M/s. Shree Krishna Traders, Anand V. The ACIT.,Cent,.Circle-2, Baroda

ITSSA 553/AHD/2010

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8932 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 14-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA RAM
• Keywords: Business income

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH, JM AND D.C.AGRAWAL, AM SHREE KRISHNA TRADERS, PROP. M/S M.C. PATEL & SONS, PO;KHANDHLI (NAPA), DIST. ANAND. VS. ASSTT. CIT, C.C.2, BARODA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI MUKUND BAKSHI, AR RESPONDENT BY:- SHRI CHANDRA RAM, CIT, DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUND:- (1) THE LD. CIT(A)IV, AHMEDABAD HAS ERRED IN LAW AND IN FACTS IN NOT ALLOWING THE LOSS ON SALE OF LAND OF RS.4,86,24 1/- HELD AS STOCK IN TRADE AS BUSINESS LOSS ON THE GROUND THAT THE IMPUGNED LAND WAS AN INVESTMENT. THE ADDITION THUS MADE IS B AD IN LAW AND IN FACTS IS PRAYED TO BE DELETED. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS ABOUT AN ADDITION OF RS.4,86,241/- BEING THE DISALLOWANCE OF LOSS ON SAL E OF LAND WHICH WAS CLAIMED TO BE HELD AS STOCK IN TRADE. DURING THE YE AR UNDER CONSIDERATION THE ASSESSEE PURCHASED A LAND FOR RS.40,92,656/- AN D SOLD PART OF THE SAME FOR RS.26,31,000/. REST OF THE LAND WAS SHOWN IN BA LANCE SHEET AT RS.9,75,425/-. ON THIS BASIS ASSESSEE CLAIMED TO HA VE INCURRED A LOSS OF RS.4,86,241/- IN THE BUSINESS OF DEALING IN LAND. T HE ASSESSEE WAS IT(SS)A NO.553/AHD/2010 ASST. YEAR :2007-08 2 ORIGINALLY FOUND TO BE DOING BUSINESS OF SALE AND P URCHASE OF TOBACCO AND BARDANA. THE LD. CIT(A) CONFIRMED THE ADDITION BY HOLDING THAT IN FINANCIAL YEAR 2006-07 PURCHASE OF LAND WAS SHOWN A S INVESTMENT AND THUS ASSESSEE HAD NEVER INDULGED IN BUSINESS OF REA L ESTATE. IT WAS ONLY IN THE CURRENT YEAR THAT ASSESSEE SOUGHT TO SHOW THE S ALE OF LAND AS TRADING ACTIVITY AND CLAIMED THE LOSS OF RS.4,86,241/-. SIN CE ASSESSEE WAS NOT FOUND DOING BUSINESS OF TRADING REAL ESTATE LOSS WA S DISALLOWED AND CONFIRMED BY THE LD. CIT(A). 3. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT IT IS INCORRECT ON THE PART OF THE AUTHORITIES BELOW TO HOLD THAT L AND WAS NOT SHOWN AS STOCK IN TRADE BUT WAS SHOWN AS INVESTMENT. HE REFE RRED TO THE DECISION OF HON. GUJARAT HIGH COURT IN CIT VS. NEHA BUILDERS (P ) LTD. (2007) 164 TAXMAN 342 WHEREIN IT IS HELD THAT IF THE PROPERTY IS SHOWN AS STOCK IN TRADE IN THE BALANCE SHEET THEN IT SHOULD BE CONSID ERED AS BUSINESS INCOME. 4. ON THE OTHER HAND LD. DR SUBMITTED THAT THERE IS NO EVIDENCE TO HOLD THAT LAND WAS SHOWN AS STOCK IN TRADE OR ASSES SEE WAS DOING BUSINESS IN REAL ESTATE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE ISSUE HAS NOT BEEN CORRECTLY EXAMINED AT THE STAGE OF AO. THE DATE OF PURCHASE O F LAND IS NOT SHOWN. IF THE LAND WAS PURCHASED IN THE CURRENT YEAR ONLY THEN HOW THE LAND COULD BE SHOWN IN THE BALANCE SHEET IN THE PRECEDING YEAR . FURTHER INTENTION OF THE ASSESSEE AS TO WHETHER HE WANTED TO DO THE BUSI NESS IN REAL ESTATE OR IT PURCHASED THE LAND FOR HOLDING AS INVESTMENT HAS NO T BEEN MADE CLEAR. NO EVIDENCE WITH REGARD TO THIS HAS BEEN COLLECTED. FU RTHER HOW THE LAND HAS BEEN PARTITIONED AND SOLD IN PART IS ALSO NOT CLEAR , AND WHETHER ASSESSEE 3 HAD DIVIDED THE LAND INTO SMALL PARTS AND CARVED OU T SPACE FOR ROADS AND OTHER CIVIC AMENITIES OR THE LAND WAS SOLD AS SUCH WITHOUT MAKING ANY VALUE ADDITION OR CARVING OUT THE LAND IN PLOT, IS NOT COMING OUT FROM THE ORDER OF AO. IF THE LAND WAS PURCHASED IN EARLIER Y EAR, THEN IT HAS TO BE SEEN WHAT TREATMENT ASSESSEE HAS GIVEN IN THE BALAN CE SHEET, WHETHER TREATED AS A STOCK IN TRADE OR AS INVESTMENT. FURTH ER, WHAT ARE THE EVIDENCES TO SHOW THAT ASSESSEE INTENDED TO DEAL IN LAND. THUS FOR THE PURPOSE OF EXAMINING THE ISSUE AFRESH WE RESTORE TH E MATTER TO THE FILE OF AO. THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 15/10/10. SD/- SD/- (MAHAVIR SINGH) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT ME MBER AHMEDABAD, DATED : 15/10/10. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 4 1.DATE OF DICTATION 1/10/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 11/10/2010. MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..