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TMI Blog2016 (5) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... not organized business activity of the assessee. There was no intention of the assessee to enter into real estate business. The assessee has also shown sale consideration on the basis of valuation of stamp authority U/s 50C of the Act. Thus, the assessee rightly claimed long term capital gain on sale of shops/flats during the year under consideration. Addition n account of deduction U/s 24(a) - Held that:- The assessee, undisputedly, has disclosed the rental income from shops of mall under the head income from house property. The deduction U/s 24(a) is mandatory, therefore, we uphold the order of the ld CIT(A). - ITA No. 337/JP/2014 - - - Dated:- 8-4-2016 - SHRI T.R.MEENA, AM SHRI LALIET KUMAR, JM For The Revenue : Mrs. Neena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x through an agreement with development M/s Krishna Pratap and Company on April, 08, 1995. The assessee was continuing the trading of said multi storied shops/flats of the complex of his share and earned profit. His intention was to earn profit. Therefore, income was assessable under the head profit and gain of business or profession. During the year under consideration, he sold flats amounting to ₹ 1,45,97,450/- against stock in trade value of ₹ 11,40,765/- and earned profit of ₹ 1,34,83,725/- out of which 2/3 share derived at ₹ 89,89,150/-. As per ld Assessing Officer, this income was taxable under the head income from business whereas the Assessing Officer had computed the capital gain of ₹ 89,89,150/- under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried shops/ flats with a intention to earn profit. However, it cannot be said that profits are always attributable to business income and they cannot be attributable to capital gains on sale of capital assets. So, the profits accruing to the assessee cannot be a sole criteria for treating the income of the assessee as income from business. It may be mentioned that the assessee is not maintaining any books of accounts in respect of the inherited land and it has not been shown as stock in trade in the books of accounts. The assessee s only business concern is M/s Badnor Automobiles for which profit and loss account and balance sheet are drawn and said land does not appear in the same. The loss incurred in above business concern has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the land. In consideration thereof, the assessee had agreed to transfer 50% of the total constructed area to the developer for the recovery of construction cost. From above, it is apparent that assessee has developed his land into flats/ shops through the developer. The profit on the sale of said capital assets in the form of flats/ shops gives rise to capital gains only and it cannot be termed as business income. It is also mentioned in the agreement that the assessee has entered into the agreement with the developer on Principal to Principal basis and has not developed the said land as a joint venture or AOP. So it cannot be said that assessee has carried out any organized activity for carrying on any real estate business. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be allotted to the assessee in lieu of land. Thus the assessee converted its capital asset being land into shops of mall constructed and developed by builder. The assessee calculated fair market value as on 01/4/1981. As per provisions of Section 50(2) of the Act since the capital asset became the property of the assessee by mod of Will of Rani Sahiba Smt. Rajkanwar Nathawat Ji as prescribed U/s 49(1) who acquired the same prior to 01st April, 1981, thus it is not transferred U/s 2(47) of the Act. This case also not covered U/s 45(2) of the Act. The assessee got the price of the land through constructed area allotted in shape of shops/flats. It is not a case of transfer of assets nor a case of conversion of capital asset into stock in tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the ld Assessing Officer made addition in the income of the assessee, which was challenged before the ld CIT(A), who had deleted the addition by observing that this issue also related to ground No. 1 where he has held that the transaction is not a business transaction but capital assets of the assessee. Incidental rental income from the same is liable to be taxed as income from house property against which deduction U/s 24(a) of the Act is allowable. 8. Now the revenue is in appeal before us. The ld DR has vehemently supported the order of the Assessing Officer. At the outset, the ld AR of the assessee has vehemently supported the order of the ld CIT(A) and argued that the assessee has shown rental income from shop of Mall-21 (2/3rd) a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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