Smt. S Vijayalakshmi, Hyderabad vs Assessee

Smt.S. Vijayalakshmi, Addl. Commissioner of KURNOOL Vs Income Tax, [PAN: ADNPV 7677 A] KURNOOL

(Appellant) (Respondent)

For Assessee : Shri G.Venkateswarlu, AR For Revenue : Shri Ramakrishna Bandi, DR

Date of Hearing : 07-01-2015 Date of Pronouncement : 16-01-2015

ORDER

PER B. RAMAKOTAIAH, A.M. :

This is an appeal by assessee against the order of Commissioner of Income Tax(Appeals)-IV, Hyderabad dated 27-02-2012.

2. Briefly stated, assessee, an individual has filed return of income in which Assessing Officer re-computed the capital gains and made an addition of Rs.42,14,381/- being 50% share on the sale of building at Angallu. There is no dispute with reference to the sale price of Rs.1.11 Crores. The dispute is with reference to the investment made by assessee and proportionate share in the :- 2 -: I.T.A. No. 1117 /Hyd/13 Smt.S. Vijayalakshmi

property. Assessing Officer was of the opinion that assessee's share is 50% and has taken investment/cost of asset at Rs.18,25,000/-, whereas it was the assessee's contention that there are four persons who invested in property along with her husband and share of investment was Rs.24,75,000/-. Assessing Officer did not accept the claims and ld.CIT(A) confirmed the same.

3. It was fairly admitted that similar issue in hands of the assessee's husband Shri K.V.Subba Reddy has been adjudicated by the ITAT in ITA No.1299/Hyd/2013 and C.O.No.01/Hyd/2014 vide order dt.06-06-2014, wherein the issue was restored to the file of the Assessing Officer for fresh adjudication after examining the facts. The order of ITAT in para 23 is as under:

23. We heard both sides and perused the orders of the Revenue authorities and other material available on record. We have also gone through the elaborate written submission of the assessee on this issue.

The learned counsel for the assessee submitted that the building, appurtenant to the land in question is as much 32,000 sq. ft., for which the cost adopted by the Assessing Officer was a meager Rs.23,15,000. It was further submitted that expenditure aggregating to Rs.80 lakhs was incurred for construction of the building and investment was made by the assessee, his wife, his brother, Shri K.Vijaya Raju Subba Reddy, and his sister in law, Smt.G.Nirmalamma. It was also pointed out that the investment made by Smt.Nirmalamma has been reflected in her income-tax return as well. As against this, it was submitted that the Assessing Officer has determined capital gains to be assessed in the hands of the assessee at 50%, on an erroneous assumption that it was only the assessee and his wife, who alone contributed to the investment in the construction of the building. We find merit in these contentions of the assessee. However, these factual aspects of the matter, pleaded by the learned counsel for the assessee, which go to the matter and relevant for determination of the issue, need verification by the Assessing Officer. We accordingly, set aside the impugned order of the CIT(A) and restore the matter to the file of the Assessing Officer with a direction to verify the above factual aspects of the matter and redetermine the capital gains liable to be assessed in the hands of the assessee for the year under appeal. The Assessing Officer shall fair opportunity of hearing to the assessee, who is at liberty to adduce necessary evidence to substantiate its claim. The Assessing Officer, thereafter, considering all aspects of the matter, shall pass appropriate :- 3 -: I.T.A. No. 1117 /Hyd/13 Smt.S. Vijayalakshmi

orders redetermining the capital gains to be assessed in the hands of the assessee, in accordance with law.

Respectfully following the same, we set aside the impugned orders of the Assessing Officer and CIT(A) and restore the matter to the file of Assessing Officer with a direction to verify the factual aspects and re- determine the capital gains to be assessed in the hands of assessee. Assessing Officer shall give fair opportunity of hearing to assessee. With this, the grounds are allowed for statistical purposes.

4. The next issue for consideration is with reference to the addition made out of agricultural income. Assessee offered an income of Rs.5 Lakhs as agricultural income whereas Assessing Officer considering the past year's incomes re-determined the income at Rs.2 Lakhs and remaining Rs.3 Lakhs was treated as 'Income from Other Sources'. Since the investment in the hands of Shri K.V.Subba Reddy was assessed at an amount of Rs.7 Crores, this addition was considered protectively. It was fairly admitted that the issue in the hands of Shri Subba Reddy was settled in that assessee's favour, therefore, the disallowance made in the hands of the assessee becomes regular addition. It is the contention of the assessee that an amount of Rs.5 Lakhs was earned as agricultural income and necessary evidences were furnished to the authorities.

5. Considering the rival arguments and orders of the authorities, we partially agree with the assessee's contentions. As seen from the order of the Assessing Officer, assessee was only offering incomes of Rs.60,000/-, Rs.78,200/- and Rs.1,75,700/- in the earlier three years on the agricultural land. Even though it was submitted that the land holding has not changed in the years, the income has suddenly jumped from Rs.1.75 Lakhs to Rs.5 Lakhs in the impugned :- 4 -: I.T.A. No. 1117 /Hyd/13 Smt.S. Vijayalakshmi

Assessment Year (AY). Considering the submissions for assessee and past record, we are of the opinion that agricultural income can be determined at Rs.2,50,000/-. Consequently, Assessing Officer is directed to restrict the amount to Rs. 2,50,000/- only.

6. In the result, appeal of the assessee is partly allowed.

Order pronounced in open Court on 16th January, 2015.

Sd/- Sd/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 16th January, 2015. TNMM

Copy to :

1. Smt. S.Vijayalakshmi, C/o. P.Murali & Co., Chartered Accountants, 6-3-655/2/3, 1st Floor, Somajiguda, Hyderabad- 500 082.

2. Addl. Commissioner of Income Tax, Kurnool.

3. CIT(A)-IV, Hyderabad

4. CIT-III, Hyderabad

5. D.R. ITAT, Hyderabad.