ACIT, Jaipur V. SHRI ATMA RAM GUPTA, Jaipur

ITA 695/JPR/2012

• Counselvise Citation: 69523114 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 27-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEPH
• Keywords: Capital asset; Salary income; Opportunity of being heard; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO.695/JP/2012 ASSTT. YEAR- 2009-10 PAN NO. ADSPG 7611 C THE A.C.I.T. SHRI ATMA RAM GUPTA (INDIVIDUAL) CIRCLE-3, JAIPUR. VRS. PLOT NO. 702, MADHAV VILAS , MADHO SINGH CIRCLE, BANIPARK, JAIPUR. (APPELLANT) (RESPONDENT) DEPARTMENT BY :- MRS. NEENA JEPH. ASSESSEE BY :- SHRI P.C. PARWAL. DATE OF HEARING : 10/11/2014 DATE OF PRONOUNCEMENT : 31/12/2014 O R D E R PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 18/05/2012 OF THE LEARNED CIT(A)-I, JAIPUR FOR THE A.Y. 2009-10. THE SOLE GROUND OF APPEAL IS AGAINST DELETING THE ADDIT ION OF RS. 1,23,47,880/- TREATED AS SHORT TERM CAPITAL GAIN BY THE ASSESSING OFFICER. 2. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE A SSESSEE HAS INCOME FROM SALARY AND HOUSE PROPERTY. RETURN FOR A .Y. 2009-10 WAS ITA 695/JP/2012 ACIT VS. ATMA RAM GUPTA 2 FILED ON 30/03/2010 DECLARING TOTAL INCOME AT RS. 2 2,31,920/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT). THE ASSESSING OFFICER FURTHER OBSERVED THAT TH E ASSESSEE SOLD IMMOVABLE PROPERTY SITUATED AT VILLAGE BASDA ALIAS, KHASRA NO. 6/1 AND 6/4 GOVINDPURA, TEHSIL- PHAGI, DISTRICT- JAIPUR MEAS URING 9 BIGHAS 4 BISWA TO M/S GRASS FIELD FARMS AND RESORTS PVT. LTD. WHERE THE ASSESSEE WAS A DIRECTOR. THE LAND WAS PURCHASED BY THE ASSESSEE AS ON 24/03/2007 FOR RS. 15,00,000/-. AND SOLD AS ON 18/0 9/2008 FOR RS. 1,39,60,080/-. THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD AS TO WHY SHORT TERM CAPITAL GAIN ON ACC OUNT OF SALE OF IMMOVABLE PROPERTY SHOULD NOT BE ASSESSED AT RS. 1, 23,47,880/-. THE ASSESSEES REPLY WAS CONSIDERED BY THE ASSESSING OFF ICER. AFTER CONSIDERING THE ASSESSEES REPLY ON ISSUES I.E. BAS IS OF CHARGES, CAPITAL ASSET, TRANSFER AND HELD THAT THE CAPITAL GAIN ON T HIS TRANSFER WAS SHORT TERM CAPITAL GAIN. THE PURCHASE DEED CLEARLY MENTION ED THE ASSESSEE AS A PURCHASER AND SECOND PARTY. NOWHERE, IT WAS MEN TIONED THAT THE ASSESSEE PURCHASED LAND AS A CAPACITY OF AGENT ON B EHALF OF M/S GRASS FIELD FARMS AND RESORTS PVT. LTD. IF THE ASSESSEE WA S HOLDING THIS PROPERTY AS AN AGENT ON BEHALF OF M/S GRASS FIELD F ARMS AND RESORTS PVT. LTD. AND THERE WAS NO NEED TO SELL THE PROPERTY AGAIN TO M/S GRASS ITA 695/JP/2012 ACIT VS. ATMA RAM GUPTA 3 FIELD FARMS AND RESORTS PVT. LTD.. THE COMPANY HAD WR ONGLY SHOWN THIS LAND AS AN ASSET OF THE COMPANY BECAUSE AS PER LEGA L DOCUMENTATION, THE ASSESSEE MR. ATMA RAM GUPTA WAS THE OWNER OF THE PROPERTY. FINALLY, THE LEARNED ASSESSING OFFICER CALCULATED S HORT TERM CAPITAL GAIN AT RS. 1,23,47,880/- AND ADDED IN THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD ALLOWED THE APPEAL BY OBSERVING THAT THE SURVEY OPERATIONS WERE CARRIED OUT AT THE BUSINESS PREMISES OF M/S GFFR PVT. LTD. FROM 26 /02/2008 TO 28/02/2008. CERTAIN INCRIMINATING DOCUMENTS WERE FOU ND REGARDING PAYMENTS MADE THAT WERE NOT ACCOUNTED FOR IN THE REG ULAR BOOKS OF ACCOUNT OF THE COMPANY. SUCH LAND TRANSACTIONS WERE INVENTORISED ALONGWITH THE DETAILS OF PARTICULARS OF THE LAND, LE TTERS NAME, REGISTRATION NUMBER, PURCHASE VALUE, MARKET VALUE AND FINAL VALU E. ON THE BASIS OF THIS INVENTORY, THE COMPANY SURRENDERED THE AMOUNT NOT DECLARED IN THE BOOKS OF ACCOUNTS. THE TRANSACTION OF LAND, WHICH WAS MADE THE BASIS OF THE ADDITION OF ACCOUNT OF SHORT TERM CAPITAL GAINS IN THE HANDS OF THE APPELLANT IS REFLECTED IN THIS INVENTORY. THIS LAND WAS SUBSEQUENTLY SHOWN BY THE COMPANY M/S GFFR PVT. LTD. IN ITS CLOSI NG STOCK AS ON 31/03/2008. M/S GFFR PVT. LTD. SOLD THIS LAND TO M/ S GRASS FILED FIRE ITA 695/JP/2012 ACIT VS. ATMA RAM GUPTA 4 CAPITAL DEVELOPERS (P) LTD. ON 05/08/2008 FOR RS. 1 ,51,80,000/- AND OFFERED THE PROFIT FOR TAXATION AS PER THE P&L ACCO UNT OF A.Y. 2009-10. THE APPELLANT IS A DIRECTOR IN M/S GFFR PVT. LTD.. TH E DEPARTMENT HAS NOT INITIATED ANY ACTION IN THE HANDS OF THE COMPAN Y M/S GFFR PVT. LTD. IN A.Y. 2009-10 REGARDING THE SALE OF LAND. THE PROF ITS ACCRUED FROM THIS TRANSFER HAVE BEEN ACCEPTED IN THE HANDS OF THE COM PANY M/S GFFR PVT. LTD.. IN SHORT IT HAS ACCEPTED THE SURRENDER AND SU BSEQUENT PROFIT FROM THE SALE OF THIS LAND IN THE HANDS OF THE COMPANY M /S GFFR PVT. LTD. THE LAND HAS CONSISTENTLY BEEN SHOWN IN THE BOOKS OF THE COMPANY M/S GFFR PVT. LTD., IN WHICH THE APPELLANT IS A DIRECTOR. NO WHERE HAS A FINDING BEEN GIVEN IN THE CASE OF THE COMPANY THAT THIS LAN D DID NOT BELONG TO THE COMPANY. THEREFORE, TO TREAT THE GAINS ON TRANSF ER OF LAND AS SHORT TERM CAPITAL GAIN IN THE HANDS OF THE APPELLANT WOUL D AMOUNT TO A DOUBLE ADDITION IN TWO DIFFERENT HANDS OF THE SAME I NCOME WHICH IS NOT PERMISSIBLE UNDER THE I.T. LAW. THEREFORE, SHE DELETED THE ADDITION OF RS. 1,23,47,880/-. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARNE D D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER AND ARGUED THAT THE LAND WAS IN THE NAME OF THE DIRECTOR, WHICH WAS SU BSEQUENTLY ITA 695/JP/2012 ACIT VS. ATMA RAM GUPTA 5 TRANSFERRED IN THE NAME OF THE COMPANY I.E. M/S GFF R PVT. LTD.. THEREFORE, ORDER OF THE LEARNED ASSESSING OFFICER MA Y BE REINSTATED. 5. AT THE OUTSET, THE LEARNED A.R. FOR THE ASSESSEE ARGUED THAT THE CONCERNED LAND WAS PURCHASED ON 27/05/2008 AT RS. 1, 26,23,758/- IN THE NAME OF DIRECTOR ON BEHALF OF ARG DEVELOPERS PV T. LTD.. THE SECOND PURCHASE WAS MADE ON 28/06/2008 AT RS. 4,48,57,500/- IN THE NAME OF DIRECTOR ON BEHALF OF M/S ARG INFRA DEVELOPERS PVT. LTD. AND SALE WAS MADE ON 18/09/2008 AT RS. 1,39,60,080/- BY THE DIRE CTOR ON BEHALF OF TO M/S GRASS FIELD FARMS AND RESORTS PVT. LTD.. THE ASS ESSING OFFICER HAD ACCEPTED THE EXPLANATION OF THE ASSESSEE IN RESPECT OF THE ABOVE PURCHASE AND SALE TRANSACTION EXCEPT FOR THE AGRICU LTURAL LAND SOLD BY THE ASSESSEE AS AN AGENT OF TO M/S GRASS FIELD FARMS AN D RESORTS PVT. LTD.. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE FACT THAT THE PURCHASE COST AND THE SALE CONSIDERATION O F THE IMPUGNED LAND IS DULY RECORDED IN THE BOOKS OF ACCOUNTS OF GFFR I N WHICH ASSESSEE IS A DIRECTOR. IN FACT THE COMPANY PURCHASED THE AGRICUL TURAL LAND AT KHASRA NO. 6/1 &, 6/4 AT VILLAGE BASDA FOR RS. 15,00,000/- ON 15-07-2007 BUT THE SALE DEED WAS EXECUTED IN THE NAME OF THE ASSESS EE BEING DIRECTOR OF THE COMPANY. THE COST OF THIS LAND TO THE COMPANY IS RS. 40,98,494/- COMPRISING OF SALE CONSIDERATION OF