The Pondicherry State Co-operative Housing Federation Ltd., CHENNAI V. ACIT, Pondicherry

ITA 613/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96304 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 12-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 13-03-2014
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: S SRIDHAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.613/MDS/2014 / ASSESSMENT YEAR : 2004-05 M/S THE PONDICHERRY STATE CO - OPERATIVE HOUSING FEDERATION LTD 7 TH CROSS, THANTHAI PERIYAR NAGAR PONDICHERRY 605 005 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE I PONDICHERRY [PAN AAAAT 0235 H ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /RESPONDENT BY : D R. B NISCHAL, JCIT / DATE OF HEARING : 12 - 10 - 2015 ! / DATE OF PRONOUNCEMENT : 28 - 10 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VI, CHENN AI, DATED 18.12.2013 AND PERTAINS TO ASSESSMENT YEAR 2004-05 . 2. AT THE OUTSET, IT WAS NOTICED THAT THERE WAS A DELA Y OF NINETEEN DAYS IN FILING THE APPEAL. THE ASSESSEE FILED APPLICATION TO CONDONE THE DELAY. AFTER HEARING BOTH SIDES, WE FIND THAT THERE WAS ITA NO.613/14 :- 2 -: SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITHIN T HE PERIOD PRESCRIBED. ACCORDINGLY, THE DELAY OF NINETEEN DAYS IN FILING T HE APPEAL IS CONDONED AND THE APPEAL OF THE ASSESSEES IS ADMITTED. 3. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE CO-OPERATIVE SOCIETY IS ENGAGED ITSEL F IN PROVIDING FINANCE FOR CONSTRUCTION OF HOUSE TO ITS MEMBERS. DURING THE COURSE OF ITS BUSINESS ACTIVITY, IN SETTLEMENT OF THE DEBT OW ED BY THE PONDICHERRY HEALTH EMPLOYEES CO-OPERATIVE HOUSING S OCIETY, THE ASSESSEE ACQUIRED AGRICULTURAL LAND. THE TOTAL OUT STANDING LOAN WAS ` 57,75,000/-. HOWEVER, THE ASSESSEE SOLD THE ABOVE SAID AGRICULTURAL LAND FOR A TOTAL SALE CONSIDERATION OF ` 77,00,000/-. THE PROFIT ARISING OUT OF SALE OF THE AGRICULTURAL LAND WAS CLAIMED TO BE EXEMPTED. HOWEVER, THE ASSESSING OFFICER REJECTED THE CLAIM O F THE ASSESSEE. THE PONDICHERRY HEALTH EMPLOYEES CO-OPERATIVE HOUSI NG SOCIETY SOUGHT FOR ADDITIONAL COMPENSATION FROM THE ASSESS EE. THE MATTER WAS PLACED BEFORE THE DISTRICT REGISTRAR FOR CO-OP ERATIVE SOCIETIES. THE DISTRICT REGISTRAR ACCORDED HIS APPROVAL FOR TR EATING A SUM OF ` 11,60,038/- AS ADDITIONAL COMPENSATION. THE LD. CO UNSEL FURTHER SUBMITTED THAT THE TOTAL OUTSTANDING LOAN WAS ADJUS TED FROM THE SALE PROCEEDS OF THE AGRICULTURAL LAND. IN THE COURSE O F TRANSACTION, THE ASSESSEE HAS EARNED A SUM OF ` 33,01,215/-. THE ADDITIONAL COMPENSATION PAID BY THE ASSESSEE TO THE EXTENT OF ` 11,97,969/- WAS ITA NO.613/14 :- 3 -: CLAIMED AS DEDUCTION WHILE COMPUTING THE TAXABLE IN COME. HOWEVER, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE A SSESSEE ON THE GROUND THAT THE SUBSEQUENT LOSS INCURRED BY THE PO NDICHERRY HEALTH EMPLOYEES CO-OPERATIVE HOUSING SOCIETY CANNOT BE A RELEVANT FACTOR FOR THE PURPOSE OF ARRIVING AT THE COST OF ACQUISIT ION OF THE ASSET BY THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, THE MONEY WAS PAID AS PER THE DIRECTION OF