Sri.Shaji Thomas, Trivandrum v. ACIT, Trivandrum

ITA 132/COCH/2013 | 2008-2009
Pronouncement Date: 25-10-2013

Appeal Details

RSA Number 13221914 RSA 2013
Assessee PAN ABJPT8752G
Bench Cochin
Appeal Number ITA 132/COCH/2013
Duration Of Justice 7 month(s) 15 day(s)
Appellant Sri.Shaji Thomas, Trivandrum
Respondent ACIT, Trivandrum
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 25-10-2013
Assessment Year 2008-2009
Appeal Filed On 11-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE S/SHRI N.R.S.GANESAN JM AND B.R.BASKAR AN AM I.T.A. NO. 132/COCH/2013 ASSESSMENT YEAR : 2007-08 SHRI SHAJI THOMAS UP XI-725 A MANJANKAL HOUSE PATTOM THIRUVANANTHAPURAM-4. [PAN NO. ABJPT 8752G] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1(1) THIRUVANANTHAPURAM. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI T.M. SREEDHARAN SR. ADV. REVENUE BY SMT. S.VIJAYAPRABHA JR. DR DATE OF HEARING 31/07/2013 DATE OF PRONOUNCEMENT 25/10/2013 O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 13.02.2013 PASSED BY LD CIT(A) TRIVANDRUM AND IT R ELATES TO THE ASSESSMENT YEAR 2008-09. 2. FOLLOWING ADDITIONS MADE BY THE ASSESSING OFFICE R HAVING BEEN CONFIRMED BY LD CIT(A) THE ASSESSEE HAS FILED THIS APPEAL BE FORE US. (A) DISALLOWANCE OF INTEREST RS. 23 34 718/- (B) ASSESSMENT OF CAPITAL GAINS RS.1 09 05 257/- 3. THE FACTS RELATING TO BOTH THE ISSUES REFERRED ABOVE ARE STATED IN BRIEF. THE ASSESSEE IS THE MANAGING DIRECTOR OF A COMPANY NAMED M/S MANJAKAL COMMUNICATION AND SYSTEMS PVT LTD AND HE IS ALSO HA VING A PROPRIETARY BUSINESS I.T.A. NO. 132/COCH/2013 2 CONCERN BY NAME M/S MANJAKAL BUSINESS CORPORATION. HE FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING A TOTAL INCOME OF RS.1 00 15 970/-. IN THE PROPRIETARY BUSINESS THE ASSESSEE CLAIMED DEDUCTION FOR INTEREST EXPENSES AS UNDER:- INTEREST AND BANK CHARGES 5 75 312 INTEREST 17 59 406 --------------- 23 34 718 ======== ACCORDING TO THE AO THE ASSESSEE HAS GIVEN INTERES T FREE ADVANCES TO ITS SISTER CONCERNS AS DETAILED BELOW:- ALCO BREW DISTILLERIES (P) LTD 31 61 390 THOMAS HOLIDAYS AND RESORTS INDIA (P) LTD 2 82 07 022 BEACH CASTLE 3 63 86 010 AMBILI JAMES 9 00 000 ----------------- 6 86 54 422 ========= THE AO NOTICED THAT THE ASSESSEE HAS AVAILED LOANS FROM BANKS TO THE TUNE OF RS.1 75 47 372/-. ACCORDINGLY THE ASSESSING OFFIC ER HELD THAT THE ASSESSEE HAS DIVERTED INTEREST BEARING LOANS FOR GIVING INTEREST FREE ADVANCES TO THE SISTER CONCERNS CITED ABOVE. HENCE BY PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL KERALA HIGH COURT IN THE CASE OF V.I . BABY (254 ITR 248) THE AO DISALLOWED ENTIRE INTEREST CLAIM OF RS.23 34 718/- SINCE THE AMOUNT GIVEN TO THE SISTER CONCERNS WAS MORE THAN THE BORROWED FUNDS. 