Shri Kapil Shroff, Kolkata v. ITO, Ward 5(1), Kolkata, Kolkata

ITA 743/KOL/2017 | 2012-2013
Pronouncement Date: 15-11-2019 | Result: Allowed

Appeal Details

RSA Number 74323514 RSA 2017
Assessee PAN AKOPS6739A
Bench Kolkata
Appeal Number ITA 743/KOL/2017
Duration Of Justice 2 year(s) 7 month(s) 2 day(s)
Appellant Shri Kapil Shroff, Kolkata
Respondent ITO, Ward 5(1), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 15-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 15-11-2019
Date Of Final Hearing 22-08-2019
Next Hearing Date 22-08-2019
Last Hearing Date 04-12-2018
First Hearing Date 19-08-2019
Assessment Year 2012-2013
Appeal Filed On 13-04-2017
Judgment Text
C IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA JUDICIAL MEMBER AND DR. A.L. SAINI ACCOUNTANT MEMBER ITA NO. 743 / KOL / 2017 ASSESSMENT YEAR :2012-13 SHRI KAPIL SHROFF 9 TH FLOOR AAKASHDEEP 5 LOWER ROWDON STREET KOLKATA-700 020 PAN NO.AKOPS 6739 A ] V/S . INCOME TAX OFFICER WARD-5(1) 8 TH FLOOR AAYAKAR BHAWAN P-7 CHOWRINGHEE SQUARE KOLKATA-700 069 /APPELLANT .. / RESPONDENT /BY APPELLANT NONE /BY RESPONDENT SHRI SANKAR KUMAR HALDER JCIT-SR-DR /DATE OF HEARING 22-08-2019 /DATE OF PRONOUNCEMENT 15-11-2019 / O R D E R PER S.S.GODARA JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-2 KOLKATAS OR DER DATED 10.01.2017 PASSED IN CASE NO.1328/CIT(A)-2/15-16 INVOLVING PRO CEEDINGS U/S 143(3) OF THE INCOME TAX ACT 1961; IN SHORT THE ACT. CASE CALLED TWICE. NONE APPEARS AT ASSESSEES BEHES T. THE REGISTRY HAS ALREADY SENT AN RPAD NOTICE DATED 09.07.2019. H E IS ACCORDINGLY POSTED EX PARTE . 2. THE ASSESSEES FORMER TWO SUBSTANTIVE GROUNDS CH ALLENG CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION TREATING HIS INCO ME FROM SALE OF ALLEGED ITA NO.743/KOL/2017 A.Y. 2012-13 SHRI KAPIL SHROFF VS. ITO WD-5(1) KOL. PAGE 2 AGRICULTURAL LAND AMOUNTING TO 93 29 222/- AS CAPITAL GAINS RESULTING IN ADDITION OF 51 50 550/- AFTER INVOKING SEC. 50C OF THE ACT. 3. THE CIT(A)S DETAILED DISCUSSION QUA THIS FORMER ISSUE READS AS UNDER:- GROUNDS-1&2 THESE GROUNDS OF APPEAL AS RAISED BY THE ASSESSEE A GAINST THE ORDER OF THE ASSESSING OFFICER ARE AS UNDER:- THAT THE: LEARNED ASSESSING OFFICER WAS NOT JUSTIF IED IN ADDING THE INCOME OF RS.9329222/- CLAIMED AS EXEMPT INCOME FRO M SALE OF AGRICULTURAL LAND WITHOUT PROPER EXAMINATION AND VE RIFICATION OF THE DETAILS FURNISHED. THAT THE; LEARNED ASSESSING OFFICER WAS NOT JUSTIFI ED IN ADDING THE ADDITIONAL AMOUNT OF RS.4150550 UNDER SECTION 50C W ITHOUT PROPER EXAMINATION AND VERIFICATION OF THE DETAILS FURNISH ED. THE AR OF THE APPELLANT DURING THE APPELLATE PROCEE DINGS FURNISHED WRITTEN SUBMISSIONS AS UNDER:- A. THE ASSESSEE