Kailash Narain Gupta, Jhansi v. Dy.C.I.T., Circle-6, Jhansi

CO 53/AGR/2012 | 2007-2008
Pronouncement Date: 18-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 5320323 RSA 2012
Assessee PAN AASPG9316K
Bench Agra
Appeal Number CO 53/AGR/2012
Duration Of Justice 1 year(s) 1 month(s) 1 day(s)
Appellant Kailash Narain Gupta, Jhansi
Respondent Dy.C.I.T., Circle-6, Jhansi
Appeal Type Cross Objection
Pronouncement Date 18-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 18-10-2013
Date Of Final Hearing 17-10-2013
Next Hearing Date 17-10-2013
Assessment Year 2007-2008
Appeal Filed On 17-09-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI PRAMOD KUMAR ACCOUNTANT MEMBER ITA NO.60/AGRA/2012 ASSESSMENT YEAR: 2007-08 ASSTT. COMMISSIONER OF INCOME TAX VS. SHRI KAILASH NARAIN GUPTA CIRCLE-6 JHANSI. OPP. MEDICAL COLLEGE JHANSI. (PAN : AASPG 9316 K). C.O. NO.53/AGRA/2012 (IN ITA NO.60/AGRA/2012) ASSESSMENT YEAR: 2007-08 SHRI KAILASH NARAIN GUPTA VS. ASSTT. COMMISSIONER OF INCOME TAX OPP. MEDICAL COLLEGE CIRCLE-6 JHANSI. JHANSI. (PAN : AASPG 9316 K). (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI K.K. MISHRA JR. D.R. ASSESSEE BY : SHRI NAVIN GARGH ADVOCATE DATE OF HEARING : 17.10.2013 DATE OF PRONOUNCEMENT : 18.10.2013 ORDER PER PRAMOD KUMAR ACCOUNTANT MEMBER: ITA NO.60/AGRA/2012 FILED BY THE ASSESSING OFFICER. 2 ITA NO.60/AGRA/2012 & C.O. NO.53/AGRA/2012 A.Y. 2007-08 1. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 17 TH NOVEMBER 2011 PASSED BY THE CIT(A)-II AGRA IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2007- 08. 2. IN THE FIRST GROUND OF APPEAL THE ASSESSING OFF ICER HAS RAISED THE FOLLOWING GRIEVANCE:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.1 70 770/- HOLDING THAT AS NO NEW AS SET HAS COME INTO EXISTENCE THEREFORE THE SAME HAS TO BE ALLOWED AS REVENUE EXPENDITURE WITHOUT APPRECIATING THE FACTS AND CIRC UMSTANCES OF THE CASE. 3. BRIEFLY STATED THE RELEVANT FACTS ARE LIKE THIS . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS INCURRED AN EXPENDITURE OF RS.1 89 745/- ON REPAIRS AND MAINTENANCE OF THE BUILDING AND HE OBSERVED THAT THE PERUSAL OF VOUCH ERS SHOW THAT THIS IS AN EXPENDITURE IN THE NATURE OF CAPITAL EXPENDITURE A ND DOES NOT RELATE TO PERIODIC MAINTENANCE OF THE BUILDING. WITH THESE OBSERVATIO NS THE SAID EXPENDITURE WAS DISALLOWED BUT DEPRECIATION @ 10% WAS GRANTED RESUL TING IN A NET DISALLOWANCE OF RS.1 70 770/-. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE SAID DISALLOWANCE AND OBSERVED THAT AS NO NEW ASSETS HAVE COME INTO E XISTENCE AS A RESULT OF THE EXPENDITURE IN QUESTION THE REPAIRS AND MAINTENANC E EXPENDITURE IN QUESTION 3 ITA NO.60/AGRA/2012 & C.O. NO.53/AGRA/2012 A.Y. 2007-08 SHOULD HAVE BEEN ALLOWED AS REVENUE DEDUCTION. THE ASSESSING OFFICER IS NOT SATISFIED WITH THIS DECISION AND IS IN APPEAL BEFOR E US. 4. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD WE SEE NO REASONS TO DISTURB THE STAND OF T HE CIT(A). THERE IS INDEED NOTHING TO SHOW THAT ANY NEW ASSETS HAVE COME INTO EXISTENCE OR THAT THE EXPENDITURE IN QUESTION HAS RESULTED IN ANY ENDURIN G ADVANTAGE IN CAPITAL FIELD. A PERUSAL OF DETAILS OF EXPENSES AS FILED BEFORE US SHOWS THAT THE EXPENDITURE IS INCURRED ON ROUTINE MAINTENANCE OF BUILDING AND CON SISTS OF SMALL PAYMENTS ON THAT ACCOUNT. IN THIS VIEW OF THE MATTER AND IN THE AB SENCE OF ANY CATEGORICAL FINDINGS ON RECORD OR MATERIAL IN SUPPORT OF SUBSTANTIATIN G ASSESSING OFFICERS STAND WE APPROVE THE CONCLUSION ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. GROUND NO.1 IS DISMISSED. 6. IN GROUND NO.2 AND 3 WHICH WE WILL TAKE UP TOGE THER ASSESSING OFFICER HAS RAISED THE FOLLOWING GRIEVANCES : 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN HOLDING THAT THE PROFIT ON THE SALE OF LAND HAS TO BE ASSES SED UNDER THE HEAD CAPITAL GAIN NOT UNDER THE HEAD BUSINESS INCOME W ITHOUT 4 ITA NO.60/AGRA/2012 & C.O. NO.53/AGRA/2012 A.Y. 2007-08 APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E WHEREIN AO HAS OBSERVED & FOUND THAT THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL GAIN OF RS.27 70 994/- INSTEAD OF BUSINESS PROFIT O NLY TO REDUCE TAX LIABILITY AND TO AVOID ANY ADDITION U/S 40A(3) AND ACCORDINGLY THE CAPITAL GAIN SHOWN HAS BEEN TREATED AS BUSINESS INC OME. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS.93 406/- MADE BY AO ON ACCOUNT OF DI SALLOWANCE OF THE BENEFIT OF INDEXATION TO THE ASSESSEE ON ACCOUNT OF SAID TRANSACTION OF SALE OF LAND WITHOUT APPRECIATING OF THE AO MADE IN THE ASSESSMENT ORDER. 7. SO FAR AS THIS ISSUE IS CONCERNED ONLY A FEW MA TERIAL FACTS NEED TO BE TAKEN NOTE OF. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAD SOLD A PIECE OF LAND FO R RS.32 00 000/- AND GAINS ON SALE OF THIS LAND WAS SHOWN AS CAPITAL GAINS. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE ASSESSEE WAS A COLONIZER AND DEALIN G IN SALE OF LAND ANY PROFITS OR GAIN ON SALE OF LAND COULD ONLY BE BUSINESS PROFITS . HE WAS ALSO OF THE VIEW THAT SINCE ASSESSEE COULD NOT PROVE HIS INTENTION TO THE EFFECT THAT LAND SOLD WAS IN FACT AN INVESTMENT BENEFIT OF INDEXATION COULD NOT BE A LLOWED AS THE GAINS CAN ONLY BE TAXED AS BUSINESS PROFITS. ACCORDINGLY CAPITAL GA INS DISCLOSED BY THE ASSESSEE WERE REJECTED AND BUSINESS PROFITS COMPUTED ON THE SALE OF LAND AND WERE BROUGHT TO TAX ACCORDINGLY. AGGRIEVED ASSESSEE CARRIED TH E MATTER IN APPEAL BEFORE THE CIT(A) WHO REVERSED THE STAND OF THE ASSESSING OFFI CER BY OBSERVING AS FOLLOWS :- 5.1 AS PER THE AO THE ASSESSEE COULD NOT PROVE THE INTENTION THAT LAND HAS BEEN PURCHASED WITH THE PURPOSE TO RETAIN IT NOR MENTIONED ANY SPECIFIC CONDITION WHY IT WAS SOLD EXCEPT EARNI NG OF PROFIT. THEREFORE AS PER THE AO THE ASSESSEE HAS CLAIMED CAPITAL GAIN 5 ITA NO.60/AGRA/2012 & C.O. NO.53/AGRA/2012 A.Y. 2007-08 INSTEAD OF BUSINESS PROFIT ONLY TO REDUCE TAX LIABI LITY AND TO AVOID ANY ADDITION U/S. 40A(3). 