3.1 THE AO NOTICED THAT THE ASSESSEE HAS SOLD 1 30.73 ARES OF LAND LOCATED AT KUMARAKOM AND CLAIMED THE SAME AS AGRICULTURAL LAND . ACCORDINGLY THE ASSESSEE CLAIMED THE SALE PROCEEDS AS EXEMPTION. T HE ASSESSEE ALSO PRODUCED A CERTIFICATE OBTAINED FROM THE VILLAGE OFFICER KUMA RAKOM AND ALSO ANOTHER CERTIFICATE OBTAINED FROM HEAD SURVEYOR WHEREIN TH E ABOVE SAID LAND WAS CERTIFIED TO BE AGRICULTURAL LANDS. THE ASSESSEE A LSO FURNISHED COPIES OF TAX REGISTER NAMED AS THANDAPPER REGISTER WHEREIN AL SO THE ENTIRE LAND WAS I.T.A. NO. 132/COCH/2013 3 DESCRIBED AS AGRICULTURAL LAND. ACCORDING TO THE AO HE CONDUCTED ENQUIRIES AND ALSO FOUND FROM THE REVENUE RECORDS THAT A PORTION OF PROPERTY COMPRISING 33.13 ARES WAS DESCRIBED AS BACK WATERS (KAYAL). HENCE THE AO TOOK THE VIEW THAT THE PORTION OF LAND DESCRIBED AS BACK WATERS CANN OT BE CONSIDERED AS AGRICULTURAL LAND. ACCORDINGLY HE ASSESSED THE PR OPORTIONATE AMOUNT OF NET CONSIDERATION PERTAINING TO 33.13 ARES WHICH WORKE D OUT TO RS.1 09 05 257/- AS SHORT TERM CAPITAL GAIN TREATING THE SAME AS NON-AG RICULTURAL LAND. 4. THE LD CIT(A) CONFIRMED BOTH THE ADDITIONS REFERRED ABOVE AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 5. THE FIRST ISSUE RELATES TO THE DISALLOWANCE OF INTEREST CLAIM OF RS.23 34 718/-. THE LD A.R SUBMITTED THAT THE ASSE SSEE IS A SHARE HOLDER IN M/S ALCO BREW DISTELLERIES PVT LTD AND M/S THOMAS HOLID AYS & RESORTS INDIA PVT LTD. HENCE HE HAS GIVEN THE IMPUGNED ADVANCES EITHER AS SUBSCRIPTION TO SHARE CAPITAL OR AS LONG TERM INVESTMENT. ACCORDINGLY HE SUBMITTED THAT THERE IS COMMERCIAL EXPEDIENCY IN MAKING THESE ADVANCES AND HENCE THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS (288 ITR 1) SHALL SQUARELY APPLY TO THESE CASES. THE CONCERN M/S BEACH CASTLE HAS ACQUIRED A HOTEL AT KOVALAM BY AVAILING TERM LOAN FROM STATE BANK AND T HE ASSESSEE HAS CONTRIBUTED FUNDS IN ORDER TO ENABLE THE COMPLETION OF THE TRAN SACTION OF PURCHASE OF HOTEL. HENCE THERE IS COMMERCIAL EXPEDIENCY IN THIS TRANS ACTION ALSO. MRS. AMBILI SHAJI IS THE SPOUSE OF THE ASSESSEE AND THE SUM OF RS.9.0 0 LAKHS WAS GIVEN OUT OF INTERNAL ACCRUALS. THE LD COUNSEL FURTHER SUBMITTE D THAT THE ASSESSEE HAS BORROWED FUNDS FROM BANKS FOR SPECIFIC PURPOSES AND HENCE THERE IS NO SCOPE OF DIVERTING THE SAME FOR OTHER PURPOSES. THE ADVANCE STANDING IN THE NAME OF M/S ALCO BREW DISTILLERIES PVT LTD WAS GIVEN IN THE EAR LIER YEARS AND NO AMOUNT WAS ADVANCED DURING THE YEAR UNDER CONSIDERATION. OUT OF THE BALANCE AMOUNT OF RS.282.07 LAKHS STANDING IN THE NAME OF M/S THOMAS HOLIDAYS & RESORTS INDIA PVT LTD ONLY RS.16.56 LAKHS WAS GIVEN DURING THE Y EAR UNDER CONSIDERATION. THE I.T.A. NO. 132/COCH/2013 4 LD COUNSEL ALSO SUBMITTED THAT THE ASSESSEE HAD GEN