RAJAT KUMAR BALIARSINHA,CUTTACK vs. DCIT, CIRCLE-1(1), CUTTACK, CUTTACK

Shri S.K.Sarangi S.K.Sarangi, ld AR appeared for the assessee and Shri the assessee and Shri S.C.Mohanty, Sr. S.C.Mohanty, Sr. DR appeared for the revenue.

It was submitted by ld AR that the issue in this appeal was in respect It was submitted by ld AR that the issue in this appeal was in respect It was submitted by ld AR that the issue in this appeal was in respect of sale of land owned by the of sale of land owned by the assessee, more so, purchased by the assessee assessee, more so, purchased by the assessee in the year 2001 and part of which was 2001 and part of which was acquired by National Highway acquired by National Highway

P a g e 1 | 6 Authority of India (NHAI) during the assessment year 2019-2020 but the compensation of which was received during the relevant assessment year and on account of the acquisition of land by NHAI, the assessee left with no alternative option had to sell the balance of the land. It was the submission that the land sold by the assessee was cut into plots, roads were also demarcated so that the assessee could get better price. It was the submission that the assessee had offered the income therefrom as liable for long term capital gain, whereas the Assessing Officer treated the same as adventure in the nature of trade. It was the submission that the Assessing Officer had recognized that the assessee had incurred an expenditure of Rs.28,00,000/- in respect of laying of road, filling/leveling of land and construction of compound wall in respect of the demarcated plots of land sold. It was the submission that the Assessing Officer after recognizing Rs.28,00,000/- incurred by the assessee, held that the fact that the assessee had incurred such expenditure would show that the transaction of the sale of land by the assessee was adventure in the nature of trade. It was the further submission that after utilizing the expenditure incurred by the assessee for the development of the land, to hold the sale as adventure in the nature of trade, the Assessing officer disallowed Rs.28,00,000/- stating that adequate proof in regard to incurring the same was not produced. It was the further submission that the assessee has also treated the compensation received from NHAI in respect of compulsory acquisition

In reply, ld Sr DR vehemently supported the order of the Assessing Officer and ld CIT(A). It was the submission that in view of the provisions of Section 140 of the Income tax Act, the income of the assessee cannot be assessed below the returned income and the Assessing Officer could not have given the benefit of the compulsory acquisition of the land by NHAI as P a g e 3 | 6 exempt. It was the submission that the fact that the assessee has incurred expenditure in respect of the development of the land shows that the activity of the assessee in plotting the land and selling the same was actually adventure in the nature of trade and the Assessing Officer has rightly treated the same as business income of the assessee.

We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the assessee has admittedly not represented itself before the ld CIT(A). All facts have also not been considered by the Assessing Officer. There are mistakes in the income as offered by the assessee also. This being so, in the interest of justice, we are of the considered view that the issues in this appeal must be restored to the file of the Assessing officer for readjudication after granting the assessee adequate opportunity of being heard and we do so.

Considering the submission of ld AR, it is also directed that it is a fact that the assessee had purchased the land in 2001 and NHAI has compulsorily acquired part of the said land towards development of National Highway No.56. It is also admitted fact that the assessee has offered the capital gains in respect of compulsory acquisition of the land by NHAI. Here, we are live to the fact that the assessee has itself offered the income under the head “Long term capital gains”. The Income Tax Officer is not just a tax collector he is also a tax assessor. He is duty bound to advise

It is also recognized that the Assessing Officer has accepted that the assessee has claimed expenditure of Rs.28,00,000/- towards development of the said land but has denied the expenditure stating the reasons given in para 10 of his order, the disallowance of Rs.28,00,000/- as made by the Assessing Officer is consequently reduced to Rs.14,00,000/-. Liberty is also granted to the assessee to produce all such evidences, as required by him to substantiate his further claims before the Assessing officer in the course of set aside proceedings.

In the result, appeal of the assessee stands partly allowed for statistical purposes.