ACIT - 17(3), MUMBAI vs. VANITKUMAR I. GUPTA, MUMBAI

आदेश / O R D E R Per Shri Sandeep Gosain, Judicial Member: These two appeals filed by the revenue as well as assessee are against the order of Ld. CIT(A) – 28, Mumbai dated 12.02.16 for AY 2011-12.

(AY 2011-12) 3. First of all we take up revenue’s appeal in for assessment year 2011-12 as lead case. The ground of appeal are mentioned herein below:-

'1) On the facts & in the circumstances of the case, and in law, the Ld.CIT(A) has erred in treating the profit of Rs.2,09,43,529/- on sale of lands as exempt from tax, as against taxable business profit treated by the A.O.

3 ITA No, 2353 & 1557/Mum/2016 Vanitkumar I. Gupta 2) On the facts & in the circumstances of the case, and in law, the Ld.CIT(A)has erred in not appreciating the fact that the activity of the assessee of buying & selling of lands at higher volume, frequency & continuity, is nothing but a business activity, which result into business income only.

3) On the facts & in the circumstances of the case, and in law, the Ld.CIT(A)has erred in relying upon its own decision in the case of the assessee for AX. 2008-09 when the Department is in the process of filing appeal u/s.260A before the Hon'ble Bombay High Court.

4) On the facts & in the circumstances of the case, and in law, the Ld.CIT(A)has erred in deleting the disallowance u/s.40(a)ia) of the I.T. Act totaling to Rs3,85,380/- with respect to non-deduction of TDS on brokerage paid/incurred by the assessee in relation to sale of lands at Barpe.

5) The appellant prays that the order of the A.O. should be restored andorder of the CIT(A) should be set aside.

6) The appellant craves leave to amend or alter any ground or add a newground, which may be necessary.'

4 ITA No, 2353 & 1557/Mum/2016 Vanitkumar I. Gupta 4. As per the facts of the present case, the assessee company is engaged in the business of dealer/trader in iron and steel and other ferrous/non metals and also in sale and purchase of lands. The assessee filed its return of income for AY 2011-12 on 30.09.2011, declaring a total income of Rs. 98,35,060/- The return was processed u/s 143(1) of the Act. The case was selected for scrutiny assessment through Computer Assisted Selection System (CASS) and after serving statutory notices and providing opportunity of hearing, assessment order u/s 143(3) of the I.T. Act was passed by AO thereby making addition/disallowance u/s 14A of I.T. Act, treated the profits and gains from the sale of agricultural lands chargeable to tax under the head ‘business or profession’ and also made disallowance u/s 40(a)(ia) of I.T. Act. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties partly allowed the appeal of the assessee by deleting the additions made by the AO. However sustained the disallowance made u/s 14A of the I.T. Act. Aggrieved by the order of Ld. CIT(A), both i.e. revenueas well as the assessee have filed their respective appeals before us.

Ground No. 1 to 3 5. These ground grounds raised by the revenue are inter- connected and inter-related and relates to challenging the order of Ld. CIT(A) in treating the profit of Rs.2,09,43,529/- on sale of lands as exempt from tax, as against taxable business profit treated by the A.O, therefore we thought it fit to dispose of by this common order.

6 ITA No, 2353 & 1557/Mum/2016 Vanitkumar I. Gupta 5.2 Ground 2,3&4: This is against the action of the AU in holding that the profit onsale of agricultural land is taxable as business income. The AO has elaborately dealt with the matter in his assessment order. The appellant has also filed lengthy and elaborate submissions on the issue. I find that in the earlier Year the same issue arose on identical facts. The CIT(A) confirmed the action of the AO2fe appellant carried the matter to the ITAT for the AY 200809. The Hon'ble ITAT vide its order in the appellants own case for AY 2008-09 in 1 dated 16.1 2.20 5 has decided the matter in the favor of the appel1anA copy of the order is placed on record. The Honble ITAT has passed a detailed order and the operative portion is para 6 onwards. The ITAT has held in para IS that the intention of the assessee at the time of purchase of lands cannot be held to be holding the same as stock in trade. They held that the appellant has held the impugned lands as investment only and hence cannot be categorized as a capital asset u/s 2(14) and hence the gains therefrom are not taxable. I have perused the order of the Hon'ble ITAT in this case and find that the issue is identical on facts and is therefore squarely covered, In fact the ITAT has categorically held that the lands held by the appellant in AY 2008-09 are to be 7 ITA No, 2353 & 1557/Mum/2016 Vanitkumar I. Gupta categorized as investments and not stock in trade and are out of the purview of capital asset. It is these very lands which have been sold during the year leading to profit. Respectfully following the decision of the Hon'ble ITAT in the appellants own case, 1 hold that the sale of agricultural land cannot be held to be a business activity and therefore the profit therefrom cannot be assessed as business income. I accordingly delete the addition of Rs 2,0 43,529. Ground 2. 3&4 are allowed.

After having gone through the facts of the present case as well as considering the orders passed by revenue authorities and submissions made by both the parties, we find that Ld. CIT(A) had correctly appreciated the facts of the present case by following the decision of Hon’ble ITAT in for AY 2008-09 in assessee’s own case wherein it was held that the intention of the assessee at the time of purchase of lands cannot be held to be holding the same as stock-in-trade. It was further held that the assessee has held the impugned lands as investment only and therefore, cannot be categorized as capital asset u/s 2(14), thus gains there from are not taxable. As per the Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, these ground raised by the revenue stands dismissed.

Ground No. 4 7. This ground ground raised by the revenue relates to challenging the order of Ld. CIT(A) in deleting the disallowance u/s.40(a)(ia) of the I.T. Act totaling to Rs3,85,380/- with respect to non-deduction of TDS on brokerage paid/incurred by the assessee in relation to sale of lands at Barpe.

9 ITA No, 2353 & 1557/Mum/2016 Vanitkumar I. Gupta 8. We have heard counsels for both the parties at length and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above ground raised by the revenue in its order. The operative portion of the order of Ld. CIT(A) is contained in para no. 5.3 of its order and the same is reproduced below:- 5.3 Grounds 5&6: This is against the action of the AO in disallowing thebrokerage paid towards sale of agricultural land as TDS was not deducted on the same. This is an admitted fact that TDS was not deducted. The AO held the profit from sale of agricultural land as business income. Naturally profit is calculated after granting all deductions towards expenses. As the appellant has paid brokerage, it should naturally have been allowed as an expense. However the AO noticed that as no TDS was deducted, the same cannot be allowed US 40(a)(1a). Now in the light of my decision above, on the issue of profit from sale of agricultural land as being non taxable, it naturally follows that no deduction for brokerage expenses can be gken I find that the appellant has not claimed these in his P&L A/c. In the circumstances, the After having gone through the facts of the present case as well as considering the orders passed by revenue authorities and submissions made by both the parties, we find that Ld. CIT(A) had correctly appreciated the facts of the case and rightly concluded that the profit from sale of agricultural land is not taxable. No deduction for brokerage expenses can be given. From the records, Ld. CIT(A) has correctly appreciated that the assessee has not claimed these expenses in profit and loss account. Thus provisions of section 40(a)(ia) was not found applicable.

Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are Ground No. 5 & 6 9. These grounds raised by the revenue are general in nature, thus requires no specific adjudication.

ITA No. 1557/Mum/2016 for AY 2011-12.