ERATED FUNDS DURING THE YEAR UNDER CONSIDERATION THROUGH AGRICULTURAL INCOM E (RS.17.85 LAKHS) SALE OF AGRICULTURAL LAND AT KUMARAKOM (RS.430.31 LAKHS) S ALE OF LAND AT PATTOM ( RS.47.48 LAKHS) AND PROFIT FROM BUSINESS ( RS.58.82 LAKHS). BESIDES THE ABOVE THE ASSESSEE HAD OPENING BALANCE IN HIS CAPITAL ACC OUNT TO THE TUNE OF RS.214.12 LAKHS. ACCORDINGLY BY PLACING RELIANCE ON THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF MUNJAL SALES CORPORATION (298 ITR 29 8) HE SUBMITTED THAT THE ASSESSEE WAS HAVING HUGE INTEREST FREE FUNDS WITH H IM. ACCORDINGLY HE SUBMITTED THAT THERE IS NO NECESSITY TO MAKE DISALL OWANCE OF INTEREST CLAIM MADE BY THE ASSESSEE. 5.1 ON THE CONTRARY THE LD D.R SUBMITTED THAT THE ASSESSEE HAS ACCEPTED THE FACT OF DIVERSION OF FUNDS AND FURTHER THE CLAIM OF COMMERCIAL EXPEDIENCY HAS NOT BEEN PROVED WITH EVIDENCES. SHE FURTHER SUBMITTED THAT THE DECISION RENDERED BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF V.I. BABY (SUPRA) SHALL SQUARELY APPLY TO THE INSTANT CASE. THE LD D.R CON TENDED THAT THERE IS NO NECESSITY TO BORROW FUNDS IF THE ASSESSEE IS HAVIN G SURPLUS FUNDS. ACCORDINGLY SHE SUBMITTED THAT THERE IS CLEAR DIVERSION OF BORR OWED FUNDS FOR NON-BUSINESS PURPOSES AND ACCORDINGLY CONTENDED THAT THE DISALLO WANCE OF INTEREST CLAIM SHOULD BE SUSTAINED. 5.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND CAR EFULLY PERUSED THE RECORD. ON A CAREFUL READING OF THE ASSESSMENT ORDER IT APPEA RS TO US THAT THE ASSESSEE DID NOT OFFER ANY EXPLANATION WITH REGARD TO THE PROPOS AL OF DISALLOWANCE OF INTEREST CLAIM BY FOLLOWING THE DECISION OF V.I. BABY (SUPRA ). HOWEVER THE ASSESSEE HAS OFFERED EXPLANATION BEFORE LD CIT(A) BUT THE FIRST APPELLATE AUTHORITY HAS ALSO FOLLOWED THE DECISION OF V.I. BABY (SUPRA) BY MAKIN G A GENERAL STATEMENT THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE OR HE HAS FAILED TO PROVE THE BUSINESS CONSIDERATION/COMMERCIAL EXPEDIENCY INVOLV ED IN MAKING THESE ADVANCES. I.T.A. NO. 132/COCH/2013 5 5.3 ON THE CONTRARY THE CONTENTION OF THE ASSE SSEE IS THAT HE IS A SHARE HOLDER IN M/S ALCO BREW DISTELLERIES PVT LTD AND M/ S THOMAS HOLIDAYS & RESORTS INDIA PVT LTD AND THE IMPUGNED ADVANCES WERE GIVEN EITHER AS SUBSCRIPTION TO SHARE CAPITAL OR AS LONG TERM ADVANCE. WE NOTICE T HAT BOTH THE CONCERNS CITED ABOVE ARE PRIVATE LIMITED COMPANIES AND HENCE THER E IS A POSSIBILITY THAT THE ASSESSEE IS A MAJOR SHARE HOLDER AND DIRECTOR IN TH E ABOVE SAID TWO CONCERNS. IN THIS KIND OF INTEREST FREE ADVANCES MADE BY THE ASS ESSEE WHAT IS REQUIRED TO BE SEEN IS WHETHER THERE IS COMMERCIAL EXPEDIENCY IN G IVING THESE ADVANCES AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF S.A. BU ILDERS (SUPRA). FOR THE SAKE OF CONVENIENCE