Sri, H,J, Siwani, Bangalore V. ACIT, Bangalore

ITSSA 5/BANG/2014

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2202 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-06-2016
• Assessment Year: misc
• Appeal Filed On: 05-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR AGGARWALA
• Assessee Lawyers: PRASAD R SRINATH
• Keywords: Capital asset; Business income; Principle of natural justice; Cost of acquisition; Block assessment; Capital receipt

Judgement Text

IT(SS)A NOS.5 & 6(B)/14 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C, BANGALORE BEFORE SHRI A.K.GARODIA, AM (SMC) ITA NOS.5 & 6(B)/2014 (BLOCK PERIOD: 01-04-1991 TO 29-05-2001 SHRI H.J.SIWANI & M.J.SIWANI, NO.14, GENEVA HOUSE, CUNNINGHAM ROAD, BANGALORE-560 052 PAN NO.AHWPS5879E APPELLANT VS THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-8(1), BANGALORE RESPONDENT ASSESSEE BY : SHRI PRASAD R.SRINATH, ADVOCATE REVENUE BY : SHRI SUNIL KUMAR AGGARWALA, JCIT DATE OF HEARING : 07-06-2016 DATE OF PRONOUNCEMENT : 24-0 6-2016 O R D E R PER SHRI A.K.GARODIA, AM: BOTH THESE APPEALS ARE FILED BY TWO DIFFERENT BUT CONNECTED ASSESSEES AND THEREFORE, BOTH THESE APPEALS WERE HEARD TOGETH ER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAK E OF CONVENIENCE. ITA NO.5(BANG)/2014 THIS APPEAL HAS BEEN FILED BY SHRI H.J.SIWANI, FOR BLOCK PERIOD FROM 01-04-1991 TO 29-05-2001 2. THE GROUNDS RAISED BY THIS ASSESSEE ARE AS UNDER : 1. THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE APPELLANT, IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, NATURAL JUSTICE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 2. THE AUTHORITIES BELOW ERRED IN ASSESSING THE SUM OF RS.16,50,000J - BEING THE AMOUNT FORFEITED AND DEDUCTED FROM THE COST OF THE CAPITAL ASSET ON THE ABORTED SALE U/S 51 OF THE INCOME- TAX ACT, IT(SS)A NOS.5 & 6(B)/14 1961 BY THE APPELLANT, AS BUSINESS INCOME FOR THE IMPUGNED ASSESSMENT YEAR 1999-00 LIABLE TO BE CONSIDERED AS UNDISCLOSED INCOME IN THE BLOCK ASSESSMENT YEAR UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 3. WITHOUT PREJUDICE TO THE ABOVE THE SAID AMOUNT IS NOT TAXABLE AS BUSINESS INCOME AND THE AUTHORITIES OUGHT TO HAVE HELD THE SAME AS CAPITAL RECEIPT UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 4. THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE APPELLANT HAS AND CONTINUES TO HOLD THE PROPERTY AT RAMAGONDANAHALLI AS INVESTMENT ONLY AND NOT AS A BUSINESS ASSET UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 5. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN HOLDING THAT THE PROPERTY AT RAMAGONDANAHALLI WAS A BUSINESS ASSET AND NOT A CAPITAL ASSET AS CLAIMED BY THE APPELLANT AND CONSEQUENTLY DISALLOWING THE SAME AND TREATING IT AS BUSINESS INCOME WHICH IS ERRONEOUS UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE 6. THE AUTHORITIES FAILED TO APPRECIATE THAT THE APPELLANT HAD NOT EVEN SET UP THE BUSINESS OF REAL ESTATE LET ALONE COMMENCED THE SAME AND TREAT IT AS BUSINESS INCOME UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 7. THE AUTHORITIES BELOW FAILED TO GIVE AN OPPORTUNITY TO THE APPELLANT TO PROVE THE VERACITY OF HIS CLAIM OF DEDUCTION OF THE FORFEITED AMOUNT FROM THE ADVANCES U/ S 51 OF THE ACT AND THE TRUE NATURE OF THE PROPERTY ALONG WITH EVIDENCES WHICH IS AGAIN ST THE PRINCIPLE OF NATURAL JUSTICE AND CONSEQUENTLY T HE ORDER DESERVES TO BE CANCELLED UNDER THE FACTS AND CIRCUMSTANCES OF THE APPEL L ANT ' S CASE . 8. THE APPELLANT DENIES HIS LIABILITY TO BE CHARGED TO INTEREST U/S. 158BF A OF THE INCOME-TAX ACT, 1961 UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 9. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, IT(SS)A NOS.5 & 6(B)/14 DELETE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE . 10. IN THE VIEW OF THE ABOVE AN D O THER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICE AND EQUITY. 3. SIMILARLY, IN ITA NO.6(BANG)/2014 THE ASSESSEE SHRI M.J.SIWANI, HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE APPELLANT, IS OPPOSED TO LAW, WEIGHT OF EVIDENCE , NATURAL JUSTICE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 2. THE AUTHORITIES BELOW ERRED IN ASSESSING THE SUM OF RS.16,50 , 000J - BEING THE AMOUNT FORFEITED AND DEDUCTED FROM THE COST OF THE CAPITAL ASSET ON THE ABORTED SALE U/ S 51 OF THE INCOME- TAX ACT, 1961 BY THE APPELLANT, AS BUSINESS INCOME FOR THE IMPUGNED ASSESSMENT YEAR 1999-00 LIABLE TO BE CONSIDERED AS UNDISCLOSED INCOME IN THE BLOCK ASSESSMENT Y EAR UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT' S CASE. 3. WITHOUT PREJUDICE TO THE ABOVE THE SAID AMOUNT I S NOT TAXABLE AS BUSINESS INCOME AND THE AUTHORITIES OUGHT TO HAVE HELD THE SAME AS CAPITAL RECEIPT UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 4. THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE APPELLANT HAS AND CONTINUES TO HOLD THE PROPERT Y AT RAMAGONDANAHALLI AS INVESTMENT ONLY AND NOT AS A BUSINESS ASSET UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 5. THE AUTHORITIES BELO W ARE NOT JUSTIFIED IN HOLDING THAT THE PROPERTY AT RAMAGONDANAHALLI WAS A BUSINESS ASSET AND NO T A CAPITAL ASSET AS CLAIMED B Y THE APPELLANT AND CONSEQUEN T L Y DISALLOWING THE SAME AND TREATING IT AS BUSINESS INCOME WHICH IS ERRONEO US UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE. 6. THE AUTHORITIES FAILED TO APPRECIATE IT(SS)A NOS.5 & 6(B)/14 THAT THE APPELLANT HAD NOT EVEN SET UP THE BUSINESS OF REAL ESTATE LET ALONE COMMENCED THE SAME AND TREAT IT AS BUSINESS INCOME UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 7. THE AUTHORITIES BELOW FAILED TO GIVE AN OPPORTUNITY TO THE APPELLANT TO PROVE THE VERACITY OF HIS CLAIM OF DEDUCTION OF THE FORFEITED AMOUNT FROM THE ADVANCES U/ S 51 OF THE ACT AND THE TRUE NATURE OF THE PROPERTY ALONG WITH EVIDENCES WHICH IS AGAIN ST THE PRINCIPLE OF NATURAL JUSTICE AND CONSEQUENTLY T HE ORDER DESERVES TO BE CANCELLED UNDER THE FACTS AND CIRCUMSTANCES OF THE APPEL L ANT ' S CASE . 