Shri Nanubhai S.patel, Baroda v. The ACIT,Circle-III,, Baroda

ITA 56/AHD/2012 | 2004-2005
Pronouncement Date: 30-03-2012 | Result: Partly Allowed

Appeal Details

RSA Number 5620514 RSA 2012
Assessee PAN EAROF1992B
Bench Ahmedabad
Appeal Number ITA 56/AHD/2012
Duration Of Justice 2 month(s) 20 day(s)
Appellant Shri Nanubhai S.patel, Baroda
Respondent The ACIT,Circle-III,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 30-03-2012
Assessment Year 2004-2005
Appeal Filed On 09-01-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD BEFORE SHRI A. K. GARODIA ACCOUNTANT MEMBER AND SHRI KUL BHARAT JUDICIAL MEMBER I.T.A. NO.56 / AHD/2012 (ASSESSMENT YEAR 2004-05) SHRI NATUBHAI S PATEL 13 TARUN SOCIETY OPP. ELLORA MILK CENTRE ELLORA PARK BARODA VS. ACIT CIRCLE III BARODA PAN/GIR NO. : ACWP0753H (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI M J SHAH AR RESPONDENT BY: SHRI VINOD TANWANI SR. DR DATE OF HEARING: 07.03.2012 DATE OF PRONOUNCEMENT: 30.03.2012 O R D E R PER SHRI A. K. GARODIA AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) III BARODA DATED 21.10.2011 FOR THE ASSESSMENT YEA R 2004-05. 2. GROUND NO.1 IS AS UNDER: THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FROM TH E FACTS OF THE CASE IN ALLOWING THE INCOME FROM SALES OF LAND AT V ADSAR BY CONSIDERING THE WHOLE RECEIPTS RS.18 LACS AS BUSINE SS INCOME INSTEAD OF INCOME FROM LONG TERM CAPITAL GAINS AS O FFERED BY THE APPELLANT. 3. THE BRIEF FACTS ON THIS ISSUE ARE THAT IT IS NOT ED BY THE A.O. IN THE ASSESSMENT ORDER THAT THE ASSESSEE IS THE PROPRIETO R OF SHREE JALA ORGANISER WHICH IS ENGAGED IN THE BUSINESS OF CONS TRUCTION. HE FURTHER NOTED THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN OF RS.12 33 580/- IN RESPECT OF SALE OF LAND SITUATED AT VADSAR. THE A.O. I.T.A.NO.56 /AHD/2012 2 FURTHER NOTED THAT THE ASSESSEE IS IN THE BUSINESS OF ACQUIRING LAND AND SELLING OF IT AND ALSO IN CONSTRUCTION BUSINESS BEC AUSE IN HIS CAPITAL ACCOUNT THE ASSESSEE HAS MADE SUBSTANTIAL PAYMENTS FOR PURCHASE OF LAND AND ALSO FOR THE AGREEMENT FOR PURCHASE OF LAND AND THE SAME IS SHOWN AS WITHDRAWAL FROM HIS CAPITAL ACCOUNT. THE A.O. ASKE D THE ASSESSEE TO SHOW CAUSE AS TO WHY WHOLE OF THE CONSIDERATION OF RS.18 LACS RECEIVED DURING THIS YEAR SHOULD NOT BE TREATED AS BUSINESS INCOME. IN REPLY IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT THE LAND IN QUESTION WAS ACQUIRED IN THE YEAR OF 1992 BY THE ASSESSEE WITH O THER TWO PERSONS AND IT HAS BEEN HELD FOR ALMOST TEN YEARS. IT WAS ALSO SU BMITTED THAT THE TRANSACTION IS A ONE TIME TRANSACTION AND A STRAY T RANSACTION AND THEREFORE IT IS A CAPITAL ASSET AND THEREFORE THE INCOME SHOU LD BE TREATED AS LONG TERM CAPITAL GAIN. THE A.O. WAS NOT SATISFIED AND HE HELD THAT THE ASSESSEE IS IN THE BUSINESS OF ACQUIRING LAND AND S ELLING IT AND ALSO IN CONSTRUCTION BUSINESS AND THEREFORE THE INCOME AC CRUING FROM SUCH TRANSACTION CAN ONLY BE TAXED AS BUSINESS INCOME AN D NOT AS CAPITAL GAIN. HE CONSIDERED THE ENTIRE SALE PROCEEDS OF LAND IN Q UESTION OF RS.18 LACS AS BUSINESS INCOME. BEING AGGRIEVED THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NO W THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD. A.R. OF THE ASSESSEE THAT LD. CIT(A) HAS SIMPLY FOLLOWED HIS ORDER IN THE PRECEDING YEAR WI THOUT GIVING ANY CLEAR CUT FINDING IN RESPECT OF THE FACTS OF THE PRESENT YEAR. IT IS SUBMITTED THAT EVEN IF A PERSON IS DEALING IN LAND THERE IS NO BA R THAT HE CANNOT HAVE EVEN ONE PIECE OF LAND AS CAPITAL ASSET. IT WAS AL SO SUBMITTED BEFORE THE LD. CIT(A) THAT EVEN IF THE SALE PRICE OF THE LAND IS CONSIDERED AS BUSINESS RECEIPT INSTEAD OF CAPITAL GAIN DEDUCTION OF EXPEN SES IS REQUIRED TO BE GIVEN. HE SUBMITTED THAT NO FINDING IS GIVEN BY LD. CIT(A) ON THIS ASPECT ALSO. IT WAS SUBMITTED