WAS HAVING AN AGRICULTURAL LAND IN MAHESHPUR GRAM PANCHYAT AREA BEARING KHATIYAAN NO.197 154 1651 2 34 AND 257 HAVING AN AREA OF 219.25 DECIMALS AS PER MEMO OF MA HESPUR GRAM PANCHYAT DATED 12/03/2012 (COPY ENCLOSED). THE SAID AGRICULTURE LAND IS NOT AN CAPITAL ASSET U/S. 2(14)(III) OF THE INCO ME TAX ACT (SAID SECTION 2(14) IS ATTACHED HEREWITH . FURTHERMORE THE SAID L AND WAS NEVER USED BY THE ASSESSEE FOR ANY INDUSTRIAL PURPOSE AND WAS USED FOR DOING AGRICULTURAL ACTIVITY. FROM THE LAND RECORDS OF MAHESHPUR GRAM PANCHAYAT A S PER LETTER DATED 12/03/2012 WHICH WAS OBTAINED BY THE ASSESSE E BEFORE THE SALE OF SUCH LAND EXECUTED ON 29/03/2012 IT IS CLEAR TH AT SAID LAND WAS SALI OR AGRICULTURAL LAND AT THE TIME OF SALE OF SU CH LAND. FURTHER IN VIEW OF SPECIFIC PROVISIONS OF SECTION 2 (14) OF THE INCOME TAX ACT THE SAID LAND IS NOT A CAPITAL ASSET AND AS SU CH NO CAPITAL GAIN TAX WILL BE PAYABLE ON SALE OF SUCH LAND AND ENTIRE SAL E CONSIDERATION WILL BE CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE. FURTHERMORE AS SALE OF SUCH AGRICULTURAL LAND WILL BE OUT OF THE P URVIEW FOR CAPITAL GAIN TAX AND THUS SECTION 50C WILL NOT BE APPLICABLE ON SUCH SALE OF LAND. IN A RECENT APPELLATE TRIBUNAL DECISION INCOME TAX TRIBUNAL HYDERBAD VIDE ORDER DATED 30/08/2013 IN ITA NO.1715 BETWEEN RAJENDRA PERSHAD TEJPRAKASH VS ITC WARD 9(2) HYDERABAD HELD THAT SALE OF AGRICULTURAL AND WILL NOT BE TAXABLE AS CAP ITAL GAIN UNDER THE INCOME TAX ACT. IN VIEW OF THE ABOVE THE ADDITIONS OF RS.9329222 BEING PROFIT ON SALE OF AGRICULTURAL LAND AND RS.5150550 BEING CAPITAL GAIN UNDER PROVISIONS OF SECTION 50C ADDED BY THE ASSESSING OF FICE BE DELETED AS THE PROFIT FROM SUCH SALE OF AGRICULTURAL LAND IS C APITAL RECEIPT AND NOT TAXABLE UNDER ANY PROVISIONS OF THE INCOME TAX ACT 1961. ITA NO.743/KOL/2017 A.Y. 2012-13 SHRI KAPIL SHROFF VS. ITO WD-5(1) KOL. PAGE 3 I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIALS AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER DU RING THE ASSESSMENT PROCEEDINGS. THE AO HAS VERIFIED THE CLAIM OF THE A SSESSEE FROM THE OFFICE OF THE ADDITIONAL DISTRICT SUB-[REGISTRAR OF ULUBERIA TO KNOW THE STATUS OF SUCH LANDS SOLD BY THE ASSESSEE. THE REPLY FROM THE OFFI CE OF THE ADDITIONAL DISTRICT SUB-REGISTRAR RECEIVED ON 06.01.2015 AND IN SUCH LE TTER THE PURPOSE OF THE LAND WAS CLEARLY MENTIONED AS INDUSTRIAL USE . DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE VIDE HIS LETTER DATED 23 .02.2015 ADMITTED THAT DURING ANY PORTION OF THE TENURE THROUGHOUT WHICH T HE AFORESAID LANDS WERE IN THE OCCUPATION OF THE ASSESSEE ANY PROCESS OF CULT IVATION WAS NOT INITIATED IN THE SAID LAND. THE RELEVANT PORTION