M/S. KAKB DEVELOPERS vs. THE INCOME TAX OFFICER

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TCA/797/2017HC Madras25 March 2021Bench: Hon`ble Mr Justice M.DURAISWAMY5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law framed for consideration. The Court noted the enactment of the Direct Tax Vivad Se Vishwas Act, 2020, which provided for the resolution of disputed tax. The learned counsel for the appellant/assessee informed the Court that the assessee had been issued with Form – 3 under the said Act and sought permission to withdraw the appeal. Consequently, the High Court dismissed the Tax Case Appeal as withdrawn. No costs were awarded. The connected miscellaneous petition was also closed. The specific findings on the substantial questions of law, the reasoning, and the ratio decidendi are not recorded as the appeal was withdrawn.

What were the facts?

The assessee, M/s. KAKB Developers, filed an appeal before the High Court of Judicature at Madras under Section 260A of the Income Tax Act, 1961. The appeal was against an order dated 21.06.2017 passed by the Income Tax Appellate Tribunal, Madras "D" Bench, for the assessment year 2012-13. The dispute concerned the tax treatment of gains arising from the sale of land. The assessee had offered the gains as long-term capital gains, while the Revenue contended it should be treated as business income. The High Court was to decide substantial questions of law framed by the assessee. However, due to subsequent developments, the appeal was disposed of without a decision on the merits.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the Tribunal was right in law in holding that the gain arising on the sale of land, which was held as a capital asset, should be assessed as profit from business under Section 28 of the Act, as against long-term capital gains offered by the assessee? 2. Whether the transaction of developing the land into plots by a "Developer" pursuant to a development agreement, without the assessee itself plotting it out, would amount to an adventure in the nature of trade and income therefrom should be assessed as business income and not as long-term capital gains? Assessee's Contentions: The assessee argued that the gain arising on the sale of land should be treated as long-term capital gains. The assessee also contended that the transaction, involving a development agreement with a developer without the assessee undertaking the plotting itself, did not constitute an adventure in the nature of trade and thus the income should not be assessed as business income. Revenue's Contentions: The Revenue contended that the gain arising from the sale of land should be assessed as business income, not long-term capital gains. The Revenue likely argued that the nature of the transaction, involving development, indicated an adventure in the nature of trade.

Which sections of the Income-tax Act were involved?

Section 260A,Section 28

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.797 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25.03.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MRS.JUSTICE T.V. THAMILSELVI Tax Case Appeal No.797 of 2017 and C.M.P.No.20010 of 2017 M/s.KAKB Developers, 10 & 11, Dr.Radhakrishnan Salai, Chennai City Centre, 4th Floor, Mylapore, Chennai – 600 004. ... Appellant Vs.

The Income Tax Officer, Corporate Range – 5, Now Corporate Ward 3(4), Chennai – 600 034. ... Respondent

Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras "D" Bench, dated 21.06.2017 passed in I.T.A.No.3254/Mds/2016. For Appellant : Mr.R.Venkatanarayanan For Respondent : Mr.T.Ravi Kumar, Senior Standing Counsel Page 1/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.797 of 2017 J U D G M E N T (Delivered by M.DURAISWAMY, J.) This appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 21.06.2017 passed by the Income Tax Appellate Tribunal, Madras "D" Bench, ('the Tribunal' for brevity) in I.T.A.No 3254/Mds/2016 for the assessment year 2012-13. 2.The appellant has raised the following Substantial Questions of Law in the grounds of appeal: “1)Whether the Tribunal was right in law in holding that the gain arising on the sale of land which was held a capital asset should be assessed as profit from business in terms of Sec.28 of the Act as against long term capital gains offered by the assessee? 2)Whether the transaction of developing the land into the plots by a “Developer” pursuant to a development agreement without the assessee itself plotting it out would amount to adventure in the nature of trade and income therefrom should be assessed as business income and not as long term capital gains?” Page 2/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.797 of 2017 3.We have heard Mr.R.Venkatanarayanan, learned counsel for the appellant/assessee and Mr.T.Ravi Kumar, learned Senior Standing Counsel for the respondent/Revenue. 4.It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. 5.We are informed by the learned counsel for the appellant/ assessee that the assessee had already been issued with Form – 3 on 30.12.2020 and the learned counsel for the appellant seeks permission of this Court to withdraw the appeal. Page 3/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.797 of 2017 6.In view of the submission made by the learned counsel for the appellant, the Tax Case Appeal stands dismissed as withdrawn. No costs. Consequently, the connected miscellaneous petition is closed. [M.D., J.] [T.V.T.S., J.] Index : Yes/No 25.03.2021

Internet : Yes

va To 1. Income Tax Appellate Tribunal, Madras "D" Bench 2. The Income Tax Officer, Corporate Range – 5, Now Corporate Ward 3(4), Chennai – 600 034. Page 4/5 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.797 of 2017 M. DURAISWAMY, J. and T.V. THAMILSELVI, J. va Tax Case Appeal No.797 of 2017 and C.M.P.No.20010 of 2017

25.03.2021 Page 5/5 https://www.mhc.tn.gov.in/judis/

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