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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:
the Order of the Commissioner of Income Tax (Appeals)-15 , Chennai, in dated 18.08.2016 for the AY 2012-13.
Mr.Palanichamy, JCIT represented on behalf of the Revenue and Mr.S.Sridhar, Adv., represented on behalf of the assessee.
ITA No.3191/Mds/2016 :- 2 -:
It was submitted by the Ld.DR that the assessee is an individual who is a practicing Doctor and is also partner in the partnership firm. It was a submission that the assessee had purchased agricultural land between 18.05.2005 and 23.04.2007. The assessee along with the three other land owners had joined together and applied to the Directorate of Town and Country Planning, Chengalpattu on 28.06.2006 for the conversion of their contiguous lands to residential purposes. After obtaining the said approvals, the assessee along with three others had divided the land into plots, developed a layout and had sold the plots to various Doctors through the Tamil Nadu Doctors Housing Welfare Trust with whom the assessee had entered into an agreement to sell at Rs.850/-
per square feet. It was a submission that the assessee had offered capital gains in respect of the said transaction and also claimed a benefit of exemption u/s.54F of the Act. It was a submission that the AO has treated the same as adventure in the nature of trade and assessed the same as business income of the assessee. It was a submission that on appeal, the Ld.CIT(A) had upheld the stand of the assessee and had followed the decision of the Hon’ble Madras High Court in the case of A.Mohammed Mohideen reported in176 ITR 393 to hold that the income of the assessee from the said transaction was liable to be assessed under the head capital gains and the assessee was entitled to the benefit of deduction u/s.54F of the Act. It was a submission that the order of the Ld.CIT(A) was liable to be reversed.
ITA No.3191/Mds/2016 :- 3 -:
In reply, the Ld.AR submitted that the Ld.CIT(A) had also considered the decision of the Hon’ble Madras High Court in the case of Kasturi Estates Pvt. Ltd. reported in 62 ITR 578 to hold that the transaction itself should be looked at to see whether it is essentially of a commercial character. It was a submission that this is one off transactions done by the assessee. It was a submission that the assessee was a Doctor and the assessee had desired to do agricultural work. However, after purchase of the land, it was found that the assessee would not be able to give adequate time to do agricultural activities due to his profession and family requirements. Consequently to get a better price, the assessee along with the land owners of contiguous lands got the land converted and had then sold the same to his colleague Doctors through the media of the Tamil Nadu Doctors Housing Welfare Trust. It was a submission that in view of the decision of the Hon’ble Madras High Court in the case of Kasturi Estates Pvt. Ltd. referred to supra as also the decision of the Hon’ble Madras High Court in the case of A.Mohammed Mohideen referred to supra wherein it has been held that plotting, developing of the land before sale by itself would not establish that the person concerned was engaged in trading activity, the findings of the Ld.CIT(A) was liable to be upheld.
We have considered the rival submissions. A perusal of the Assessment Order shows that the AO has treated the transaction entered into by the assessee as liable to be assessed under the head income from business and not under the head capital gains as claimed by the assessee
ITA No.3191/Mds/2016 :- 4 -: on the ground that the assessee and others had pooled up their land to economize the benefit due to loss on account of streets, lanes, passages and pathways, etc., together and had applied for an approval for housing plots. Just because, the assessee joined with other owners to pool up their land to economize the benefit and to get better price for their land if necessary through getting the approvals and selling the land as housing plots, the same would not make the transaction as one of business. A perusal of the decision of the Ld.CIT(A) shows that the Ld.CIT(A) has followed the principles enunciated by the Hon’ble Madras High Court in the case of Kasturi Estates Pvt. Ltd. as also the decision in the case of A.Mohammed Mohideen referred to supra. The Revenue has not been able to show any error in recording of the facts by the Ld.CIT(A) or any error in the findings as arrived at by the Ld.CIT(A). This being so, we find no reason to interfere in the findings of the Ld.CIT(A). Consequently respectfully following the principles laid down in the decision of the Hon’ble Madras High Court in the case of Kasturi Estates Pvt. Ltd. as also the decision of the Hon’ble Madras High Court in the case of A.Mohammed Mohideen referred to supra, the findings of the Ld.CIT(A) stands confirmed.
ITA No.3191/Mds/2016 :- 5 -:
In the result, the appeal filed by the Revenue stands dismissed.