2010 (10) TMI 847 - HC - Income Tax

Date of acquisition of the property - Held that - It is the contention of the appellant that the appellant had held the property for a period of more than three years which is disputed by the revenue and since there is no finding as to the date of acquisition by any of the authorities below, it would be appropriate to remand the matter to the ITAT for the purpose of determining the actual date of acquisition of the property and then to decide the matter afresh. The learned Counsel for the parties also state that the matter back is remanded back the question as to whether the profit arising out of a sale was in the nature of business profit or the capital gain should also be decided afresh by the ITAT which was accepted.

Summary

Issues:
Determining whether the profit earned was business profit or capital gain, Date of acquisition of the property, Relevance of the date of registration of the sale deed, Remand of the matter to the ITAT for further determination.

Analysis:
The case involved a dispute regarding the nature of profit earned by the appellant - whether it constituted business profit or capital gain. The appellant had purchased a plot of land and later sold it along with a building. The appellant claimed the profit as capital gain in the income tax return for the assessment year 1997-1998. However, the Assessing Officer considered it as business profit, a decision upheld by the Commissioner of Income Tax (Appeals) and the Income Tax Appellant Tribunal (ITAT). The appellant challenged this decision, leading to the current appeal.

The respondent argued that even if the profit was considered capital gain, it would be short-term capital gain due to the short period between acquisition and sale of the property. The respondent contended that the date of registration of the sale deed, which was after the acquisition date, should be considered as the acquisition date. On the other hand, the appellant's counsel highlighted the lack of clear evidence regarding the actual date of registration of the sale deed. The appellant's position was that the date the sale deed was executed should be the relevant date for determining the acquisition.

Considering the conflicting arguments and the absence of a clear finding on the date of acquisition, the High Court decided to remand the matter to the ITAT for further examination. The Court emphasized the importance of determining the actual date of acquisition before deciding on the nature of the profit earned. The Court also agreed that the question of whether the profit was business profit or capital gain should be reconsidered by the ITAT along with the new findings on the acquisition date. As a result, the impugned orders were set aside, and the matter was sent back to the Tribunal for a fresh decision, keeping all contentions open for review.