ACIT, Palakkad V. Smt.Vinitha Jose, Cochin

ITA 83/COCH/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2586 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 10-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 15-03-2012
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: P K SASIDHARAN
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 83/COCH/2012 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME-TAX,CIRCLE-2(2), ERNAKULAM. VS. SMT. VINITHA JOSE, PROP. M/S. PAPERMARK GALLERY, BROADWAY, ERNAKULAM, COCHIN-682 031. [PAN: AFEPJ 1342K] (REVENUE-APPELLANT) (ASSESSEE- R ESPONDENT) REVENUE BY SMT. S. VIJAYAPRABHA, JR. DR ASSESSEE BY SHRI P.K. SASIDHARAN, FCA DATE OF HEARING 10/06/2013 DATE OF PRONOUNCEMENT 31/07/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DATED 15-12-2011 PASSED BY THE LD. CIT(A)-II, KOCHI AND IT RELATES T O THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN HOLDING THAT THE COST OF DEVELOPMENT OF LAND OF RS. 15.52 LAKHS AND BROKERAGE OF RS.5.00 LAKHS ARE DEDUCTIBLE AS EXPENDITURE FROM THE AMOUNT OF SHORT TERM CAPITAL GAINS COMPUTED BY THE ASSESSING OFFICER. 3. THE FACTS RELATING TO THE SAID ISSUE ARE STATED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN WEDDING CARDS, GREETI NG CARDS ETC. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SOLD CERTAIN VACANT L AND DURING THE YEAR UNDER CONSIDERATION AND THE PROFITS ARISING THERE FROM WE RE DECLARED UNDER THE HEAD INCOME I.T.A. NO.83/COCH/2012 2 FROM BUSINESS. AGAINST THE SAID INCOME, THE ASSES SEE ALSO CLAIMED VARIOUS TYPES OF EXPENSES. THE ASSESSING OFFICER TOOK THE VIEW THAT THE PROFITS ARISING FROM THE SALE OF VACANT PLOTS/LAND IS ASSESSABLE UNDER THE HEAD CAP ITAL GAIN, SINCE THE ACTIVITIES OF THE ASSESSEE DID NOT DEMONSTRATE THAT SHE WAS ENGAGED I N THE REAL ESTATE BUSINESS. ACCORDINGLY, THE ASSESSING OFFICER COMPUTED SHORT T ERM CAPITAL GAIN AT RS. 5,19,94,953/- WITHOUT ALLOWING ANY EXPENDITURE. 4. BEFORE THE ASSESSING OFFICER, THE ASSESSEE CLAIM ED THAT THE EXPENSES INCURRED TOWARDS COST OF DEVELOPMENT OF LAND AND PAYMENT OF BROKERAGE SHOULD BE ALLOWED AS DEDUCTION. IT WAS FURTHER SUBMITTED THAT THE ASSES SEE HAS PAID THE ABOVE SAID EXPENDITURE BY WAY OF CHEQUE/D.D AND ALSO DEDUCTED TDS WHEREVER FOUND NECESSARY. HOWEVER, THE ASSESSING OFFICER HELD THAT THE MAKING PAYMENT BY WAY OF CHEQUE/D.D OR DEDUCTING TDS FROM SUCH PAYMENTS, BY ITSELF WOULD N OT SHOW THAT THEY WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE SPECIFIC PURPOSES. HE FURTHER NOTED THAT THE EXPLANATION OFFERED AND THE DETAILS FURNISHED IN THIS REGARD AR E INADEQUATE AND INSUFFICIENT. FURTHER, THE ASSESSEE COULD NOT PRODUCE PROPER VOUCHERS ALSO . ACCORDINGLY, THE AO REJECTED CLAIM OF BOTH THE EXPENSES. 5. THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSI NG OFFICER BY FILING APPEAL BEFORE THE LD. CIT(A). THE FIRST APPELLATE AUTHORI TY CONFIRMED THE DECISION OF THE ASSESSING OFFICER THAT THE PROFITS ARISING FROM THE SALE OF VACANT PLOT/LAND IS ASSESSABLE UNDER THE HEAD CAPITAL GAIN. SINCE THE ASSESSEE DI D CHALLENGE THE SAID FINDING OF LD CIT(A) BEFORE US, IT HAS ATTAINED FINALITY. FURTHE R, THE LD. CIT(A) HELD THAT THE EXPENSES INCURRED TOWARDS THE COST OF DEVELOPMENT OF LAND AN D BROKERAGE PAID ARE DEDUCTIBLE FROM THE CAPITAL GAIN AS THEY WERE INCURRED IN CONN ECTION WITH PURCHASE AND SALE OF PROPERTIES. AGGRIEVED BY THE SAID DECISION, THE RE VENUE HAS FILED THIS APPEAL BEFORE US. 6. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS DISALLOWED BOTH THE EXPENSES CLAIMED BY THE ASSESSEE, REFERRED ABOVE, F OR THE REASONS THAT THE EXPLANATIONS AND DETAILS FURNISHED BY THE ASSESSEE WERE INADEQUATE. FURTHER THE ASSESSEE HAS ALSO FAILED TO FURNISH PROPER VOUCHERS TO SUPPORT THE EXPENDITURE CLAIM. I.T.A. NO.83/COCH/2012 3 7. ON THE CONTRARY, THE LD. AR SUBMITTED THAT THE A SSESSEE HAD INCURRED BOTH THE EXPENSES, VIZ., COST OF DEVELOPMENT OF LAND AND PAY MENT OF BROKERAGE, BY MAKING PAYMENTS BY WAY OF CHEQUE/D.D AND CASH. FURTHER TH E ASSESSEE HAS ALSO DEDUCTED TAX AT SOURCE WHEREVER IT IS FOUND NECESSARY. HE FURTH ER SUBMITTED THAT THE LD CIT(A) HAS GIVEN A CLEAR FINDING THAT BOTH THE EXPENSES WERE I NCURRED IN CONNECTION WITH THE TRANSFER OF LAND. HENCE, THE LD. CIT(A) WAS JUSTIF IED IN ALLOWING THE CLAIM FOR DEDUCTION OF BOTH THE EXPENSES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. THERE SHOULD NOT BE ANY DOUBT THAT THE EXPENSES INCURRED TOWARDS THE COST OF DEVELOPMENT OF LAND AND PAYMENT OF BROKERAGE IN CONNECTION WITH SE LLING THE PROPERTY ARE DIRECT EXPENSES AND HENCE, THEY ARE ALLOWABLE AS DEDUCTION . WHILE COMPUTING THE CAPITAL GAIN IN THE INSTANT CASE, THE ASSESSING OFFICER HAS DISALLOWED THE EXPENSES WITH A SPECIFIC OBSERVATION THAT THE ASSESSEE HAS FAILED T O GIVE ADEQUATE EXPLANATION AND SUFFICIENT DETAILS IN SUPPORT OF THE CLAIM OF THE A BOVE SAID EXPENSES. THE AO HAS ALSO OBSERVED THAT THE VOUCHERS MAINTAINED BY THE ASSESS EE IN SUPPORT OF BOTH THE EXPENSES WERE NOT PROPER. HOWEVER, THE AO HAS FAILED TO DIS CUSS ABOUT THE NATURE OF EXPLANATIONS AND DETAILS THAT WERE FURNISHED BY THE ASSESSEE AND HOW THEY WERE DEFICIENT. 9. IT IS NOT CLEAR AS TO WHETHER THE LD. CIT(A) HAS EXAMINED THE VOUCHERS MAINTAINED BY THE ASSESSEE. THE LD CIT(A) HAS ALLOWED THE CL AIM, BY ACCEPTING THAT THE EXPENSES INCURRED ON DEVELOPMENT OF LAND AND PAYMENT OF BROK ERAGE ARE ALLOWABLE AS DEDUCTION WHILE COMPUTING THE CAPITAL GAIN. HOWEVER, THE ISS UE IS WHETHER THE ASSESSEE HAS PROVED THE INCURRING OF BOTH THE EXPENSES. THE LD C IT(A) HAS NOT RECORDED A FINDING THAT THE EXPLANATIONS AND EVIDENCES FURNISHED BY TH E ASSESSEE JUSTIFY THE CLAIM OF THE ABOVE SAID EXPENSES. THUS IT IS SEEN THAT THE LD. CIT(A) HAS ALLOWED BOTH THE EXPENSES WITHOUT MAKING PROPER EXAMINATION OF THE E XPLANATIONS AND EVIDENCES FURNISHED BY THE ASSESSEE. I.T.A. NO.83/COCH/2012 4 10. THUS, IT IS SEEN THAT BOTH THE TAX AUTHORIT IES HAVE FAILED TO EXAMINE OR FAILED TO GIVE A SPECIFIC FINDING WITH REGARD TO THE GENUINEN ESS OF THE CLAIM. UNDER THESE CIRCUMSTANCES, IN OUR VIEW, THIS MATTER REQUIRES FR ESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE O RDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER TO THE FILE OF THE ASSESSIN G OFFICER WITH A DIRECTION TO EXAMINE THE CLAIM OF BOTH THE EXPENSES, REFERRED ABOVE, AFR ESH AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO FURNISH NECESSARY INFORMATION AND EVIDENCES IN SUPPORT OF HER CLAIM. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 31-07-2 013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 31ST JULY, 2013 GJ COPY TO: 1. SMT. VINITHA JOSE, PROP. M/S. PAPERMARK GALLERY, BROADWAY, ERNAKULAM, COCHIN-682 031. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -2(2), ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN