DCIT, CHENNAI vs. B ALU JAYARAMAN, CHENNAI

The appeal filed by the Revenue and the Cross Objection filed by the assessee are directed against the order of the ld. Commissioner of Income Tax (Appeals) 6, Chennai, dated 11.07.2019 relevant to the assessment year 2016-17. Besides, challenging the grounds on merits, the Revenue has raised a specific ground that the ld. CIT(A) has omitted to call for remand report under Rule 46A of Income Tax Rules 1962, when the assessee furnished details/fresh evidence in support of its claim

Brief facts of the case are that the assessee filed his return of income for the assessment year 2016-17 on 29.03.2018 declaring a total income of ₹.70,21,250/-. The case was selected for scrutiny and notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] dated 21.08.2018 was issued and duly served on the assessee. After considering the details and document furnished, the Assessing Officer has completed the assessment under section 143(3) of the Act dated by assessing total income of the assessee at ₹.4,14,17,813/- after taxing short term capital gain of ₹.1,15,58,644/- and long term capital gain of ₹.2,28,34,135/- by rejecting assessee’s claim of exemption on sale of agricultural lands. On appeal, the ld. CIT(A) deleted both the short term capital gain and long term capital gain and allowed the appeal of the assessee.

Aggrieved, the Revenue is in appeal before the Tribunal. By referring to the grounds of appeal, the ld. DR has submitted that without calling for remand report from the Assessing Officer, the ld. CIT(A) accepted fresh evidences in support of assessee’s claim and by relying

On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A) and also the assessee has filed Cross Objection in lieu thereof.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the assessee owned 13.60 acres of agricultural lands located at Vallam Village, Sriperumbudur Taluk, Kancheepuram Dt. These lands were acquired in May, 2015 for a total consideration of ₹.7,94,86,356/-. However, within a span of just three months, the assessee sold these lands for a consideration of ₹.9,10,45,000 on 03.08.2015. The assessee claimed that the lands under consideration of transfer are agricultural lands and thus, the sale proceeds are not exigible to capital gains tax. However, the Assessing Officer rejected the assessee’s claims and brought the sale proceeds to tax as short term capital gains by holding that the assessee’s transaction is ‘adventure in the nature of trade’.

Since we have set aside the order of the ld. CIT(A) and remitted the matter back to the file of the Assessing Officer, the Cross Objection filed by the assessee became infructuous and accordingly dismissed.

In the result, the appeal filed by the Revenue is allowed for statistical purposes and the Cross Objection filed by the assessee is dismissed. Order pronounced on the 08th June, 2022 at Chennai.