WE EXTRACT BELOW THE FOLLOWING OBSE RVATIONS MADE BY HONBLE SUPREME COURT IN THE ABOVE CITED CASE. WE WISH TO MAKE IT CLEAR THAT IT IS NOT OUR OPINIO N THAT IN EVERY CASE INTEREST ON BORROWED LOAN HAS TO BE ALLOWED IF THE ASSESSEE ADVANCES IT TO A SISTER-CONCERN. IT ALL DEPENDS ON THE FACTS AND C IRCUMSTANCES OF THE RESPECTIVE CASE. FOR INSTANCE IF THE DIRECTORS OF THE SISTER-CONCERN UTILIZE THE AMOUNT ADVANCED TO IT BY THE ASSESSEE FOR THEIR PERSONAL BENEFIT OBVIOUSLY IT CANNOT BE SAID THAT SUCH MONEY WAS ADV ANCED AS A MEASURE OF COMMERCIAL EXPEDIENCY. HOWEVER MONEY CAN BE SAI D TO BE ADVANCED TO A SISTER-CONCERN FOR COMMERCIAL EXPEDIENCY IN MA NY OTHER CIRCUMSTANCES (WHICH NEED NOT BE ENUMERATED HERE). HOWEVER WHERE IT IS OBVIOUS THAT A HOLDING COMPANY HAS A DEEP INTERE ST IN ITS SUBSIDIARY AND HENCE IF THE HOLDING COMPANY ADVANCES BORROWED MONEY TO A SUBSIDIARY AND THE SAME IS USED BY THE SUBSIDIARY F OR SOME BUSINESS PURPOSES THE ASSESSEE WOULD IN OUR OPINION ORDIN ARILY BE ENTITLED TO DEDUCTION OF INTEREST ON ITS BORROWED LOANS. HOWEVER WE NOTICE THAT THE TAX AUTHORITIES HAVE NO T EXAMINED THE ADVANCES GIVEN TO THE ABOVE SAID TWO PRIVATE LIMITED COMPANI ES FROM THE ANGLE OF COMMERCIAL EXPEDIENCY AS EXPLAINED BY THE HONBLE S UPREME COURT IN THE CASE OF S.A. BUILDERS (SUPRA) EVEN THOUGH THE ASSESSEE HAS CLAIMED BEFORE LD CIT(A) THAT THERE WAS COMMERCIAL EXPEDIENCY. WE NOTICE TH AT THE ASSESSEE HAS ALSO FAILED TO FURNISH THE DETAILS AS TO HOW THE TWO PRI VATE LIMITED COMPANIES CITED ABOVE HAVE UTILIZED THE FUNDS RECEIVED FROM THE ASS ESSEE. I.T.A. NO. 132/COCH/2013 6 5.4 WITH REGARD TO THE ADVANCE GIVEN TO THE CONC ERN NAMED BEACH CASTLE WE NOTICE THAT EITHER THE ASSESSEE OR THE ASSESSING OF FICER DID BRING ON RECORD ABOUT THE OWNERSHIP DETAILS OF THE SAID CONCERN. HOWEVER FROM THE PAPER BOOK FILED BY THE ASSESSEE WE NOTICE THAT THE ASSESSEE HAS FU RNISHED A COPY OF BALANCE SHEET AS AT 31.3.2008 AT PAGE 19 OF THE PAPER BOOK. OUR EXAMINATION OF THE SAME REVEALS THAT THE ASSESSEE HAS PREPARED A CONS OLIDATED BALANCE SHEET COMBINING THE FINANCIAL STATEMENTS OF M/S MANJANKAL BUSINESS CORPORATION AND M/S BEACH CASTLE. NORMALLY SUCH TYPE OF CONSOLIDA TE BALANCE SHEET IS PREPARED ONLY IF THE ASSESSEE IS THE PROPRIETOR OF BOTH THE CONCERNS. IT IS AVAILABLE ON RECORD THAT THE ASSESSEE IS THE PROPRIETOR OF M/S M ANJANKAL BUSINESS CORPORATION. IF THE ASSESSEE HIMSELF IS THE PROPRIETOR OF M/S BE ACH CASTLE ALSO THEN THE FUNDS GIVEN TO THAT CONCERN CANNOT BE CONSIDERED AS DIVER SION OF FUNDS. HOWEVER AS STATED EARLIER THE OWNERSHIP DETAILS OF THE CONCERN M/S BEACH CASTLE WERE NOT BROUGHT ON RECORD AND HENCE THE FACTUAL ASPECTS IN THIS REGARD NEEDS TO BE EXAMINED. WE ALSO NOTICE THAT THE ASSESSEE HAS FUR NISHED THE FINANCIAL STATEMENTS OF M/S BEACH CASTLE ALSO IN HIS PAPER BOOK WHEREIN THE LOAN OF RS.328.94 LAKHS OBTAINED FROM STATE BANK OF INDIA I S SHOWN. HENCE THE OBSERVATION MADE BY THE FIRST APPELLATE AUTHORITY T HAT THE ASSESSEE HAS NOT PROVED ABOUT THE FACT OF LOAN AVAILED FROM BANK MAY NOT BE CORRECT. FURTHER THE ASPECT OF COMMERCIAL EXPEDIENCY IN RESPECT OF THI S LOAN NEEDS TO BE EXAMINED IF THE ASSESSEE WAS NOT FOUND TO BE OWNER OF M/S BE ACH CASTLE. 5.5 THE NEXT LOAN IS THE LOAN OF RS.9.00 LAKHS GIVEN TO THE SPOUSE OF THE ASSESSEE. THE ASSESSEE HAS STATED THAT THE SAME WA S GIVEN OUT OF INTERNAL ACCRUALS. BESIDES THE ABOVE THE CONTENTION OF THE ASSESSEE IS THAT HE IS HAVING HUGE OPENING BALANCE IN HIS CAPITAL ACCOUNT AND FUR THER HE HAS GENERATED FUNDS DURING THE CURRENT YEAR ALSO. ALL THESE CLAIMS HAV E NOT BEEN EXAMINED BY THE TAX AUTHORITIES. I.T.A. NO. 132/COCH/2013 7 5.6 WE NOTICE THAT THE TAX AUTHORITIES HAVE PLA CED HEAVY RELIANCE ON THE DECISION RENDERED BY THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF V.I. BABY (SUPRA). HOWEVER THE FACTS PREVAILING IN THA T CASE WERE TOTALLY DIFFERENT AND HENCE IN OUR VIEW THE RATIO OF SAID DECISION CANNOT BE APPLIED TO THE FACTS OF INSTANT CASE. IN ANY CASE WE HAVE ALREADY NOTI CED THAT THE TAX AUTHORITIES HAVE NOT EXAMINED THE ASPECTS OF COMMERCIAL EXPEDIE NCY AND OTHER DETAILS WITH REGARD TO THE ADVANCES GIVEN BY THE ASSESSEE. UNDE R THESE CIRCUMSTANCES IN OUR VIEW THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFIC ER WITH THE DIRECTION TO EXAMINE THE ISSUE AFRESH BY DULY CONSIDERING THE RATIO LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF M/S S.A.BUILDERS (SUPRA) AND M /S MUNJAL SALES CORPORATION (SUPRA) AND DECIDE THE ISSUE IN ACCORDANCE WITH THE LAW AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD. THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE INFORMATION AND EXPLANATION THAT MAY BE CALLED FOR BY THE ASSESSING OFFICER IN THIS REGARD. 6. THE NEXT ISSUE RELATES TO THE ASSESSMENT OF CAPITAL GAINS ARISING ON SALE OF A PORTION OF AGRICULTURAL LAND TREATING THE SAME AS NON-AGRICULTURAL. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS SOLD ENTIRE EXT ENT OF LAND IN A SINGLE LOT TO A SINGLE PARTY ONLY. FURTHER ENTIRE EXTENT LAND FORM S A SINGLE BIT OF LAND. THE ASSESSEE CLAIMED THE ABOVE SAID LAND AS AGRICULTUR AL LAND AND ACCORDINGLY CLAIMED THAT THE CAPITAL GAINS ARISING ON THE SALE OF THE SAME AS EXEMPT FROM TAXATION. ACCORDING TO THE AO A PORTION OF LAND H AVING AN EXTENT OF 33.13 ARES OF LAND IS SHOWN AS BACK WATERS (KAYAL) IN THE RE VENUE RECORDS. ACCORDING TO AO HIS ENQUIRIES REVEALED THAT THE ASSESSEE DID NO T CARRY ON ANY AGRICULTURAL OPERATION ON