SHRI HANUMAN PRASAD JANGID,JAIPUR vs. INCOME TAX OFFICER, WARD-2-3, JAIPUR

PDF · subscribers
ITA 1286/JPR/2018Status: DisposedITAT Jaipur06 June 2019AY 2009-104 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 44AD is applicable to the assessee's construction and sale of flats, as it constitutes civil construction. The CIT(A)'s finding that the flats were constructed for personal use was also found to be contrary to the record.

What were the facts?

The assessee, a real estate developer, sold two flats without offering capital gains or filing a return. Upon reopening, the assessee declared a loss from house property and business income under Section 44AD. The AO rejected Section 44AD, estimating higher profits, which was upheld by the CIT(A).

What were the issues?

Whether Section 44AD of the Income Tax Act is applicable to a real estate developer constructing and selling flats, and whether the flats were constructed for sale or personal use.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES “SMC”,

Before: SHRI RAMESH C SHARMA, AM vk;dj vihy la-@ITA No. 1286/JP/2018

For Appellant: Shri P.C.Parwal, (CA) jktLo dh vksj ls@
Hearing: 15/04/2019Pronounced: 06/06/2019

vkns’k@ ORDER PER: R.C. SHARMA, A.M. This is an appeal filed by the assessee against the order of ld.CIT(A)-I, Jaipur dated 13/09/2018 for the A.Y. 2009-10 in the matter of order passed u/s. 143(3)/147 of the Income Tax Act, 1961 (in short, the Act).

2.

I have heard the rival contentions and carefully gone through the orders of the authorities below and found that the assessee is engaged in the business of real estate developer. The A.O. got information from the Director of Income Tax that the assessee had sold two immovable properties, however, no capital gain was offered

2 Hanuman Prasad Jangid Vs ITO nor any return was filed. Accordingly, the assessment was reopened by issuance of notice U/s 148 of the Act. In the return so filed after reopening, the assessee had shown loss of Rs. 59,667/- from the house property and business income of Rs. 1,84,880/- U/s 44AD of the Act.

3.

During the course of reassessment, the A.O. declined assessee’s claimed profit offered U/s 44AD of the Act on the plea that Section 44AD is applicable only when the assessee is engaged in business of civil construction or supply of labour for civil construction. As per the A.O., the assessee is not engaged in construction activity but only in purchase and sale of property. Accordingly, the A.O. estimated profit of Rs. 5.00 lacs in respect of flats so sold during the year as against the income offered by the assessee U/s 44AD of the Act @ 8% of the gross receipts.

4.

By the impugned order, the ld. CIT(A) confirmed the action of the A.O. by observing that the assessee had not constructed house for sale but the construction of flat was for assessee himself. Against the order of the ld. CIT(A), the assessee is in further appeal before the ITAT.

5.

I have considered the rival contention and carefully gone through the orders of the authorities below and found from the record that in reply to notice U/s 148 of the Act, the assessee has filed return

3 Hanuman Prasad Jangid Vs ITO wherein he has declared profit of Rs. 1,84,880/- on turnover of Rs. 23,11,000/- U/s 44AD of the Act. I found that the assessee has purchased a plot on 09/08/2007 for a sum of Rs. 8.00 lacs and constructed three flats on it. During the year under consideration, the assessee had sold two flats for consideration of Rs.9,11,000/- and Rs. 14,00,000/-. Thus, total sale consideration of flats works out to be Rs. 23.11 lacs on which the assessee has offered 8% profit under the provisions of Section 44AD of the Act. I do not find any merit in the action of the A.O. for not applying the provisions of Section 44AD of the Act with respect to construction activity so carried on by the assessee. It appears that the A.O. has wrongly presumed that Section 44AD of the Act is only applicable in the case when assessee engaged in the business of civil construction for others or supply of labour for civil construction. In the instant case, since the assessee has constructed flats on the land, the same also amounts to civil construction and profit earned thereon, are eligible for taxation U/s 44AD of the Act. The finding of the ld. CIT(A) to the effect that the assessee has constructed flat for himself is also contrary to the material on record. In so far as the assessee after construction of flat had sold the same and the profit earned thereon was also offered as business income, there is no reason to hold that the assessee has earned capital gains. Accordingly, I direct the A.O. to compute 8%

6.

In the result, appeal of the assessee is allowed, in terms indicated hereinabove.

Order pronounced in the open court on 06th June, 2019.

Sd/- ¼jes'k lh 'kekZ½ (RAMESH C SHARMA) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 06th June, 2019 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Hanuman Prasad Jangid, Jaipur. 1. izR;FkhZ@ The Respondent-The ITO, Ward 2(3),Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए 5. Jaipur xkMZ QkbZy@ Guard File (ITA No. 1286/JP/2018) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →