Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (5) TMI 712 - ITAT CHENNAINature of activity - dividend received - taking land from the company on lease - sham transaction - addition under the head "Income from other sources" rejecting the claim of the assessee to treat it as agricultural income - Held that:- The transaction of lease of agricultural land between the assessee and the land holding companies cannot be termed as illegal, however it appears to be sham because of the following reasons : "(1) The lease rent paid to the land holding companies/HUF by the assessee and the other individuals who had taken the land on lease is only ₹ 500 per acre per annum, which is too low and not in parity with the agricultural income earned by the lease holders. (2) All the shareholders of the land holding companies are the lease holders of the land owned by the companies which is in proportion to the shares held by them. (3) The decision of the company to lease the land is not in the interest of the company which is a distinct legal entity for profit but a modus operandi to pass on the income derived from agricultural operation from the land owned by the companies to the shareholders of the company directly. (4) The entire transaction is aimed to circumvent the provisions of the Act because dividend income is taxable in the hands of the asses see. (5) There is also no cogent evidence to prove that the assessee had cultivated the land and earned agricultural income individually because it appears that the agricultural operations were collectively performed by all the shareholders by engaging staff. The documentary evidences created are in connivance with all the parties to make believe the transaction entered in papers to be genuine. (6) It is crystal clear that all the shareholders of the company had performed agricultural activities under the name of Barwood Estate instead of in the name of the companies which is only to avoid the distribution of profit by the companies as dividend." Because of the above mentioned reasons, we are of the considered view that the learned Assessing Officer and the learned Commissioner of Income-tax (Appeals) are right in their decisions for holding the amount received by the assessee to be treated as dividend income due from the company. Hence we hereby refrain from interfering with the orders of the Revenue authorities. - Decided against assessee.
|