ACIT, CHENNAI v. Smt. Kumari Narasingan, CHENNAI

ITA 1143/CHNY/2009 | 2006-2007
Pronouncement Date: 18-11-2011 | Result: Dismissed

Appeal Details

RSA Number 114321714 RSA 2009
Assessee PAN AADPK0305R
Bench Chennai
Appeal Number ITA 1143/CHNY/2009
Duration Of Justice 2 year(s) 4 month(s) 8 day(s)
Appellant ACIT, CHENNAI
Respondent Smt. Kumari Narasingan, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 18-11-2011
Date Of Final Hearing 08-11-2011
Next Hearing Date 08-11-2011
Assessment Year 2006-2007
Appeal Filed On 10-07-2009
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI B BENCH CHENNAI. BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER I.T.A. NO. 1143/MDS/2009 ASSESSMENT YEAR: 2006-07 THE ASSISTANT COMMISSIONER OF INCOME TAX BUSINESS CIRCLE VI CHENNAI. VS. SMT. KUMARI NARASINGAN NO. 38 NEW THANDAVARAYAN STREET CHENNAI 21. [PAN: AADPK0305R] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A.C. JOSEPH SR. DR ASSESSEE BY : SHRI S. SRIDHAR DATE OF HEARING : 08.11.2011 DATE OF PRONOUNCEMENT 18.11.2011 ORDER PER HARI OM MARATHA J.M. THIS APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) IX CH ENNAI DATED 30.03.2009. THIS APPEAL ARISES OUT OF THE ORDER PASSED UNDER SE CTION 143(3) OF THE INCOME TAX ACT PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX BUSINESS CIRCLE VII CHENNAI DATED 31.12.2008. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT ONE SHRI K. SUBRAMANIA MUDALIAR NOW DECEASED HAD PURCHASED LANDS MEASURI NG 60 ACRES AND 4.5 CENTS DURING THE PERIOD FROM 1963 TO 1970 AND 32 AC RES AND 52 CENTS BETWEEN THE YEARS 1982 TO 2000. THE DESCRIPTION OF THIS LAND(S) IS AS UNDER: I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1143 143143 143/ // /MDS/ MDS/ MDS/ MDS/09 0909 09 2 IN PERUMBAKKAM VILLAGE DOCUMENT NUMBER ACRES 1741/06 13.95 1742/06 00.25 14.20 DOCUMENT NUMBER ACRES 1744/06 36.46 1745/06 21.63 58.09 IN ARASANKALANI VILLAGE DOCUMENT NUMBER ACRES 1740/06 20.59 20.59 3. THE ABOVE LAND(S) AS PER THE LAND REVENUE RECOR DS AS ON THE DATE OF SALE WAS SHOWN AS AGRICULTURAL LAND. SHRI K. SUB RAMANIA MUDALIAR DIED ON 23.11.2005 LEAVING THE FOLLOWING SIX LEGAL HEIRS N AMELY I) SHRI K.S. RAVIKUMAR ALIAS S. RAVI II) SMT. S. RUKMINI AMMAL III) SHRI SEKAR IV) SMT. N. KUMARI V) SMT. S. PRABHA VI) KM. NARASINGAN 4. THE QUESTION WHICH ARE AROSE FOR DETERMINATION WAS AS TO WHETHER THE LAND SOLD BY THE ASSESSEE AS CO-OWNER WAS AGRICULTU RAL LAND OR OTHERWISE. BOTH THE PARTIES WERE IN AGREEMENT THAT THE ISSUE I NVOLVED IN THIS APPEAL STANDS SQUARELY COVERED BY THE CONSOLIDATED ORDER O F THE D BENCH OF THE TRIBUNAL IN ITA NOS. 1076 1078 1079 1080 AND 10 94/MDS/2009 IN THE CASES OF ITO VS. CHANDAR HUF AND OTHERS VIDE ORDE R DATED 26.04.2011. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1143 143143 143/ // /MDS/ MDS/ MDS/ MDS/09 0909 09 3 5. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE ENTIRE RECORD AVAILABLE BEFORE US. THE TRIBUNAL HAS COME TO THE C ONCLUSION THAT THE PIECE OF LAND SOLD BY ALL CO-OWNERS IN THEIR CASES WAS AGRICULTURAL LAND AT THE TIME OF SALE AND THEREFORE NO CAPITAL GAIN WOULD ARISE THEREON. FOR READY REFERENCE WE ARE EXTRACTING PARA 9 OF THE TRIBUNAL ORDER DATED 26.04.2011 PASSED IN OTHER CO-OWNERS CASES AS UNDER: 9. THE ABOVE DECISION APPLIES MUTATIS MUTANDIS TO THE FACTS OF THE GIVEN CASES AND THE LANDS IN QUESTION CANNOT BE TRE ATED AS A CAPITAL ASSET. EVEN IF THE DECEASED LATE SHRI K. SUBRAMANI A MUDALIAR HAD SOUGHT PERMISSION TO DEVELOP THIS LAND BUT WITHOUT TAKING ANY FURTHER ACTION IN THAT DIRECTION THE CHARACTER OF THE LAND WILL NOT CHANGE AND IT WILL NOT BECOME ADVENTURE IN THE NATURE OF TRADE. E VEN THOUGH THE APPROVAL HAD BEEN OBTAINED THE LAND TO CERTAIN PURC HASER OF THE LAND IN THE YEAR 1994 BUT IT WAS ADMITTEDLY ABANDONED AND L ATE SHRI K. SUBRAMANIA MUDALIAR NEVER IMPLEMENTED NOR ACTED UPO N THE SAME. EVEN AFTER FORMING LAYOUT AGRICULTURAL ACTIVITIES WERE DONE AND ALL THE LANDS WERE MENTIONED AS AGRICULTURE LANDS ONLY. UNDISPUTE DLY AFTER LAYOUT APPROVAL NO PLOT WAS SOLD TILL THE YEAR 2005. IT I S ALSO NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEES HAD SOLD ANY S UCH PLOT. THE ENTIRE LANDS WERE SOLD AS AGRICULTURAL LAND ONLY AS HAS BE EN CERTIFIED BY TEHSILDAR AND WHICH WAS FURTHER RECOGNIZED BY THE S UB-REGISTRAR FOR STAMP DUTY VALUE. IN OUR OPINION MERE OBTAINING PE RMISSION FOR THE LAYOUT DOES NOT CHANGE THE CHARACTER OF THE LANDS F ROM AGRICULTURAL LANDS. HAD THE DECEASEDS INTENTION TO DO BUSINESS NO PRUDENT BUSINESSMAN AFTER OBTAINING LAYOUT PERMISSION WILL KEEP THE LANDS WITHOUT SELLING FOR MORE THAN 12 YEARS. IN OUR CONS IDERED OPINION THE SALE OF THE LAND BY ALL THE ASSESSEES SIMULTANEOUSL Y TO ONE PERSON CANNOT BE TREATED AS A SINGLE OR ISOLATED INCIDENCE OF SAL E BRINGING THE SALE UNDER THE EXPRESSION ADVENTURE IN THE NATURE OF TR ADE. WHILE DISCUSSING THIS ISSUE THE ASSESSING OFFICER HAS WR ONGLY INTERPRETED CERTAIN DECISIONS. IN THE CASE OF ESTATE INVESTMENT PVT. LTD. 121 ITR 580 IT HAS BEEN HELD THAT EVEN A SINGLE TRANSACTION OF PURCHASE AND SALE OUTSIDE THE ASSESSEES LINE OF BUSINESS MAY CONSTIT UTE AS ADVENTURE IN THE NATURE OF TRADE HAS BEEN WRONGLY INTERPRETED TO F IT IN THE FACTS OF THIS CASE. ADMITTEDLY NO SUCH SINGLE OR ISOLATED EXAMPL E OF SALE IS EVIDENT IN THIS CASE. THE ASSESSING OFFICER HAS CONFUSED THE T ERM INVESTMENT WITH THE TERM BUSINESS. IF ANY PERSON MAKES AN INVESTM ENT PARTICULARLY IN I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1143 143143 143/ // /MDS/ MDS/ MDS/ MDS/09 0909 09 4 AGRICULTURAL LAND AND IF THE ENTIRE LAND IS SOLD AF TER ITS VALUE IS APPRECIATED IT WOULD NOT BECOME ADVENTURE IN THE N ATURE OF TRADE. IT IS THE NATURE OF THE TRANSACTION WHICH DEFINES THE ACT UAL NATURE OF THE TRANSACTION. THE ASSESSING OFFICER HAS HIMSELF DISC USSED THIS ISSUE BY RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NARAIN SWADESHI WEAVING MILL 26 ITR 765 WHEREIN IT HAS