RS.15,00,000/-, SURRENDER AMOUNT OF ITA 695/JP/2012 ACIT VS. ATMA RAM GUPTA 6 RS. 23,11,257/- REGISTRATION EXPENSES OF RS.1,12,70 0/- AND CLU CHARGES OF RS. 1,74,527/- WHICH IS DULY REFLECTED IN THE CLO SING STOCK STATEMENT OF GFFR AS ON 31-03-2008. HE FURTHER SUBMITTED THAT THIS LAND WAS SOLD BY GFF R TO GRASS FIELD FIRE CAPITAL DEVELOPERS PRIVATE LIMITED ON 5- 08-2008 FOR RS.1,51,80,000/- FOR WHICH THE SALE DEED WAS EXECUTED BY THE ASSESSEE AS AGENT OF THE GFFR. SALE AMOUNT IS DULY RECORDED IN THE BOOKS OF GFFR AS EVIDENT FROM THE DETAILS OF THE LAND SALE AND SC HEDULE R OF THE ACCOUNTS. THE CERTIFICATE OF THE COMPANY CONFIRMING THE OWNERSHIP OF THIS LAND WAS ALSO FILED TO THE ASSESSING OFFICER. HE ALSO SUBMITTED THAT FROM THESE EVIDENCES IT IS E VIDENT THAT PROFIT ON SALE OF THIS TRANSACTION IS DULY RECORDED BY GFFR I N ITS BOOKS OF ACCOUNTS AND OFFERED FOR TAX. HENCE SIMPLY BECAUSE BOTH IN T HE PURCHASE DEED AND THE SALE DEED OF THIS LAND ASSESSEE HAS BEEN RE FLECTED AS THE PURCHASER/SELLER OF THE LAND WITHOUT REFERENCE TO TH E NAME OF THE GFFR, IT CAN'T BE PRESUMED THAT IT IS THE TRANSACTION OF THE ASSESSEE AND NOT OF THE COMPANY MORE PARTICULARLY WHEN THE DEPARTMENT HA S ASSESSED THE PROFIT ON THE SALE OF THIS LAND IN THE HANDS OF THE COMPANY. ITA 695/JP/2012 ACIT VS. ATMA RAM GUPTA 7 HE FURTHER SUBMITTED THAT THE OBSERVATION OF THE AS SESSING OFFICER THAT THE ASSESSEE IS THE LEGAL OWNER OR THAT IN THE PURCH ASE/SALE DEED THERE IS NO MENTION AS TO THE CAPACITY OF THE ASSESSEE AS AGENT OF GFFR ARE IRRELEVANT WHEN THERE IS NO DISPUTE AS TO THE FACT T HAT PURCHASE AND SALE IN RESPECT OF THIS LAND IS DULY RECORDED IN THE BOO KS OF THE COMPANY AND THE COMPANY IS EXERCISING ALL THE RIGHTS AS A OWNER. FURTHER THE OBSERVATION OF THE ASSESSING OFFICER THAT THIS PROP ERTY WAS AGAIN SOLD BY THE ASSESSEE TO M/S GRASS FIELD FARMS & RESORTS P. LTD. IS INCORRECT AS IT IS SOLD TO M/S GRASS FIELD FIRE CAPITAL DEVELOPERS PRIVATE LIMITED. IT HAS BEEN HELD IN THE VARIOUS CASES THAT FOR THE PURPOSE OF ALLOWING THE CLAIM OF DEDUCTION OR FOR TAXABILITY OF INCOME, THE REAL BENEFICIAL OWNER IS TO BE CONSIDERED AND NOT THE LEGAL OWNER. HE PLACED RELIAN CE ON THE FOLLOWING CASE LAWS: (I) MYSORE MINERALS LTD. VS. CIT (1999) 239 ITR 775 (SC). (II) CIT VS. PODDAR CEMENT PVT. LTD. 226 ITR 625 (SC ). THEREFORE HE PRAYED TO CONFIRM THE ORDER OF THE LEAR NED CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AG RICULTURAL LAND WAS PURCHASED ON BEHALF OF THE COMPANY IN THE NAME OF T HE DIRECTOR, WHICH HAS BEEN REFLECTED IN THE BALANCE SHEET OF THE COMP ANY M/S GFFR PVT. ITA 695/JP/2012 ACIT VS. ATMA RAM GUPTA 8 LTD. AS ON 31/3/2008. THE PROPERTY WAS ALSO SOLD THRO UGH DIRECTOR ON BEHALF OF THE COMPANY AND SHORT TERM CAPITAL GAIN H AS BEEN SHOWN IN THE RETURN OF THE COMPANY. THEREFORE, THERE IS NO LO GIC TO ASSESS THE SAME IN THE INCOME IN THE HANDS OF THE DIRECTOR OF THE COMPANY. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LEARNED CIT( A). 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 31/12/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 31 ST DECEMBER, 2014 * RANJAN COPY FORWARDED TO :- 1. THE ACIT, CIRCLE-3, JAIPUR. 2. SHRI ATMA RAM GUPTA, JAIPUR. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 695/JP/2012) BY ORDER, AR ITAT JAIPUR.