Jodhan Real Estate Development Co. Pvt.Ltd., JAIPUR V. ITO (Technical), JODHPUR

ITA 541/JODH/2008

• Counselvise Citation: 54123314 RSA 2008
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-09-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: RAJEEV PANDEY
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Depreciation; Revenue expenditure
• Section: 50C

Judgement Text

1 ITA 541-08 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 541/JODH/2008 ASSTT. YEAR : 2005-06. JODHAN REAL ESTATE DEVELOPMENT CO. VS. THE INCOME -TAX OFFICER, PVT. LTD., UMAID BHAWAN PALACE, (TECHNICAL) O/O CIT-1, JODHPUR. JODHPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJEEV PANDEY RESPONDENT BY : SHRI G.R. KOKANI DATE OF HEARING : 07.12.2011. DATE OF PRONOUNCEMENT : 15.12.2011. ORDER DATED : 15/12/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2005-06. 2. GROUND NOS. 1, 2 AND 9 WERE NOT PRESSED, THEREFO RE, THEY ARE DISMISSED AS NOT PRESSED. 3. GROUND NOS. 3 & 4 RELATE TO UPHOLDING ADDITION O F RS. 4,50,004/- OUT OF TOTAL OUTSTANDING LIABILITY AND TREATING THEM AS CEASED L IABILITIES. 4. THE ASSESSING OFFICER DISALLOWED THE LIABILITY B Y OBSERVING THAT THE LIABILITY SHOWN ON ACCOUNT OF MUNICIPAL TAX AT RS. 4,47,430/- , HOUSE TAX PAYABLE AT RS. 1,293/- 2 AND ENTERTAINMENT TAX AT RS. 1,281/- HAVE BEEN CEAS ED. THE CIT (A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THESE GROUNDS. IT IS SEEN THAT OUT OF MUNICIPAL TAX, ASSESSEE HAS PAID A SUM OF RS. 3,84,840/- ONLY ON 2 4.5.2007, COPY OF CHALLAN PAID BY ASSESSEE IS PLACED AT PAGE 14 OF THE PAPER BOOK. R EMAINING AMOUNT I.E. RS. 62,590/- HAS BEEN WRITTEN OFF BY ASSESSEE IN SUBSEQUENT YEAR AND HAS PAID TAX ON THIS AMOUNT. THEREFORE, ADDITION MADE DURING THE YEAR UNDER CONS IDERATION ON ACCOUNT OF THAT LIABILITY HAS BEEN CEASED WAS NOT JUSTIFIED AND ACCORDINGLY W E DELETE THE ADDITION. 6. GROUND NOS. 5 TO 8 RELATE TO HOLDING INCOME DERI VED BY ASSESSEE COMPANY BY SALE OF PLOT OF LAND UNDER THE HEAD LONG TERM CAPITAL GA IN OR INCOME FROM BUSINESS AS DECLARED BY ASSESSEE AND UPHOLDING APPLICABILITY OF SECTION 50C OF IT ACT ON ACCOUNT OF APPLYING LONG TERM CAPITAL GAIN. IN THIS WAY, THE ASSESSING OFFICER HAS DETERMINED THE LONG TERM CAPITAL GAIN AT RS. 46,66,004/-. 7. THE ASSESSEE HAS SHOWN LAND IN QUESTION AS STOCK IN TRADE SINCE LONG. HOWEVER, ASSESSING OFFICER DID NOT ACCEPT THE SAID STOCK IN LAND. IT WAS HELD BY HIM THAT THIS IS A CAPITAL ASSET AND FALLS UNDER THE CAPITAL GAIN HEAD . ACCORDINGLY HE COMPUTED THE CAPITAL GAIN ON SALE PROCEEDS SHOWN BY ASSESSEE AGAINST TRE AT THE SAME AS BUSINESS RECEIPT BY THE ASSESSEE. THE LD. CIT (A) HAS ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 8. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY THE TRI BUNAL IN FAVOUR OF THE ASSESSEE, COPY OF THE ORDER OF THE TRIBUNAL IS PLACED AT PAGES 25 TO 34 OF THE PAPER BOOK AND TRIBUNAL HAS TREATED THIS LAND IN QUESTION AS STOCK IN TRADE. F INDINGS OF THE TRIBUNAL HAS BEEN RECORDED 3 IN PARA 9 AT PAGE 6 OF ITS ORDER. THE TRIBUNAL FI NALLY OBSERVED THAT WE HOLD THAT THIS INTEREST HAS BEEN PAID DURING THE NORMAL COURSE OF BUSINESS OF REAL ESTATE AND EXHIBITION OF CINEMA STILL CONTINUED AND PAYMENT OF INTEREST I N RELATION TO ACQUIRING OF STOCK-IN- TRADE, BEING LAND AND BUILDING AT GURGAON, HAS TO B E TREATED AS REVENUE EXPENDITURE WHICH IS ALLOWABLE. THE MATTER ALSO REACHED BEFORE THE HONBLE HIGH COURT IN CASE OF WEALTH- TAX PROCEEDINGS. THE TRIBUNAL HAS ALLOWED THE ISSU E IN FAVOUR OF THE ASSESSEE BY HOLDING THAT SINCE THE LAND WAS STOCK-IN-TRADE AND, THEREFO RE, NO WEALTH-TAX IS APPLICABLE ON STOCK- IN-TRADE. THEREAFTER, ON APPEAL BEFORE HONBLE HIGH COURT BY DEPARTMENT, THE HONBLE HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE A SSESSEE. IT MEANS THE LAND IN QUESTION WAS TREATED AS STOCK-IN-TRADE AND, THEREFORE, THE S ALE PROCEEDS ON ACCOUNT OF SAME LAND HAS TO BE TREATED AS REVENUE RECEIPTS. 8.1. ON A SPECIFIC QUERY FROM THE BENCH, THE LD. C OUNSEL OF THE ASSESSEE HAS STATED THAT THE LAND IN QUESTION IS SAME LAND WHICH WAS ST ATED BY THE TRIBUNAL AS STOCK-IN-TRADE AND ALSO BY THE HONBLE HIGH COURT. SINCE THIS ISS UE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL AS WELL AS BY THE HONBLE JURISDICTIONAL H IGH COURT, THEREFORE, WE HOLD THAT ASSESSING OFFICER AND LD. CIT (A) WERE NOT JUSTIFIE D IN TREATING THE SAME LAND AS CAPITAL ASSET LIABLE FOR CAPITAL GAIN TAX. SINCE WE HAVE H ELD THAT THE LAND IN QUESTION WAS STOCK- IN-TRADE AND THE SALE PROCEEDS ARE OF REVENUE NATUR E, THEREFORE, PROVISIONS OF SECTION 50C ARE ALSO NOT APPLICABLE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ALLOW THIS GROUND AND DIRECT THE DEPARTMENT TO ACCEPT THE REVENUE REC EIPTS SHOWN BY ASSESSEE AS BUSINESS RECEIPTS. 9 GROUND NO. 10 IS CONSEQUENTIAL TO GROUND NOS. 5 T O 8 WHICH IS AGAINST NOT ALLOWING SET OFF OF BROUGHT FORWARD BUSINESS LOSS A ND DEPRECIATION. 4 10. SINCE WE HAVE HELD THE SALE CONSIDERATION OUT O F SALE OF PLOTS AS BUSINESS RECEIPTS, THEREFORE, SET OFF OF BROUGHT FORWARD BUS INESS LOSS AND DEPRECIATION IS ALLOWABLE AND ACCORDINGLY THE ASSESSING OFFICER IS DIRECTED T O ALLOW THE SAME AS PER PROVISIONS OF LAW. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. 12. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 .12.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JODHPUR, COPY FORWARDED TO :- JODHAN REAL ESTATE DEVELOPMENT CO. PVT. LTD., JODHP UR. THE ITO (TECHNICAL) O/O CIT-I, JODHPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 541/JODH/2008) BY ORDER, AR ITAT JODHPUR.