United Farming & Real Estate, Pune V. DCIT cir,2, Pune

ITA 71/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67058 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: R G NAHAR
• Keywords: Business income
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.71/PN/2012 (ASSESSMENT YEAR : 2008-09) UNITED FARMING & REAL ESTATE C/O SHAH KHANDELWAL JAIN & ASSOCIATES CHARTERED ACCOUNTANTS LEVEL 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN : AACFU0487D . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 2, PUNE. . RESPONDENT APPELLANT BY : MR. R.G. NAHAR RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 05-06-2013 DATE OF PRONOUNCEMENT : 25-06-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 02.11.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 22.12.2010 PAS SED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2008-09. 2. IN THIS APPEAL, THE SOLITARY GRIEVANCE OF THE AS SESSEE IS THAT THE CIT(A) ERRED IN UPHOLDING THE INTEREST CHARGED BY THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER UNDER SECTION 234C OF THE ACT AMOU NTING TO RS.9,74,576/- WHEN IN-FACT UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE, NO INTEREST WAS CHARGEABLE. ITA NO.71/PN/2012 UNITED FARMING & REAL ESTATE A.Y. 2008-09 3. IN BRIEF, THE FACTS ARE THAT ASSESSEE IS A PARTN ERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF LAN DS. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED A RETURN O F INCOME DECLARING TOTAL INCOME OF RS.7,74,93,020/- AND IN THE ASSESSMENT FI NALIZED UNDER SECTION 143(3) OF THE ACT TOTAL INCOME HAS BEEN DETERMINED AT RS.7,84,41,020/- AFTER MAKING A DISALLOWANCE OF RS.9,48,000/- OUT OF COMMI SSION EXPENDITURE. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A) CHALLENGING THE ADDITION MADE AND ALSO CHARGING OF INTEREST UNDER S ECTION 234C OF THE ACT AMOUNTING TO RS.9,74,576/-. THE INTEREST UNDER SECT ION 234C OF THE ACT WAS CHARGED BY THE ASSESSING OFFICER ON ACCOUNT OF DEFE RMENT OF INSTALMENTS OF ADVANCE TAX. THE ASSESSEE FIRM DENIED SUCH LIABILIT Y IN ITS APPEAL BEFORE THE CIT(A). THE PLEA OF THE ASSESSEE WAS THAT THE ONLY TRANSACTION OF SALE WAS CARRIED OUT ON 31.03.2008 IN WHICH THE TOTAL VALUE OF LAND SOLD WAS OF RS.17,66,85,150/- AND SUCH A SALE RESULTED IN THE A MOUNT OF INCOME RETURNED BY THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THE EV ENT OF SALE GIVING RISE TO THE IMPUGNED INCOME COULD NOT BE VISUALIZED OR ESTI MATED ON THE DUE DATES OF PAYMENT OF ADVANCE TAX AND THEREFORE, IT COULD NOT BE FASTENED WITH THE LIABILITY UNDER SECTION 234C OF THE ACT. THE CIT(A) HOWEVER N OTED THAT THOUGH THE LANDS HAVE BEEN SOLD ON 31.03.2008 BY WAY OF EXECUT ION OF SALE-DEEDS HOWEVER IN RESPECT OF SUCH SALES, ASSESSEE HAD RECE IVED ADVANCES MUCH BEFORE DURING THE YEAR UNDER CONSIDERATION ITSELF A ND THEREFORE THE ASSESSEE OUGHT TO HAVE ESTIMATED ADVANCE TAX PAYABLE AT THE TIME OF DUE DATES OF PAYMENT OF INSTALMENTS OF ADVANCE TAX. ACCORDINGLY, HE HAS UPHELD THE CHARGING OF INTEREST UNDER SECTION 234C OF THE ACT OF RS.9,74,576/- AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE FIRM WAS ENGAGED IN THE BUSINESS OF SALE A ND PURCHASE OF LAND AND THE ASSESSMENT YEAR UNDER CONSIDERATION WAS THE SEC OND YEAR OF BUSINESS. IN THE PRECEDING ASSESSMENT YEAR OF 2007-08 NO SALE TR ANSACTION HAD TAKEN ITA NO.71/PN/2012 UNITED FARMING & REAL ESTATE A.Y. 2008-09 PLACE AND THE RETURN OF INCOME WAS FILED AT NIL INC OME, A COPY OF WHICH HAS BEEN PLACED ON RECORD. FURTHER, EVEN DURING THE YEA R UNDER CONSIDERATION THE ONLY TRANSACTION GIVING RISE TO THE INCOME OF RS.7, 74,93,020/- DECLARED IN THE RETURN OF INCOME, WAS SALE OF LANDS EXECUTED ON 31. 