Dismissed

Pr. Commissioner of Income Tax, v. Shri Ashok Agarwal HUF

Rajasthan HC16 Nov 2021ITA/4/2021

Case brief

AI extract

What is this about?

The High Court dismissed the Revenue's appeal against the ITAT's decision to confirm deletion of a tax addition. The court held that Section 56(2)(vii) is not applicable to property held as stock in trade and found sufficient independent evidence that the assessee was engaged in real estate development.

What did the court decide?

The appeal filed by the Revenue was dismissed. The ITAT order confirming deletion of the addition was upheld.

Pr. Commissioner of Income Tax, Vs Shri Ashok Agarwal HUF — Income Tax | Rajasthan HC (2021)

¶1

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

¶2

D.B. Income Tax Appeal No. 4/2021

¶3

Pr. Commissioner Of Income Tax, Jaipur -Ii, Jaipur.

¶4

----Appellant

¶5

Versus

¶6

Shri Ashok Agarwal Huf, 25, Dayal Nagar, Narayan Niwas, Gopalpura Bye Pass, Jaipur

¶7

----Respondent

¶8

For Appellant(s) : Mr. Nikhil Simlote on behalf of Mr. R.B. Mathur

¶9

HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MS. JUSTICE REKHA BORANA Order

¶10

16/11/2021

¶11

This appeal is filed by the Income Tax Department to challenge the judgment of the Income Tax Appellate Tribunal dated 30.07.2020. Following question is presented for our consideration:-

¶12

“I) Whether in the facts and in circumstances of law, the ITAT was justified in confirming deletion of the addition of Rs. 3,15,70,809/- by CIT(A) under section 56(2) (vii) (b) (ii) of the Act without appreciating that during the course of Assessment proceedings AR of the assessee in his defence only disputed the DLC rate applied by the AO and the plea that the lands were held as business asset was never taken before AO and that the assessee has also shown land/plots as investments and there are no developmental expenses as such debited/claimed in the year.”

¶13

The short question pertains to applicability of Section 56(2) (vii) of the Income Tax Act, 1961 in case of the respondentassessee. The Assessing Officer with the aid of the said provision had made an addition of the sum of Rs.3,15,70,809/- as income of the assessee for the assessment year 2015-16. The assessee carried the matter in appeal before the CIT (Appeals). The

¶14

(2 of 4)

¶15

[ITA-4/2021]

¶16

assessee sought permission to produce additional documents. On the basis of such additional documents, the assessee sought to raise a contention that the land which was transferred in favour of the assessee was a stock in trade and he was engaged in the business of real estate development. The CIT (Appeals) called for the remand report from the Assessing Officer and eventually accepted the stand of the assessee and deleted the addition. The Revenue thereupon approached the Tribunal. The Tribunal by the impugned judgment upheld the order of the CIT (Appeals) upon which present appeal has been filed.

¶17

As is well known Section 56 of the Act pertains to income from other sources. As provided under sub-section (1) of Section 56 income of every kind which is not excluded from the total income under the Act would be chargeable to income tax under the head ‘income from other sources’ if it is not chargeable under any of the heads specified in Section 14, items A to E. Sub-section (2) of Section 56 provides that in particular and without prejudice to the generality of the provisions of sub-section (1), the income specified in several sub-clauses contained in this section shall be chargeable to income tax as income from other sources. The relevant portion of clause (vii) which is at the center of the issue reads as under:-

¶18

“(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 [but before the 1st day of April, 2017],—

¶19

(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

¶20

(b) any immovable property,—

¶21

(3 of 4)

¶22

[ITA-4/2021]

¶23

(i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

¶24

(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:

¶25

Provided that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of this subclause:

¶26

Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property;”

¶27

Even the Counsel for the Revenue did not argue that the said provisions would be applicable to a stock in trade of an assessee. In other words if it was found that assessee was actually in the business of real estate development and the land in question formed part of the stock in trade of the assessee, Section 56(2) (vii) would have no applicability.

¶28

In this context, as noted above the CIT (Appeals) as well as the Tribunal have concurrently come to a finding that the assessee had shown the said property as stock in trade in its business of real estate development and that even otherwise there was sufficient independent evidence for such purpose. Merely because the assessee did not raise such a contention before the Assessing Officer, as per settled law would not preclude the assessee from raising such contention before the Appellate Authority. As noted the assessee followed the proper procedure by filing application for taking additional evidence on record which was allowed by the Commissioner of Appeals and taken into consideration after calling the remand report from the Assessing Officer.

¶29

(4 of 4)

¶30

[ITA-4/2021]

¶31

No question of law arises. The appeal is dismissed.

¶32

(REKHA BORANA),J

¶33

(AKIL KURESHI),CJ

¶34

Kamlesh Kumar/N.Gandhi/12

Pr. Commissioner of Income Tax, v. Shri Ashok Agarwal HUF

Case brief

What is this about?

What did the court decide?

Pr. Commissioner of Income Tax, v. Shri Ashok Agarwal HUF

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

The State of Rajasthan Vs Ratan Singh Meena S/O Shri Baniyaram Meena

State of Rajasthan Vs Dr. Babita D/O Budharmal

Sulatan Singh Son of Shri Pokhar Mal Vs Registrar Examination

Bubugao Communication Private Limited Vs Commissioner, Central Goods and Service Tax

Yogesh Kumar Tailor (Advocate)S/O Late. Shri Kamal Kumar Tailor Vs Managing Director,Jaipur Vidhut Vitran Nigam Limited

Union of India Vs Ex-Const/Dvr Mukesh Kumar Raigar Son of Ram Swaroop Raigar