TRIBUNAL . 6. ON PERUSAL OF THE RECORD AND AFTER HEARING BOTH T HE AUTHORIZED REPRESENTATIVES, LIMITED ISSUE ARISING IN THE PRESENT APPEAL OF THE ASSESSEE REGARDING GAIN/LOSS ON SALE OF ASSESSEES SHARE IN AGRICULTURAL LAND AT AURANGABAD. THE ASSESSEE ALONG WITH OTHER THREE PERSONS HAD PURCHASED THE LAND ON 28.01.08 AT RS. 14,51,000/ - . THE EXPENSES INCURRED IN CONNECTION TO TRANSFER OF RS. 2,55,300/ - AND AGGREGATED COST WAS RS. 17,06,300/ - . THE TOTAL LAND PURCHASED IS 95R AND SHARE OF THE ASSESSEE IS 35R. THE SAID LAND WAS SOLD ON 22.07.09 FOR RS. 17,00,000/ - AND THE MARKET VALUE AS PER STAMP VALUAT ION AUTHORITY WAS 68,25,000/ - . IT MAY BE POINTED OUT HERE IN ITSELF THAT MARKET VALUE AS PER STAMP VALUATION AU THORITY ON THE DATE OF PURCHASE WAS RS. 45,00,000/ - . THE ASSESSEE CLAIMS THAT IT WAS EN GAGED IN THE BUSINESS OF EARNING COMMISSION ON PROPERTY TR ANSACTION S AND THIS PARTICULAR LAND WAS PURCHASED FOR SUB - PLOTTING AND MAKING BUILDING THERETO. HOWEVER, THERE WAS NULLA ON THE SAID LAND BECAUSE OF WHICH THE SAID AUTHORITY REFUSED TO ALLOW SUB - PLOTTING OF LAND AND DOING BECAUSE OF WHICH THE SAID AUTHORITY REFUSED TO ALLOW SUB - PLOTTING OF LAND AND DOING THE BUSINESS OF REAL ESTATE. THE ASSESSEE ALONG WITH OTHERS THUS, DECIDED TO SELL THE PROPERTY WITHI N SHORT SPAN OF TIME. IN THE EV ENT EXERCISE OF THE ASSESSEE WAS AS ADVENTURE IN THE NATURE OF TRADE, WHEREIN THE ASSESSEE ALONG WITH OTHERS AIMED TO MAKE SOME PROFIT ON THE SAID LAND. HOWE VER, BECAUSE OF THE CERTAIN CIRCUMSTANCES, THE INTENTION OF THE ASSESSEE TO SUB - PLOT THE LAND AND SELL THE SAID LAND BY MAKING PROFIT COULD NOT BE ACHIEVED AND HENCE, LOSS IN THE TRANSACTION. 7. IN VIEW OF THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, TH ERE IS NO MERIT IN THE STAND OF THE ASSESSING OFFICER THAT THE GAIN IS TO BE ASSESSED AS SHORT TERM CAPITAL GAIN S AND ACCORDINGLY, THE SAID STAND TAKEN BY THE ASSESSING OFFICER IS THUS REJECTED. SIN CE THE ASSESSEE HAD CARRIED OUT THE SAID TRANSACTION BEING ADVENTURE IN THE NATURE OF TRADE THEN PROFIT/LOSS ARISING THERE FROM IS TO BE ASSESSED AS INCOME FROM BUSINESS AND ONCE IT IS SO ASSESSED THEN THERE IS NO MERIT IN APPLYING THE PROVISION SECTION 5 ITA NO. 1606 /PUN/2014 & 507/PUN/2016 A.Y. 2010 - 11 50C (1) OF THE ACT. IN THIS REGARD, I FIND SUPPORT FROM THE D ECISION IN SHRI KISHOR TARACHAND JAIN VS. ITO, IN ITA NO. 332/PN/2016 RELATING TO ASSESSMENT YEAR 2011 - 12 DATED 17.08.2016. ACCORDINGLY, GROUND O F APPEAL RAISED BY THE ASSESSEE IS THUS ALLOWED. 8. THE ASSESSEE IN ITA NO. 507/PUN/2016 IS ONE OF THE CO - OWNERS OF THE SAI D PROPERTY. ACCORDINGLY, MY DECI SION IN I TA NO. 1606/PUN/2014 WOULD APPLY MUTATIS - MUTANDIS TO ITA NO. 507/PUN/2016. 9 . IN THE RESULT, BOTH THE APPEALS OF DIFFERENT ASSESSEE ARE ALLOWED. ORDER PRO NOUNCED ON 26 TH DAY OF MAY , 201 7 . SD/ - ( SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE; / DATED : 26 TH MAY , 2017 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS) , AURANGABAD 4. THE CIT ( APPEALS ) - 2 , AURANGABAD. 5. THE CIT, AURANGABAD . 6. THE PR. CIT - 2, AURANGABAD. 7 . , , - , / DR, ITAT, SMC BENCH, PUNE. 8 . / GUARD FILE. // TRUE COPY // / BY ORDER, /ASSISTANT REGISTRAR , / ITAT, PUNE 6 ITA NO. 1606 /PUN/2014 & 507/PUN/2016 A.Y. 2010 - 11