SMT S.KALPANA, vs. THE ASSISTANT COMMISSIONER

T.C.A.Nos.999 and 1000 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 05.07.2022 CORAM THE HONOURABLE MR. JUSTICE R. MAHADEVAN AND THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A. Nos.999 and 1000 of 2015 Smt.S.Kalpana Old No.50, New No.40, Taylors Road, Kilpauk, Chennai - 600 010. (PAN ACMPSO964M) .. Appellant in both Appeals Vs. The Assistant Commissioner of Income Tax, Income Tax Circle XIII, New Block, VI Floor, 121 N.H.Road, Chennai-600 034. .. Respondent in both Appeals COMMON PRAYER: Appeal under Section 260A of the Income Tax Act, 1961 against the order dated 07.03.2013 of the Income Tax Appellate Tribunal 'D' Bench, Chennai in I.T.A.Nos.553/Mds/2010 and 719/Mds/2010 for the Assessment year 2006-07. For Appellant : No appearance

For Respondent : Mrs.V.Pushpa in both appeals Standing Counsel 1/11 https://www.mhc.tn.gov.in/judis T.C.A.Nos.999 and 1000 of 2015 COMMON JUDGMENT (Order of the court was made by MOHAMMED SHAFFIQ, J.) These tax case appeals are filed by the appellant / assessee challenging the order of the Income Tax Appellate Tribunal on the premise that the Tribunal had erred in treating the sale of an Industrial Site at Ambattur under the head “capital gains” rejecting the claim of the appellant to treat the transfer receipts as "business income", while also rejecting the claim of the appellant with respect to the cost of acquisition of the land at Rs.1.80 crores and deduction of commission payment to one T.P.Anand as share of profit. 2.At the outset, it is necessary to state that though the above appeals were listed on the following dates i.e., 09.06.2022 and 21.06.2022, there was no representation for the appellant. Again, when the matters were listed on 05.07.2022, after printing the name of the appellant in the cause list, there was no representation on her behalf, either in person or through any learned counsel. In such circumstances, this court has no other option except to dispose the appeals, on merits. 3.Before examining the correctness of the Tribunal’s order, which has been put to challenge in these appeals, it is relevant to set out the facts briefly: 2/11 https://www.mhc.tn.gov.in/judis T.C.A.Nos.999 and 1000 of 2015 (i)The appellant is an individual engaged in the business of lorry operator. On 31.10.2006, she had returned loss of Rs.20,74,581/-. Thereafter, she filed her revised return on 31.03.2007 declaring an income of Rs.47,24,400/-, representing the same as income from business of real estate and salary from partnership firm of Rs.67,80,982/- and Rs.18,000/- respectively. (ii)According to the appellant, she had purchased a site measuring 63,551 sq. ft. in Ambattur Industrial Estate on 10.03.2005 for Rs.1.40 crores. Soon thereafter, an agreement for sale was entered into on 15.04.2005 and the same was thereafter sold for a sum of Rs.3.43 crores vide sale deed dated 31.08.2005. In her original return, she had not disclosed the said transfer and in the revised return, she disclosed the said transfer receipts as business income and computed the net profit on the sale of land as follows: GROSS SALE CONSIDERATION Rs.3,43,00,000/- 1. Commission for purchase and sale of land Rs.6,80,000/- 2. Payment to TN Small Industries Dev. Corpn Rs.2,26,503/- 3.Share of profit to Sri T.P.Anand Rs.74,00,000/- 4.Purchase of land Rs.1,80,00,000/- 5.Land Registration Charges Rs.12,12,514/- 6.Loss from Lorry operation business Rs.20,74,581/- NET PROFIT ON SALE OF LAND Rs.47,06,401/- (iii) The above claim of the assessee as "business income" was rejected by the Assessing Officer and the same was treated as income under the head “capital gains” (short term). Further, the Assessing Officer was of the view that 3/11 https://www.mhc.tn.gov.in/judis T.C.A.Nos.999 and 1000 of 2015 the claim of the appellant with respect to the cost of acquisition of land at Rs.1.80 crores, was unacceptable, since the registered sale deed to which the appeallant was a party, revealed that the cost of acquisition/ purchase of the land was only Rs.1.40 Crores, while it is the submission of the appellant that the cost of acquisition was Rs.1.80 Crores on the basis of an alleged agreement entered into between the appellant and one Shri. A.Mubarak Ali. (iv) That apart, the appellant claimed that she had entered into an MOU with one Shri. Anand for clearing encumbrance, lis and encroachments in relation to the said site and that, on the sale of the industrial site, a sum of Rs.74 lakhs was paid to the said Anand which ought to be deducted. The Assessing Officer and the First Appellate Authority found that