Case Law Details
Dr. M. Senthilvelan Vs ACIT (ITAT Chennai)
The only issue involved in this appeal is whether the assessee has to pay capital gains to the disputed conversion of land into stock-in-trade. According to the A.O, the assessee converted a land which is stock-intrade and sold the plots. According to the A.O, the land sold by the assessee attracts the provisions of the capital gains hence capital gains have to be taxed. The case of the assessee is that the land which is converted by the assessee which is 8.5 K.M away from the Chidambaram Municipality and therefore, he does not come to the ambit of s. 45(2) of the Act. He further submitted that the land is an agriculture land. The assessee has not proved any evidence that the land is an agricultural land. So far as the distance is concerned, the A.O has deputed the Inspector to ascertain the distance from the municipality limit and accordingly, the A.O has inspected and submitted a report that as per the odometer of the car showed the distance as 6.7 K.M and even according to the Google map also the distance is 6.7 K.M. By considering the report given by the Inspector, the A.O came to the conclusion that the distance is 6.7 K.M therefore, the assessee claim is not correct. In so far as the certificate issued by the Tehsildar is concerned which is at page No.1A of the paper book, it does not show that from the Chidambaram how it comes to 8.5 K.M and apart from that in our view the Tehsildar is not a competent person to decide the distance. Therefore, we are of the opinion that the certificate issued by the Tehsildar is not a material to be considered the distance. In view of the above, we are of the opinion that the A.O has rightly taxed the capital gains in the hands of the assessee and the same is confirmed by the Ld. CIT(A).
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), Puducherry in I.T.A No.74/CIT(A)-PDY/201 6-17 dated 29.06.2018 relevant to the Assessment Year 2013-14.
2. The brief facts of the case are that the assessee, a Doctor by profession and working as Professor in Annamalai University, admitted income from salary and profession. He also admitted income from real estate business and interest income received from his bank accounts. During the financial year 2012-13, the assessee converted 7.49 acres of land at R.S No.62/2, 64/1,2, 65/3,4, 66/3, 66/4, 110/34, 110/33, 110/4, 110/5 situated at Melbhuvangiri and Keezhbuvanagiri into saleable plots (stock-in-trade). The assessee sold some plots measuring 57345 sq. ft. for Rs. 57,34,500/- and declared income at Rs. 4,77,965/- on presumptive basis u/s. 44AD. In the assessment order, the A.O has noted that the assessee has converted the capital asset into stock-in-trade as per the provisions of s. 45(2) of the Income Tax Act, 1961 (hereinafter as “the Act”), profits or gains arising from the transfer of capital asset or its treatment by the assessee as a stock-intrade of a business carried on by him, such conversion or treatment is deemed as a transfer of capital asset and attracts capital gain provisions. The same was pointed out to the assessee, in reply the assessee has submitted by a letter dated 26.12.2015 that the lands at Keezhbuvangiri and Melbhuvanagiri are agricultural lands till the date of conversion into saleable plots. The assessee also stated that the lands are located more than 8 KM from the nearest Chidambaram Municipality and thus, he satisfied the requirement for being agricultural land as it is located beyond the specified limit hence, he did not admit capital gain tax on conversion. The A.O was deputed Inspector to make an enquiry in respect of distance of the land. The enquiry Officer submitted a report, which is extracted as under:
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Who is a cometent person to issue certificate regarding distances?