THAT PORTION OF LAND. THE AO PLACED R ELIANCE ON THE DECISION OF HONBLE HIGH COURT OF KERALA IN THE CASE OF KALPETT A ESTATES PRIVATE LIMITED (185 ITR 318)(KER) WHEREIN IT WAS HELD THAT THE BURDEN OF PROOF IS ON THE ASSESSEE TO SHOW THAT IMPUGNED LAND IS AN AGRICULTURAL LAND. H E FURTHER PLACED RELIANCE ON I.T.A. NO. 132/COCH/2013 8 THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF FAZALBHOY INVESTMENT CO. LTD VS. CIT (176 ITR 523)(BOM) WHEREIN IT WAS HELD THAT THE LAND CANNOT BE TREATED AS AGRICULTURAL LAND IF EVIDENCE SHOWS THAT THE AGRICULTURAL OPERATIONS WERE NOT CARRIED ON IT. ACCORDINGLY THE AO HELD TH AT THE WATER LOGGED PORTION OF LAND HAVING AN EXTENT OF 33.13 ARES CANNOT BE TREA TED AS AGRICULTURAL LAND. ACCORDINGLY HE DID NOT ALLOW EXEMPTION OF CAPITAL G AIN ARISING ON SALE OF 33.13 ARES OF LAND. THE LD CIT(A) ALSO CONFIRMED THE SAI D ASSESSMENT. 6.1. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE ASSESSEE PURCHASED THE LAND IN 2006 AND SOLD THE SAME IN 2008. IN THE PURCHASE DEED THE ENTIRE EXTENT OF LAND IS CLEARLY DESCRIBED AS AGRICULTURAL LAND. HE SUBMITTED THAT THE ASSESSEE HAS DECLARED AGRICULTURAL INCOME IN HIS RE TURN OF INCOME AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HOWEVER THE ASSESSING OFFICER CHOSE TO TREAT 33.13 ARES OF LAND AS NON-AGRICULTUR AL ON THE REASONING THAT THE REVENUE RECORDS SHOW THEM AS BACKWATER AREA (KAYAL) . THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE WATER LOGGED AR EA CONSTITUTES A FRACTION OF THE TOTAL EXTENT OF LAND THAT WAS SOLD BY THE ASSES SEE. HE SUBMITTED THAT THE WATER AVAILABLE IN THAT PORTION WAS USED FOR IRRIGA TING THE ENTIRE EXTENT OF AGRICULTURAL LAND. THE LD A.R ALSO SUBMITTED THAT T HE ASSESSEE HAS FILED COPIES OF BILLS FOR PURCHASE OF FERTILIZERS ETC. TO SHOW THA T THE ASSESSEE HAS CARRIED ON AGRICULTURAL OPERATIONS. ACCORDINGLY HE SUBMITTED THAT THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM TO PROVE THE LAND AS AGRICULTURAL LAND. FURTHER THE VERY FACT THAT THE ASSESSING OFFICER HA S ACCEPTED THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE WOULD SHOW THAT THE ASSESSEE WAS USING THE IMPUGNED LAND FOR AGRICULTURAL PURPOSES. THE LD A. R FURTHER SUBMITTED THAT THE AREA CONSISTING OF 33.13 ARES WILL NOT LOOSE THE CH ARACTER OF AGRICULTURAL LAND SINCE THE SAME IS CONTIGUOUS AND FORMING PART OF SA ME BIT OF LAND AND FURTHER IT WAS USED FOR IRRIGATION PURPOSES. IN THIS CONNECTI ON HE PLACED RELIANCE ON THE FOLLOWING CASE LAW:- I.T.A. NO. 132/COCH/2013 9 (A) K.N. FARMS INDUSTRIES (PVT.) LTD. VS. STATE OF BIHAR AND OTHERS (2009) KHC 5042. (B) COMMISSIONER OF WEALTH TAX VS. ANGLO AMERICAN DIRECT TEA TRADING CO. LTD. 69 ITR 260 (CAL.). (C) TEA ESTATES INDIA (P) LTD. VS. COMMISSIONER OF WEALTH TAX 59 ITR 428 (CAL.). 