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2020 (5) TMI 299 - ITAT DELHIIncome earned by sale of land - business income or Long Term Capital Gains - whether the land in question is investment or stock-in-trade irrespective of the fact whether the books of accounts have been wrongly accounted or whether the capital gains have been wrongly offered to tax? - assessee has taken plea that the land has been sold only on account of the notice received from the revenue department to surrender the land as it was an encroachment on the Gaon Sabha Land - HELD THAT:- The notice was issued in the year 1997 hence cannot be given any relevance with regard to determination for the issue before us. The fact that the land in question has been sold after obtaining NOC from the ADM, South District, New Delhi on 24.01.2011. We find that the main objects of the company are to acquire purchase take on lease are otherwise any land building, structures plot to act as real estate agents in connection with buildings schemes and also to be colonizers to sale plots and flats. Having acquired the land as stock-in-trade, the land continued to be held for business purpose and continued to be shown as closing stock for all the years. The assessee is into the business of acquiring and sale of plot and colonizers. On going through the Memorandum and Articles of Association, conduct and business affairs of the assessee, and on perusal of the books of accounts of the assessee, it cannot to be said to be an income arising out of capital gains and has been rightly treated as business income by the ld. CIT (A). Whether the capital gains are eligible to avail its exemption? - Since, the income earned has been already adjudicated on merits to be taxed as “business income”, it is hereby clarified that the treatment proposed by the assessee to consider the proceeds of the sale of land under the head “Long Term Capital Gains”and subsequent exemption from taxation cannot be held to be valid in the eyes of law. Disallowance u/s 40(a)(ia) - CIT-A uphold addition on the grounds that the assessee is not a new company and been in the business of land transactions from 1997 and the provisions of TDS are clearly defaulted by the assessee - HELD THAT:- In the absence of any evidences contra, putforth by the assessee, we hereby decline to interfere with the order of the ld. CIT (A) on this issue. - Decided against assessee.
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