ACIT,Circle-4, Kolkata, Kolkata V. M/S Sree Kamakhya Tea Co. Pvt.Ltd., Kolkata

ITA 555/KOL/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3409 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Department
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 10-04-2012
• Court: TRIBUNAL
• Department Lawyers: S S ALAM
• Keywords: Capital asset; Depreciation; Cost of acquisition; Valuation report
• Section: 2(14)

Judgement Text

ITA NO.555/KOL/2012 M/S.SREE KAMAKHYA TEA CO.PVT.L TD.. A./Y.2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.555/KOL/2012 ASSESSMENT YEAR : 2006-07 A.C.I.T., CIRCLE-4, -VERSUS- M/S.SREE KAMAKHYA TE A CO.PVT.LTD. KOLKATA KOLKATA (PAN:AAECS 4245 E) (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S.S.ALAM, JCIT, SR.DR FOR THE RESPONDENT : NONE DATE OF HEARING : 07.12.2015. DATE OF PRONOUNCEMENT :.20.01.2016. ORDER PER SHRI N.V.VASUDEVAN, JM : THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 21.12.2011 OF CIT(A) IV, KOLKATA, RELATING TO AY 2006-07. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READS AS FOLLOWS :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) HAS ERRED IN LAW IN DIRECTING THE A.O TO DELETE THE ADDITION OF RS.2,46 ,00,000/- FROM INCOME FROM OTHER SOURCE AND TREAT RS.50,00,210/- AS LONG TERM CAPITA L LOSS ARISING FROM TRANSFER OF LAND SINCE THE ASSESSEES CLAIM WAS NOT SUBSTANTIATED CO NSEQUENT UPON THE FACT THAT A REQUEST WAS MADE BY THIS OFFICE TO M/S TUSHIT BUILDERS PVT. LTD. BUYER COMPANY TO FURNISH INFORMATION IN REGARD TO PURCHASE OF PROPERTY BUT N O RESPONSE HAS BEEN MADE AND EVEN BEFORE THE LD.CIT(A) THE SAID COMPANY DID NOT SUBMI T ANY SUCH INFORMATION. 3. THE ASSESSEE IS A COMPANY. IT CARRIES ON BUSINE SS OF GROWING AND MANUFACTURING OF TEA. THE GROUND OF APPEAL RAISED BY THE REVENUE RELATES TO TREATMENT OF PROFIT ON SALE OF LAND BY THE AO AS INCOME FROM OTHER SOURCES. THE FACTS RELEVANT TO THE AFORESAID GROUND ARE THAT THE ASSESSEE DURIN G THE PREVIOUS YEAR I.E., IN JUNE, 2005, SOLD A PIECE OF LAND WITH A TEMPORARY STRUCTU RE, WHICH WAS ADJACENT TO ITS REGISTERED OFFICE AND UNDER THE SAME PREMISES AT 4, HASTINGS PARK ROAD, KOLKATA ITA NO.555/KOL/2012 M/S.SREE KAMAKHYA TEA CO.PVT.L TD.. A./Y.2006-07 2 700027 FOR A SALE CONSIDERATION OF 2.62 CRORES. TH E ASSESSEE HAD ACQUIRED THE PROPERTY IN QUESTION ABOUT 40 YEARS BACK FOR RS.16 LACS. THE PROFIT ON SALE OF THE PROPERTY WAS SHOWN AS INCOME IN THE ACCOUNTS. THE AO TREATED BY HIS ORDER PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (ACT), DATED 30-12-2008 HELD SUCH PROFIT AS INCOME FROM OTHER SOURCES. 