THE DISTRICT REGISTRAR FOR CO-OPERATIV E SOCIETIES WITH REGARD TO ACQUISITION OF AGRICULTURAL LAND, THEREFO RE, IT HAS TO BE CONSTRUED AS PART OF THE PURCHASE PRICE OF THE AGR ICULTURAL LAND. THE LD. COUNSEL PRAYED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE ACTUAL COST O F THE LAND. 4. ON THE CONTRARY, DR. B. NISCHAL, THE LD. DEPARTMENT AL REPRESENTATIVE SUBMITTED THAT FROM THE MATERIAL AVA ILABLE ON RECORD IT APPEARS THAT THE PONDICHERRY HEALTH EMPLOYEES CO-OP ERATIVE HOUSING SOCIETY SUFFERED HUGE LOSS, THEREFORE, SOUGHT FOR A DDITIONAL COMPENSATION FROM THE ASSESSEE. SUBSEQUENT TO THE ACQUISITION OF THE LAND, IF THE PONDICHERRY HEALTH EMPLOYEES CO-O PERATIVE HOUSING SOCIETY INCURRED HEAVY LOSS AND THE ASSESSEE COMPE NSATED THE SAME, THAT CANNOT BE A REASON FOR REDUCING THE PROFIT OF THE ASSESSEE ON SALE OF THE AGRICULTURAL LAND. ACCORDING TO THE L D. DR, THE ASSESSEE AGREED TO PURCHASE THE LAND AT A COST OF ` 31,45,976/- FROM THE PONDICHERRY HEALTH EMPLOYEES CO-OPERATIVE HOUSING S OCIETY. THE ITA NO.613/14 :- 4 -: OUTSTANDING LOAN TOGETHER WITH INTEREST COMES TO NE ARLY ` 43,98,785/- AS ON 30.6.1999, THEREFORE, THE PROFIT EARNED BY TH E ASSESSEE ON SALE OF THE AGRICULTURAL LAND WAS ` 33,01,215/- . THE CLAIM OF THE ASSESSEE TO ADJUST THE PAYMENT MADE TO THE PONDICHERRY HEALT H EMPLOYEES CO- OPERATIVE HOUSING SOCIETY TOWARDS ADDITIONAL COMPEN SATION CANNOT BE DEDUCTED WHILE COMPUTING THE PROFIT ON SALE OF THE LAND. REFERRING TO PAGE 5 OF THE CIT(A)S ORDER, THE LD. DR SUBMITTED THAT IT MAY NOT BE NECESSARY TO GO BACK TO THE ASSESSING OFFICER FOR R E-CONSIDERATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY, IN THE COURSE OF ITS BUSINESS ACTIVITY, THE ASSESSEE ACQU IRED AGRICULTURAL LAND OWNED BY THE PONDICHERRY HEALTH EMPLOYEES CO-OPERAT IVE HOUSING SOCIETY. THE PONDICHERRY HEALTH EMPLOYEES CO-OPERA TIVE HOUSING SOCIETY CLAIMED ADDITIONAL COMPENSATION FROM THE A SSESSEE. THE MATTER WAS PLACED BEFORE THE DISTRICT REGISTRAR FO R CO-OPERATIVE SOCIETIES FOR ADJUDICATION. THE DISTRICT REGISTRAR FOR CO-OPERATIVE SOCIETIES APPROVED THE PAYMENT OF ADDITIONAL COMPEN SATION. THE ASSESSEE SOCIETY IS BOUND BY THE ORDER OF THE DISTR ICT REGISTRAR OF CO- OPERATIVE SOCIETIES. THE ADDITIONAL COMPENSATION C LAIMED BY THE PONDICHERRY HEALTH EMPLOYEES CO-OPERATIVE HOUSING S OCIETY HAS TO BE MET ONLY FROM THE PROFIT EARNED BY THE ASSESSEE ON SALE OF AGRICULTURAL LAND. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT THE ITA NO.613/14 :- 5 -: MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OF FICER. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER A UTHORITIES AND REMIT THE ENTIRE ISSUE OF ADDITIONAL COST PAID BY THE AS SESSEE OF ` 11,97,969/- BACK TO THE FILE OF THE ASSESSING OFFIC ER. THE ASSESSING OFFICER SHALL CONSIDER THE ISSUE AFRESH IN THE LIGH T OF THE DIRECTION/APPROVAL OF DISTRICT REGISTRAR OF CO-OPER ATIVE SOCIETIES AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW A FTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 28 TH OCTOBER, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF