P. Hari Babu, Tirupathi V. DCIT, Central Circle, Tirupathi

MA 182/HYD/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0004 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 17-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital asset; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA `VIJAYARAGHAVAN, JUDICIAL MEMBER MA NO. 182/HYD/2012 IN ITA NO. 1653/HYD/2010 ASSESSMENT YEAR - 2008-09 DEPUTY CIT CENTRAL CIRCLE, TIRUPATI VS. SRI P. HARI BABU TIRUPATI PAN: AIKPP6931D APPELLANT RESPONDENT (APPELLANT IN MA) MA NO. 29/HYD/2013 IN ITA NO. 1463/HYD/2010 ASSESSMENT YEAR - 2008-09 SRI P. HARI BABU TIRUPATI PAN: AIKPP6931D VS. ASST . CIT CENTRAL CIRCLE, TIRUPATI APPELLANT RESPONDENT ASSESSEE BY: SRI S. RAMA RAO REVENUE BY: SMT. T.H. VIJAYA LAKSHMI DATE OF HEARING: 2 2 . 0 2 .201 3 DATE OF PRONOUNCEMENT: 22.03.2013 O R D E R PER CHANDRA POOJARI, AM: THESE TWO MISCELLANEOUS APPLICATIONS FILED BY THE A SSESSEE SEEK RECTIFICATION IN THE COMBINED ORDER OF THE TRI BUNAL DATED 24.7.2012 IN ASSESSEE'S APPEAL NO. 1463/HYD/2010 AN D REVENUE APPEAL IN ITA NO. 1653/HYD/2010 FOR ASSESSMENT YEAR 2008-09. 2. THE LEARNED AR SUBMITTED THAT IN THE ASSESSEE'S APP EAL THE ASSESSEE RAISED ONE OF THE GROUNDS WITH REGARD TO C ONFIRMING THE ACTION OF THE ASSESSING OFFICER BY THE CIT(A) IN MA KING ADDITION OF RS. 70 LAKHS TO THE INCOME OF THE ASSESSEE. THE LE ARNED AR SUBMITTED THAT WHILE DISPOSING OF THIS GROUND THE T RIBUNAL CAME TO THE CONCLUSION THAT THE ADDITION CAN BE MADE ONL Y IF THERE IS A MA NO. 182 / HYD/2012 & ANR. SRI P. HARI BABU ======================= 2 SEIZED MATERIAL AND THE TRIBUNAL HAVING FOUND THAT THE ASSESSING OFFICER/CIT(A) DID NOT DRAW ANY SUPPORT FROM ANY OF THE SEIZED MATERIAL, THE TRIBUNAL SHOULD HAVE DELETED THE ADDI TION IN ITS ENTIRETY INSTEAD OF REMITTING THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO ESTABLISH NEXUS BETWEEN THE SE IZED MATERIAL AND THE ADDITION. ACCORDING TO THE AR, THIS DIRECT ION GIVEN BY THE TRIBUNAL IS IMPROPER AND THE ORDER OF THE TRIBUNAL HAS TO BE RECTIFIED ACCORDINGLY. 3. THE LEARNED DR SUBMITTED THAT THERE IS NO MISTAKE A PPARENT FROM RECORD WHICH WARRANTS RECTIFICATION OF THE ABO VE FINDINGS OF THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATERIAL ON RECORD. THE ASSESSEE HEREIN WANTED TO INTERFERE WI TH THE DECISION MAKING PROCESS OF THE TRIBUNAL. THE TRIBUNAL HAVIN G GONE THROUGH THE ENTIRE FACTS AND CIRCUMSTANCES OF THE C ASE FOUND THAT THERE SHOULD BE SOME MORE ENQUIRY FROM THE END OF T HE ASSESSING OFFICER AND HE HAS TO ESTABLISH THE RELATION BETWEE N THE SEIZED MATERIAL AND THE ADDITION MADE BY HIM. AS THE ASSE SSING OFFICER NOT ESTABLISHED LIVE LINK BETWEEN THE SEIZED MATERI AL AND ADDITION MADE BY HIM, THE TRIBUNAL DIRECTED HIM TO SHOW THAT THE ADDITION SPRINGS FROM THE SEIZED MATERIAL. IN THAT FINDING, WE DO NOT FIND ANY INFIRMITY AND THE SAME IS CONFIRMED. MA NO. 29 /HYD/2013 IS DISMISSED. 5. NOW COMING TO THE OTHER MA FILED BY THE ASSESSEE IN MA NO. 182/HYD/2012 ARISING OUT OF DEPARTMENTAL APPEAL IN ITA NO. 1653/HYD/2010. THE ASSESSEE IS HAVING A GRIEVANCE WITH REGARD TO GIVING DIRECTION BY THE TRIBUNAL IN GROUND RAISE D BY THE DEPARTMENT WITH REGARD TO TREATMENT OF ADVANCE OF R S. 5,97,06,479 SHOWN IN THE BALANCE SHEET. MA NO. 182 / HYD/2012 & ANR. SRI P. HARI BABU ======================= 3 6. THE LEARNED AR SUBMITTED THAT THE ASSESSEE IS IN BU SINESS OF REAL ESTATE. BUYING AND SELLING OF LAND IS THE BUSI NESS OF THE ASSESSEE. INCOME OF THE ASSESSEE WAS BOOKED UNDER THE HEAD 'BUSINESS INCOME'. THERE WAS A RECEIPT OF ADVANCE FROM M/S. AISHWARYA HOMES, BANGALORE AT RS. 5,97,06,479. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT TREATED THE ENTIRE AMOUNT AS SHORT TERM CAPITAL GAIN AND THE CIT(A) ON APPEAL DELETED THE SAME BY OBSERVING THAT THE SALES HAD TAKEN PLACE TH ROUGH M/S. AISHWARYA HOMES, BANGALORE WHICH ARE REFLECTED IN T HE PROFIT AND LOSS A/C., AND CREDIT APPEARING IN THE NAME OF AISH WARYA HOMES, BANGALORE IN THE BALANCE SHEET IS ONLY ADVANCE RECE IVED AND BY NO MEANS IT CAN BE SAID THAT IT IS A SALE PROCEEDS TO BE CONSIDERED AS CAPITAL GAIN. ACCORDINGLY, THE CIT(A) DELETED THE ADDITION MADE UNDER THE HEAD SHORT TERM CAPITAL GAIN. 7. HOWEVER, THE TRIBUNAL WHILE ADJUDICATING THE DEPART MENTAL APPEAL ON THIS ISSUE OBSERVED THAT IF THE SALE OF L AND IS REFLECTED IN THE PROFIT AND LOSS A/C., AND THE CORRESPONDING CRE DITORS ARE REFLECTED IN THE BALANCE SHEET, THE SAME CANNOT BE CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE TRIBUNAL A LSO GIVEN A FINDING THAT ONLY NET INCOME FROM REAL ESTATE TRANS ACTION IS TO BE CONSIDERED AS BUSINESS INCOME OF THE ASSESSEE AND T HE TRIBUNAL REMITTED THE ISSUE BACK TO THE FILE OF THE ASSESSIN G OFFICER. ACCORDING TO THE AR THERE IS NO DISPUTE REGARDING R EFLECTION OF SALE OF LAND IN THE PROFIT AND LOSS A/C. OR CREDITORS AP PEARING TOWARDS THIS TRANSACTION IN THE NAME OF AISHWARYA HOMES, BA NGALORE IN THE BALANCE SHEET OF THE ASSESSEE. THERE WAS A CLE AR-CUT FINDING ON THIS ISSUE IN PARA 5 OF THE CIT(A) ORDER. BEING SO, ACCORDING TO THE AR THE FACTS WERE CLEARLY BROUGHT OUT ON RECORD BY THE LEARNED CIT(A) IN HIS ORDER AND THE DEPARTMENT DID NOT BRIN G ANY CONTRADICTING EVIDENCE BEFORE THE TRIBUNAL. BEING SO, THE TRIBUNAL SHOULD HAVE CONFIRMED THE ORDER OF THE CIT(A) INSTE AD OF REMITTING THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER . THE FINDING MA NO. 182 / HYD/2012 & ANR. SRI P. HARI BABU ======================= 4 RECORDED BY THE TRIBUNAL IN PARA 6 IS AS FOLLOWS WH ICH IS NOT PROPER: '6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. REGARDING THE ADDITION OF RS. 5,97,06,479, THE PLEA OF THE ASSESSEE IS THAT IT REPRESENTS THE SALE OF LAND REFLECTED IN THE PROFIT AND LOSS A/C. AND THE GROSS AMOUNT ITSELF CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE. WE FIND THE PLEA OF THE ASSESSEE IS REASONABLE. IN OUR OPINION, IF IT IS A SALE OF LAND REFLECTED IN THE PROFIT AND LOSS A/C. AND THE CORRESPONDING CREDITOR IS REFLECTED IN THE BALA NCE SHEET AND DISCLOSED TO THE DEPARTMENT IN THE RETURN OF INCOME OF THE ASSESSEE, THE SAME CANNOT BE CONSIDER ED AS UNDISCLOSED INCOME OF THE ASSESSEE. IN OTHER WO RDS, THE ASSESSEE BEING A DEALER IN REAL ESTATE, BUYING AND SELLING OF LANDS IS HIS BUSINESS ACTIVITY, ONLY THE NET INCOME GENERATED FROM THESE TRANSACTIONS HAS TO BE CONSIDERED AS INCOME OF THE ASSESSEE RATHER THAN GR OSS SALE VALUE OF LAND AS INCOME OF THE ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RECONSIDER THE ISSUE. 8. THE LEARNED DR RELIED ON THE ORDER OF THE TRIBUNAL. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. AS SEEN FROM THE ABOVE ORDER, THE TRIBUNAL CONFIRMED THE FINDING OF THE CIT(A) THAT THE ASSESSEE IS ENGAGED IN BUYING AND SELLING OF LAND AS HIS BUSINESS AND ALSO GIVEN A FI NDING THAT NET INCOME FROM THE TRANSACTION IS TO BE CONSIDERED AS INCOME OF THE ASSESSEE UNDER THE HEAD 'BUSINESS INCOME'. AFTER G IVING THIS FINDING, THE TRIBUNAL GIVEN A DIRECTION TO THE ASSE SSING OFFICER TO RECONSIDER THE ISSUE, THOUGH THERE IS NO DISPUTE RE GARDING THE ASSESSMENT OF INCOME FROM REAL ESTATE BUSINESS. TH ERE IS NO DISPUTE REGARDING RECEIPT OF ADVANCE OF RS. 5,97,06 ,479 AND THERE IS NO DISPUTE REGARDING DISCLOSURE OF SALES IN PROF IT AND LOSS A/C. THERE IS NO DISPUTE REGARDING DISCLOSURE OF AN AMOU NT OF RS. 5,97,06,479 CREDITED IN THE NAME OF AISHWARYA HOMES , BANGALORE IN THE BALANCE SHEET. THE DISPUTE IS ONLY WITH REG ARD TO TREATMENT OF THIS CREDIT AS INCOME FROM SHORT TERM CAPITAL GA IN. IN OUR MA NO. 182 / HYD/2012 & ANR. SRI P. HARI BABU ======================= 5 OPINION, THE RECEIPT OF ADVANCE SHOWN IN THE BALANC E SHEET CANNOT BE CONSIDERED AS CAPITAL ASSET SO AS TO TREAT THE S AME AS INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN. BEING SO, WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE. THE EARLIER ORD ER OF THE TRIBUNAL IS MODIFIED TO THAT EXTENT AND THE NET RESULT IS TO BE READ AS FOLLOWS: '9. IN THE RESULT, REVENUE APPEAL IS DISMISSED AND ASSESSEE'S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES.' 10. IN THE RESULT, MA NO. 182/HYD/2012 IS ALLOWED AND M A NO. 29/HYD/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2013 SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 22 ND MARCH, 2013 COPY FORWARDED TO: 1. SHRI P. HARI BABU, PLOT NO. 8, VIDYA N AGAR MAIN RD, TIRUPATI. 2. THE ASST. CIT , CENTRAL CIRCLE, TIRUPATI. 3. THE DEPUTY CIT, CENTRAL CIRCLE, TIRUPATI. 4 . THE CIT(A) - VII, HYDERABAD. 5 . THE CIT (CENTRAL), HYDERABAD. 6 . THE DR B BENCH, ITAT, HYDERABAD. TPRAO