SABARI PROPERTIES PVT LTD.,CHENNAI vs. ITO, CHENNAI

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-15, Chennai dated 31.03.2017 relevant to the assessment year 2012-13. The grounds raised

Brief facts of the case are that the assessee filed return of income for the assessment year 2012-13 on 26.03.2013 admitting total loss of ₹.52,680/-. The case was selected for scrutiny. After examination of the details furnished against the statutory notices as well as considering the submissions, the assessment under section 143(3) of the Income Tax Act, 1961 [“Act” in short] was completed by assessing total income of the assessee at ₹.1,25,07,420/- after making various additions. On appeal, the ld. CIT(A) confirmed the additions.

On being aggrieved, the assessee is in appeal before the Tribunal.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. By filing an affidavit containing the translated copy of valuation details provided by the Sub-Registrar of Gummidipoondi, the ld. Counsel for the assessee has submitted that from the date of purchase to date of conversion of property, the impugned land is an agricultural land. It was the submission that the profit from the sale of land should be calculated as per the fair market value of property fixed by the Revenue Department, which was not done by the Assessing Officer and prayed for the same. We find force in the argument of the ld. Counsel. In the assessment order, the Assessing Officer has not discussed the basis for adopting the cost of acquisition at ₹.8,71,906/-. Accordingly, we remit the matter back to the file of the Assessing Officer to determine the cost of acquisition as per the fair market value of property fixed by the Revenue Department and assess the business profit in accordance with law after affording an opportunity of being heard to the assessee. Thus, the ground raised by the assessee is allowed for statistical purposes.

The next ground raised in the appeal of the assessee relates to confirmation of addition of ₹.1,57,884/-. The assessee has admitted ₹.1,57,884/- as agricultural income. Since the assessee could not substantiate the same, this income was assessed under ‘income from other sources’. Vide reply dated 16.03.2015 at point No. 5, it was the submission that agricultural operations were carried on the land earlier, but was temporarily suspended because of inadequate water availability. Moreover, from the plans attached to the sale deed and part of the assessment order, we have noted that it is impossible to carry out any agricultural operation in a pucca lay out with roads and streets were formed by the assessee before selling the land, where in this case, the sales commenced in July, 2011 onwards. However, the ld. Counsel for the assessee has submitted that before plotting the land for non-agricultural purposes, various trees stood in the land of 3 acres and 30.5 cents were cut and sold and thereby, the assessee earned income of ₹.1,57,884/- and thus, the said income has to be allowed agricultural income. However, the assessee has not produced any evidence in this regard. Anyway, in case, if the assessee furnishes any cogent evidence, the same may be examined and allowed. In case the assessee failed to furnish cogent evidence, the orders of authorities below stand sustained. Accordingly, the ground raised by the assessee is allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 07th August, 2019 at Chennai.