2014 (2) TMI 1034 - HC - Income Tax

Nature of Income sale of land - Business income OR Capital gain Held that - CIT(A) held that the activity of business has not been established conclusively - The conduct of the appellant in the previous years, their actions as apparent from the balance sheet of the previous years and their source of income in the previous years, all point to the fact that there was no business activity and the land was sold during the year on which income had been derived could not be considered to be a business activity thus, the sale of land be treated as capital gain and not business income Tribunal upheld the decision of CIT(A) - Whether the income arose out of any business activity or out of capital gain is essentially a question of fact or a mixed questions of law and fact - Both the CIT (Appeals) and the learned Tribunal agreed as regards the fact that the income arose out of capital gain - revenue could not point out any infirmity in the view taken by the CIT (Appeals) and the Tribunal there is no question of law arises in the appeal to be entertained Decided against Revenue.

Summary

Issues:
1. Appeal against dismissal of appeal by Tribunal
2. Determination of income as business activity or capital gain

Analysis:
The High Court of Calcutta heard an appeal by the Revenue against a Tribunal's decision dismissing their appeal against the Commissioner of Income-tax's order. The case involved the sale of a plot of land and the classification of the resulting income as either business income or capital gain. The Commissioner held that the land sale should be treated as capital gain, considering various factors such as the appellant's lack of business activity on the land and the intention behind the land purchase for investment purposes. The Tribunal upheld this decision, emphasizing that the computation of capital gains was in accordance with the law and that the sale was not a business activity for the appellant in the relevant assessment year.

The Court noted that the question of whether the income arose from a business activity or capital gain was a factual or mixed question of law and fact. Both the Commissioner and the Tribunal agreed that the income should be treated as capital gain. The Court found no infirmity in the decisions of the lower authorities. The appellant's representative could not point out any errors in the rulings. Consequently, the Court held that the appeal did not raise any substantial question of law and refused to admit it, dismissing the appeal.

Additionally, a correction was allowed in the Memorandum of Appeal to rectify the appellant's name description. The Court directed the department to make the necessary correction.