the said Anand had only got the site fenced and had assisted in clearing bushes and removal of debris. The Assessing Officer thus restricted the claim of deduction to Rs.2 lakhs in the absence of any evidence that the said Anand rendered any other service, whereas the First Appellate Authority had enhanced the deduction to 7% of the total sale consideration amounting to Rs.24.01 lakhs. To the said extent, the order of assessment was modified by the first Appellate Authority, in the appeal filed by the assessee. (v) Aggrieved by the order of the C.I.T(Appeals), both the assessee and the Revenue challenged the same and carried the matter to the Income Tax 4/11 https://www.mhc.tn.gov.in/judis T.C.A.Nos.999 and 1000 of 2015 Appellate Tribunal. The Tribunal affirmed the order of assessment on all counts by rejecting the appeal filed by the appellant and allowing the appeal filed by the Revenue, by the order impugned herein. Therefore, the assessee is before this court with the present tax case appeals. 4.The present appeals are filed by the Assessee/Appellant challenging the order of the Tribunal confirming the order of the Lower Authorities insofar as treating the receipts under the head “capital gains”, while rejecting the claim of the appellant that the receipts represented "business income" and restoring the order of assessment insofar as the claim of deduction of the amounts paid to Anand was restricted to a sum of Rs.2 lakhs, though the same was enhanced to 7% by the First Appellate Authority. The present appeals also challenge the determination of the cost of acquisition of land at Rs.1.40 Crores rejecting the claim of the appellant that the same was Rs.1.80 Crores. 5.Heard the submission of Mrs. Pushpa, learned Standing Counsel for the Revenue and also perused the documents enclosd in the typed set of papers, including the orders of the Authorities below. 6.We are of the view that the appeals challenging the order of the Tribunal, may have to fail for the following reasons: 5/11 https://www.mhc.tn.gov.in/judis T.C.A.Nos.999 and 1000 of 2015 (a) Receipts whether “capital gains” or business income: While it is the consistent case of the assessee before all the authorities including the Tribunal that the receipts represented "business income" and not "capital gains", the same was rejected by all the authorities below. It may be relevant to note that the following aspects weighed in the mind of the authorities below, while rejecting the said claim: The returns were filed by the appellant disclosing that she was engaged in the business of lorry transportation. Form 3 CD, schedule of fixed assets, profit and loss accounts, stock in trade would militate against the appellant’s claim of "business income", on the premise that she was engaged in real estate business. The appellant had purchased the site on 10.03.2005 and entered into an agreement and effected sale within six months from the date of acquisition. It was recorded by the Tribunal, while affirming the order of the Lower Authorities that her business activity was only as lorry operator and if the appellant was engaged in the business of real estate, evidence ought to have been let in relating to the infrastructure raised, stock and trade and other evidence which would show that the appellant was into the business of real estate. To the contrary, the Tribunal found that the order of lower authorities cannot be disturbed as the claim of the appellant is not supported by any evidence and further the evidence in the form of profit and loss account, schedule of fixed assets and Form 3 CD does not provide 6/11 https://www.mhc.tn.gov.in/judis T.C.A.Nos.999 and 1000 of 2015 any basis to disturb the said finding of the Lower Authorities. Keeping in mind the above findings of fact, we are of the view that the concurrent finding of all the three authorities namely, Assessing Officer, First Appellate Authority and the Tribunal is based on evidence and the finding that the appellant had not let in evidence in support of his claim as business income is again concurrent and made on the basis and on consideration of the material on record. Hence, the same being essentially a finding of fact that the sale of Industrial Site is one to be assessed under the head “capital gains” and not under "business income", the concurrent finding of fact by all the authorities below in the absence of any evidence to the contrary being let in by the appellant, does not warrant any interference by this court. (b) Cost of purchase/ acquisition of Industrial Site – Finding of fact:- The Tribunal affirmed the order of the lower