6.2 ON THE CONTRARY THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS MADE OBSERVATION THAT THE REVENUE RECORDS SHOW THE IMPUGNED LAND AS WATER LOGGED AREA. FURTHER THE ASSESSEE HAS FAILED TO PR OVE THAT THE SAID PORTION OF LAND WAS USED FOR AGRICULTURAL PURPOSES. THE LD D. R FURTHER SUBMITTED THAT THE BURDEN TO PROVE THE LAND AS AGRICULTURAL LAND LIES UPON THE ASSESSEE ONLY. 6.3 IN THE REJOINDER THE LD. COUNSEL SUBMITTED THA T THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS SPECIFICALLY SOUG HT FOR EVIDENCE FOR UNDERTAKING AGRICULTURAL OPERATIONS AND ALSO SOUGHT FOR PROOF FOR USAGES OF IRRIGATION FERTILIZER PESTICIDE ETC. VIDE LETTER DATED 30-11-2010. IN RESPONSE THERETO THE ASSESSEE FILED THE DETAILS SOUGHT FOR BY THE ASSESSING OFFICER VIDE HIS LETTER DATED 06-12-2010. ACCORDINGLY THE LD. AR S UBMITTED THAT THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF SATISFACTORILY B Y ANSWERING ALL THE QUERIES RAISED BY THE ASSESSING OFFICER. 6.4 WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISS UE AND CAREFULLY PERUSED THE RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS SOLD THE ENTIRE EXTENT OF L30.73 ARES OF LAND IN A SINGLE LOT TO A SINGLE PARTY. IN THE SALE DEED EXECUTED BY THE ASSESSEE THE IMPUGNE D PROPERTY IS DESCRIBED AS UNDER: I.T.A. NO. 132/COCH/2013 10 SCHEDULE HEREIN ABOVE REFERRED ALL THAT PIECE AND PARCEL OF LAND COMPRISED IN THA NDAPER NO. 5988 BLOCK NO. 10 (OLD SURVEY NOS. 130/1 130/2 129/12 AND 44 4/1) RESURVEY NO. 306/5 ADMEASURING TO AN EXTENT OF 97.60 ARES AS PER THE THANDAPER RECORDS AND AS PER THE TORRENT PLAN AN EXTENT OF 96 .56 ARES COMPRISED IN RESURVEY NO. 306/5-2 AND IN BLOCK NO. 11 THANDAPER NO. 16 (OLD SURVEY NOS. 130/1 130/2 129/12 AND 444/1) RESURVEY NO. 1 /5 ADMEASURING TO AN EXTENT OF 33.13 ARES ALTOGETHER 1 HECTARE 20 ARE S 69 SQ. MTS. (320.46 CENTS) OF KUMARAKOM VILLAGE KOTTAYAM TALUK OR THER EABOUTS AND BOUNDED BY AS FOLLOWS: ON OR TOWARDS THE EAST : NIKARTHU VAZHI ON OR TOWARDS THE WEST : VEMBANA TTU LAKE ON OR TOWARDS THE NORTH : VEMBANA TTU LAKE EDANMANA PROPERTY AND THACHARA PROPERTY. ON OR TOWARDS THE SOUTH : THACHA RA PROPERTY. THUS THE TOTAL EXTENT OF LAND SOLD BY THE ASSESSEE IS DESCRIBED AS TWO PORTIONS CONSISTING OF 97.60 ARES AND 33.13 ARES SINCE BOTH OF THEM ARE HAVING TWO DIFFERENT RE-SURVEY NUMBERS. IT IS SEEN THAT THE L AND REVENUE IS ALSO LEVIED UNDER TWO DIFFERENT THANDAPPER NUMBERS. OTHERWISE THE EN TIRE EXTENT OF LAND IS CONSIDERED AS SINGLE BIT BY BOTH BUYERS AND SELLERS WHICH IS EVIDENCED BY THE FACT THAT THE BOUNDARIES FOR THE ENTIRE EXTENT OF L AND HAS BEEN DESCRIBED IN THE CONVEYANCE DEED. THERE SHOULD NOT BE ANY DISPUTE T HAT THE BOUNDARIES TO ANY LAND IN ALL THE FOUR SIDES ARE AN IMPORTANT FACTOR TO IDENTIFY THAT LAND. IT CAN BE NOTICED THAT THE BOUNDARY IN THE WEST SIDE AND ALSO A PORTION OF NORTH SIDE IS VEMBANATTU LAKE. WE UNDERSTAND THAT 130.73 ARES IS EQUIVALENT TO ABOUT 3.25 ACRES AND 33.13 ARES IS EQUIVALENT TO 0.818 ACRES. I.T.A. NO. 132/COCH/2013 11 6.5 THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSING OFFICER HAS ACCEPTED 97.60 ARES OF LAND AS AGRICULTURAL LAND. WITH REGARD TO THE REMAINING PORTION HAVING AN EXTENT OF 33.13 ARES THE ASSESSI NG OFFICER REFUSED TO TREAT THE SAME AS AGRICULTURAL LAND FOR THE REASON THAT THE R EVENUE RECORDS SHOW IT AS BACK WATERS (KAYAL). 7. THE QUESTION THAT ARISES FOR OUR CONSIDERATION N OW IS WHETHER WATER LOGGED AREA WHICH HAPPENS TO BE A PART OF AGRICULT URAL LAND WOULD LOOSE THE CHARACTER OF AGRICULTURAL LAND. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE IN THIS REGARD ON THE FOLLOWING CASE LAWS: (A) K.N. FARMS INDUSTRIES (PVT.) LTD. VS. STATE OF BIHAR AND OTHERS (2009) KHC 5042. (B) COMMISSIONER OF WEALTH TAX VS. ANGLO AMERICAN DIRECT TEA TRADING CO. LTD. 69 ITR 260 (CAL.). (C) TEA ESTATES INDIA (P) LTD. VS. COMMISSIONER OF WEALTH TAX 59 ITR 428 (CAL.). IN ALL THESE CASES IT IS HELD THAT THE AGRICULTURA L LAND INCLUDES WATER TANKS TUBE WELLS AND WATER SUPPLY PLANTS. IN THE INSTANT CASE THE LD A.R SUBMITTED THAT THE ASSESSEE HAS USED THE WATER AVAILABLE IN THE PORTIO N OF 33.13 ARES FOR IRRIGATION PURPOSES. WE HAVE ALREADY NOTICED THAT THIS PORTIO N OF LAND ALSO FORMS PART OF ENTIRE BIT OF LAND SOLD BY THE ASSESSEE AND HENCE T HE SAME ACQUIRES THE CHARACTER OF WATER TANK AVAILABLE IN A AGRICULTURAL LAND. HENCE IN OUR VIEW THAT PORTION OF LAND CANNOT HAVE DIFFERENT CHARACTER DIF FERENT FROM THAT OF THE MAIN LAND. SINCE THE AO HAS ACCEPTED THAT THE REMAININ G PORTION OF LAND I.E. 97.60 ARES OF LAND AS AGRICULTURAL LAND IN OUR VIEW THE SAME TREATMENT HAS TO BE GIVEN TO THE 33.13 ARES OF LAND REFERRED ABOVE. ACCORDI NGLY WE HOLD THAT THE ENTIRE EXTENT OF LAND SOLD BY THE ASSESSEE IS AGRICULTURAL LAND ONLY. ACCORDINGLY WE SET ASIDE THE ORDERS OF LD CIT(A) AND THE AO TO TREAT 3 3.13 ARES OF LAND ALSO AS AGRICULTURAL LAND AND REVISE THE ASSESSMENT ACCORDI NGLY. I.T.A. NO. 132/COCH/2013 12 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY O N 25-10-2013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 25TH OCTOBER 2013 GJ COPY TO: 1. SHRI SHAJI THOMAS UP XI-725 A MANJANKAL HOUSE PATTOM THIRUVANANTHAPURAM-4. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE -1(1) THIRUVANANTHAPURAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS) TRIVAND RUM. 4. THE COMMISSIONER OF INCOME-TAX TRIVANDRUM. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T COCHIN