4. BEFORE CIT(A), THE ASSESSEE SUBMITTED THAT WHAT WAS SOLD WAS LAND AND THE SAME WAS NOT A DEPRECIABLE ASSET NOR WAS IT PART OF STOC K IN TRADE OF THE ASSESSEE. SINCE THE PROPERTY IN QUESTION WAS A CAPITAL ASSET IN THE HAN DS OF THE ASSESSEE, ANY GAIN ARISING OUT OF TRANSFER OF A CAPITAL ASSET HAD TO BE ASSESS ED UNDER THE HEAD CAPITAL GAINU/S.45 OF THE ACT. THE ASSESSEE GAVE A CALCUL ATION OF LONG TERM CAPITAL LOSS ON SALE OF THE PROPERTY IN QUESTION AS FOLLOWS: SALE CONSIDERATION OF LAND IN JUNE 2005 RS.2,62 ,00,000 LESS: COST OF ACQUISITION (PURCHASED FOR RS.16 LACS ) MARKET VALUE AS ON 28-03-05 AS PER REGISTERED VALUER'S REPORT DT 27-07-06 - RS.3,0L,33,000 VALUE AS ON 31-03-2006 - ( 30133000 / 480) X 497 R S.3,12,00,210 LONG TERM CAPITAL LOSS RS. 50,00,210 5. THE ASSESSEE ACCORDINGLY PLEADED BEFORE CIT(A) THAT THE ADDITION OF RS.2.46 CRORES UNDER THE HEAD INCOME FROM OTHER SOURCES SHO ULD BE DELETED AND THE LONG TERM CAPITAL LOSS FOR RS.50,00,210 SHOULD BE TREATE D UNDER THE HEAD CAPITAL GAIN AND BE ALLOWED TO BE CARRIED FORWARD IN ACCORDANCE WITH LAW. 6. THE CIT(A) ON A CONSIDERATION OF THE SUBMISSION S OF THE ASSESSEE AND REMAND REPORT OF THE AO ON THE ABOVE ASPECT FILED BEFORE C IT(A) WAS OF THE VIEW THAT THERE WAS NO DENIAL OF THE FACT THAT THE PROPERTY IN QUES TION WAS LAND WHICH HAD BEEN SOLD AND THE CONSIDERATION AS WELL AS THE COST OF ACQUIS ITION WERE NOT IN DISPUTE. WHAT WAS IN DISPUTE WAS ONLY THE CHARGEABILITY UNDER A PARTI CULAR HEAD. THE CIT(A) FOUND THAT THE AO HAD ACCEPTED THE CLAIM OF LONG TERM CAPITAL GAIN FOR THE ONLY REASON THAT BECAUSE THE CONFIRMATORY LETTER FROM THE BUYER WAS NOT RECEIVED. THE CIT(A) FOUND ITA NO.555/KOL/2012 M/S.SREE KAMAKHYA TEA CO.PVT.L TD.. A./Y.2006-07 3 THAT THE ENTIRE TRANSACTION WAS TRANSPARENT AND MADE BY CHEQUES/BANK DRAFTS AND THE DOCUMENTS WERE DULY REGISTERED WITH THE REGISTRAR O F ASSURANCES. THE CIT(A) WAS OF THE VIEW THAT FROM THE EVIDENCE ON RECORD IT WAS CLEAR THAT THERE WAS NOTHING ON RECORD TO SHOW OR PROVE THAT THE TRANSACTION IN QUESTION WAS NOT GENUINE. THE CIT(A) WAS ALSO OF THE VIEW THAT LAND WAS NOT A DEPRECIATION ASSET AND THEREFORE AND WAS NOT INCLUDED AS STOCK IN TRADE, THUS CLEARLY EVIDENCING THAT THE LAND WAS WITHOUT ANY DOUBT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) O F THE INCOME TAX ACT. THE CIT(A) THEREFORE HELD THAT ANY TRANSFER OF A CAPITAL ASSET IS TO BE CHARGED UNDER THE HEAD CAPITAL GAINS U/S.45(1) AND THE MODE OF COMPUTATION AS PER SECTION 48 OF THE INCOME TAX ACT, HAD TO BE APPLIED. THE CIT(A) ALSO VERIF IED THE VALUATION REPORT DATED 27/07/2006 OF A REGISTERED VALUER WHEREFROM IT WAS CLEAR THAT THE VALUATION HAS BEEN DONE IN CONFORMITY WITH VALUATION OF SIMILAR PROPE RTIES IN THAT AREA, AROUND THE SAME TIME. THE VALUE AS ON 