Commissioner Of Income Tax, Chennai v. Ms.vidya Thangakumar

In the High Court of Judicature at Madras Coram The Honourable Mr.Justice V.RAMASUBRAMANIANandThe Honourable Ms.Justice K.B.K.VASUKI T.C.A.No.189 of 2015 Commissioner of Income Tax, Chennai....Appellant / Respondent Vs Ms.Vidya Thangakumar ...Respondent / Appellant Tax Case Appeal filed under Section 260A of the Income Tax Act,1961 against the order dated 5.9.2014 passed by the Income TaxAppellate Tribunal, Madras 'D' Bench, for the assessment year 2009-2010, made in ITA No.1081/Mds/2014. against the order of the Commissioner of Income Tax, Chennai X ,Chennai-34 dated 7.2.2014 and made in C.No.6502(75) 2013-14/X Whichwas filed against the order of the Income Tax Officer, Business Ward-V(4) Chennai-34 dated 16.12.2011 and made in PAN . For Appellant : Mr.S.Rajesh Judgment was delivered by V.RAMASUBRAMANIAN,J This tax case appeal is filed by the Revenue questioning thecorrectness of the order passed by the Income Tax Appellate Tribunal. 2. Heard Mr.S.Rajesh, learned counsel for the appellant. 3. The assessee, who is the respondent, is an individual. Shefiled a return of income for the assessment year 2009-2010 on31.7.2009, admitting a total income of Rs.1,04,880/-. Later, the casewas taken up for scrutiny. After verifying the books of accounts, bankstatement and property documents, the Assessing Officer passed anorder under Section 143(3) of the Income Tax Act, accepting the returnof income vide order dated 16.12.2011. 4. The Commissioner of Income Tax later issued a show causenotice under Section 263, on the ground that the property, which the https://hcservices.ecourts.gov.in/hcservices/ assessee got by way of settlement, was sold by her over a period ofthree years to various persons in the form of undivided share and thattherefore, the income derived therefrom was a business income. Theassessee filed objections. However, the Commissioner of Income Taxconsidered the objections, set aside the assessment and directed theAssessing Officer to treat the income from the property transaction asbusiness income instead of capital gains. 5. As against the said order of the Commissioner of Income Taxdated 7.2.2014, the assessee filed an appeal in I.T.A.No.1081/Mds/2014before the Income Tax Appellate Tribunal. The Tribunal, by order dated5.9.2014, allowed the appeal, holding that the assessee was actually afull time student undergoing MBBS course and that she is not indulgingin any business activity and it was a case of change of opinionAggrieved by the said order of the Tribunal, the Revenue is on appealbefore us. 6. The main contention of the learned counsel for the Revenue isthat merely because the assessee was a student, the Tribunal ought notto have come to the conclusion that she could not have indulged in anybusiness activity. It is also contended that whenever a propertyacquired by someone is sold in bits and pieces, after collecting thedevelopment charges with a view to make a profit out of the same, thesame can be treated as business income as per the law laid down by theSupreme Court in Raja Rameshwara Rao Bahadur Vs. CIT [1961 (42) ITR179 (SC]. 7. We have carefully considered the above submissions. 8. It is not as though the Tribunal merely went by the fact thatthe assessee was a full time student undergoing MBBS course and thattherefore, she could not have indulged in any business activity. Itwas one of the reasons adduced by the Tribunal for coming to theconclusion that it did. 9. A careful look at the order of the Tribunal would show thatthe assessee got the property by way of settlement. Thereafter, sheentered into a promoter's agreement on 18.12.2007 and a constructionagreement on 30.3.2008. It was in pursuance of those agreements thatthe assessee was compelled to sell undivided shares in the land, overa period of three assessment years namely 2008-09, 2009-10, etc. Theassessee also filed a return of income for the assessment year 2008-09under the head 'long term capital gain'. 8. It is not as though the Tribunal merely went by the fact thatthe assessee was a full time student undergoing MBBS course and thattherefore, she could not have indulged in any business activity. Itwas one of the reasons adduced by the Tribunal for coming to theconclusion that it did. 9. A careful look at the order of the Tribunal would show thatthe assessee got the property by way of settlement. Thereafter, sheentered into a promoter's agreement on 18.12.2007 and a constructionagreement on 30.3.2008. It was in pursuance of those agreements thatthe assessee was compelled to sell undivided shares in the land, overa period of three assessment years namely 2008-09, 2009-10, etc. Theassessee also filed a return of income for the assessment year 2008-09under the head 'long term capital gain'. 10. Therefore, the Tribunal rightly concluded that thetransaction of sale of undivided shares in the land merely startedcrystallizing from the assessment year 2008-09 onwards and what isimportant is that the Revenue accepted the stand of the assesseeTherefore, it was clearly a case of change of opinion and it is now https://hcservices.ecourts.gov.in/hcservices/ well settled that on the basis of the change of opinion, the powerunder Section 143(3) cannot be invoked. 11. In so far as the second ground is concerned, it is true thatin Raja Rameshwara Rao Bahadur, the Supreme Court held that when aperson acquired the land with a view to selling it later afterdeveloping it, he is carrying on an activity resulting in profit andthe activity can only be described as a business venture. But, thecase on hand stands on a different footing. The assessee did notacquire any land for the purpose of development and sale as part ofany business venture. She got this property by way of a settlement andshe merely wanted to sell it. The better method of selling it wasfound to be to entrust it to a developer. Once an agreement for saleis entered into in the manner in which a developer wanted, there is noway the assessee would have had control over the period of time,within which, the entire transaction would have been concluded.Therefore, this is not a fit case calling for our interference. 12. Accordingly, the above tax case appeal is dismissed. Sd/- Asst.Registrar (CS III) /true copy/ To Sub Asst. Registrar 1. The Income Tax Appellate Tribunal, Madras 'D' Bench. 2. The Commissioner of Income TaxChennai X, Chennai 3. The Income Tax OfficerBusiness ward V (4) Chennai-34 KK (CO)kk 4/5