TaxTMI 
TaxTMI 
2012 (10) TMI 1094
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....e assessment completed under section 143(3) of the Income-tax Act, 1961. 2. The assessee had purchased and sold 43.76 acres of land in Mamallapuram Village. As per the sale deed, the sale value was Rs. 40,75,07,918/-. The assessee company computed the capital gains on sale of the land at Rs. 24,45,26,891/-. But, the Assessing Officer found that the guideline value, as per the Registration Department of the State Government, was Rs. 66,74,25,518/-. The Assessing Officer proposed to adopt the said guideline value for computing the capital gains. Meanwhile, the valuation was referred to the Departmental Valuation Officer (DVO) under section 50C of the Act. The DVO has determined the value of the land at Rs. 44,15,21,200/-. The said report of ....
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....mmissioner of Incometax( Appeals) did not accept the same. The Commissioner of Income-tax(Appeals) held that the property is non agricultural land and, therefore, the assessee is liable for short-term capital gains taxation. 7. The assessee has also claimed an expenditure of Rs. 80 lakhs as deduction in computing the long-term capital gains. This was allowed by the Commissioner of Income-tax(Appeals). The Commissioner of Income-tax(Appeals) also allowed a deduction of Rs. 60,65,732/- claimed by the assessee as preoperative expenses. 8. Regarding the addition of deemed dividend under section 2(22)(e) of the Act, the Commissioner of Incometax( Appeals) has modified the addition to Rs. 5,61,87,557/-. 9. As far as the appeal filed by the R....
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.... 12. It is on the above evidences and details that the assessee has claimed that the property sold was agricultural land and, therefore, there cannot be any levy of tax under the Income-tax Act. 13. The assessee has also relied on the judgments of the Hon'ble Bombay High Court in the case of CIT vs. Smt. Debbie Alemao, 331 ITR 59 and in the case of CIT vs. Minguel Chandra Pais and Another, 282 ITR 618. 14. In the course of hearing, the learned chartered accountants have placed reliance on the following judgments:- 1. Dev Kumar Jain vs ITO, 309 ITR 240 2. CIT vs. Siddarth J Desai, 139 ITR 628 3. ITO vs. Chandar (HUF), 47 SOT 17. 15. The learned Commissioner of Income-tax, on the other hand, contended that the assessee is a subsi....
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....interested in carrying on any agricultural activities in the said property. 18. Therefore, we have to come to a finding of fact that the assessee has not purchased the property for the purpose of generating income by way of agricultural operations. 19. Next to see, the property is not situated in any agricultural area. It is a seaside land. The entire area is developed as a tourism industry corridor. A lot of resorts are situated around the property purchased and sold by the assessee. 20. Therefore, it is not possible to hold a view that the particular property of the assessee alone was an agricultural property situated amidst of throbbing commercial activities. 21. The Hon'ble Supreme Court in the case of Sarifabibi Mohmed Ibrahim and ....
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....d circumstances of that particular case. For example, a factory having 200 acres of estate in its custody might be growing coconut trees, mango trees, etc. in some patches of its land; still in fact, it is running a factory in the said land. Only for the reason that the assessee is also growing certain vegetation in the vast estate held by it, it is not possible to hold that the property held by the assessee is agricultural in nature. The incidental planting of trees in the factory estate does not change the character of the land. 24. Likewise, in the present case, the assessee has invested crores of rupees in purchasing the seaside land at ECR at Chennai for its commercial objective of running holiday homes and resorts. Seasonal pl....
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....ordance with law. 29. This issue is accordingly decided against the assessee. 30. Now, regarding the addition of Rs. 5,61,87,557/-, confirmed by the Commissioner of Income-tax(Appeals) as deemed dividend under section 2(22)(e), the issue is covered by the decision of the Tribunal in assessee's own case for the assessment year 2006-07. The Income-tax Appellate Tribunal, D-Bench, Chennai, in assessee's own case, through their order dated 24-5-2011 in ITA No.2219(Mds)/2010, has held that the addition towards deemed dividend was not justified in assessee's case. The circumstances being similar, we follow the said order of the Tribunal and hold that the addition sustained by the Commissioner of Income-tax(Appeals) is not justified. Accordingly....