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TMI Blog2013 (11) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Pvt. Ltd. on 29.3.2005 and the profit thereon was claimed as exempt taking the stand that the plot of land was the agricultural land and the said land was situated beyond the distance of the 8 kms. the limits of the municipal corporation. As noted by the A.O., the land sold was situated in the industrial zone at Maan (Hinjewadi). The A.O. obtained the certificate from the competent authority establishing that the land under consideration was situated within the jurisdiction of the municipality which has the population of not less than 10,000 and also same was within the 8kms. Limits from the Pimpri Chinchwad Municipal Corporation (PCMC). The A.O. therefore asked the assessee that the assets sold i.e. the land is a capital asset within the meaning of section 2(14)(iii) of the Act and the profit derived from the said transaction was liable to be taxed under the Income-tax Act. As per the agreement to sale filed by the assessee dated 6.7.2005, the land was bearing the certificate no.277 which was situated in Maan. The agreement had 3 parties i.e. assessee, W.B. Engineers International Pvt. Ltd. as a confirming party and Sakal Papers Ltd. as a purchaser. 2.1 It appears that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out as the business profit. The assessee resisted the action of the A.O. denying to compute the gain under the head capital gain. The Assessee stated that land was purchased in the year 2000-01 with an object of yielding long term returns and after the period of about 5 years holding, the same was sold out and it cannot be treated as a stock in trade. The A.O. was not inclined to accept the explanation of the assessee. The A.O. has observed that when the land was purchased the assessee was hardly 19 years old and subsequently he migrated to Chennai after March. The A.O. has also noted that her father was the sole controlling authority on the basis of the power of attorney and has also obtained loan from Janata Sahkari Bank, Pune on hypothecation/mortgage of the said land. The A.O. therefore treated the said transaction as an adventure in the nature of trade and treated profit/gain on sale of land as business income and accordingly brought to tax. 3. So far as A.Y. 2005-06 is concerned, the assessee has sold plot no.12 W.B. Engineers International Pvt. Ltd. i.e. 03-23-05 Hectares. On 29.3.2005, the assessee has received Rs.2.30 crores as her share in the land out of the consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was communicated to the assessee and assessee filed his letter dated 16.12.2008 has admitted the mistake and stated that the distance from PCMC limit remained unquoted through oversight. The A.O. objected for admitting the certificate obtained by the assessee from Kamgar Talathi dated 14.1.2010. The CIT(A) called for the comments of the assessee and the objections filed by the A.O. The A.O. filed his submissions dated 17.3.2010 which are reproduced in the order of the Ld. CIT(A). There were particularly two issues before the Ld. CIT(A). First issue was whether the A.O. was justified in assessee the profits/gain on the sale of the land under the head "business"? and secondly, whether if assets under the head "capital gain" where the said land is to be treated as a capital asset? So far as the treatment of the gain/profit on the sale of the land is concerned, the Ld. CIT(A) accepted the contention of the assessee that the sale of the plot of the land cannot be treated as an adventure in the nature of the trade and same is to be assessed under the head capital gain. The Ld. CIT(A) has recorded that it was the sole transaction of purchase of immovable property and it was in the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunities were not given by the A.O. during the assessment proceedings, which is incorrect since the A.O. had given opportunities to the appellant. The A.O. also duly confronted the appellant with the enquiry conducted from the office of Town Planning & Valuation Department, Pune and the reply dated 08.12.2008 of the ADTP. Therefore, on this basis, the additional evidence furnished by the appellant is liable to be rejected under Rule 46A of I.T. Rules. 3.15. Moreover, in his report dated 14.12.2010 the A.O. has correctly stated that in the response received from the ADTP dated p8.12.2008, which was communicated to the assesses, it was categorically reported that the particular land under the transaction was situated within 8 kms from the extended limits of PCMC w.e.f. 11.08.97. On being confronted with the same, the appellant vide submission dated 16.12.2008 had admitted the mistake and conceded that the income was taxable under the head capital gains. Further, vide specific letter dated 26.12.2008 the appellant gave a detailed working of the computation of capital gain arising therefrom. Therefore, the appellant had considered the matter, and after a careful consideration had acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e certificate from the Kamgar Talathi of the Maan village. We further find that before the A.O., when the information/certificate obtained from the Assistant Director of Town Planning was confronted to the assessee, she admitted that land in question was within the distance of 8 kms. 7. We find that assessee is taking contradictory stand before the A.O. and before CIT(A) on this particular aspect. When the assessee files a certificate from the Talathi, she has to first of all controvert how the certificate given by the another competent authority is not correct. But she prefers to be silent on this important certificate. So far as the rejection of the evidence by the Ld. CIT(A) is concerned, we admit the evidence in the form of certificate issued by Kamgar Talathi in the interest of justice. As Tribunal being last fact finding authority, the assessee should have every opportunity to prove his/her cast. Even if the said certificate is admitted, the same is not much more help to the assessee. Assessee has filed the copy of the said certificate at page 11 of the compilation which is in Marathi and English translation at page no.12. We have anxiously perused the certificate issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee explained that the land was purchased in the year 2000 for the purpose of the agriculture and intention was for enhancement of the value of the said asset and the said land was used for 5 years for yielding grass. The assessee also contended that the assessee was never in the business of any real estate in past nor in future. The said asset was held for the period of 5 years as an investment. There was no systematic trading activity involved in the sale of the said land. The Ld. CIT(A) accepted the plea of the assessee though not by the A.O. The Ld. CIT(A) has observed that merely because the assessee has made some development expenses and some land was taken by the assessee's father against the security of the said land, the transaction as a whole cannot be treated as a 'business income'. The Ld. CIT(A) also took a note of the fact that there was no other transaction entered into by the assessee and the land was retained almost for the 5 years. The Ld. CIT(A) referred to the decision of the Hon'ble High Court of Bombay in the case of CIT Vs. Lakshmi Surgical Pvt. Ltd. 202 ITR 601. The Ld. CIT(A) held that the sale of the land cannot be treated as an adventure in the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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