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TMI Blog2012 (9) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... lex on such lands, the same amounts to business, therefore, any gain arising out of sale of such building is business receipts liable to tax as business profit. The benefit of long term capital gain till the date of transfer of such capital assets into stock in trade i.e. year in which agreement with the builder is entered into. As per Sec. 45(2), such capital gain is liable to tax in the previous year in which such stock in trade is sold or otherwise transferred by the assessee. Issue remands back to AO for recompute capital gain and business income. - I.T.A.No.229/Ind/2012 - - - Dated:- 5-7-2012 - SHRI JOGINDER SINGH AND SHRI R.C.SHARMA, JJ. Appellant by : Shri H.P. Verma, Shri Ashish Goyal, and Shri Girish Agarwal, Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shops and duplex on the land owned by the assessee situated at Khasra No. 63/1/1/1 at Patwari Halka No.20 at Gram Ahmedapura, Tah. Huzur, Distt. Bhopal. The payment of Rs.21,00,000/- was received vide cheque dated 01.06.2003 amounting to Rs.11,00,000/- drawn on Andhra Bank and another cheque amounting to Rs. 10,00,000/- dated 01.08.2003 drawn on the same bank. It was also agreed upon between the assessee and Nirupam Associates that the sale proceeds of shops and duplexes amounting to 35 % would be given to the assessee and advance amount of Rs. 21,00,000/- will be adjusted from such sale proceeds of these shops. As per another agreement dated 27.04.2005, between assessee and M/s Aryan Builders and Colonizers it was decided that on the land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the above claims. As per the AO the assessee did not furnish the complete data and instead partial submissions were made. Even the copies of agreement with the two parties discussed above were obtained by way of calling these parties through summons u/s 131 of IT Act. On the basis of enquiries so made from M/s Nirupam Associates and M/s. Aryan Builders and Colonizers, the AO gathered that the constructed following properties were handed over to Smt. Kamla Joshi and family against the agreement executed with M/s. Nirupam Associates. The AO accordingly, confronted the assessee to explain why such sale of land and amount received against sale of such constructed property may not be taxed as business income as against the LTCG sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions amounting to the trading activities in view of provisions of section 2(13). The AO observed that the modus of operation of agreement is of the nature that on being initially agreed upon the builder has taken part of the land and constructed the houses on such land. As per these agreements, part percentage of sale consideration of these houses was given to the assessee. The AO accordingly, held that the assessee has the intension to carry out the business and it was evident from the fact that 35 % and 33 % of the sale receipts were to be received by the assessee from the builders. It was also stated that the sale consideration as so received was not on account of sale of agriculture land but by way of constructed houses. The AO f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in total sale proceeds Ahmedpur 01.06.2003 M/s.Nirupam Associates 35 % Bawadia Kalan 27.04.2005 M/s.Aryan Builders Colonizers 33 % Accordingly, the agreements were drawn. All the development charges were to be borne by the other parties. Possession of land was given to the other parties. Rs. 10,00,000/- were received from M/s. Nirupam Associates at the time of agreement as security deposit. On sale of built up property, the assessee received capital consideration from builder as under : Builder Type of property Financial year Sale consideration received by assessee (Rs.) Nirupam Associates Duplex 2004-05 8,00,000 Nirupam Associates Shop 2004-05 6,00,000 Niru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of advance so received from M/s. Nirupam Associates, were in the nature of security deposit and the same was returned back by the assessee. As per the Bank account particulars placed before the lower authorities, M/s. Nirupam Builders had also confirmed the same before the Assessing Officer while recording statement u/s 131. Once the assessee has entered into agreement with the builder for construction of housing complex on the lands owned by her, the same amounts to business, therefore, any gain arising out of sale of such building is business receipts liable to tax as business profit. Here provisions of Section 45(2) is clearly attracted, according to which the profits and gains arising from transfer by way of conversion by the owner o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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