OF HIS LETTER I S QUOTED:- NO AGRICULTURAL ACTIVITIES HAVE BEEN CARRIED OUT BY THE ASSESSEE IN THE LAST 5 YEARS . AS REGARDS TO APPLICABILITY OF SECTION 50C THE AR DUR ING THE APPELLATE PROCEEDING DID NOT FILE ANY ARGUMENT IN THE MATTER. KEEPING IN VIEW OF ABOVE THE ORDER OF THE AO IS UPHELD ON BOTH THE GROUND AND THESE GROUN DS OF APPEAL ARE DISMISSED . LEARNED VEHEMENTLY CONTENDS DURING THE COURSE OF HE ARING THAT BOTH THE LOWER AUTHORITIES HAVE RIGHTLY HELD THAT THE ASSESSEES L AND TO BE A CAPITAL ASSET U/S 2(14) OF THE ACT IN VIEW OF THE ABOVE EXTRACTED DET AILED DISCUSSION. HE BUTTRESSES THE POINT THAT THE SUB-REGISTRARS LETTE R BEFORE THE ASSESSING OFFICER (SUPRA) MADE IT CLEAR THAT THE LAND IN ISSUE HAD BE EN NOT BEEN PUT AGRICULTURAL BUT INDUSTRIAL USE. WE FIND NO MERIT IN THE REVENUE S INSTANT ARGUMENTS. THE ASSESSEES DETAILED PAPER BOOK RUNNING INTO 216 PAG ES AND MORE PARTICULARLY UP TO PAGES 1 TO 132 REVEALS THAT THE LAND IN ISSUE IN SALE HAD BEEN SHOWN AS AGRICULTURAL AS PER THE RELEVANT RECORDS AS ON 26.0 2.2019 ( PAGES 88 TO 97 ). COUPLED WITH THIS WE FIND THAT THIS IS NOT ALSO TH E REVENUES CASE THAT THE LAND ITSELF DURING ASSESSEES POSSESSION HAD EVER B EEN CONVERTED TO INDUSTRIAL USE. HON'BLE BOMBAY HIGH COURTS DECISION IN CIT VS. DEBBIE ALEMAO AND 2. JOAQUIM ALEMAO (2011) 331 ITR 59 (BOM) HOLDS THAT IT IS NOWHERE N ECESSARY FOR AN ASSESSEE TO PROVE CARRYING OUT ACTUAL AGRICU LTURAL ACTIVITY OF THE LAND IN ISSUE IS AGRICULTURAL. WE TAKE INTO ACCOUNT ALL THE SE FACTS AS WELL AS FOREGOING JURISDICTIONAL PRECEDENT TO HOLD THAT BOTH THE LOWE R AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN TREATING THE ASSESSEES AGRICUL TURAL LAND SOLD AS INDUSTRIAL GIVING RISE TO CAPITAL GAINS IN ISSUE. WE THEREFORE ACCEPT ASSESSEES FORMER TWIN SUBSTANTIVE GROUNDS TO THIS EFFECT. ITA NO.743/KOL/2017 A.Y. 2012-13 SHRI KAPIL SHROFF VS. ITO WD-5(1) KOL. PAGE 4 4. NEXT COMES SES.2(22)(E) DIVIDEND ADDITION AMOUNT ING TO 60 00 000/- MADE IN BOTH THE LOWER PROCEEDINGS. THE CIT(A)S DE TAILED DISCUSSION QUA THE INSTANT LATTER ISSUE READS AS UNDER:- GROUND NO.-3. THIS GROUND OF APPEAL AS RAISED BY THE ASSESSEE AGA INST THE ORDER OF THE ASSESSING OFFICE IS AS UNDER:- THAT THE: LEARNED ASSESSING OFFICER WAS NOT JUSTIFI ED IN MAKING ADDITION OF RS.6000000 AS DEEMED DIVIDEND U/S. 2(22 )(E) WITHOUT PROPER EXAMINATION. THE AR OF THE APPELLANT DURING THE APPELLATE PROCEE DINGS FURNISHED WRITTEN SUBMISSIONS AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIALS AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER DU RING THE ASSESSMENT PROCEEDINGS. THE AO HAS STATED THAT THE ASSESSEE IS A SUBSTANTIAL SHAREHOLDER AS WELL AS HAVING