A.Vinod Kumar Reddy, CHENNAI V. DCIT, CHENNAI

MA 98/CHNY/2017

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5679 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 17-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MURALI MOHAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Deemed to accrue or arise in india; Fair market value; Capital receipt

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BBENCH, CHENNAI , ! ' ! # . $% , &'( BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU R.L. REDDY, JUDICIAL MEMBER M.P.NO.98/MDS/2017 ( ./I.T.A. NO.2657/MDS/2016) & ) *) / ASSESSMENT YEAR : 2011-2012. SHRI. A. VINOD KUMAR REDDY, 4 TH FLOOR, BAY WATCH APARTMENTS, NO.92/93, COSTAL ROAD, BESANT NAGAR, CHENNAI 600 090. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE II, CHENNAI. [PAN ABOPV 6636N] (PETITIONER) (RESPONDENT) +, - . /APPELLANT BY : SHRI. S. SRIDHAR. ADVOCATE /0+,-. /RESPONDENT BY : SHRI. MURALI MOHAN, ADDL. CIT . ! -1 /DATE OF HEARING : 02.06.2017 23* -1 /DATE OF PRONOUNCEMENT : 07.06.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER : BY THIS MISCELLANEOUS PETITION ASSESSEE SEEKS RECTI FICATION ORDER OF THE TRIBUNAL IN ITA NO.2657/MDS/2016 DATED 17.02.20 17. 2 M.P. NO.98/MDS/2017 2. IT WAS OBSERVED FROM THE CASE RECORDS THAT ORIGI NALLY ASSESSEES CASE CAME BEFORE THIS TRIBUNAL CHALLENGING TREATING THE TOTAL OF A4,75,10,880/- BEING THE PROFIT WORKED OUT ON SALE OF LAND AT THALAMBUR AS TAXABLE INCOME UNDER THE HEAD INCOME FROM CAPI TAL GAINS. ASSESSEE ALSO RAISED ANOTHER GROUND WITH REGARD TO ALTERNATI VE TREATMENT BY LD. ASSESSING OFFICER REGARDING GAIN ON SUCH TRANSACTIO N AS BENEFIT GRANTED TO THE ASSESSEE BY THE COMPANY BEING THE PURCHASER IN WHICH HE IS A DIRECTOR AND ALSO HOLDS SUBSTANTIAL INTEREST AS DEE MED INCOME U/S.2(24) (IV) OF THE INCOME TAX ACT, 1961 (IN SHORT THE AC T). THE TRIBUNAL ADJUDICATED THE APPEAL IN ITS ORDER DATED 17 TH FEBRUARY, 2017 AND GIVEN AN FINDING AT PARAS 9.1 & 9.2 AS UNDER:- 9.1 IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE OPINION THAT THE LAND IN QUESTION CANNOT BE CONSIDE RED AS STOCK IN TRADE IN THE HANDS OF ASSESSEE. IT IS N OTHING BUT AGRICULTURAL LAND IN TERMS OF SEC. 2(14)(III) R.W.S . 10(1) OF THE ACT AND TRANSFER OF THAT LAND CANNOT LEAD TO TA XABLE CAPITAL GAINS OR INCOME FROM BUSINESS. 9.2 FURTHER, IT IS ALSO BE NOTED THAT OUR ABOVE V IEW IS ALSO SUPPORTED BY THE RECENT JUDGMENT OF JURISDICTI ONAL HIGH COURT IN T.C.A. NO.483/2016 DATED 01.09.2016 IN THE CASE OF M/S. MANSI FINANCE CHENNAI LTD. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO CONSIDER GAIN ON SALE OF IMPUGNED LAND AS EXEMPTED FROM CAPITAL GAINS AND TO TREAT AS AGRICULTURAL INCOME ONLY. ACCORDINGLY, WE ALLO W THE GROUND TAKEN BY THE ASSESSEE IN HIS APPEAL. 3 M.P. NO.98/MDS/2017 3. NOW THE CONTENTION OF THE LD. AUTHORISED RE PRESENTATIVE IN ITS MISCELLANEOUS PETITION IS THAT THE TRIBUNAL ADJUDI CATED THE ISSUE RELATING TO THE TAXING THE GAIN ON AGRICULTURAL LAND AS NOT TAXABLE AS IT IS EXEMPTED FROM TAX AS CAPITAL RECEIPTS. HOWEVER, TH E TRIBUNAL FAILED NOT TO ADJUDICATE THE ISSUE OF APPLICABILITY OF PROVISI ONS OF SEC. 2(24)(IV) OF THE ACT WITH REGARD TO THE DEEMED INCOME ON TRANSFE R OF AGRICULTURAL LAND TO A COMPANY IN WHICH THE ASSESSEE IS A DIRECTOR AN D HOLDING SUBSTANTIAL INTEREST IN THAT COMPANY. THE LD. AUTHORISED REPRES ENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE RAISED THE GROUND WITH REFERENCE TO APPLICABILITY OF SEC. 2(24)(IV) OF THE ACT WHICH WA S NOT ADJUDICATED AND THE SAME MAY BE ADJUDICATED OR THE ORDER MAY BE REC ALLED SO AS TO ADJUDICATE THE SAME. 4. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESEN TATIVE SUBMITTED THAT APPLICABILITY OF SEC. 2(24)(IV) OF THE ACT IS NOT ADJUDICATED BY THE TRIBUNAL AND THE ORDER MAY BE RECALLED FOR ADJUDICA TION OF THE SAME. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE AS SEEN FROM THE ORDER OF THE TRIBUNAL, THE TRIBUNAL CONSIDERED ENTIRE ISSUE IN DISPUTE IN A CUMULATIVE MANNER AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. WITH REGARD T O CAPITAL GAIN ON TRANSFER OF THE LANDED PROPERTY, IT IS HELD THAT IT IS EXEMPTED FROM TAX, THIS CAN BE SEEN FROM THE GROUNDS AND FACTS RECORDE D BY THE TRIBUNAL IN 4 M.P. NO.98/MDS/2017 PARAS 2 TO 3.3 BY GIVING THEM A FINDING THAT GAIN O UT OF TRANSFER OF THE LANDED PROPERTY CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE. AT THAT STAGE, THE TRIBUNAL WAS OF THE OPINION THAT ONCE IT WAS OBSERVED THAT CAPITAL GAINS ON SALE OF AGRICULTURAL LAND WAS EXEM PTED U/S. 10(37) OF THE ACT, IT DOES NOT WARRANT ADJUDICATION OF THE SAID I SSUE U/S. 2(24) (IV) OF THE ACT AND IT WAS OF THE OPINION OF THE TRIBUNAL T HAT IT WAS ONLY ACADEMIC, WHICH DOES NOT REQUIRE ANY ADJUDICATION. THERE IS ONE MORE REASON FOR THE TRIBUNAL FOR NOT GIVING SPECIFIC FIN DING ON THIS ISSUE IS THAT THERE IS NO COMPUTATION OF INCOME U/S. 2(24)(IV) OF THE ACT EITHER BY LD.AO OR BY LD. COMMISSIONER OF INCOME TAX (APPEALS ). THE LOWER AUTHORITIES HAVE NOT EXPLORED THE APPLICABILITY OF PROVISIONS OF SEC. 2(24)(IV) OF THE ACT SPECIFICALLY COMPARING THE FAI R MARKET VALUE OF THE LANDED PROPERTY AND THE SALE PRICE AT WHICH THE LAN DED PROPERTY WHICH WAS SOLD BY THE ASSESSEE TO THE COMPANY. IN OTHER WORDS, TO APPLY THE PROVISIONS OF SEC.2(24)(IV) OF THE ACT IT IS INCUM BENT OR MANDATORY ON THE PART OF LD. ASSESSING OFFICER TO BRING ON RECOR D THE DIFFERENCE BETWEEN FAIR MARKET VALUE AND SALE PRICE AT WHICH T HE PROPERTY WAS SOLD BY THE ASSESSEE TO THE COMPANY. THE ENTIRE GAIN ON SALE OF LANDED PROPERTY CANNOT BE CONSIDERED AS DEEMED GAIN U/S. 2 (24)(IV) OF THE ACT. IN THIS CASE MORE SPECIFICALLY THERE IS NO DISPUTE REGARDING THE VALUE DECLARED BY THE ASSESSEE ON SALE OF THE LANDED PROP ERTY AND THE VALUE OF THE LANDED PROPERTY DISCLOSED IN THE SALE DEED WHIC H WAS ACCEPTED BY 5 M.P. NO.98/MDS/2017 THE STATE VALUATION AUTHORITY AND THERE WAS NO ALLE GATION BY THE LD. ASSESSING OFFICER REGARDING DECLARING OF THE SALE V ALUE LESS THAN VALUE ADOPTED BY THE STATE VALUATION AUTHORITY FOR REGIST RATION PURPOSE. FROM THIS POINT OF VIEW ALSO, THERE IS NO QUESTION OF IN VOKING PROVISIONS OF SEC. 2(24)(IV) OF THE ACT. AS SUCH THE TRIBUNAL IN EARL IER OCCASION WAS OF THE OPINION THAT MENTIONING OF SEC. 2(24)(IV) OF THE AC T BY THE LD. ASSESSING OFFICER IN ITS ORDER WAS A PASSING REMARK AS SUCH THE TRIBUNAL WAS NOT DWELL UPON ON IT. IT IS TO BE SAID THAT THERE IS NO ERROR IN THE ORDER OF THE TRIBUNAL SO AS TO RECALL IT. THE ORDER OF THE T RIBUNAL HAS NOT TO BE SCRUTINIZED SENTENCE BY SENTENCE MERELY TO FIND OUT WHETHER ALL FACTS HAVE BEEN SET OUT, IN DETAIL BY THE TRIBUNAL OR WH ETHER SOME INCIDENTAL FACT WHICH APPEARS ON THE RECORD HAS NOT BEEN NOTIC ED BY THE TRIBUNAL IN ITS JUDGMENT. IF THE COURT, ON A FAIR READING OF THE JUDGMENT OF THE TRIBUNAL, FINDS THAT IT HAS TAKEN INTO ACCOUNT ALL RELEVANT MATERIAL AND HAS NOT TAKEN INTO ACCOUNT ANY IRRELEVANT MATERIAL IN B ASING ITS CONCLUSIONS, THE DECISION OF THE TRIBUNAL IS NOT LIABLE TO BE IN TERFERED WITH, UNLESS, OF COURSE, THE CONCLUSIONS ARRIVED AT BY THE TRIBUNAL ARE PERVERSE. IT IS NOT NECESSARY FOR THE TRIBUNAL TO STATE IN ITS JUDGMENT SPECIFICALLY OR IN EXPRESS WORDS THAT IT HAS TAKEN INTO ACCOUNT THE CU MULATIVE EFFECT OF THE CIRCUMSTANCES OR HAS CONSIDERED THE TOTALITY OF THE FACTS, AS IF THAT WERE A MAGIC FORMULA; IF THE JUDGMENT OF THE TRIBUNAL SHOW S THAT IT HAS, IN FACT, DONE SO, THERE IS NO REASON TO INTERFERE WITH THE D ECISION OF THE TRIBUNAL. 6 M.P. NO.98/MDS/2017 ACCORDINGLY, WE DO NOT FIND ANY APPARENT REASON TO RECALL THE EARLIER ORDER OF THE ORDER AND IT IS SUFFICE TO SAY THAT TH E ORDER OF THE TRIBUNAL TO BE CONSIDERED AS ALLOWED IN FAVOUR OF THE ASSESSEE IN ITS ENTIRETY AND NO GROUND DECIDED AGAINST ASSESSEE IN HIS APPEAL. WIT H THIS OBSERVATION, WE ARE INCLINED TO DISMISS THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE. 6. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 7TH OF JUNE, 201 7, AT CHENNAI. SD/- SD/- ( ! ' ! # . $% ) DUVVURU R.L. REDDY) & /JUDICIAL MEMBER ( ) (CHANDRA POOJARI) /ACCOUNTANT MEMBER /CHENNAI, H /DATED, THE 7TH JUNE, 2017. KV COPY TO: PETITIONER/RESPONDENT/CIT(A)/CIT/DR