03.2008, I.E. ON THE LAST DATE OF THE ACCOUNTING YEAR AND THEREFORE UNDER THE SE CIRCUMSTANCES ASSESSEE COULD NOT HAVE VISUALIZED PAYMENT OF ADVAN CE TAX ON THE RELEVANT DATES AND THEREFORE THE INTEREST FOR DEFERMENT OF A DVANCE TAX UNDER SECTION 234C OF THE ACT IS NOT CHARGEABLE. THE LEARNED COUN SEL SUBMITTED THAT THE CIT(A) HAS WRONGLY APPRECIATED THE FACTS INASMUCH A S THE RECEIPT OF ADVANCES FROM THE OTHER PARTY AGAINST SALE WAS NOT IN RELATI ON TO ANY SPECIFIC SALE-DEEDS. EXPLAINING THE TRANSACTION, IT WAS SUBMITTED THAT T HERE WERE 16 SALE-DEEDS EXECUTED ON 31.03.2008 OF THE TOTAL VALUE OF THE LA ND SOLD OF RS.17,66,85,150/. IT WAS POINTED OUT THAT THE SALE-DEEDS RELATED TO D IFFERENT GAT NUMBERS OF THE LAND SOLD. THE LEARNED COUNSEL POINTED OUT THAT AT PAGES 23 TO 25 OF THE PAPER BOOK IS PLACED THE STATEMENT OF ACCOUNT OF THE BUYE R WHICH SHOWS THAT ON VARIOUS DATES DURING THE YEAR STARTING FROM JULY 20 07 AD-HOC ADVANCES HAVE BEEN RECEIVED AND THE SAME WERE APPROPRIATED TOWARD S SALES ONLY ON 31.03.2008 ON EXECUTION OF SALE-DEEDS OF RS.17,66,8 5,150/-, AND AT THE TIME OF RECEIPT OF ADVANCES THE SAME WERE NOT IN RELATIO N TO THE SALE OF ANY PARTICULAR GAT NUMBER OF LAND. OUR ATTENTION WAS AL SO INVITED TO THE FACT THAT IN THE ACCOUNT OF THE BUYER THERE WAS A CLOSING BALANC E AS ON 31.03.2008 OF RS.5,57,67,600/- WHICH WAS CARRIED FORWARD TO THE N EXT YEAR WHEREIN OTHER SALES HAVE BEEN EXECUTED. IT WAS ALSO POINTED OUT W ITH REFERENCE TO FEW COPIES OF THE SALE-DEEDS, WHICH HAS BEEN PLACED IN THE PAP ER BOOK THAT ACTUAL PHYSICAL POSITION OF THE LAND WAS ALSO GIVEN TO THE BUYER ONLY AT THE TIME OF EXECUTION OF THE SALE-DEED ON 31.03.2008. IT WAS TH EREFORE, CONTENDED THAT THERE WAS NO JUSTIFICATION FOR THE CIT(A) TO HOLD T HAT THE ASSESSEE WAS IN FULL KNOWLEDGE OF THE BUSINESS TRANSACTION MUCH EARLIER THAN THE ACTUAL EXECUTION OF SALE-DEED ON 31.03.2008. THE LEARNED COUNSEL SUB MITTED THAT DUE TO THE AFORESAID REASONS, ASSESSEE WAS NOT IN A POSITION T O PAY THE INSTALMENTS OF ITA NO.71/PN/2012 UNITED FARMING & REAL ESTATE A.Y. 2008-09 ADVANCE TAX DURING THE YEAR UNDER CONSIDERATION AND THEREFORE INTEREST UNDER SECTION 234C OF THE ACT WAS NOT CHARGEABLE. IN THIS CONTEXT, RELIANCE HAS ALSO BEEN PLACED OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF EXPRESS NEWS PAPERS LTD. VS. JCIT 103 TTJ 122. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS SUBMITTED THAT IN THIS CASE, TH E ASSESSEE HAS DECLARED BUSINESS INCOME ON THE SALE OF LAND AND THAT THOUGH THE LAND HAS BEEN SOLD ON 31.03.2008 YET THE CONSIDERATION WAS RECEIVED MU CH EARLIER AND THEREFORE, THE LIABILITY TO PAY ADVANCE TAX AROSE AT THE TIME OF RECEIPT OF ADVANCES ITSELF. IN THIS MANNER, IT IS SOUGHT TO BE SUBMITTED THAT T HERE WAS A DEFERMENT OF PAYMENT OF INSTALMENTS OF THE ADVANCE TAX AND INTER EST UNDER SECTION 234C OF THE ACT HAS BEEN RIGHTLY LEVIED. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THE PRESENT CASE THE ONLY ISSUE RAISED IS CHARGING OF INTEREST UNDER SECTION 234C OF THE ACT FOR DEFERMENT OF PAYMENT OF INSTALMENTS OF ADVANCES TAX . NOTABLY, THE ASSESSEE HAS NOT DISPUTED THE LEVY OF INTEREST UNDER SECTION 234B OF THE ACT FOR SHORTFALL IN PAYMENT OF ADVANCE TAX. IN THIS CASE, CLAUSE (B) TO SECTION 234C OF THE ACT PRESCRIBES THAT ASSESSEE IS LIABLE TO PAY INSTALMEN TS OF ADVANCE TAX ON HIS CURRENT INCOME DURING THE YEAR ON DIFFERENT DATES N AMELY BY 15 TH SEPTEMBER, 2007, 15 TH DECEMBER, 2007 AND 15 TH MARCH, 2008 AND IF IT IS NOT SO PAID, THEN INTEREST UNDER SECTION 234C IS CHARGEABLE. THE CASE SET-UP BY THE ASSESSEE IS THAT THE INCOME DURING THE YEAR HAS ARISEN ON AC COUNT OF SALE OF LAND WHICH TOOK PLACE ON 31.03.2008 AND FOR NON-PAYMENT OF ADV ANCE TAX INSTALMENTS DUE ON 15 TH SEPTEMBER, 2007, 15 TH DECEMBER, 2007 AND 15 TH MARCH, 2008, ASSESSEE HAS BEEN CHARGED INTEREST UNDER SECTION 23 4C OF THE ACT. HAVING REGARD TO THE FACTS OF THE CASE, IT CANNOT BE DISPU TED THAT PRIOR TO 31.03.2008 IT WAS IMPOSSIBLE FOR THE ASSESSEE TO ESTIMATE HIS INC OME FOR THE PURPOSES OF PAYMENT OF INSTALMENTS OF ADVANCE TAX. THE HONBLE RAJASTHAN HIGH COURT IN ITA NO.71/PN/2012 UNITED FARMING & REAL ESTATE A.Y. 2008-09 THE CASE OF CIT VS. SMT. PREMLATA JALANI (2003) 264 ITR 744 (RAJ.) HAS UPHELD THE VIEW THAT NO INTEREST UNDER SECTION 234C OF THE ACT IS CHARGEABLE, CONSIDERING THE IMPOSSIBILITY FOR THE ASSESSEE TO E STIMATE THE INCOME ARISING ON A PARTICULAR TRANSACTION WHICH HAD NOT OCCURRED OR COME INTO EXISTENCE. IN THIS CASE, IT IS UNDENIABLE THAT THE IMPUGNED INCOM E HAS RESULTED ON ACCOUNT OF THE SALE-DEEDS EXECUTED ON 31.03.2008, AND THUS THE INCOME FROM SUCH TRANSACTION COULD NOT BE ESTIMATED BY THE ASSESSEE PRIOR TO SUCH DATE, AND THUS THE INTEREST UNDER SECTION 234C OF THE ACT IS NOT CHARGEABLE, HAVING REGARD TO THE PECULIAR FACTS AND CIRCUMSTANCES OF T HE CASE. 7. THE PLEA OF THE REVENUE IS THAT THE CHARGING OF INTEREST IS MANDATORY AND CANNOT BE WAIVED. NO DOUBT THE CHARGING OF INTE REST UNDER SECTION 234C IS MANDATORY SO HOWEVER IT IS MANDATORY ONLY IN SIT UATIONS WHERE ASSESSEES DEFAULT COMES WITHIN THE PURVIEW OF SECTION 234C OF THE ACT. IN SITUATIONS, WHERE THERE IS AN IMPOSSIBILITY OF PAYING ADVANCE T AX INSTALMENTS ON THE RELEVANT DATE, THE MANDATORY NATURE OF INTEREST SHA LL NOT JUSTIFY LEVY OF INTEREST UNDER SECTION 234C OF THE ACT. 8. IN THE PRESENT CASE, THE REVENUE HAS ALSO EMPHAS IZED THAT ASSESSEE HAD RECEIVED ADVANCES AGAINST SALE MUCH BEFORE 31.0 3.2008 AND THEREFORE THE INCOME COULD HAVE BEEN ESTIMATED AND THE INSTAL MENTS OF ADVANCE TAX PAID ON DUE DATES. IN OUR VIEW, THE AFORESAID ARGUM ENT MISSES THE POINT THAT IT IS ONLY ON EXECUTION OF SALE-DEED ON 31.03.2008 THA T THE SALE TRANSACTION TOOK PLACE AND RESULTED IN INCOME IN THE HANDS OF THE AS SESSEE, WHICH IS MUCH AFTER THE DATES ON WHICH THE INSTALMENTS OF ADVANCE TAX WERE PAYABLE. THEREFORE WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE INTEREST CHARGED UNDER SECTIO N 234C OF THE ACT AMOUNTING TO RS.9,74,576/-. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ITA NO.71/PN/2012 UNITED FARMING & REAL ESTATE A.Y. 2008-09 ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 25 TH JUNE, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE