ACIT, CHENNAI vs. WESTERN AGENCIES (MADRAS) PVT. LTD., CHENNAI

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) – 11, Chennai, dated 12.02.2016 and pertains to assessment year 2011-12.

Shri S. Nataraja, the Ld. Departmental Representative, submitted that the assessee claimed exemption of gain on the sale of land. According to the Ld. D.R., the Assessing Officer found that the land in question is not agricultural land, therefore, the assessee is not eligible for exemption. The Ld. D.R. further submitted that the land purchased by the assessee was part of Revathipuram layout and it was sold as housing plot. In other words, according to the Ld. D.R., the assessee purchased the land as housing plot and sold the same as housing plot, therefore, the claim of the assessee that the land is subjected to cultivation is not justified.

On the contrary, Shri G. Baskar, the Ld.counsel for the assessee, submitted that a part of the land purchased by the assessee was plotted as housing cites. The major portion of land was agricultural land. Therefore, according to the Ld. counsel, the CIT(Appeals) found that the land in question is agricultural land, hence, eligible for exemption as agricultural income. Referring to the computation of book profit under Section 115JB of the Income- tax Act, 1961 (in short 'the Act'), the Ld.counsel submitted that the book profit computed as per the provisions of Companies Act cannot be linked by the Assessing Officer.

We have considered the rival submissions on either side and perused the relevant material available on record. We have carefully gone through the registered sale deed by which the assessee has purchased the land and also the copy of registered sale deed whereby the assessee sold the land. In the schedule of document it was clearly stated that the land purchased by the assessee is a part of Revathipuram layout. It was also sold as Revathipuram layout housing plot. The assessee now claims that the assessee was maintaining the same as agricultural land. The assessee also claims that a major portion of land was purchased as agricultural land and only a part of it was purchased as housing plot.

The next issue arises for consideration is with regard to computation of book profit under Section 115JB of the Act.

Since the main issue of assessment of gain on sale of land is remitted back to the file of the Assessing Officer, this issue of computation of book profit under Section 115JB of the Act also needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the entire issue raised by the assessee is remitted back to the file of the Assessing Officer.

In the result, the appeal filed by the Revenue is allowed for statistical purposes.