01-04-1981 HAS BEEN ARRIVED U PON ON WHICH COST INFLATION INDEX WAS APPLIED TO ARRIVE AT THE VALUE OF PROPERTY AS O F 28-03-2005 AND SUBSEQUENTLY FOR THE FY 2005-2006 I.E. THE PREVIOUS YEAR IN RELATION TO THE ASSTT. YEAR 2006-07. UNDER THE CIRCUMSTANCES, THE CIT(A) WAS OF THE VIEW THAT THERE WAS NO REASON TO DISAGREE WITH THE CLAIM OF THE ASSESSEE AND THE CALCULATION MADE BY THE ASSESSEE. ACCORDINGLY, THE CIT(A) DIRECTED THE AO TO DELETE T HE ADDITION OF RS.2,46,00,000 FROM INCOME FROM OTHER SOURCES AND TREAT RS.50,00,210 AS LONG TERM CAPITAL LOSS ARISING FROM TRANSFER OF LAND. 7. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 8. NOTICE WAS DIRECTED TO BE SERVED ON THE ASSESSE E THROUGH THE DR. DESPITE SEVERAL OPPORTUNITIES REVENUE HAS NOT COMPLIED WITH THE DIR ECTIONS OF THE TRIBUNAL. WE PROCEEDED TO DECIDE THE APPEAL AFTER HEARING THE SU BMISSIONS OF THE LEARNED DR. THE LEARNED DR REITERATED THE STAND OF THE REVENUE AS R EFLECTED IN THE GROUNDS OF APPEAL FILED BEFORE THE TRIBUNAL. 9. WE ARE OF THE VIEW THAT THE STAND TAKEN BY THE REVENUE IN THE GROUNDS OF APPEAL IS UNSUSTAINABLE. FROM THE GROUNDS OF APPEAL RAISED BY THE REVENUE IT IS CLEAR THAT THE REVENUE HAS NOT DISPUTE ANY OF THE FINDINGS OF THE CIT(A) EXCEPT HARPING ON THE POINT ITA NO.555/KOL/2012 M/S.SREE KAMAKHYA TEA CO.PVT.L TD.. A./Y.2006-07 4 THAT THE PURCHASER OF THE PROPERTY DID NOT CONFIRM THE DETAILS OF THE TRANSACTIONS AS GIVEN BY THE ASSESSEE. THE SALE DEED OF THE PROPER TY DATED 14.06.2005 IS A REGISTERED DOCUMENTS. THE AUTHENTICITY OF THE SAME CANNOT BE D OUBTED. THE FACT THAT THE PURCHASE OF THE PROPERTY DID NOT RESPOND TO THE NOTICES ISSU ED BY THE AO CANNOT BE THE BASIS TO TREAT THE GAIN IN QUESTION AS INCOME FROM OTHER SOU RCES. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD ABOUT THE VALUE OF THE PROPERTY AS ADOPTED FOR THE PURPOSE OF REGISTRATION OF DOCUMENTS BY THE REGISTRAR OF ASSUR ANCES. IN THE GIVEN FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW THAT CONCLUSIONS D RAWN BY THE CIT(A) DO NOT CALL FOR ANY INTERFERENCE . ACCORDINGLY ORDER OF CIT(A) IS C ONFIRMED AND THIS APPEAL BY THE REVENUE IS DISMISSED. 10. IN THE RESULT, APPEAL BY THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE COURT ON 20.01.2016. SD/- SD/- [ M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 20.01.2016. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. M/S. SREE KAMAKHYA TEA CO.PVT. LTD., 4, HASTINGS PARK ROAD, KOLKATA-27. 2 THE A.C.I.T., CIRCLE-4, KOLKATA 3. THE C.I.T.(A)-IV, KOLKATA 4. THE CI T-II, KOLKATA 5. C.I.T.(DR), KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA NO.555/KOL/2012 M/S.SREE KAMAKHYA TEA CO.PVT.L TD.. A./Y.2006-07 5