M/s Sagar Edutech Pvt. Ltd., Chandigarh V. ACIT, Chandigarh

ITA 580/CHANDI/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8334 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 01-07-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 03-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Cost of acquisition; Bad and doubtful debts
• Section: 2(14)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 580/CHD/2017 / ASSESSMENT YEAR : 2013-14 M/S SAGAR EDUCTECH PVT LTD., H.NO. 1041, SECTOR 27-B, CHANDIGARH VS. THE DCIT CIRCLE - 5(1), CHANDIGARH . ! ' ./ PAN NO: AAACM4738J !#/ APPELLANT %& !# / RESPONDENT '()* /ASSESSEE BY : SHRI VISHAL MOHAN, ADVOCATE )* / REVENUE BY : SHRI MANJIT SINGH, CIT DR + ,)( -' /DATE OF HEARING : 01.07.2019 ./ )( -' / DATE OF PRONOUNCEMENT : 10.07 .2019 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 03.01.2017 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-2, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWI NG GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN UPHOLDING THE ADDITION OF RS. 30,00,000/- ON ACCOUNT OF BAD DEBTS WRITTEN OFF. ITA NO. 580-C-17 M/S SAGAR EDUTECH PVT. LTD., CHANDIGARH 2 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING T HE ADDITION OF RS. 63,50,584/- BY UPHOLDING THE INCOME FROM SALE OF LAND AS INCOME FROM BUSINESS AND PROFESSION. FACT OF THE MATTER IS THAT THE SAME WAS NOT TAXABLE AS THE LAND AGRICULTURAL IN NATURE AND WAS SITUATED OUT OF THE M.C. ARE AND AS SUCH WAS NOT AT ALL TAXABLE IN THE EYES OF LAW. 3. THAT THE ORDER OF THE LD. CIT(A) IS BAD IN LAW AND FACTS. 3. GROUND NO. 1 : VIDE GROUND NO.1 THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN UPHOLDING THE ADDITION OF R S. 30 LACS ON ACCOUNT OF BAD DEBT WRITTEN OFF. 4. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS BEEN FAIR ENOUGH TO ADMIT THAT THE AFORESAID AMOUNT OF BAD DEBT HAD NOT BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR IN WHICH THE AMOUNT OF SAID DEBT OR PART THEREOF WAS W RITTEN OFF OR IN ANY OF EARLIER PREVIOUS YEARS. HENCE, DISALLOWANCE ON ACCOUNT OF BAD DEBT HAS RIGHTLY BEEN MADE BY THE LOWER AUTHORITIES BEIN G HIT BY THE PROVISIONS OF SECTION 36(2) OF THE INCOME TAX ACT. IN VIEW OF THIS, THERE IS NO MERIT IN THE GROUND NO.1 OF THE APPEAL AND THE SAME IS ACCORDINGLY DISMISSED. 5. GROUND NO.2: VIDE GROUND NO.2, THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN UPHOLDING THE ADDITION OF I NCOME FROM SALE OF LAND AS INCOME FROM BUSINESS AND PROFESSION. THE A SSESSEE BEFORE THE ITA NO. 580-C-17 M/S SAGAR EDUTECH PVT. LTD., CHANDIGARH 3 LOWER AUTHORITIES HAD CLAIMED THAT THE AFORESAID LA ND WAS AN AGRICULTURAL LAND AND DID NOT FALL IN THE DEFINITION OF CAPITAL ASSET AS DEFINED U/S 2(14) OF THE I.T. ACT. HOWEVER, BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED ON THIS ISSUE AS TO WHETHE R THE LAND WAS AGRICULTURAL LAND OR NOT. HOWEVER, HE HAS SUBMITTE D THAT THE LAND IN QUESTION WAS NOT A TRADING ASSETS OF THE ASSESSEE, RATHER, THE SAME WAS A CAPITAL ASSET, HENCE, THE INCOME FROM THE SALE OF LAND SHOULD BE TAXED UNDER THE HEAD CAPITAL GAINS AND DUE BENEFITS, SUCH AS OF COST OF ACQUISITION AND INDEXATION THEREOF SHOULD BE ALL OWED TO THE ASSESSEE. HE IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE DATED 27.1.2016 PASSED IN ITA NO. 1388/CHD/2010, WHEREIN, CERTAIN OBSERVATIONS HAD BE EN MADE BY THE ITAT IN PARA 10 OF THE SAID ORDER, WHICH READS AS U NFAIR:- 10. HOWEVER , THE ASSESSEE HAS PURCHASED CERTAIN LANDS DURING THE YEAR ON WHICH IT CLAIMED THE PAYMENT OF SAID COMMISSION AND THIS COMMISSION AMOUNT HAS BEEN CAPITALIZED WITH THE COST OF LAND IN THE FIXED ASSET SCHEDULE OF THE ASSESSEE 6. THE LD. COUNSEL THERE HAS SUBMITTED THAT THE LOW ER AUTHORITIES HAVE WRONGLY ASSESSED THE INCOME FROM THE SALE OF L AND UNDER THE HEAD BUSINESS INCOME. 7. A PERUSAL OF THE IMPUGNED ORDER OF THE ASSESSING OFFICER REVEALS THAT THE ASSESSING OFFICER HAS NOTED THAT THE LAND IN QUESTION WAS A TRADING ASSET OF THE ASSESSEE. HOWEVER, IT HAS ALSO BEEN FOUND IN THE ITA NO. 580-C-17 M/S SAGAR EDUTECH PVT. LTD., CHANDIGARH 4 PLEADINGS THAT THE LAND IN QUESTION WAS PURCHASED B Y THE ASSESSEE FOR CONSTRUCTION OF AN EDUCATIONAL INSTITUTE WHICH PURP OSE SEEMS TO BE AN INVESTMENT PURPOSE. IN OUR VIEW, THE ISSUE NEEDS T O BE EXAMINED BY THE ASSESSING OFFICER AFRESH. WE, THEREFORE, RESTORE TH IS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR LIMITED PURPOSE TO CONSID ER AND DECIDE AS TO WHETHER THE LAND IN QUESTION WAS A CAPITAL ASSET OR A TRADING ASSET OF THE ASSESSEE. THE ASSESSING OFFICER FOR THE SAID PURPOS E WILL LOOK INTO THE RECORDS OF THE ASSESSEE TO GATHER WHETHER THE ASSES SEE HAS CAPITALIZED THE SAID LAND IN FIXED ASSETS SCHEDULE AND HAS TREATED THE SAID LAND AS ITS CAPITAL ASSET AND NOT A TRADING ASSET. NEEDLESS TO SAY THAT THE ASSESSING OFFICER WILL GIV E PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE SUB JECT TO OUR FINDINGS GIVEN ABOVE, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.3: THIS GROUND IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10.07.2019. SD/- SD- ( . . / N.K. SAINI) ( ! / SANJAY GARG) '#$ / VICE PRESIDENT %& / JUDICIAL MEMBER DATED : 10.07.2019 ITA NO. 580-C-17 M/S SAGAR EDUTECH PVT. LTD., CHANDIGARH 5 .. 1)%(2343( / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. %& !# / THE RESPONDENT 3. + 5( / CIT 4. + 5( ( )/ THE CIT(A) 5. 36 %(7 , - 7 , 89:; / DR, ITAT, CHANDIGARH 6. :< , / GUARD FILE 1 + / BY ORDER, = / ASSISTANT REGISTRAR