TaxTMI 
TaxTMI 
2011 (5) TMI 697
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....n pieces to different persons from February, 2004 onwards, selling 16.26 acres (to five persons) up to 31.3.2004, and another 384.72 acres (to 13 persons) during the financial year 2004-05, the relevant previous year. In the return of income for the year (filed by the assessee on 30.11.2005), it disclosed the income from the said sale as 'income from other sources', at Rs. 5216147/-, even as the surplus as per its calculation - given separately - worked to Rs. 6625844/- and which stood transferred by it in its accounts to Keepply Rubber Estate Reserve' A/c. Even though the assessee paid tax on the returned income it claimed a nil liability to tax on that account, claiming the sale to be an agricultural land (being located outside the 8 km. limit from the nearest municipality). The Assessing Officer (AO) found the assessee's proposition as strange The assessee could either prefer a claim (per its return) or not so. Once it declares an income, stating the basis on which it is arrived at, and pays tax thereon, the tax liability is admitted. As such, claiming the income to be exempt, on whatever ground, so that no tax liability inures, is contradictory. There could be no right to appea....
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.... with a view to take advantage of the rising prices. If indeed, as claimed, the intention was to continue the plantation activity of the estate, the same would not be limited to a very small fragment of the total area. The decisions relied upon by the AO were found by him to fit the instant case, also reproducing the head notes there from as a part of his order. Aggrieved, the assessee is in appeal. 3. Before us the case was argued vehemently from both the sides, raising like arguments. The assessee's legal right to claim has necessarily to be preferred through its return of income or a revised return of income. This is the ratio of the decision in the case of CIT v. Ramco International, 17 DTR (P&H) 214, rendered after considering the decision by the hon'ble Apex Court in the case of Goetze (India) Ltd. v. CIT, [2006] 284 ITR 323/157 Taxman 1 (SC) and Addl. CIT v. Gurjargravures (P.) Ltd. [1978] 111 ITR 1 (SC). Further, even where the assessee had itself disallowed its claim per the return of income, it could press for the claim thereof in the assessment proceedings, and is not precluded from doing so. Admission, though by itself an evidence, is yet not conclusive of the matter....
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....im, i.e., of the income being exempt, declining to examine the assessee's case factually, and brought the income returned to tax only on the basis of the assessee having returned the same and paid tax thereon. Or, though found the assessee's claim of it being only a sale of agricultural land as valid, yet refused to grant the assessee the benefit thereof in view of it having returned taxable income on the transaction. The decisions in the case Goetze (India) Ltd. v. CIT (supra) and CIT v. Shelly Products [2003] 261 ITR 367/120 Taxman 271 (SC) would have been required to be considered for their application in that case. The decisions in the case of CIT v. Ramco International (supra) as well as Ester Industries Ltd. v. CIT [2009] 316 ITR 260/185 Taxman 266 (Del.), both of which are based on the principle laid by the Apex Court in the case of Pullangode Rubber Produce. Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) to the effect that admission though an extremely important piece of evidence, cannot be conclusive of the matter, so that it is open to the assessee to contend that the admission did not conform to law, and its claim is admissible in law, would be of no moment; the asses....
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.... ignored by the ld. CIT(A).' What is the purport of the clarification if it does not amount to or lead a claim? Further, in that case, there can be no grievance as to non-consideration of the 'claim' by the Revenue. That being the assessee's stand, it is difficult not to accept the Revenue's claim of there being firstly, no claim by the assessee, i.e., with regard to its income being exempt and secondly, even so, of the same being not permissible, being not on a question of law but of fact, on which the assessee could not possibly assume a contradictory stand. 4.3 On merits, we proceed by delineating the moot question that calls to be addressed, i.e., whether the land under reference represents the assessee's capital expenditure (asset) or a stock-in-trade?. The answer lies in intention with which the property is purchased/acquired and which needs to be gathered from the entirety of the facts and circumstances, even as held by the Apex Court in the cases relied upon by the Revenue. 4.4 In our considered view, the rubber estate under reference represents the assessee's stock- in- trade and not a fixed asset for its agricultural activities. First and foremost, is its financi....
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....le. Firstly, the sale of the asset continues, i.e., beyond or even after the realization of funds thereby as sufficient to liquidate the bank liability (Rs. 170 lakhs plus interest of Rs. 11.56 lakhs). Why? If the purpose of the sale was only to neutralize the bank liability, to be discharged immediately for any reason, the assessee would stop sale as soon as the funds to that extent are realised, so that the inference of a trade would, if at all, be limited to holdings so sold. In fact, such a scheme is usually adopted by businessmen so as to fund the purchase/acquisition. This is as the same neutralizes the borrowing which enabled the acquisition of a larger interest/holding, bearing the advantage of a higher cake as well as a higher margin inasmuch as these are more competitively priced. Secondly, the sale, it is to be noted, starts in Feb., 2004, i.e., immediately after the purchase is completed. Now, the rubber estate is not something for which there is an open, ready market which could be tapped at will. Buying and selling estate, and of such size, requires negotiations and is at times protracted. In other words, the sale in Feb., 2004. is only the result of effect of e....
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....ot attract any buyer? The same, besides being unevidenced, is incomprehensible. Fourth, is the increase in the price. The assessee has fetched an overall price increase of around 42% (apprx. Rs. 436.60 lacs), While selling 400.98 acres at (Rs. 531.74 lakhs) in a matter of a year. In fact, almost immediately, considering that 32.16 acres stood sold for Rs. 39.54 lakhs during February-March, 2004. How could this be? The only reason that can be ascribed thereto is the plotting, i.e., selling in much lower sizes, for which payment, on account of increased accessibility, is that much more. 4.6 The assessee's argument that it has incurred expenditure to the tune of Rs. 35.74 lakhs on the upkeep and maintenance is of no moment in view of the finding by the ld. CIT(A) that the plantation activity was extended to a very small area, the assessee reporting a profit of Rs. 2.59 lakhs. In fact, the arguments runs counter to the fact of continued sale of land from Feb., 2004 onwards. The assessee could not possibly upkeep the plantation for its own sake and then sell it, i.e., upkeep expenditure was only towards facilitating the sale and has been rightly taken as business expenditure by th....