9911796707
TMI Blog2012 (10) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... ional evidence in contravention of Rule 46A of the I.T. Rules". The appellant craves the right to alter, amend add or substitute the grounds of appeal". 2. The brief facts of the case are that assessee is an individual. She has filed her return of income electronically on 21st July, 2008 declaring total income of Rs.49,01,493. The Income-tax Return-V was filed with the Assessing Officer on 31st July 2008. In the return, assessee has disclosed income from salary at Rs.5,43,188. She is a reader with Mata Sundry College for Women, University of Delhi. Apart from salary income, she has shown property income at Rs.37,50,597. She has also shown income from short term capital gain and income from other sources. 3. The case of the assessee was selected for scrutiny assessment and a notice under sec. 143(2) of the Income-tax Act, 1961 and questionnaire under section 142(1) of the Act were issued and served upon the assessee. In response to the notice, Shri Rajiv Sabharwal, AR of the assessee appeared before the Assessing Officer from time to time and filed the required details. According to the Assessing Officer, the record of the assessee with the Income-tax Department had disclosed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l limit of Gurgaon. In support of her contentions, she submitted the revenue record i.e. copy of Jamabandi, copy of mutation register, a certificate from the Patwari exhibiting the distance of land from the municipal limit of the Gurgaon. On the strength of these documents, it was contended by the assessee that the land was a agricultural land which does not fall within the ambit of capital assets defined in sec. 2(14) of the Income-tax Act, 1961. Sale of such agricultural land would not result any capital gain which can be brought to tax. 5. Learned Assessing Officer has rejected this contention of the assessee. He observed that a land could be treated as a agricultural land only if assessee demonstrates on the record that she had carried out basic operation of agriculture on the land in dispute. He further observed that a SEZ was notified in the vicinity of the assessee's land under sec. 3 of Special Economic Zone Act, 2005 (28 of 2005). A letter of approval for establishment of a SEZ was granted by the Central Government on 6.11.2006. Thus, the area where land is situated has been ceased to be an agricultural land. Learned Assessing Officer thereafter made reference to the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Revenue Records show that the lands sold by the Appellant are entered in the Land Revenue Records in the name of the Appellant as "Agriculture Lands", (vi) that the "Jamabandis" of the Land Revenue Records also show that the lands were cultivated as "Khudkast" which means "Self Cultivation", (vii) that the 'Jamabandls" 01 the Land Revenue Records further show that the "Source of Irrigation" used for cultivation of the 'Agriculture Lands' is "Tubewell Water" (viii) That the said "Jamabandis" of the land Revenue also show that an amount of Rs.1.00, Rs.1.00, Rs.7.50 and Rs. 0.12 was levied as land Revenue/Lagan on the said "agricultural land" sold by the Appellant. (ix) that the "Distance Certificates" Issued by the patwari/Tehsildar specifically states in Hindi that the lands are "Arail Jaral" i.e "Agriculture Lands" (the English meaning of Araji Jarai" is "Agriculture Land"). (x) that the "Distance Certificates" issued by the patwari/Tehsildar specifically states in Hindi that "Araji Jarai' (English meaning of "Araji Jaral" is "Agricultural Land") i.e. the lands are "Agriculture Lands" which are situated at a distance of 12 KM and 15 KM outs ide the Municipality limit at Gurg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culture Lands" by the Department under the heading "Immovable Assets" (which is Non Taxable being exempt under section 2(e)(a) of the Wealth Tax Act). The relevant portion of the said Assessment Order dated 16.3.2006 is reproduced as under:- "A return disclosing taxable wealth of Rs.37.23,900/- has been filed on 2.8.2004, which was processed u/s 16(1) on returned wealth on 31.8.2005. The case was selected for scrutiny. In response to a notice u/s 16(2) Shri Rajeev Sabharwal, C.A. attended from time to time and filed the details asked for. The case has been discussed. The wealth of the assessee comprises of agricultural lands, residential house and commercial establishments, plots and jewellary. The valuation of commercial establishments has been taken as per Rule 1 aa and value of plots has been taken on the basis of rate list of Tehsil Gurgaon issued by the Sub- Registrar, Gurgaon. After discussion net wealth declared by the assessee is accepted." (xv) that during the Assessment Year 2003-04, the "Return of Income" of the Appellant (and in which Assessment Year, the "Agriculture Land" purchased by the Appellant in Village Gwal Pahari, Tehsil Sohna, Gurgaon, in the year 1995-96 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e source of irriqation used for cultivation IS "Tube Well" It was proved to the Ld Addl CIT that the Patwan and Tehsildar of Tehsil Sohna had issued "Distance Certificates" dated 6.3.2007 certifying the distance of the said "Agriculture Lands" and also certifying that the said "Agricultural Lands" are situated at a distance of 12 KM to 15 KM outside Municipality limits of Gurgaon. It was also proved to the Ld. Addl ClT that these "Agriculture l.ands' were situated at 12 KM &15 KM outside Municipality Limits of Gurgaon and the said "Agriculture Lands" do not fall with the definition of "Capital Asset" provided under section 2(14)(iii)(b), of the Income Tax Act, and hence no Capital Gain Tax is applicable on the said "Agriculture Lands" as it is not a "Capital Asset" falling within the meaning of the Income Tax Act. (xviii) that with the support of the Judgment of the Division Bench of Hon'ble Delhi High Court in the matter of "Hindustan Industrial Resources Ltd. Vs Asstt. Commissioner of Income Tax" in the case No. ITA 1130 of 2006 decided on 9.1.2009, it was proved to the Ld Addl CIT that the said Judgment is directly applicable to the facts of the case of the Appellant, and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Assessing Officer in order to treat the assessee as a dealer in land are that assessee had purchased and sold various other immoveable properties since assessment year 2004-05. The details of such transactions have been compiled in Annexure A attached with the assessment order. On the strength of these details, learned Assessing Officer invited the explanation of the assessee as to why it should not be treated that assessee was carrying a business/adventure in the nature of trade. In response to the query of the Assessing Officer, assessee filed written submissions on 27.12.2010. learned Assessing Officer has reproduced the submissions made by the assessee which read as undera: "i) During the F.Y. 1995-96 (i.e. 12 years prior to the year under assessment) and during the F.Y. 2003-04 (i.e. 4 years prior to the year under assessment), the assessee had purchased agriculture land in Village Gwal Pahadi and Village Balula, Tehsil Sohna, Distt. Gurgaon. The said agriculture land is situated at a distance of approx. 12 to 15 Kms. Outside the municipal limits of Gurgaon Municipality. The said agriculture land does not fall under the definition of 'Asset' under the Income Tax Act. (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture or any adventure or concern in the nature of trade, commerce or manufacture."] 11. Learned Assessing Officer had gone through the submissions of the assessee and observed that the Hon'ble Supreme Court as well as Hon'ble High Court in their authoritative pronouncements had propounded the meaning of expression "in the nature of trade". According to these decisions, the expression in the nature of trade postulate the existence of certain elements in the adventure which in law would invest it with the character of a trade or business. An adventure in the nature of trade cannot properly be regarded as a trade or business. Even an isolated and single transaction can be specified of an adventure in the nature of trade. Learned Assessing Officer further observed that assessee did not enjoy any agricultural income from the said piece of agricultural land. No agricultural operations were performed on these lands, therefore, it clearly establishes that these lands were purchased by the assessee only to sell at a profit. He made reference to the decision of Hon'ble Supreme Court in the case of G. Venkateswaram Naidu & Co. vs. CIT reported in 35 ITR 594 and CIT vs. Sutlej Cotton Mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade or business. It may not be trade or business in itself but it might have some essential features, that make up a trade or business. Thus, the question whether a transaction carried out by an assessee is an adventure in the trade or not, cannot be decided by attaching importance to one or more facts in isolation. It is not possible to evolve any single legal tests or formula which can be applied in determining whether a transaction is an adventure in the nature of trade or not. The answer to the question must necessarily depend in each case on the total impression and effect of all the relevant factors and circumstances proved therein, which determined the character of the transaction. There are basic test which can be applied on the facts to decide the controversy whether transaction was in the nature of trade or not. There are certain basic parameter which the adjudicating authority ought to have kept in mind. These basic test are, namely, (i) what is the dominant intention of an assessee while conducting the transaction; (ii) whether the purchase was made solely with an intention of resale at a profit; (iii) whether assessee has been carrying out such transactions conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the foundation of the facts put by the Assessing Officer is incorrect, which leads to draw incorrect inference. Learned first appellate authority has observed that these four properties were acquired earlier in time and they are retained by the assessee from the date of their acquisition. 16. The next circumstance referred by the Assessing Officer is with regard to the apartment No. 1/203, Malibu town, Gurgaon. Assessing Officer has observed in the annexure that this property was available with the assessee in assessment year 2004-05 but it is not appearing in her assets in assessment year 2006-07. It suggests that she must have sold the property. It was explained by the assessee that this property was gifted to her daughter Sonali Anand by the assessee. Her daughter was to get marry in the subsequent year and the assessee made the gift so that she can live a happy married life. The assessee also pointed out that she is still staying in the said apartment. 17. The next instance referred by the Assessing Officer is Plot No. LS-22, Malibu Town. He observed that it was acquired before March 2004 and it was sold during the year 2006-07. The assessee has pointed out that this plot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brief facts of the case are that assessee had booked a property bearing No. MS-305, DLF, Megha Mall. She has made the payment of Rs.58,63,050 through account payee cheque. The property could not be constructed within the stipulated period as provided in the agreement. Clause 12 of the agreement provides that in case the developer failed to construct the building then it will pay a compensation of Rs. 50 per sq.ft. of the super area per month to the intending allottee for the period of such delay. This clause also provides that if the intending allottee failed to take possession of the commercial space within period of six months from the date of intimation in writing by the developer then the allottee shall also pay holding charges of Rs. 50 per sq. ft. of the super area per month for the entire period of such delay. This holding charges is separate from the maintenance charges. According to the assessee, the building was not complete and DLF Commercial Enterprises Ltd. paid compensation every month with a covering letter that it is a compensation for delay in handing over the possession of the property. According to the assessee, it is a capital receipt. She has reduced the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is difficult to understand how the assessee can claim that DLF Commercial Developer has not given the possession of the said property, whereas the same is appearing in the wealth-tax return of the assessee for assessment year 2005-06. The assessee has raised a specific plea before the Assessing Officer that she has wrongly shown the income from this property as a rental income. It was in fact a compensation for delay in completion of the construction. Thus, the order of the Assessing Officer suggests that he proceeds on the assumption that possession was received by the assessee and it is an income from the property. This reasoning is not logical for the two reasons. If the possession was handed over to the assessee then why DLF is paying compensation to the assessee and if construction is complete and assessee failed to take possession of the completed property then as per the clause 12 of the agreement, she has to pay holding charges to the DLF. These two circumstances suggest that construction was not complete. The Assessing Officer did not cross-verify his assumption of fact from the DLF. Let us approach the issue with one more angle also. If the property was completed and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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