authorities in fixing the cost of acquisition at Rs.1.40 Crores and rejecting the claim of the appellant that the cost of acquisition was Rs.1.80 Crores. All the Lower Authorities starting from the Assessing officer, First Appellate Authority and the Tribunal have found as a matter of fact that the cost of acquisition was Rs.1.40 Crores, based on the registered sale deed, a document registered with the statutory authority. The Tribunal found that the said fact having been proved by the Appellant before the Statutory Authority and the same having been accepted in the absence of any 7/11 https://www.mhc.tn.gov.in/judis T.C.A.Nos.999 and 1000 of 2015 material other than mere assertion alleging that the appellant had entered into a subsequent agreement with one A.Mubaraq Ali, would show that the cost of acquisition was Rs.1.80 Crores, was rightly rejected by the Tribunal and other Lower Authorities, since weight must be given to a statement/ document approved by a Statutory Authority vis-a-vis a self serving document which has no sanctity. The same is a finding of fact based on consideration of the material on record and thus, does not warrant any interference by this court. (c)Claim of deduction of amounts paid to Anand: As regards the claim of the appellant that a sum of Rs.74 lakhs was paid to one Anand for rendering the service of clearing encumberence, lis and encroachments apart from having the site fenced and clearing the bushes and trees and removal of debris, the lower authorities and the Tribunal found that there is no mentioning of encroachments or any issue qua dimension of the property nor is there any evidence let in by the appellant to show that the said Anand as a matter of fact removed the encroachments, fenced the sites cleaned the bushes trees and removed the debris. It was thus found by the Tribunal that the order of the Assessing Officer fixing the payment for the alleged services by the said Anand in the absence of any evidence let in, at Rs. 2 lakhs was in order and enhanced it to 7% by the First Appellate Authority, in the absence of any 8/11 https://www.mhc.tn.gov.in/judis T.C.A.Nos.999 and 1000 of 2015 evidence, was unacceptable. Secondly, the Tribunal was prompted by the fact that the said claim of deduction was contrary to Section 48 of the Income Tax Act, 1961, which reads as under: “48. The income chargeable under the head “capital gains” shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto” A reading of the above provision would show that in case of transfer of Capital Asset, deduction is allowable only under two circumstances, when the expenditure is made wholly and exclusively in connection with such transfer and if it represents the cost of improvement for the transfer. The plea of the appellant that the payments were made towards the improvement of the assessee’s title and rights, was not supported by any evidence whatsoever and thus, cannot be allowed. In any view, the said claim of deduction does not fall within the two circumstances mentioned in Section 48 of the Income Tax Act, 1961. Thus, the Tribunal has rightly affirmed the order of the assessing officer in fixing the claim of deduction of payment to Anand restricted to Rs.2 lakhs, which does not warrant any interference. 9/11 https://www.mhc.tn.gov.in/judis T.C.A.Nos.999 and 1000 of 2015 7.While exercising its power under Section 260 A of the Income Tax Act, 1961, this court would exercise restraint and normally, would not interfere with the finding of fact unless it is shown to be perverse, which is not the case here. In this regard, it may be relevant to refer to the judgments of the Hon'ble Supreme Court in Madan Lal v. Gopi [(1980) 4 SCC 255], Hero Vinoth v. Seshammal [(2006) 5 SCC 545] and Vijay Kumar Talwar v. CIT [(2011) 1 SCC 673]. Thus, this court is of the view that the order of the Tribunal being one essentially finding of facts and based on evidence and on consideration of relevant materials on record, it does not warrant any interference. 8.For all the reasons stated above, both the tax case appeals are dismissed. No costs. [R.M.D., J.] [M.S.Q., J.] 05.07.2022 Index : Yes/No Speaking/Non-Speaking Order nst To 1. The Assistant Commissioner of Income Tax, Income Tax Circle XIII, New Block, VI Floor, 121 N.H.Road, Chennai-600 034. 2. The Income Tax Appellate Tribunal 'D' Bench, Chennai. 3. The Commissioner of Income Tax (Appeals) XIII Chennai. 10/11 https://www.mhc.tn.gov.in/judis T.C.A.Nos.999 and 1000 of 2015 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. nst T.C.A. Nos.999 and 1000 of 2015 05.07.2022 11/11 https://www.mhc.tn.gov.in/judis