Ramesh Babu Nimmatoori Vs ACIT (ITAT Hyderabad)
ITAT Hyderabad Grants Major Relief to Assessee’s Family – Agricultural Land & JDA Disputes Resolved
Hyderabad Tribunal delivered a common order disposing of 15 appeals by six family members (Ramesh Babu, Raja Babu, Yashoda, Sulochana, Manjusha & Anudeep) and two by Revenue. The matters arose out of search in Aurora Educational Society group, leading to multiple additions on land dealings, capital gains, advances, JDAs & unexplained investments.
1. Sale of Agricultural Land – Not a Capital Asset
- Assessees sold 4 acres at Raigiri village to M/s Incredible India Projects Pvt. Ltd.
- AO taxed gains holding land fell under HMDA limits → treated as capital asset u/s 2(14).
- Tribunal, relying on Tehsildar & Bhongir Municipality certificates, held land was beyond 2 km from Municipality, population 53,339, hence agricultural.
- Addition of ₹1.35 crore (Ramesh Babu’s case) deleted
2. Advance from Aishwarya Infra Developers – Not Taxable u/s 56(2)(ix)
- Family entered agreement (14.09.2016) with Aishwarya Infra Developers for ~29 acres; received ₹5.18 crore advance.
- Deal later shifted to JVG Structures Pvt. Ltd. under JDA (30.06.2017), with Aishwarya also party.
- AO taxed advance as forfeiture u/s 56(2)(ix).
- Tribunal: No forfeiture, but carried forward into JDA; plus land was agricultural.
- Addition of ₹79.35 lakh (Ramesh Babu) deleted
3. Joint Development Agreement with JVG Structures (2017)
- AO taxed capital gains in AY 2018-19 at FMV (₹14.70 cr), invoking s.45(1).
- Tribunal: Applied Section 45(5A) – capital gains taxable only in year of completion certificate, not in year of JDA.
- Since no completion certificate, addition of ₹3.12 crore (Ramesh Babu share) deleted
4. Additions under Section 56(2)(x) – Banjara Hills Property
- Assessees bought land at Road No.12, Banjara Hills in Aug 2017 for ₹3 crore; SRO value ₹4.20 crore.
- AO taxed difference u/s 56(2)(x).
- Tribunal upheld CIT(A) – difference of ₹24.07 lakh (Ramesh Babu’s share) sustained
5. Unexplained Investment – Jubilee Hills Property
- Land & building at Road No.40, Jubilee Hills purchased; AO added ₹13 lakh in Ramesh Babu’s hands.
- Tribunal found payment recorded in Raja Babu’s books, not assessee’s.
- Addition of ₹13 lakh deleted
6. Cash Seized During Search
- Cash of ₹28.06 lakh found. AO added u/s 69A.
- Tribunal accepted explanation that cash came from declared income of AYs 2016–2018.
- Addition deleted
7. Other Issues
- Increases in capital accounts explained from agricultural land sales – additions deleted.
- Family pension receipts, unexplained deposits, Edupalle land investment etc. partly remanded.
- Revenue’s appeals (on relief granted by CIT(A)) dismissed.
8. Tribunal’s Final Decision
- Most additions on land sales, advances & JDAs deleted.
- Only addition sustained: ₹24.07 lakh u/s 56(2)(x) for Banjara Hills property.
- Appeals of assessees largely allowed, Revenue appeals dismissed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