THAT THE MATTER MAY BE REST ORED BACK TO THE FILE OF I.T.A.NO.56 /AHD/2012 3 LD. CIT(A) FOR A FRESH DECISION. HE ALSO SUBMITTED THAT IN ASSESSMENT YEAR 2003-04 ALSO THIS ISSUE WAS DECIDED BY THE TR IBUNAL IN I.T.A.NO. 3161/AHD/2008 DATED 23.1.2012. HE SUBMITTED A COPY OF THIS TRIBUNAL DECISION WHICH IS ALSO ON RECORD. HE SUBMITTED THA T IN THAT YEAR THE ISSUE WAS RESTORED BACK BY THE TRIBUNAL TO THE FILE OF TH E A.O. WITH A DIRECTION TO CARRY OUT NECESSARY VERIFICATION AND DECIDE THE ISSUE ACCORDINGLY IN THE LIGHT OF THE DISCUSSION MADE IN THAT TRIBUNAL ORDER . HE SUBMITTED THAT IN VIEW OF THIS TRIBUNAL DECISION ALSO IN THE PRESENT YEAR ALSO THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE TRIBUNAL DECISION IN THE ASSESSEES OWN CASE FOR TH E ASSESSMENT YEAR 2003- 04. WE FIND THAT IN THAT YEAR THE TRIBUNAL HAD RE STORED BACK THE SIMILAR ISSUE TO THE FILE OF THE A.O. FOR A FRESH DECISION IN THE LIGHT OF DISCUSSION MADE BY THE TRIBUNAL IN THAT YEAR. IN THE PRESENT YEAR LD. CIT(A) HAS DECIDED THIS ISSUE MAINLY ON THE BASIS OF THE ORDER OF HIS PREDECESSOR IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 200 3-04 AND 2005-06. SINCE IN ASSESSMENT YEAR 2003-04 THE MATTER WAS AL READY RESTORED BACK BY THE TRIBUNAL TO THE FILE OF THE A.O. FOR A FRESH DECISION WE FEEL THAT IN THE PRESENT YEAR ALSO THIS ISSUE SHOULD GO BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AND ACCORDINGLY WE SET ASIDE THE OR DER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AS PER THE TRIBUNAL DIRECTION AND DISCUSS ION IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04. GROUND N O.1 OF THE ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PU RPOSES. 6. GROUND NO.2 IS AS UNDER: DISALLOWANCE OF EXPENSES 1/10 TH OF DEPRECIATION OF VEHICLES (CAR & MOTOR CYCLE) AND TELEPHONE AND TELEX EXPENSES OF RS .20 776/-. THE LD. I.T.A.NO. HAS ERRED IN LAW AS WELL AS FROM THE FACTS IN ALLOWING I.T.A.NO.56 /AHD/2012 4 THE ADDITIONS OF RS.20 776/- BEING 1/10 TH AMOUNT OF DEPRECIATION ON VEHICLES (CAR & MOTOR CYCLE) RS.2 150/- AND TELEPHO NE & TELEX EXPENSES OF RS.5 613/- ON ACCOUNT OF PERSONAL USAGE EVEN THOUGH THEY ARE GENUINE BUSINESS EXPENSE AND NECESSARY PRO OF OF THEIR BEING INCURRED AND PAID EXISTS AND THEREFORE HAS DI SALLOWED SUCH EXPENSES ON AD HOC BASIS. 7. IT IS SUBMITTED BY THE LD. A.R. THAT THE DISALLO WANCE MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) IS EXCESSIVE. LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THE A.O. HAS MADE DISALLOWANCE OF RS.20 776/- BEING THE 10% OF RS.2 02 150/- ON ACCOUNT OF DEPRECIATION OF VEHICLE AND RS.5613/- ON ACCOUNT OF TELEPHONE EXPENSES. THE DISALLOWANCE IS MADE ON ESTIMATE BASIS FOR THIS REASON THAT PERSONAL USE CANNOT BE R ULED OUT. IN THE FACTS OF THE PRESENT CASE WE ARE OF THE CONSIDERED OPINION THAT SOME DISALLOWANCE OUT OF THIS EXPENDITURE FOR ALLEGED PERSONAL USE IS JUSTIFIED SINCE THE ASSESSEE COULD NOT SHOW THAT HE WAS HAVING HIS PERS ONAL CAR AND MOTOR CYCLE AND PERSONAL TELEPHONE AND TELEX. THE DISALL OWANCE MADE BY THE A.O. IS TO THE EXTENT OF 10% OF THE EXPENSES WHICH IS QUITE REASONABLE IN THE FACTS OF THE PRESENT CASE AND IN OUR CONSIDERED OPINION AND THEREFORE THIS GROUND OF THE ASSESSEE IS REJECTED. 9. IN THE RESULT APPEAL OF THE ASSESSEE STANDS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. 10. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP I.T.A.NO.56 /AHD/2012 5 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD 1. DATE OF DICTATION 28/3 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29/3.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 30/3 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.30/3 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30/3/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .