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TMI Blog2016 (8) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... nce on record to even suggest that this property in question was also a business asset and the revenue has proceeded on this basis that since in respect of some property, the assessee is disclosing income as business income and showing the closing stock as business stock/ business asset, it cannot be inferred that each and every property owned by the assessee is a business asset and therefore, hold that the property in question is a capital asset because, the revenue could not bring any material on record to establish that this property is also a business asset. Once hold this that the property in question is a capital asset, Sec.51 of the IT Act is applicable regarding the advance received against sale agreement of this property which is forfeited and therefore, such forfeiture of advance has to be reduced from the cost of this asset. Since the forfeiture amount of ₹ 33.00 Lakhs is more than the cost of this asset ₹ 31,76,160/-, the excess amount of forfeiture i.e. ₹ 1,23,840/- has to be brought to tax in the present year in equal proportion in the case of both these assessees who were the owner of this asset in equal proportion and in the year of sale of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow failed to give an opportunity to the Appellant to prove the veracity of his claim of deduction of the forfeited amount from the advances u/ s 51 of the Act and the true nature of the property along with evidences which is against the principle of natural justice and consequently the order deserves to be cancelled under the facts and circumstances of the Appellant s case. 8. The Appellant denies his liability to be charged to interest u/s. 158BF A of the Income-Tax Act, 1961 under the facts and circumstances of the Appellant s case. 9. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 10. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity . 3. Similarly, in ITA No.6(Bang)/2014 the assessee Shri M.J.Siwani, has raised the following grounds: 1. The order of the Authorities below in so far as it is against the Appellant, is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant s case. 2. The Authorities below erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and he submitted a copy of the Tribunal order in the first round in ITA No.1,2,6 7/Bang/2005 dated 31-08-2006. He has drawn my attention to para 8.3 of this Tribunal order on pages 43 44 of the tribunal order book as per which the Tribunal restored back the issue regarding the taxability of forfeiture of advance of ₹ 33.00 lakhs shared by these two persons equally i.e. ₹ 16.50 lakhs in each case. He pointed out that as per this Tribunal order, it is held by this Tribunal that treating the entire income would not be correct because the receipt of this amount includes both capital as well as profit if any. He submitted that as per this Tribunal s order, the entire receipt of this amount of ₹ 33.00 lakhs cannot be taxed as income in full. He submitted that the main grievance of this assessee is this that as per Sec.51 of the IT Act, forfeiture of advance received against capital asset has to be reduced from the cost of asset and the same cannot be taxed as income on forfeiture but this claim of the assessee is not accepted by the department on this basis that this is not an advance for sale of a capital asset but the asset in question is a business asset. He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, according to the AR, this could not automatically imply that the appellant was also in the same business. 4.2 The Statement of Affairs as on 31.03.1999 was filed where the advance for property at Ramagondanahalli was shown at ₹ 79,98,126 (net of forfeiture) and it was explained that the appellant was still holding this property as a capital asset, thereby showing his intention to treat is as an investment and not a stock in trade for the purpose of business. 5. I have considered the appellant s submissions as above and gone through the evidences filed. While it is true that except for AY 1998-99 the appellant s business income in all other years, as per the statement of income has flown from his gaining business, it is also an undisputed fact that in AY 1998-99 the assessee has ventured out on his real estate business through the Crystal Springs Projects transferred to him by M/s HM Constructions. The profit from sale of plots in this project was returned as business income and the balance unsold plots have continued to be shown in the balance sheet of subsequent years as closing stock value of crystal Springs i.e as stock in trade. Springs Le. as stock in tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atically that the assessee was also in the same business. In spite of this assertion of the assessee before the ld. CIT(A), it is held by the ld. CIT(A) in para-5 of his order as reproduced above that in AY: 1998-99, the assessee has ventured out in his real estate business through M/s Crystal Springs Projects transferred to him by M/s HM Constructions. From these facts, it comes out that in respect of this project transferred by the partnership firm M/s HM Construction to the assessee, the assessee was declaring profit on sale of property of that project as income from business but it does not mean that the assessee cannot hold any real estate property as a capital asset. If I say so, then it will be amounting to saying that a person dealing in shares cannot hold any share as investment. This cannot be said and therefore, in the present case also, this fact alone that the assessee was doing some real estate business cannot lead to this conclusion that this property in dispute was also held by the assessee as a business asset and not as a capital asset unless it is shown that this very property was held as a business asset. The revenue has not brought any evidence on record to even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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