5.2 IN SUPPORT OF THIS GROUND OF APPEAL THE LD. AR SUBMITTED THAT THE LAND IN QUESTION AT JANKIPURAM COLONY JHASNI W AS PURCHASED IN A.Y. 2001-02 FOR HIS RESIDENCE AND HAD SOLD THE SAM E FOR CAPITAL GAINS DUE TO ITS HIGH MARKET PRICE AND HAD PURCHASED ANOT HER LAND FOR HIS RESIDENCE THEREAFTER IN A.Y. 2007-08. IT WAS FURTHE R CONTENDED BY THE AR THAT ONLY BECAUSE THE APPELLANT CAME IN BUSINESS OF REAL ESTATE IN A.Y. 2003-04 IT CANNOT BE SAID THAT ALL IMMOVABLE PROPERTIES OF APPELLANT ARE BUSINESS STOCK IN TRADE AND THAT TOO WITHOUT ANY ADVERSE MATERIAL ON RECORD. THE APPELLANT HAD NEVER SHOWN T HE SAID LAND AS BUSINESS ASSET IN ANY PRECEDING YEAR BUT WAS ALWAYS PART OF HIS PERSONAL ASSETS WHICH WERE NEVER PART OF HIS BUSINE SS ASSETS AS PER HIS AUDITED REPORTS FOR PAST YEAR. 5.3 I HAVE CONSIDERED THE RIVAL CONTENTIONS AND FIN D THAT THE LAND IN QUESTION WAS PURCHASED DURING THE PERIOD RELEVANT T O A.Y. 2001-02 AND THE SAME WAS NEVER CONVERTED AS STOCK-IN-TRADE EVEN AFTER THE APPELLANT STARTED THE REAL ESTATE BUSINESS IN A.Y. 2003-04 AND ALL ALONG BEFORE THE SALE SAME HAD BEEN SHOWN AS INVEST MENT. THEREFORE THE PROFIT ON THE SALE THEREOF HAS TO BE ASSESSED U NDER THE HEAD CAPITAL GAIN. ACCORDINGLY THE GROUND OF APPEAL I S ALLOWED. 8. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GIVEN BY THE CIT(A) AND IS IN APPEAL BEFORE US. 9. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO APPLI CABLE LEGAL POSITION. 10. WE HAVE NOTED THAT THERE IS NOTHING ON RECORD T O SHOW THAT THE LAND SOLD BY THE ASSESSEE WAS EVER HELD AS BUSINESS ASSET OF THE ASSESSEE OR THAT IT WAS ACQUIRED 6 ITA NO.60/AGRA/2012 & C.O. NO.53/AGRA/2012 A.Y. 2007-08 DURING THE COURSE OF DEALING IN LAND PLOTS ETC. THERE IS ALSO NO DISPUTE THAT THE LAND WAS ACQUIRED MUCH BEFORE ASSESSEE CAME TO BE I N BUSINESS OF DEALING IN LAND OR THAT THE SAID ASSET WAS NEVER CONVERTED INTO STO CK IN TRADE. IN THESE CIRCUMSTANCES THERE IS INDEED NO LEGALLY SUSTAINAB LE BASIS FOR THE STAND OF THE ASSESSING OFFICER AND LEARNED CIT(A) RIGHTLY APPRO VED THE SAME. WE THEREFORE APPROVE THE ORDER OF THE CIT(A) ON THIS ISSUE AS WE LL AND DECLINE TO INTERFERE IN THE MATTER. 11. GROUND NO.2 IS ALSO DISMISSED. ACCORDINGLY THE APPEAL FILED BY THE ASSESSING OFFICER IS DISMISSED. C.O. 53/AGRA/2012 FILED BY THE ASSESSEE 12. WE NOW TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE WHICH ALSO CHALLENGES THE ORDER DATED 17.11.2011 PASSED BY THE CIT(A) FOR THE A.Y. 2007-08. 13. GROUND NOS.1 2 &3 ARE NOT PRESSED BY THE ASSES SEE AS THESE GROUNDS MERELY SUPPORT THE ORDER OF THE CIT(A). ACCORDINGLY GROUN D NOS. 1 2 & 3 ARE DISMISSED. 14. IN GROUND NO.4.1 4.2 & 4.3 THE ASSESSEE HAS R AISED THE FOLLOWING GRIEVANCES:- 7 ITA NO.60/AGRA/2012 & C.O. NO.53/AGRA/2012 A.Y. 2007-08 4.1 BECAUSE IN ANY VIEW THE LD. C.I.T.(A) IN THE PECULIAR FACTS AND LAW OF THE CASE HAS ERRED IN CONFIRMING THE ADDITIO N OF RS.1 00 000/- (20% OF RS.5 00 000/-) U/S 40A(3) ON INVESTMENT IN LAND. 4.2 BECAUSE IN THE FACTS AND CIRCUMSTANCES OF THE C ASE LEARNED AO HAS ERRED IN ADDING RS.1 00 000/- BY APPLYING SECTI ON 40A(3) TREATING THE INVESTMENT AMOUNT OF RS.5 00 000/- AS BUSINESS EXPENDITURE EVEN THOUGH THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION O F THIS AMOUNT AS AN EXPENDITURE. 4.3 BECAUSE ALTERNATIVELY THE ASSESSEE CASE IS COVE RED BY RULE 6DD READ WITH SECTION 40A(3) THE LD. CIT HAS ERRED IN NOT ADJUDICATING THIS SPECIFIC GROUND. (GROUND NO.1.6). 