Itta/215/2014 Of Commissioner Of Income Tax-Iii v. Sri Rao Shiva Kumar

HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDHON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.215 of 2014 Date: 26.03.2014 Between: Commissioner of Income Tax-III,Hyderabad .....Appellant AND Sri Rao Shiva Kumar,Hyderabad ...Respondent HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDHON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.215 of 2014 JUDGMENT:(per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta ) This appeal is directed against the judgment and order of thelearned Tribunal dated 31[st] January 2013 in relation to the assessmentyear 2006-07 and sought to be admitted on the following suggestedquestions of law: i. In the facts and circumstances of the case, theHon’ble Tribunal having held that the amount on sale of landby the respondent-assessee is to be treated as businessincome, whether correct in law in holding that the income onthe said transaction is to be estimated at the rate of 25% of theturn over as against the total turnover, when the respondent-assessee did not maintain its books of account nor claimed orrecorded any such expenditure in the subject proceedings? ii. In the facts and circumstances of the case and in law,whether the Hon’ble Tribunal while agreeing that sale of landhas to be treated as business income, is correct in law inallowing 75% of the sale price as costs incurred onestablishment, salaries, phone etc., without any evidence ofsuch expenditure having been incurred by the respondent-assessee and without any claim regarding the same beingmade by it? iii. In the facts and circumstances of the case, whetherthe Hon’ble Tribunal was correct in law in allowing thededuction of 75% from sale consideration of land on accountof unclaimed and unrecorded expenditure without taking intoaccount that such expenditure being outside the regular booksof account will reflect undisclosed income? The aforesaid questions clearly indicate that the appeal ispreferred in relation to a portion of the judgment. It appears, thelearned Tribunal, while upholding the fact-finding as to the nature of thebusiness being carried out by the assessee, held on fact that the dominant or the sole intention to resell is a relevant factor and raises astrong presumption though it is not a conclusive proof of trade. Meaning thereby, the lands, which were purchased, are treated to bestock-in-trade. Under these circumstances, it is held to be a businessincome and not the income from the investment and when no books ofaccount were maintained, the learned Tribunal legitimately estimatedthe income. Estimation of income is permissible in law, as theassessee does not maintain any books of account. Taking intoconsideration of the expenditure, the income is estimated. In this case,the learned Tribunal has done so. We do not find any illegality orinfirmity in the judgment and order of the learned Tribunal. Moreover,on the aforesaid question of law, the affirmed decision of the Tribunalhas been relied on. Accordingly, the appeal is dismissed. No order as to costs. ___________________ K.J. SENGUPTA, CJ __________________ SANJAY KUMAR, J 26-03-2014 Gsn