MORE THAN 10% VOTING RIGHT IN THE COMPANY M/S SPACE MATRIX PVT. LTD. FROM WHICH DURING THE YEAR HE HAS RECEIVED A LOAN OF RS.60 LACS. AS PER INDIVIDUAL BALANCE SHEET OF THE ASSESSEE HE HAS BEEN SHOWN UNDER THE HEAD UNSECURED LOAN. THE AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS RECEIVED TEMPORARY ADVANCE OF RS.60 LACS FROM M/S SPACE MARTIX PVT LTD TO MEET SHORT TERM CA SH REQUIREMENTS. THE ASSESSEE HAS ADMITTED THAT AMOUNT WAS GIVEN TO DIRE CTOR AND IT WAS NOT FOR BUSINESS PURPOSE. IT WAS A LOAN AND IF IT WAS ADVAN CE THAN THE PURPOSE HAS NOT BEEN EXPLAINED EITHER DURING THE ASSESSMENT PRO CEEDING OR APPELLATE PROCEEDING. IN VIEW OF ABOVE THE ORDER OF THE AO I S UPHELD AND THIS GROUND OF APPEAL IS DISMISSED . MR. HALDERS ARGUMENT IN SUPPORT OF THE IMPUGNED AD DITION IS THAT THE ASSESSEE COULD NOT PROVE ANY ARRANGEMENT IN SUPPORT OF THE IMPUGNED TEMPORARY ADVANCE OF 60 00 000/- FROM M/S SPACE MARTIX PVT. LTD. TO MEET SHORT TERM CASH REQUIREMENTS AND THEREFORE BOTH TH E LOWER AUTHORITIES HAVE RIGHTLY MADE THE IMPUGNED ADDITION. 5. WE FIND NO REASON TO AGREE WITH THE IMPUGNED ADD ITION. PAGE 153 IN THE CASE FILE INDICATES THAT THE ASSESSEE HAD EXECUTED AN MOU WITH M/S SPAC MARTIX PVT. LTD. ON 07.10.2009 AGREEING FOR EXTENDI NG SECURITY IN THE FORM OF ASSIGNMENT OR HYPOTHECATION OF PERSONAL ASSETS FOR SECURING LOAN FOR THE COMPANY AND THE LATTER IN TURN HAD TO GIVE MUTUAL F INANCIAL ACCOMMODATION TO THE FORMER. THE ASSESSEE THEREAFTER PLEAS ON RECORD ALL THE RELEVANT DETAILS ITA NO.743/KOL/2017 A.Y. 2012-13 SHRI KAPIL SHROFF VS. ITO WD-5(1) KOL. PAGE 5 REGARDING ITS PERSONAL GUARANTEE AND COLLATERAL SEC URITY PROVIDED TO THE BANK IN FAVOUR OF M/S SPACE MARTIX PVT. LTD. PAGE 158 OF THE PAPER BOOK REVEALS THAT THE LATTER ENTITY HAD DEFICIENT FIGURES OF 43 87 70 364/- AND 47 36 60 894/- AS ON 27.03.2012 AND 31.03.2012; RES PECTIVELY. BE THAT AS IT MAY HON'BLE JURISDICTIONAL HIGH COURTS JUDGMENT I N PRADIP KUMAR MALHOTRA VS. COMMISSIONER OF INCOME TAX WEST BENGAL-V (2011) 338 ITR 538 (CAL) HOLD LONG BACK THAT SUCH A CASE DOES NOT ATTRACT THE DEE MING FRICTION OF DIVIDEND U/S 2(22)(E). WE THEREFORE DIRECT THE ASSESSING OFF ICER TO DELETE THE INSTANT LATTER ADDITION AS WELL. 6. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 15/ 11/2019 SD/- SD/- ( %) (' %) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA *DKP (- 15 / 11 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SHRI KAPIL SHROFF 9 TH FL. AAKASHDEEP 5 LOWER ROWDON ST. KOL-20 2. /RESPONDENT-ITO WARD-5(1) 8 TH FL. AAYAKAR BHAWA P-7 CHOWRINGHEE SQ. KOL-69 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3 3 / DR ITAT KOLKATA 6. < / GUARD FILE. BY ORDER/ 3