Mubarak Gafur Korabu, Solapur V. Income-tax Officer, Ward - 2, Pandharpur

ITA 752/PUN/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8812 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 24-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Fair market value
• Section: 56(2)(vii)(b); 143(3); 2(14); 56(2); 201; 101; 20

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 752 /P U N/201 8 / ASSESSMENT YEAR : 20 1 5 - 1 6 MUBARAK GAFUR KORABU, MALEWADI - AKLUJ, TAL: MALSHIRAS, DIST: SOLAPUR 413101 . / APPELLANT PAN: CFIPK9968N VS. THE INCOME TAX OFFICER, WAD 2 , P ANDHARPUR . / RESPONDENT / APPELLANT BY : SHRI P.S. SHINGTE / RESPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 1 3 . 0 3 .201 9 / DATE OF PRONOUNCEMENT: 05 . 0 4 .20 1 9 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 7 , PUNE, DATED 2 6 . 0 2 .201 8 RELATING TO ASSESSMENT YEAR 20 1 5 - 1 6 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - ITA NO. 752 /P U N/201 8 SHRI MUBARAK GAFUR KORABU 2 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION MADE BY THE AO U/S 56(2)(VII)(B) REPRESENTING THE DIFFERENCE BETWEEN THE STAMP DUTY VALUE AN D THE ACTUAL PURCHASE CONSIDERATION OF RS.27,58,000/ - IN SPITE OF THE FACT THE PROVISIONS OF THE SAID SECTION ARE NOT APPLICABLE TO THE FACTS OF THE CASE INASMUCH AS THE AGRICULTURAL LAND PURCHASED BY THE APPELLANT NOT BEING A PROPERTY AS PER THE DEFINIT ION PROVIDED IN THE SAID SECTION, IT BEING AN AGRICULTURAL LAND NOT FALLING IN THE DEFINITION OF CAPITAL ASSET. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST ADDITION MADE UNDER SECTION 56(2)(VII)(B) OF THE ACT I.E. DIFFERENCE BETWEEN STAMP DUTY VA LUE AND THE ACTUAL PURCHASE CONSIDERATION. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD MADE INVESTMENT IN IMMOVABLE PROPERTY. THE ASSESSEE HAD PURCHASED IMMOVABLE PROPERTY WO R TH 1,55,16,000/ - ON 21.01.2015 AND OF 33,25,000/ - ON 10.04.2014. THE ASSESSEE WAS ASKED TO FURNISH COPIES OF PURCHASE DEED S AND ALSO EXPLAIN THE SOURCES OF INVESTMENT S IN THE SAID PROPERT IES . THE ASSESSEE FURNISHED THE SAME AND EXPLAINED THAT THE PROPE RTIES WERE PURCHASED IN THE JOINT NAMES AND THE RESPECTIVE SHARES IN THE PROPERTY HAD BEEN SHOWN IN THE RETURN OF INCOME. THE ASSESSEE ALSO EXPLAINED THE SOURCES OF INVESTMENTS. WITH REGARD TO PROPERTY PURCHASED ON 21.01.2015, THE ASSESSING OFFICER NOTED THAT THE SHARE OF ASSESSEE WAS 50%. THE ASSESSEE EXPLAINED THAT SUM OF 1,55,16,000/ - WAS THE STAMP DUTY VALUE AND THE ACTUAL SALE CONSIDERATION WAS 1 CRORE, FOR WHICH THE ASSESSEE HAD PAID 50 LAKHS ; ALONG WITH STAMP DUTY, REGISTRATION CHARGES, IT WORKED OUT TO 54,04,900/ - . THE ASSESSING OFFICER OBSERVED THAT THE ASSE SSEE HAD PURCHASED PROPERT IES FOR CONSIDERATION WHICH WAS LESS THAN STAMP DUTY VALUE AND WAS OF THE VIEW THAT PROVISIONS OF SECTION 56(2)(VII)(B) (II) OF THE ACT WERE CLEARLY ATTRACTED. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAID SECTION , BE NOT I NVOKED AND ITA NO. 752 /P U N/201 8 SHRI MUBARAK GAFUR KORABU 3 ADDITION MADE. THE ASSESSEE IN REPLY, POINTED OUT THAT SECTION SPECIFICALLY MENTIONED THE ASSET VIZ. LAND OR BUILDING OR BOTH , BUT OTHER THAN CAPITAL ASSET. HE FURTHER REFERRED TO DEFINITION OF CAPITAL ASSET UNDER SECTION 2(14) OF THE ACT, W HICH EXEMPTED AGRICULTURAL LAND. THE ASSESSEE EXPLAINED THAT HE HAD PURCHASED AGRICULTURAL LAND WHICH WAS SPECIFICALLY MENTIONED IN THE PURCHASE DEED AND HENCE, PROVISIONS OF SECTION 56(2) OF THE ACT WERE NOT APPLICABLE. HE ALSO PLACED RELIANCE ON CBDT C IRCULAR IN THIS REGARD. THE ASSESSING OFFICER REJECTED THE PLEA OF ASSESSEE ON THE GROUND THAT THE AFORESAID SECTION STATE S ANY IMMOVABLE PROPERTY AND DID NOT MAKE ANY DISTINCTION BETWEEN AGRICULTURAL OR NON - AGRICULTURAL PROPERTY. THUS, THE DIFFERENCE BE TWEEN STAMP DUTY VALUE AND ACTUAL CONSIDERATION , AMOUNTING TO 27,58,000/ - WAS TREATED AS INCOME UNDER SECTION 56(2)(VII)(B)(II) OF THE ACT AND ADDED UNDER THE HEAD INCOME FROM OTHER SOURCES. 5. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER, AGAIN ST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SECTION 56(2)(VII) OF THE ACT TALKS OF (A) ANY SUM OF MONEY, WITHOUT CONSIDERATION; (B) TALKS OF IMMOVABLE PROPERTY AND (C) TALKS OF P ROPERTY OTHER THAN IMMOVABLE PROPERTY. HE FURTHER REFERRED TO CLAUSE (D) OF EXPLANATION UNDER THE SECTION, WHICH DEFINES PROPERTY AS FOLLOWING CAPITAL ASSET. HE STRESSED THAT AGRICULTURAL LAND WAS NOT CAPITAL ASSET AND IN ANY CASE, THE ASSESSEE HOLDS THE SAID LAND AS ITS STOCK IN TRADE. HE THEN REFERRED TO THE MEMORANDUM INSERTING THE SAID EXPLANATION. HE FURTHER REFERRED TO THE BALANCE SHEET PLACED AT PAGE 18 OF PAPER BOOK AND UNDER THE HEADING CURRENT ASSET, ITA NO. 752 /P U N/201 8 SHRI MUBARAK GAFUR KORABU 4 THE SAID INVESTMENT IN THE PROPERTY WAS S HOWN. HE THEN, POINTED OUT THAT THE SAID PROPERTY WAS SOLD IN 2016 AND WAS SHOWN AS BUSINESS INCOME. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACING RELIANCE ON THE ORDERS OF AUTHORITIES BELOW , ALSO PLACED RELIAN CE ON THE RATIO LAID DOWN BY JAIPUR BENCH OF TRIBUNAL IN ITO VS. TRILOK CHAND SAIN (2019) 101 TAXMANN.COM 391 (JAIPUR TRIB.). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. SECTION 56(2)(VII) OF THE ACT TALKS ABOUT WHERE AN INDIVIDUAL O R HUF RECEIVED IN ANY PREVIOUS YEAR FROM ANY PERSON OR PERSONS ON OR AFTER FIRST DAY OF OCTOBER, 2009 BUT BEFORE FIRST DAY OF APRIL, 2017, UNDER CLAUSE (A) ANY SUM OF MONEY WITHOUT CONSIDERATION EXCEEDING 50,000/ - , THEN THE WHOLE OF SUCH SUM IS CHARGEABLE TO TAX UNDER INCOME FROM OTHER SOURCES. UNDER CLAUSE (B), ANY IMMOVABLE PROPERTY I.E. (I) WITHOUT CONSIDERATION, THE STAMP DUTY VALUE OF WHICH EXCEEDS 50,000/ - , THEN STAMP DUTY VALUE OF SUCH PROPER TY IS TO BE ADDED; AND (II) FOR CONSIDERATION WHICH IS LESS THAN STAMP DUTY VALUE OF THE PROPERTY BY AN AMOUNT EXCEEDING 50,000/ - , THEN STAMP DUTY VALUE OF SUCH PROPERTY AS EXCEEDS SUCH CONSIDERATION IS TO BE ADDED IN THE HANDS OF PERSON AS INCOME FROM OTHER SOURCES. CLAUSE (C) TALKS OF ANY PROPERTY OTHER THAN IMMOVABLE PROPERTY AND SUB - CLAUSE (I) TALKS OF WITHOUT CONSIDERATION THE AGGREGATE FAIR MARKET VALUE WHICH EXCEEDS 50,000/ - ; AND SUB - CLAUSE (II) TALKS OF CONSIDERATION WHICH IS LESS THAN AGGREG ATE MARKET VALUE OF THE PROPERTY BY AN AMOUNT EXCEEDING 50,000/ - . EXPLANATION UNDER THE SAID SECTION DEFINES CERTAIN TERMS AND CLAUSE (D) TALKS OF PROPERTY TO MEAN CAPITAL ASSETS OF THE ASSESSEE AND THEN REFERS TO THE LIST OF ASSETS . ITA NO. 752 /P U N/201 8 SHRI MUBARAK GAFUR KORABU 5 9. THE CASE OF ASS ESSEE BEFORE US IS THAT IT HAS PURCHASED AGRICULTURAL ASSET WHICH WAS HELD AS CURRENT ASSET BY THE ASSESSEE AND WHEN THE SAME WAS SOLD IN 2016, BUSINESS INCOME WAS DECLARED ON THE SAID TRANSACTION. THE ASSESSEE ALSO STRESSED THAT AGRICULTURAL LAND PURCH ASED BY ASSESSEE WAS NOT CAPITAL ASSET, FOR WHICH RELIANCE WAS PLACED ON THE DEFINITION OF CAPITAL ASSET UNDER SECTION 2(14) OF THE ACT. AS PER TERMS USED UNDER THE ACT, AN IMMOVABLE PROPERTY IS DEFINED TO BE THE LAND OR BUILDING OR BOTH AS PER CLAUSE ( D) OF EXPLANATION UNDER THE SAID SECTION. HENCE, CLAUSES (A) AND (B) OF SECTION 56(2)(VII) OF THE ACT ARE NOT ATTRACTED. CLAUSE (C) TALKS OF ANY PROPERTY OTHER THAN IMMOVABLE PROPERTY. SECTION 2(14) OF THE ACT DEFINES CAPITAL ASSET TO MEAN PROPERTY OF ANY KIND HELD BY ASSESSEE WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION AND ANY SECURITIES HELD BY FOREIGN INSTITUTIONAL INVESTOR BUT IT DOES NOT INCLUDE ANY (I) STOCK IN TRADE , CONSUMABLE STORES OR RAW MATERIALS HELD FOR THE PURPOSE OF BUSINES S ; (II) PERSONAL EFFECTS I.E. MOVABLE PR OPERTY HELD FOR PERSONAL USE AND (III) AGRICULTURAL LAND IN INDIA. IN THE FIRST INSTANCE, WHERE THE ASSESSEE HAD PURCHASED AGRICULTURAL LAND WHICH WAS ITS STOCK IN TRADE AND ON ITS SALE THE RECEIPTS WERE RECOGNIZED AND ACCEPTED AS BUSINESS INCOME, THEN THERE IS NO QUESTION OF ATTRACTING THE PROVISIONS OF SECTION 56(2)(VII)(B) OF THE ACT AGAINST ASSESSEE. EVEN OTHERWISE, THE LAND HELD BY ASSESSEE WAS AGRICULTURAL LAND WHICH IS NOT CAPITAL ASSET AS CLEARLY DEFINED UND ER SECTION 2(14) OF THE ACT, WHICH EXCLUDES AGRICULTURAL LAND OUT OF DEFINITION OF CAPITAL ASSET. THE ASSET OWNED BY ASSESSEE IS NOT CAPITAL ASSET , HENCE CLAUSE (B) IS NOT ATTRACTED AND PROVISIONS OF CLAUSE (C) I.E. PROPERTY OTHER THAN IMMOVABLE PROPERT Y IS ALSO NOT ATTRACTED, IN VIEW OF DEFINITION OF PROPERTY AS PER CLAUSE (D) UNDER EXPLANATION I.E. PROPERTY MEANS THE FOLLOWING CAPITAL ASSETS OF THE ASSESSEE: - ITA NO. 752 /P U N/201 8 SHRI MUBARAK GAFUR KORABU 6 (I) IMMOVABLE PROPERTY BEING LAND OR BUILDING OR BOTH; (II) SHARES AND SECURITIES; (III) JEWELLERY; (IV) ARCHAEOLOGICAL COLLECTIONS; (V) DRAWINGS; (VI) PAINTINGS; (VII) SCULPTURES; (VIII) ANY WORK OF ART; [OR] (IX) BULLION. 10. IN THE TOTALITY OF ABOVE DEFINITIONS, WE HOLD THAT AGRICULTURAL LAND PURCHASED BY ASSESSEE IS NOT GOVERN ED BY THE PROVISIONS OF SECTION 56(2)(VII)(B) OF THE ACT BEING NOT CAPITAL ASSET AND ALSO BECAUSE OF THE FACT THAT THE ASSESSEE WAS HOLDING IT AS STOCK IN TRADE. HENCE, IT IS OUTSIDE THE PURVIEW OF SAID SECTION AND NO ADDITION HAS TO BE MADE IN THE HANDS OF ASSESSEE. 11. NOW, COMING TO THE DECISION OF JAIPUR BENCH OF TRIBUNAL IN ITO VS. TRILOK CHAND SAIN (SUPRA), WHEREIN PROVISIONS OF CLAUSE (B) OF SECTION 56(2)(VII) OF THE ACT WERE CONSIDERED. HOWEVER, THEY HAVE FAILED TO TAKE INTO COGNIZANCE THE PROVIS IONS OF CLAUSE (C) OF SAID SECTION, WHICH TALKS OF PROPERTY OTHER THAN IMMOVABLE PROPERTY. THE TRIBUNAL IN PARA 6 REFERS ONLY TO THE DEFINITION OF IMMOVABLE PROPERTY AND HOLD THAT IT IS NOT CIRCUMSCRIBED OR LIMITED TO ANY PARTICULAR NATURE OF PROPERTY. HOWEVER, CLAUSE (C) VERY CLEARLY TALKS OF PROPERTY OTHER THAN IMMOVABLE PROPERTY AND THE WORD PROPERTY HAS FURTHER BEEN DEFINED UNDER CLAUSE (D) OF EXPLANATION THEREUNDER. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, THERE IS NO MERIT IN RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE RATIO LAID DOWN BY JAIPUR BENCH OF TRIBUNAL IN ITO VS. TRILOK CHAND SAIN (SUPRA). IN VIEW OF CLEAR - CUT PROVISIONS OF THE ACT, WE FIND NO MERIT IN THE ORDERS OF AUTHORIT IES BELOW IN ITA NO. 752 /P U N/201 8 SHRI MUBARAK GAFUR KORABU 7 MAKING THE AFORESAID ADDITION IN THE HANDS OF ASSESSEE. THE GROUND OF APPEAL NO.1 RAISED BY ASSESSEE IS THUS, ALLOWED. 12 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 5 TH DAY OF APRIL , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 5 TH APRIL , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 7 , PUNE ; 4. THE PR. CIT - 6 , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE