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TMI Blog2013 (12) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at Village Poiser, Talukar Borivali in year 1992 and 1993; (b) that there are total 7 parts of the said property, out of the 7 parts, the assessee had purchased 2 parts, as under: Name of Vendor Lilawati Krishnarao Raut Mankbai Pandharinath Date of agreement 10.04.1993 06.06.1992 Agreement value Rs. 8,90,000/- Rs. 8,90,000/- Total consideration paid till dated (a) Rs. 1,75,000/- Rs. 1,75,000/- Other cost incurred for above property (b) Rs. 3,500/- Rs. 3,5000/- Total (a + b) Rs. 1,78,500/- Rs. 1,78,500/- (c) that section 50C is not applicable to the facts of the case because the rights in the said property have been purchased for the development which is the business of the assessee; (d) that in the past also several properties were purchased and sold by the assessee and had been treated as stock in trade or profit/loss on the said property had been determined; (e) that the assessee has always treated this property as stock in trade and rights in the said property have been transferred as stock in trade only, therefore, the provisions of section 50C is not applicable as it applies to capital assets only and not to stock in trade; (f) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al possession of the property and each part thereof; (c) that the contention of the assessee that he has transferred the property to M/s Jajodia and Patel Properties to come out of prolong litigation is not acceptable because one of the partners of M/s Jajodia and Patel Properties is Shri Dushyant C. Patel, who is the son of the assessee; (d) that the contention of the assessee that the said property is neither transferred to him nor full consideration paid for acquisition of the property and there was no transfer of immovable property but only transfer of right is not acceptable and for this purpose the AO has referred to said agreement dated 16th June, 2006. He has stated that as per agreement, the balance amount of Rs. 48,40,000/- payable by the assessee and other co-owners to the earlier owners were paid by M/s Jajodia and Patel Properties. Therefore as such full consideration had been paid by the assessee and other co-owners for the acquisition of the property. The AO has stated that the assessee has by using the word "transfer or development of rights" has actually sold the property and thereby avoiding the stamp duty payable on transfer of property; (e) that the stamp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that assessment order for assessment year 2006-07 passed by the AO on 24th December, 2008 and he has scrutinized and examined the nature of the activity of the assessee and the nature of other development rights held by the assessee. While examining the nature of such rights as to whether it is current asset or stock in trade, the AO made following observations: "4.3 The perusal of the above definition of capital asset clearly indicates that any property connected with the business is not a capital asset. The said development right has been purchased by the assessee for his business of development of property. However, they have sold the said rights due to their business prudence. Thus, the assessee has throughout considered the said rights as their stock-in-trade for the business of development of property". The Ld. CIT(A) has stated that the AO has held, after examining the activity of the assessee, that the assessee carrying on the business as a 'developer'. 6.1 That the Ld. CIT(A) has further stated on perusal of copy of trial balance for the past year filed by the assessee before him that the assessee was in practice of filing the trial balance instead of the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty was acquired and the manner in which the said property was reflected in the accounts clearly shows that the property has all the attributes of stock in trade. 6.2 The CIT(A) has stated that, under the circumstances, he is of the view that the findings of the AO that the asset is a capital assets and not stock in trade are contrary to the facts borne out from records. The Ld. CIT(A) further stated that the said property was a part of the current assets as per trial balance for AY 2000-01 and thereafter. Even during assessment year 2005-06, the said assets were reflected as a part of the current assets. The Ld. CIT(A) has stated that the assessee explained that due to accounting error, the assets were not reflected in the trial balance in the A.Y. 2006-07. However, the said property was not sold during assessment year 2006-07 nor the AO raised claim that the property was sold during assessment year 2006-07. Hence, the objection raised by the AO has no locus standi. 6.3 The Ld. CIT(A) has further stated that the possession of the property was never with the assessee especially considering that vide order of the City Civil Court, Bombay dated 20.10.1993 in Notice of Motion No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before the authorities below. 9. We observe that the Ld. DR has not disputed the fact that the assessee has disclosed the property in trial balance for all the years from 2000-01 to 2005-06 as part of stock in trade. We also observe that during the course of assessment proceedings for earlier year i.e. assessment year 2006-07, the AO, himself observed that the assessee was in the business of construction and development rights purchased by the assessee is part of stock in trade. On perusal of the relevant pages of the paper book, placed before us, we agree with the Ld. AR that the property was affected with innumerable court proceedings and the assessee could not get possession of the said property till the date the assessee transferred his rights in the said property to M/s Jajodia and Patel Properties, vide agreement dated 16th June, 2006, copy of which is placed on pages 52 to 90 of the paper book. 10. The above fact is also emphasized that the assessee was never in possession of the said property, as the said agreements dated 6th June, 1992 and 10th April, 1993 were entered into on stamp paper of Rs. 10/-and was not registered. Hence, the rights of the assessee in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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