Income Tax Appellate Tribunal - Bangalore
Sri. C. Gopala Krishna Bhupathi, ... vs Department Of Income Tax on 17 September, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCH "B"
BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND
SHRI JASON P. BOAZ, ACCOUNTANT MEMBER
I.T.A. No.38/Bang/2012
(Assessment Year : 2006-07)
Income Tax Officer,
Ward 11(1), Bangalore. .... Appellant.
Vs.
Shri C. Gopalakrishna Bhupathi,
B-2, Eagle Rock, Eagle Street,
Hosur Road Cross, Bangalore-25. ..... Respondent.
PAN AHCPB 7482J
Appellant By : Smt. Susan Thomas Jose.
Respondent By : Shri C. Ramesh.
Date of Hearing : 17.09.2012.
Date of Pronouncement : 28.09.2012.
O R D E R
Per Shri Jason P. Boaz :
This appeal by Revenue is directed against the order of Commissioner of Income Tax (Appeals)-I, Bangalore dt.20.1.2011 for Assessment Year 2008-09.
2. The facts of the case, in brief, are as under :
2.1 The assessee filed his return of income for Assessment Year 2008-09 on 31.7.2008 declaring income of Rs.10,15,060 from salary and other sources. The return was processed under section 143(1) of the Income Tax Act, 1961 (herein after referred to as 'the Act') and 2 ITA No.38/Bang/12 subsequently taken up for scrutiny by issue of notice under section 143(2) of the Act on 17.8.2009. The Assessing Officer after examining the case completed the assessment by an order under section 143(3) of the Act dt.16.12.2010 determining the income of the assessee at Rs.23,87,560. In the relevant period, the assessee had shown gross receipts of Rs.13,87,500 from sale of 3 sites and had computed Long Term Capital Gain (LTCG) at NIL after setting off Short Term Capital Loss (STCL) on sale of shares. The Assessing Officer did not accept the assessee's claim, treated the sale of three sites as an adventure in the nature of trade and treated the entire sum of Rs.13,87,500 as 'Business Income.' 2.2 Aggrieved by the order of assessment dt.16.12.2010, the assessee went in appeal before the CIT(A). The learned CIT(A) disposed off the appeal by an order dt.21.10.2011 in favour of the assessee by allowing the assessee's appeal.
3. Revenue is now in appeal before us against the order of the learned CIT(A) dt.21.10.2011 for Assessment Year 2008-09. In the grounds of appeal raised it has been contended as under :
" 1. The order of the learned CIT (Appeals), in so far as it is prejudicial to the interest of Revenue, is opposed to law and the facts and circumstances of the case.
2. The learned CIT (Appeals) erred in not confirming the view of the Assessing Officer that the transaction of purchase of land, its development and sale of site, from its inception, was an adventure in the nature of trade and thus, assessable under the head 'income from business.'
3. The learned CIT (Appeals) erred in not appreciating the fact that the assessee has declared the business profit under the head 'capital gains' solely for the purpose of setting off the losses against such profit.3 ITA No.38/Bang/12
4. For these and such other grounds that maybe urged at the time of hearing, it is humbly prayed that the order of the CIT (Appeals) be reversed in so far as the above mentioned issue is concerned and that of the Assessing Officer be restored.
5. The appellant craves leave to add, to alter, to amend or to delete any of the grounds that may be urged at the time of hearing of the appeal."
4. The grounds raised at S.Nos.1, 4 and 5 are general in nature and therefore no adjudication is called for thereon.
5.1 The grounds raised at S.Nos.2 & 3 are in respect of the single issue of dispute in this appeal as to whether the purchase of land, its development and the sale of 3 sites by the assessee in the relevant period was assessable as 'Business Income' or under the head 'Capital Gain'. The learned Departmental Representative submitted that in the course of assessment proceedings, the Assessing Officer noticed that the assessee had shown gross receipts of Rs.13,87,500 on sale of three sites to different parties and had computed LTCG thereon at Rs.7,65,694. From the records it emerged that the assessee had acquired 1 acre 20 guntas of converted land on 6.5.1996 from Smt. Venkatalakshmamma, Smt. R. Manjula, Smt. R. Pushpa, Smt. R. Indira, Smt. R. Suguna and Sri R. Venkatesh. On examination of the purchase deed and sale deeds in respect of the said property, the Assessing Officer came to the view that the assessee's land dealings were an adventure in the nature of trade and the resultant income constituted business income and not LTCG as claimed by the assessee. It is submitted that in the absence of details of cost of acquisition for the said land the entire receipts were rightly brought to tax as business income. The learned Departmental Representative submitted that the learned CIT(Appeals) has reversed the finding of the Assessing Officer that the income 4 ITA No.38/Bang/12 was assessable as business income and allowed the assessee's claim without examining the transaction of purchase of land, its development and sale of sites. It is further submitted that without assigning any reason whatsoever the learned CIT(Appeals) in his order has neither given any finding as to how the Assessing Officer erred in taking the view that the land dealings of the assessee were 'an adventure in the nature of trade" nor any finding/reason to allow the claim of the assessee. It is further submitted by the learned Departmental Representative that as is apparent from a perusal of the order of the learned CIT(Appeals), the matter needs to be remitted back to the file of the learned CIT(Appeals) so that this issue can be examined de novo and disposed off by way of speaking orders. 5.2 The learned counsel for the assessee supported the orders of the learned CIT(Appeals) but fairly stated that he had no objection to the matter being remitted to the file of the Assessing Officer for fresh consideration.
5.3 We have heard both parties and carefully perused the material on record. On perusal of the orders of the learned CIT(Appeals), we are inclined to agree with the views expressed by the learned Departmental Representative that the order of the learned CIT(Appeals) has been passed in a summary manner without assigning any reason or finding for allowing the assessee's claim nor adducing any reasons to establish that the view of the Assessing Officer was not correct in the facts and circumstances of the case. We, therefore, in the interest of equity and justice remit to the file of the CIT(Appeals) for fresh consideration the issue of whether the land transactions entered into by the assessee in the relevant period, is to be 5 ITA No.38/Bang/12 treated as an 'adventure in the nature of trade' and consequently income therefore be taxed as 'Business Income' as held by the Assessing Officer or whether it is to be treated as an investment and taxed as LTCG as claimed by the assessee and to pass a speaking order thereon. The learned CIT(Appeals) is directed to afford the assessee adequate opportunity of being heard in the matter. It is ordered accordingly.
6. In the result, Revenue's appeal is allowed for statistical purposes.
Order pronounced in the open court on 28.09.2012.
Sd/- Sd/-
(GEORGE GEORGE K) (JASON P BOAZ)
Judicial Member Accountant Member
*Reddy gp
Copy to :
1. Appellant
2. Respondent
3. C.I.T.
4. CIT(A)
5. DR, - B Bench.
6. Guard File.
(True copy) By Order
Sr. Private Secretary, ITAT, Bangalore