N.Mohammed Yakub, CHENNAI V. ITO, CHENNAI

ITA 852/CHNY/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3870 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 04-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAHADEVAN
• Assessee Lawyers: K MEENAKSHISUNDARAM ITP
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . ! , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO. 852/MDS/2016 $ %$ / ASSESSMENT YEAR : 2007-08 N.MOHAMED YAKUB, 26/53, 1 ST MAIN ROAD, NEW COLONY, CHROMPET, CHENNAI 600 044. PAN : AEUPM1421M V. INCOME TAX OFFICER, WARD I (3), TAMBARAM, CHENNAI. ( &' /APPELLANT) ( ()&' /RESPONDENT) &' * + /APPELLANT BY : SHRI K.MEENAKSHI SUNDARAM, ITP ()&'*+ /RESPONDENT BY : SHRI SAHADEVAN, JCIT , *-' /DATE OF HEARING : 07.06.2016 . % *-' /DATE OF PRONOUNCEMENT : 06.09.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(A) -10, CHENNAI DATED 28.01.2016 AND PERTAINS TO ASSES SMENT YEAR 2007-08. 2. SHRI K.MEENAKSHI SUNDARAM, THE LEARNED REPRESENT ATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT OF 2 I.T.A. NO.852/MDS//2016 LEATHER. THE ASSESSEE HAS ALSO SOLD THE LEATHER IN THE DOMESTIC MARKETS. FOR THE PURPOSE OF EXPANSION OF BUSINESS, THE ASSESSEE PURCHASED 74 CENTS OF LAND IN SURVEY NO.22, NEMILICHERRY VILLAGE, PALLAVA RAM MUNICIPALITY, CHENNAI. THE ASSESSEE SOLD THE LAND DURING THE YEAR UNDER CO NSIDERATION. IN ORDER TO OVERCOME THE FINANCIAL CRISIS, THE LAND WAS SOLD FO R RS.28,05,000/-. THE RESULTANT PROFIT ON SALE OF THE LAND WAS OFFERED FO R TAXATION UNDER THE HEAD INCOME FROM BUSINESS. HOWEVER, THE ASSESSING OFFICE R ASSESSED THE PROFIT ON SALE OF THE LAND AS SHORT TERM CAPITAL GAIN BY APPL YING THE PROVISIONS OF SECTION 50C OF THE ACT. THE CIT(A) CALLED FOR A REM AND REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER DURING THE REMAND PROCEEDINGS FOUND THAT THERE WAS INCONSISTENCY IN THE ASSESSEES CLAI M REGARDING THE USAGE OF THE LAND. THE ASSESSEE HAS ALSO CLAIMED THAT 74 CENTS O F LAND PURCHASED BY THE ASSESSEE WAS A VACANT AGRICULTURAL LAND. THE LEARNE D REPRESENTATIVE FOR THE ASSESSEE COULD NOT PRODUCE ANY MATERIAL. ON THE BAS IS OF THE SO CALLED REMAND REPORT FILED BY THE ASSESSING OFFICER, THE CIT(A) R EFUSED TO ADMIT THE ADDITIONAL MATERIAL FILED BY THE ASSESSEE. THE CIT(A) CONFIRME D THE ORDER OF THE ASSESSING OFFICER HOLDING THAT THE LAND IN QUESTION IS A CAPI TAL ASSET. THE CLAIM OF THE ASSESSEE THAT IT IS A AGRICULTURAL LAND WAS NOT CON SIDERED BY THE CIT(A). REFERRING TO THE ORDER OF THE CIT(A), THE LEARNED R EPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) ADMITTED THAT TH E ASSESSEE HAS PURCHASED THE AGRICULTURAL LAND. HOWEVER, HE FOUND THAT THE A GRICULTURAL LAND WAS KEPT FOR COMMERCIAL PURPOSE. ACCORDING TO THE LEARNED REPRES ENTATIVE FOR THE ASSESSEE, THE CIT(A) FIND THAT IT IS AN AGRICULTURAL LAND AND THE LAND WAS NOT USED FOR ANY COMMERCIAL PURPOSE EVEN THOUGH THERE WAS AN INTENTI ON TO USE THE SAME FOR 3 I.T.A. NO.852/MDS//2016 COMMERCIAL PURPOSE. THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI SAHADEVAN, THE LEARNED DEP ARTMENT REPRESENTATIVE SUBMITTED THAT THE ASSESSEES CLAIM THAT THE LAND IN QUESTION WAS A DEPRECIABLE BUSINESS ASSET, THEREFORE, THE PR OFIT ON SALE OF THE LAND HAS TO BE ASSESSED AS BUSINESS PROFIT. REFERRING TO T HE ORDER OF THE CIT (A), THE LEARNED DEPARTMENT REPRESENTATIVE SUBMITTED THAT SE CTION 41(5) OF THE INCOME TAX ACT REFERS TO PROFIT AND GAIN ARISING FROM TRAN SFER OF CAPITAL ASSET. SINCE CAPITAL ASSET WAS TRANSFERRED, THE CIT (A) FOUND TH AT THE PROFIT HAS TO BE ASSESSED AS CAPITAL GAIN. THEREFORE, THE PROVISIO N OF SECTION 50C IS SQUARELY APPLICABLE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSES SEE ADMITTEDLY ENGAGED IN THE BUSINESS OF EXPORT OF LEATHERS AND ALSO SALE OF LEATHER IN THE DOMESTIC MARKET. IT IS NOT THE CASE OF THE ASSESSEE THAT HE IS ENGAGED IN THE BUSINESS OF REAL ESTATE. INITIALLY, THE ASSESSEE PURCHASED THE LAND FOR EXPANSION OF HIS LEATHER BUSINESS. THEREFORE, THE LAND PURCHASED BY THE ASSESSEE IS A CAPITAL ASSET. IT IS NOT THE STOCK IN TRADE OF THE ASSESSEE . THE ASSESSEE MIGHT HAVE INTENDED TO CARRY ON HIS BUSINESS BY USING THE LAND . DUE TO FINANCIAL CRISIS, THE ASSESSEE WAS FORCED TO SELL THE LAND DURING THE YEA R UNDER CONSIDERATION. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT WHEN THE LAND WAS PURCHASED AS A CAPITAL ASSET, THE PROFIT ON SALE OF SUCH LAND HAS TO BE TREATED 4 I.T.A. NO.852/MDS//2016 AS CAPITAL GAIN. THE MATTER WOULD BE STANDING IN DI FFERENT FOOTING IF THE ASSESSEE TREATED THE LAND IN QUESTION AS A STOCK IN TRADE. AS OBSERVED EARLIER, IT IS NOT THE CASE OF THE ASSESSEE THAT THE LAND IN QU ESTION IS A STOCK IN TRADE. THEREFORE, FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN, THE PROVISIONS OF SECTION 50C WOULD COME INTO OPERATION. 5. IN VIEW OF THE ABOVE, THE TRIBUNAL DO NOT FIND A NY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED ON 06 TH SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- ( . ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) ' /ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, / /DATED, THE 6 TH SEPTEMBER, 2016. SP. * (-01 21%- /COPY TO: 1. &' /APPELLANT 2. ()&' /RESPONDENT 3. , 3- ( )/CIT(A) 4. , 3- /CIT, 5. 14 (- /DR 6. 5$ 6 /GF.