15. THE ISSUE IN APPEAL LIES IN A VERY NARROW COMPA SS OF FACTS. DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE PURCHASED LAND AND PAID RS.5 00 000/- IN CASH FOR THE SAME. IT WAS IN THIS BACKDROP THAT THE ASSE SSING OFFICER DISALLOWED RS.1 00 000/- BEING 20% OF CASH EXPENDITURE U/S 4 0A(3) OF THE ACT. THE ASSESSEES CONTENTION THAT DISALLOWANCE CANNOT BE M ADE U/S 40A(3) AS NO DEDUCTION HAS BEEN CLAIMED IN RESPECT OF THE SAME WAS SIMPLY BRUSHED ASIDE. AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BUT WITHOUT A NY SUCCESS. THE ASSESSEE IS NOW IN SECOND APPEAL BEFORE US. 16. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS ON RECORD IN THE LIGHT OF APPLICAB LE LEGAL POSITIONS. 17. WE HAVE NOTED THAT THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION IN RESPECT OF THE EXPENDITURE INCURRED ON PURCHASE OF LANDS. IT I S ALSO ELEMENTARY THAT SECTION 8 ITA NO.60/AGRA/2012 & C.O. NO.53/AGRA/2012 A.Y. 2007-08 40A(3) ONLY RESTRICTS THE DEDUCTIONS WHICH ARE OTHE RWISE ADMISSIBLE. ONCE DEDUCTION HAS NOT BEEN CLAIMED THERE CANNOT BE ANY OCCASION TO RESTRICT THE SAME. CLEARLY THEREFORE IMPUGNED DISALLOWANCE IS UNSUST AINABLE IN LAW. WE VACATE THE DISALLOWANCE. AS FOR THE DECISION OF THIS BENCH IN THE CASE OF SMT. SUNITA GUPTA VS. DCIT (ITA NO.120/AGRA/2012 A.Y. 2002-03 ORDER DATED 22.02.2013) AS CITED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE T HAT WAS A CASE IN WHICH ASSESSEE COULD NOT ESTABLISH THAT DEDUCTION WAS NOT CLAIMED SINCE COMPLETE PROFIT AND LOSS ACCOUNT AND AUDIT REPORT WAS NOT FILED. TH AT IS NOT THE SITUATION BEFORE US. IT WAS ALSO NOTED THAT THERE IS NO REASON NOT TO CL AIM THE DEDUCTION IN THE SAID CASE BUT IN THE CASE BEFORE US DEDUCTION HAS NOT BEEN CL AIMED AS EXPENSES HAVE BEEN CAPITALIZED FOR NOW. THE OCCASION FOR DISALLOWANCE WILL ARISE IN THE YEAR IN WHICH SALE IS MADE AND ACCORDINGLY DEDUCTIONS ARE CLAIMED FROM THE SAME. THAT IS NOT THE YEAR BEFORE US. IN VIEW OF THESE DISCUSSIONS AS AL SO BEARING IN MIND ENTIRETY OF THE CASE WE UPHOLD THE GRIEVANCES OF THE ASSESSEE AND ACCORDINGLY DELETE THE IMPUGNED DISALLOWANCE OF RS.1 00 000/-. 18. GROUND NOS. 4.1 4.2 & 4.3 ARE ACCORDINGLY ALLOW ED. 19. IN GROUND NO.5 THE ASSESSEE HAS RAISED THE FOLL OWING GRIEVANCE:- 5. BECAUSE IN ANY VIEW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF VARIOUS EXPENSES AT 10% (MADE BY A. O. ADHOC 20% 9 ITA NO.60/AGRA/2012 & C.O. NO.53/AGRA/2012 A.Y. 2007-08 OF EXPENSES- HOSPITALITY OF STAFF GENERAL REPAIR A ND MAINTENANCE TRAVELLING AND CONVEYANCE AND PACKING CHARGES). 20. CONSIDERING THE SMALLNESS OF AMOUNT AND IN RESP ONSE TO A SPECIFIC QUESTION FROM THE BENCH LEARNED COUNSEL DID NOT REALLY PRES S THIS GROUND OF APPEAL. ACCORDINGLY GROUND NO.5 IS DISMISSED. 21. IN THE RESULT WHILE APPEAL OF THE REVENUE IS D ISMISSED CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS INDICAT ED ABOVE. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT (APPEALS) CONCERNED/CIT CO NCERNED/ D.R. ITAT AGRA BENCH AGRA/ GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY