BINNY LIMITED,CHENNAI vs. ACIT CENTRAL CIRCLE-2(1), CHENNAI

आयकरअपीलसं./ (िनधा�रणवष� / Assessment Year: 2014-15) M/s. Binny Ltd. ACIT बनाम/ No.1, Cooks Road, Perambur, Central Circle-2(1), Vs. Chennai – 600 012. Chennai. �थायीलेखासं./जीआइआरसं./PAN/GIR No.AAACB-2529-G (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri B. Ramakrishnan (FCA) – Ld. A.R ��थ�कीओरसे/Respondent by : Shri G. Johnson (Addl.CIT) – Ld DR सुनवाईकीतारीख/ : 29-03-2022 Date of Hearing घोषणाकीतारीख / : 01-04-2022 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2014-15 arises out of the order of learned Commissioner of Income Tax (Appeals)-19, Chennai [CIT(A)] dated 28.06.2019 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 30.12.2016. The only grounds urged before us during hearing are ground nos. 3 to 5 which read as under: - 2 - 3. For that the learned Commissioner of Income Tax (Appeals) erred in determining the sale consideration of the stock in trade to be the guideline value of Rs.4,59,08,000/- and thereby: (a) making addition of Rs.4,44,72,109/- as business income and (b) making addition of Rs.14,35,891/- as Long-Term Capital Gain on sale of land stating that no evidence of the mode of payment in respect of the land was produced to prove that the payment was made earlier in the year 1995 (Tax Effect Rs.1,37,72,400/-).

As evident, the sole subject matter of appeal is additions arising out of sale of certain property during the year.

3 - Upon perusal of sale deed, it was noted that guideline value of the property was Rs.459.08 Lacs. Accordingly, the provisions of Sec.50C & 43CA were held to be applicable to the case of the assessee. 3.2 The assessee submitted that land at Boat Club Road was converted into stock-in-trade on 30.10.1992. The assessee also accepted mistake of not showing the gains from the sale of land in the return of income. Accordingly, the assessee furnished computation of income under the head ‘Business Income’ as well as under the head ‘Capital Gains’ since the land was converted into stock-in-trade. However, the computations were found not acceptable since the guideline value as prevailing on the date of sale deed was to be considered for the purpose of computation of gains. Finally, the gains were computed by Ld. AO as under: - A. Computation of Capital gains as on the date of conversion from Fixed Assets to Stock in trade ie.as on 30.10.1992 Fair Market value of land i.e. Guideline value on 1992-93 Rs. 14,41,511 (Rs.722.20 per sq.ft * 1996 sq.ft) Less: indexed cost of acquisition (Rs.2520 * 223/100) Rs. 5,620 Cost price Rs.2520/- (Rs.111287/88140 sq.ft* 1996 sq.ft) Long Term capita] gains Rs.14,35,891 B. Business income from sale of stock in trade ie. Land 1996 sq.ft Sale consideration as per guideline value adopted Rs.4,59,08,000 Less: Cost as on date of conversion (as above) Rs. 14,35,891 Profit on sale of land assessed as business income Rs.4,44,72,109 The above income was added to the income of the assessee and assessment was framed on 30.12.2016. Appellate proceedings 4. Though the assessee assailed the assessment before Ld. CIT(A), however, Ld. CIT(A) confirmed the stand of Ld. AO observing as under: - 4 - 6.4. The main issue in this case however pertains to a sale of land of 1996 sqft located at No.9, Boat Club Road, 3rd Avenue, R.A puram, Chennai. This sale as per the sale deed dated 10-2-2014 is stated by the appellant to be for sale consideration of Rs.75,60,153. The claim of the appellant is that this sale was actually effected in 1996. Therefore, the value of sale consideration has been taken at the guide line value prevailing in the year 1996. 6.5. The appellant claims that the above sale of land is in connection with another sale effected by the appellant on 11-12-1995. This particular sale in the year 1995 was in respect of the property measuring 17.125 grounds covered under R.S.No.3901/14 and R.S.No.3901/149 situated at Door No.9, Boat Club Road, 3rd Avenue, R.A.puram, Madras (Chennai)-600028. The piece of land covered by R.S. No.3901/149 was originally part of 3901/14 and is renumbered as 3901/149. This sale deed was executed between Binny Limited represented by its Vice President Mr.S.Lakshmi Raghavan and M/s.The India Cements Limited represented by Mr.N.Srinivasan, Managing Director. It is observed that this particular sale deed mentions that Binny Limited has become a sick industrial company within the meaning of provisions of sick industrial companies (Special Provisions) Act 1985 and as aprocess of the rehabilitating, the company has been permitted to develop/sell its various real estate properties, itis further observed that there are other stake holders in this property who have given loans etc. to the appellant and which consists the State Govt. of Tamilnadu, Karnataka, IDBI, State Bank of India and others. This sale deed clearly mentions that the transfer of property is for 17.125 grounds and there are various schedule and map attached which specify the property under consideration. The subsequent property which is now claimed to have been transferred by the appellant of 1996 sqft is nowhere part of the original sale deed dated 11.12.1995. 6.6. The perusal of the subsequent sale deed dated 10-2-2014 show that this is between M/s. Binny Limited represented by an authorized Attorney Mr.A.Sathyaseelan, S/o.Sri.l.LRaju (authorized by a Power of Attorney dated 19.02.1996) and M/s.India Cements Limited represented by Mr.V.Jeevagan, General Manager. The perusal of the sale deed show that in this document, the respective companies are not represented by the persons in the original sale deed. It is also required to be noted the Power of Attorney of Mr.A.Sathyaseelan is dated 19-02-1996 which is subsequent to the date of the original sale deed since the second sale deed is executed by a Power of Attorney holder whose power is subsequent to the original sale deed. Therefore, this sale deed cannot be construed as part of the original sale deed. As per this sale deed dated 10.02.2014, the vendor declares itself as owner of the entire land of 17.956 grounds and states that earlier it had conveyed land measuring to an extent of 17.125 grounds as per sale deed dated 11.12.1995 and for the remaining land of 1996 sqft (0.8317 grounds) the vendor executed a general power of attorney dated 19.02.1996 in favour of Mr.A.Sathyaseelan to execute and register the sale deed in respect of the said extent of 1996 sqft. The assessee could not produce before the Assessing Officer any document to show that the land was transferred along with the original sale deed. It again needs to be pointed out that this particular patch of land was not part of the original sale deed therefore cannot be construed to have been transferred. The transfer of property happens when there is an actual transfer of title from one person to other. Here, it is observed that in respect of the appellant Mr.A.Sathyaseelan is the one who has been authorized to execute the sale deed in1996 which he has exercised in the year 2014 and only after the execution of the 5 - sale deed, the title gets transferred to M/s.India Cements Limited who happens to be the Purchaser. There is no evidence of the mode of payment in respect of this land though the claim has been made that the payment has been made earlier. No document to that effect was produced before this office also. The perusal of details of payment in the original sale deed does not show the corresponding amount in this sale deed. Therefore, on the basis of above examination of the two documents, it is observed that the sale has to be construed as happening in the Fin.Year 2013- 14 and therefore the guide line value of the property has to be taken for the Fin.Year 2013-14 only. Therefore, I find that the addition made by the Assessing Officer is correct and the same is accordingly upheld. The appeal of the assessee is dismissed.

Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 5. Before us, we find that the findings of Ld. CIT(A) remain undisturbed. The assessee is not able to show that the 1996 sq. ft. of land as stated to be sold during this year was part of original sale deed executed on 11.12.1995. As per findings given in para-6.6 of the order, the sale deed as executed during this year could not be construed as part of the original sale deed. As per sale deed dated 10.02.2014, the vendor declares itself as owner of the entire land of 17.956 grounds and states that earlier it had conveyed land measuring to an extent of 17.125 grounds as per sale deed dated 11.12.1995 and for the remaining land of 1996 sqft (0.8317 grounds) the vendor executed a general power of attorney dated 19.02.1996 in favour of Mr.A.Sathyaseelan to execute and register the sale deed in respect of the said extent of 1996 sq. ft. The assessee could not produce any document to show that the land was transferred along with the original sale deed. This particular patch of land was not part of the original sale deed therefore, cannot be construed to have been transferred in the year 1995. The transfer of property happens when there is an actual transfer of title from one person to other. There is no evidence of the mode of payment in respect 6 - of this land though the claim has been made that the payment has been made earlier. No document to that effect could be produced by the assessee. The perusal of details of payment in the original sale deed does not show the corresponding amount in this sale deed. Therefore, the adjudication of Ld. CIT(A), in the impugned order, could not be faulted with and we see no reason to interfere in the same.