8. THE APPELLANT DENIES HIS LIABILITY TO BE CHARGED TO INTEREST U/S. 158BF A OF THE INCOME-TAX ACT, 1961 UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 9. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ANY OF THE GROUNDS URGED ABOVE . 10. IN THE VIEW OF THE ABOVE AN D O THER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICE AND EQUITY. 4. AT THE VERY OUTSET, IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THIS IS SECOND ROUND OF APPEAL BEFORE THE TRIBUNAL AND HE SUBMITTED A COPY OF THE TRIBUNAL ORDER IN TH E FIRST ROUND IN ITA NO.1,2,6 & 7/BANG/2005 DATED 31-08-2006. HE HAS DRAWN MY ATTENTION TO PARA 8.3 OF THIS TRIBUNAL ORDER ON PAGES 43 & 44 OF THE TRIBUNAL ORDER BOOK AS PER WHICH THE TRIBUNA L RESTORED BACK THE ISSUE REGARDING THE TAXABILITY OF FORFEITU RE OF ADVANCE OF RS.33.00 LAKHS SHARED BY THESE TWO PERSONS EQUALLY I.E. RS.16.50 LAKHS IN EACH CASE. HE POINTED OUT THAT AS PER THIS TRIBUNAL ORDER, IT IS HELD BY THIS TRIBUNAL THAT TREATING TH E ENTIRE INCOME IT(SS)A NOS.5 & 6(B)/14 WOULD NOT BE CORRECT BECAUSE THE RECEIPT OF THIS AM OUNT INCLUDES BOTH CAPITAL AS WELL AS PROFIT IF ANY. HE SUBMITTED THAT AS PER THIS TRIBUNALS ORDER, THE ENTIRE RECEIPT OF THIS AMOUNT OF RS.33.00 LAKHS CANNOT BE TAXED AS INCOME IN FULL. HE SUBMITT ED THAT THE MAIN GRIEVANCE OF THIS ASSESSEE IS THIS THAT AS PER SEC.51 OF THE IT ACT, FORFEITURE OF ADVANCE RECEIVED AGAINST CAPITAL ASSET HAS TO BE REDUCED FROM THE COST OF ASSET AND THE SAME CANNOT BE TAXED AS INCOME ON FORFEITURE BUT THIS CLAIM OF THE ASSESSEE IS NOT ACCEPTED BY THE DEPARTMENT ON THIS BASIS THAT THIS IS NOT AN ADVANCE FOR SALE OF A CAPITAL ASSET BUT THE ASSET IN QUESTION I S A BUSINESS ASSET. HE SUBMITTED THAT THIS ALLEGATION OF DEPARTM ENT IS NOT SUPPORTED BY ANY EVIDENCE OR FACT AND THEREFORE, TH ERE IS NO MERIT IN THE SAME. AT THIS JUNCTURE, THE BENCH WANTED T O KNOW WHAT IS THE DATE AND COST OF ACQUISITION OF THIS ASSET. IN REPLY, IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT DATE O F ACQUISITION IS 29-03-1995 AND THE COST OF ACQUISITION IS RS.31,76, 160/-. AT THIS JUNCTURE, IT WAS POINTED OUT BY THE BENCH THAT EVEN IF THE CLAIM OF ASSESSEE IS ALLOWED REGARDING ADJUSTMENT OF FORFEIT URE OF ADVANCE OF RS.33.00 LAKHS AGAINST COST OF ASSET THEN ALSO, THERE WILL BE SURPLUS OF RS.1,23,840/- WHICH HAS TO BE TAXED IN T HE PRESENT YEAR IN EQUAL PROPORTION IN THE HANDS OF BOTH THESE ASSESSEES. IN REPLY LD.AR OF THE ASSESSEE AGREED TO THIS PROPOSIT ION. 5. LD.DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE ALSO SUBMITTED THAT A CLEAR F INDING HAS BEEN IT(SS)A NOS.5 & 6(B)/14 GIVEN BY THE LD.CIT(A) IN PARA-5 OF HIS ORDER THAT THE ASSESSEE IS ENGAGED IN THE REAL ESTATE BUSINESS AND THIS IS NOT AN ADVANCE RECEIVED AGAINST CAPITAL ASSET AND THEREFORE, SEC.5 1 OF THE IT ACT IS NOT APPLICABLE. HE PLACED RELIANCE ON THE JUDGME NT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF SURAJ LAMP & INDUSTRIES (P) LTD. VS STATE OF HARYANA IN 340 ITR 1(SC). 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL I REPRODUCE PARA 4 & 5 OF THE ORDER OF LD. CIT(A)S O RDER WHICH WILL SHOW THE BASIS OF THE DECISION OF THE LD. CIT(A). 4. BEFORE ME IN APPEAL, IT WAS CONTENDED THAT THE APPE LLANT WAS NOT CARRYING ON THE BUSINESS OF REAL ESTATE AND THE RETURNS OF INCOME WITH STATEMENTS OF TOTAL INCOME FROM AY 1992 - 93 TO 2000- 01, COMPRISED IN THE BLOCK PERIOD, WERE FILED TO SU BSTANT I ATE THIS CLA I M. IT WAS POINTED OUT THAT THE APPELLANT HAS OFFERE D CAPITAL GAINS FROM SALE OF PROPERTY FOR THE ASSESSMENT YEAR 1997-98 AND 1999-2000 AND THE AO HAS ASSESSED THE SAME UNDER TH E HEAD CAPITAL GAINS. IT IS ONLY FOR THE AY 1998-99 THAT T HE APPELLANT, IN RESPECT OF A CERTAIN PROJECT CRYSTAL SPR I NGS, SOLD CERTAIN LANDS AND OFFERED INCOME UNDER THE HEAD 'BUSINESS. ' 4.1 EXCEPT FOR A Y 1998-99 THE BUSINESS IN COME D I SCLOSED BY THE ASSESSEE EACH YEAR WAS FROM RUNNING A VIDEO GAM E PARLOUR. IT WAS ARGUED BY THE APPELLANT THAT THE AO HAD BEEN SW AYED BY THE FACT THAT THE PARTNERSHIP FIRM IN WHICH THE APPELLA NT WAS A PARTNER I . E . MIS HM CONSTRUCTION WAS ENGAGED IN REAL ESTATE BUSINESS BUT, ACCORDING TO THE AR, THIS COULD NOT AUTOMATICALLY I MPLY THAT THE APPELLANT WAS ALSO IN THE SAME BUSINESS. IT(SS)A NOS.5 & 6(B)/14 4.2 THE STATEMENT OF AFFAIRS AS ON 31 . 03 . 1999 WAS FILED WHERE THE ADVANCE FOR PROPERTY AT RAMAGONDANAHALLI WAS SHOWN AT RS. 79,98,126 (NET OF FORFEITURE) AND IT WAS EXP LAINED THAT THE APPELLANT WAS STILL HOLDING THIS PROPERTY AS A CAPI TAL ASSET, THEREBY SHOWING HIS INTENTION TO TREAT I S AS AN INVESTMENT AND NOT A STOCK IN TRADE FOR THE PURPOSE OF BUSINESS. 5. I HAVE CONSIDERED THE APPELLANT'S SUBMISSIO NS AS ABOVE AND GONE THROUGH THE EVIDENCES FILED. WHILE IT IS TRUE THAT EXCEPT FOR AY 1998-99 THE APPELLANT'S BUSINESS INCOME IN ALL OTHE R YEARS , AS PER THE STATEMENT OF INCOME HAS FLOWN FROM HIS GAINING BUSINESS, IT IS ALSO AN UNDISPUTED FACT THAT IN AY 1998-99 THE ASSE SSEE HAS VENTURED OUT ON HIS REAL ESTATE BUSINESS THROUGH TH E CRYSTAL SPRINGS PROJECTS TRANSFERRED TO HIM BY M/S HM CONSTRUCTIONS. THE PROFIT FROM SALE OF PLOTS IN THIS PROJECT WAS RETUR NED AS BUSINESS INCOME AND THE BALANCE UNSOLD PLOTS HAVE CONTINUED TO BE SHOWN IN THE BALANCE SHEET OF SUBSEQUENT YEARS ASCLOSING STOCK VALUE OF CRYSTAL SPRINGS I.E AS STOCK IN TRADE. SPRINGS' LE. AS STOCK IN TRADE. THE BUSINESS OF REAL ESTATE ,THEREFORE, HAS CONTINU ED, REGARDLESS OF WHETHER PLOTS WERE SOLD IN SPECIFIC LATER YEARS OR NOT. AS PART OF THE REAL ESTATE BUSINESS THE PROJECT AT RAMAGONDANAHALL I WAS INITIATED FOR SALE OF DEVELOPED PLOTS CARVED OUT FROM THE LAND PU RCHASED IN FY 1997-98 FOR WHICH ADVANCES WERE ALSO RECEIVED FROM PROSPECTIVE CUSTOMERS. IN FACT, THE DESCRIPTION OF THE IN V ESTMENT IN RG HALLI IN THE BALANCE SHEET AS ON 31 . 03.1999 SPEAKS OF 'R.G HALLI PROJECT-I' OF RS.2,60,467 AND 'R.G HALLI PROJECT-IF' FOR RS. 79,9 8,126 . THE OTHER LANDS MENTIONED IN THE BALANCE SHEET ARE BY NAME OF THE PROPERTY AND LISTED UNDER 'INVESTMENT IN PROPERTY' OR 'ADVANCE P AID FOR'. ONLY THE INVESTMENT IN R.G HALLI IS DESCRIBEDAS PROJECTS I A ND II. THE BALANCE SHEET ALSO HAS AN ENTRY FOR RAMAGONDANAHALLI FOR RS . 25,120 UNDER ' ADVANCE TO'. IT(SS)A NOS.5 & 6(B)/14 5 . 1 THE ABOVE FACTS CLEARLY INDICATE THE NATURE OF TH E INVESTMENT IN R.G HALLI AND THE ACTIVITY TO WHICH THEY ARE REL ATED AS BEING IN THE NATURE OF REAL ESTATE ACTIVITIES . EVEN IF FOR THE SAKE OF ARGUMENT IT IS HELD THAT THE APPELLANT HAD NOT CARRIED ON ANY REAL ESTATE BUSINESS BEFORE AY 1998-99 THE FACT THAT HE ENTERED THIS LIN E OF BUSINESS THROUGH THE CRYSTAL SPRING LAND SALE ESTABLISHES A NEW BUSINESS VERTICAL FOR HIM . THE INVESTMENT IN THE R.G HALLI PROJECT, THEREFORE, WHERE THE PURCHASERS OF PLOTS HAD ALSO BEEN IDENTIF IED AND ADVANCES TAKEN FROM THEM, REPRESENTS THE NEXT LINK IN THIS L INE OF BUSINESS THE NOMENCLATURE OF THE INVESTMENT IN THE BALANCE SHEET ADDITIONALLY TESTIFIES TO THIS FACT. THE AO'S ARGUMENTS, THEREFO RE, ARE FOUND TO HAVE MERITS AND THE APPELLANT'S CLAIMS ARE NOT SUBSTANTI ATED BY HIS OWN EVIDENCES. 5.2 IN VIEW OF THE DISCUSSION AS ABOVE, I A M INCLINED TO AGREE WITH THE AO ' S CONCLUSION AND THE GROUNDS RAISED ON THE MATTER O F FORFEITURE OF RS. 16,50,000, THEREFORE, FAIL. 7. FROM THE ABOVE PARAS REPRODUCED FROM THE ORDER O F THE LD.CIT(A), IT CAN BE SEEN THAT THE LD. CIT(A) HAS N OTED IN PARA 4.1 OF HIS ORDER, AS REPRODUCED ABOVE THAT EXCEPT FOR A Y: 1998-99, THE BUSINESS INCOME DISCLOSED BY THE ASSESSEE EACH YEAR WAS FROM RUNNING A VIDEO GAME PARLOUR. IT IS ALSO NOTED BY THE LD. CIT(A) THAT THE PARTNERSHIP FIRM IN WHICH THE ASSESSEE WAS A PARTNER I.E. M/S HM CONSTRUCTION WAS ENGAGED IN THE REAL ESTATE BUSINESS AND IT WAS THE CLAIM OF THE ASSESSEE THAT THIS FACT ALONE CANNOT IMPLY AUTOMATICALLY THAT THE ASSESSEE WAS ALSO IN T HE SAME BUSINESS. IN SPITE OF THIS ASSERTION OF THE ASSESSE E BEFORE THE LD. CIT(A), IT IS HELD BY THE LD. CIT(A) IN PARA-5 OF H IS ORDER AS IT(SS)A NOS.5 & 6(B)/14 REPRODUCED ABOVE THAT IN AY: 1998-99, THE ASSESSEE HAS VENTURED OUT IN HIS REAL ESTATE BUSINESS THROUGH M/S CRYSTAL SPRINGS PROJECTS TRANSFERRED TO HIM BY M/S HM CONSTRUCTIONS . FROM THESE FACTS, IT COMES OUT THAT IN RESPECT OF THIS P ROJECT TRANSFERRED BY THE PARTNERSHIP FIRM M/S HM CONSTRUCTION TO THE ASSESSEE, THE ASSESSEE WAS DECLARING PROFIT ON SALE OF PROPERTY O F THAT PROJECT AS INCOME FROM BUSINESS BUT IT DOES NOT MEAN THAT THE ASSESSEE CANNOT HOLD ANY REAL ESTATE PROPERTY AS A CAPITAL A SSET. IF I SAY SO, THEN IT WILL BE AMOUNTING TO SAYING THAT A PERS ON DEALING IN SHARES CANNOT HOLD ANY SHARE AS INVESTMENT. THIS C ANNOT BE SAID AND THEREFORE, IN THE PRESENT CASE ALSO, THIS FACT ALONE THAT THE ASSESSEE WAS DOING SOME REAL ESTATE BUSINESS CANNOT LEAD TO THIS CONCLUSION THAT THIS PROPERTY IN DISPUTE WAS ALSO H ELD BY THE ASSESSEE AS A BUSINESS ASSET AND NOT AS A CAPITAL A SSET UNLESS IT IS SHOWN THAT THIS VERY PROPERTY WAS HELD AS A BUSI NESS ASSET. THE REVENUE HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO EVEN SUGGEST THAT THIS PROPERTY IN QUESTION WAS ALSO A B USINESS ASSET AND THE REVENUE HAS PROCEEDED ON THIS BASIS THAT SI NCE IN RESPECT OF SOME PROPERTY, THE ASSESSEE IS DISCLOSING INCOME AS BUSINESS INCOME AND SHOWING THE CLOSING STOCK AS BUSINESS ST OCK/ BUSINESS ASSET, IT CANNOT BE INFERRED THAT EACH AND EVERY PROPERTY OWNED BY THE ASSESSEE IS A BUSINESS ASSET AND THERE FORE, I HOLD THAT IN THE FACTS OF THE PRESENT CASE, THE PROPERTY IN QUESTION IS A CAPITAL ASSET BECAUSE, THE REVENUE COULD NOT BRING ANY MATERIAL ON RECORD TO ESTABLISH THAT THIS PROPERTY IS ALSO A BUSINESS ASSET. IT(SS)A NOS.5 & 6(B)/14 7.1 ONCE I HOLD THIS THAT THE PROPERTY IN QUESTION IS A CAPITAL ASSET, SEC.51 OF THE IT ACT IS APPLICABLE REGARDING THE ADVANCE RECEIVED AGAINST SALE AGREEMENT OF THIS PROPERTY WH ICH IS FORFEITED AND THEREFORE, SUCH FORFEITURE OF ADVANCE HAS TO BE REDUCED FROM THE COST OF THIS ASSET. SINCE THE FORFEITURE AMOU NT OF RS.33.00 LAKHS IS MORE THAN THE COST OF THIS ASSET RS.31,76, 160/-, THE EXCESS AMOUNT OF FORFEITURE I.E. RS.1,23,840/- HAS TO BE BROUGHT TO TAX IN THE PRESENT YEAR IN EQUAL PROPORTION IN T HE CASE OF BOTH THESE ASSESSEES WHO WERE THE OWNER OF THIS ASSET IN EQUAL PROPORTION AND IN THE YEAR OF SALE OF THAT PROPERTY , COST OF ACQUISITION SHOULD BE TAKEN AT NIL TO COMPUTE CAPIT AL GAIN. I HOLD ACCORDINGLY. 8. REGARDING THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF SURAJ LAM & INDUSTRIES (P)L TD. VS STATE OF HARYANA (SUPRA), I FIND THAT THIS JUDGMENT IS NOT A PPLICABLE IN THE FACTS OF THE PRESENT CASE BECAUSE IT WAS HELD IN TH AT CASE THAT THE REGISTERED DEED OF CONVEYANCE IS THE ONLY MODE OF L EGAL TRANSFER OF IMMOVABLE PROPERTY AND THEREFORE, THE GENERAL POWER OF ATTORNEY(GPA) SALES OR SALE AGREEMENT OR GPA/WILL TRANSFERS ARE NOT VALID MODE OF TRANSFERS AND NOT TO CREATE TITLE TO OR INTEREST IN PROPERTY. IN THE PRESENT CASE, THERE IS NO DISPUTE ON THIS ASPECT OF THE MATTER BECAUSE IN THE PRESENT CASE, THE DISP UTE IS REGARDING FORFEITURE OF ADVANCE AND THEREFORE, THIS JUDGMENT IS NOT RELEVANT FOR DECIDING THE DISPUTE IN THE PRESENT CA SE. IT(SS)A NOS.5 & 6(B)/14 9. IN THE RESULT, BOTH THE APPEAL OF THE ASSESSEE A RE PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MEN TIONED IN CAPTION PAGE. (A.K.GARODIA) ACCOUNTANT MEMBER D A T E D : .06.2016 PLACE: BANGALORE AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE IT(SS)A NOS.5 & 6(B)/14 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FIL E GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER IT(SS)A NOS.5 & 6(B)/14