B EEN HELD THAT THE TERM BUSINESS CONNOTES SOME REAL SUBSTANTIAL AND SYSTEMATIC AND ORGANIZED COURSE OF ACTIVITY OR CONDUCT WITH A SET OF PURPOSE. A SINGLE AND ISOLATED TRANSACTION CAN BE CALLED CAPABLE OF F ALLING WITHIN THE DEFINITION OF BUSINESS AS BEING ADVENTURE IN THE NATURE OF TRADE PROVIDED THE TRANSACTION BEARS INDICIA OF TRADE. FU RTHER RELIANCE BY LD. ASSESSING OFFICER ON THE DECISION OF SMT. MINAL RAM ESH CHANDRA REPORTED IN 167 ITR 507 IS MISPLACED. GOING BY THE DICTUM OF THIS DECISION THIS PURCHASE OF LAND AND SALE WOULD SIMP LY AMOUNT TO INVESTMENT BY THE ASSESSEE. SINCE THE ACT SPECIFICA LLY EXCLUDES SALE CONSIDERATION ARISING FROM SALE OF AGRICULTURE LAND NO AMOUNT OF DISCUSSION AND REASONS CAN BRING SUCH A SALE UNDER THE DEFINITION OF EITHER CAPITAL ASSET OR BUSINESS. THE LAND IN QUEST ION WAS DEFINITELY AGRICULTURAL LAND AT THE TIME OF SALE AND NOTHING E LSE. THE SALE IN QUESTION IF THE SALE OF ENTIRE JOINT PROPERTY WHICH IS AGRICULTURAL LAND CONSISTING OF 9263 CENTS SITUATED IN TWO VILLAGES AS DISCUSSED ABOVE THEN THE SALE PROCEED IS NOT EXIGIBLE TO ANY TAX UN DER THE ACT. IN THIS REGARD TWO DECISIONS OF HONBLE MADRAS HIGH COURT NAMELY CIT V. KASTURI ESTATE PVT. LTD. 62 ITR 512 AND CIT VS. A. MOHAMMED MOHIDEEN 176 ITR 393 (MAD.) ARE DIRECTLY APPLICABL E. FURTHER THE DECISIONS OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. P.J. THOMAS 211 ITR 897 AND CIT VS. E. UDAYAKUMAR 284 ITR 511 ARE RELEVANT. IN THESE DECISIONS IT HAS BEEN HELD THAT A SUBSEQUENT TREATMENT OF LAND SOLD HAS NO RELEVANCE WHILE CONSIDERING A C APITAL ASSET. THE PURPOSE OF THE TRANSFEROR HAS TO BE LOOKED INTO AND NOT THAT OF THE PURCHASER. IF THE PURCHASER IN THIS CASE HAS PURCHA SED THE LANDS FOR ANY OF THE PURPOSE OTHER THAN AGRICULTURE PURPOSE THIS WOULD NOT BE RELEVANT TO DECIDE THE TAXABILITY OF THE SALE CONSIDERATION IN QUESTION. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F CIT VS. SUSHILA DEVI JAIN 259 ITR 671 HAS HELD THAT THE PROPERTIE S ARE NOT PURCHASED TO SELL BUT INHERITED AND HENCE THE TRANSACTION WAS NOT IN THE NATURE OF ADVENTURE IN THE NATURE OF TRADE. BECAUSE IN THIS C ASE ALL THE ASSESSEES HAVE INHERITED THIS PROPERTY WHICH WAS ADMITTEDLY S OLD JOINTLY BY THEM THIS DECISION DIRECTLY APPLIES TO THE FACTS OF THE CASE. 6. THEREFORE BY RESPECTFULLY FOLLOWING THE TRIBUN ALS ORDER IN CO-OWNERS CASES WHERE ONE COMPOSITE PIECE OF LAND WAS SOLD IN CLUDING THIS ASSESSEE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1143 143143 143/ // /MDS/ MDS/ MDS/ MDS/09 0909 09 5 ALSO AS A CO-OWNER. SO THE SAME TREATMENT HAS TO B E GIVEN TO THE ISSUE INVOLVED IN THIS APPEAL. THEREFORE WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THIS APPEAL OF THE REVENUE ALSO. 7. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.11.2011. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (HARI OM MARATHA) JUDICIAL MEMBER CHENNAI DATED THE 18.11.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.