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TMI Blog2018 (1) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. We affirm CIT(A)’s findings under challenge treating the assessee to have derived business income instead of capital gains. Learned Departmental Representative fails to dispute that the Section 50C of the Act does not apply in the instant case. We therefore see no reason to accept Revenue’s grievance pleaded in the instant appeal. - ITA No. 3400/Ahd/2014 - - - Dated:- 10-1-2018 - Shri Pramod Kumar, Accountant Member And Shri S. S. Godara, Judicial Member By Revenue : Shri V. K. Singh, Sr. D.R By Assessee : Shri S. N. Soparkar, A.R. ORDER Per S. S. Godara, Judicial Member This Revenue s appeal for assessment year 2010-11 arises against the CIT(A)-XIV, Ahmedabad s order dated 09.09.2014 in case no. CIT(A)- XIV/ITO/Ward-7(4)/215/2013-14, reversing Assessing Officer s action making short term capital gains addition of ₹ 36,06,950/- after invoking Section 50C, in proceedings u/s.143(3) of the Income Tax Act, 1961; in short the Act . Heard both the parties reiterating their respective stands. Case file perused. 2. We notice at the outset that the CIT(A) s findings under challenge elaborately discuss the relevant facts, Assessing Officer s actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Hasmukh Singh Bhavsingh Vaghela. Three co-owners with respective share are as follows: (i) Shri Devang Dineshbahi Shah (10%) i.e. land admeasuring 49 Aare 07 sq.mt.of undivided share of land (PAN : ADFPS 9924H) (ii) Smt.Sejalben Bipinbhai Amin(10%) i.e. land admeasuring 49 Aare 07 sq.mtof undivided share of land: (PAN: AASPA 3326P) (iii) Smt.Kalaben BipinbhaijjAmin (80%) i.ef. land admeasuring 3 Hector 92 aare 54 sq.mt.undivided share of land. The appellant paid ₹ 22,81,211 (as mentioned in conveyance deed) vide ch.No.521852, dated 14.08.2008 drawn on Union Bank of India, C.G.Road, Ahmedabad Stamp duty of ₹ 11,17,200 (577100 + 540100) was paid. (3) The appellant submitted a contra account and confirmation from M/s.Navratna Township Pvt.Ltd. (PAN AACCN 3909 L) which reflect that ₹ 22,81,211 vide ch.No.348396 of HDFC Bank paid on 21.08.2008 to appellant for purchase of this land. The appellant submitted ledger account, contra account to reflect that expenditure related to stamp duty, for conversion of agricultural land to non-agricultural land also incurred by M/s. Navratna Group. (4) As per sale deed dated 01.10.2009 of this land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: 3. Vide Point No. 4 Your Goodselves has show caused as to why the profit earned on sale of land of ₹ 30,771 should not be treated as profit and gains made from business and profession as against profit shown as capital gain in the Return of Income for A. Y. 201 0-11, considering that the purchase of land was made from the funds provided by Navratna Township Pvt Limited. In this connection the Assessee submits as under: (i) The facts of this transaction are that the Assessee is a faimer and is eligible to purchase an agricultural land in his name. Navratna Township Pvt Limited in 2006 -07 had approached me to purchase an agricultural land on their behalf for the reason that the Company was unable and legally not eligible to purchase the agricultural land from the farmers In its name till the same was converted into non-agricultural land. (ii) For helping the Company to purchase the land the Assessee had acted as a facilitator for purchasing the agricultural land from the..,owners of the agricultural land i.e. the farmers on behalf of Navratna Township Pvt. Limited. (iii) As the Assessee was only a facilitator, the entire legal work for verification of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30/06/2009 1/10/2009 231/1+2 30/06/2009 1/10/2009 Accordingly, a/most all the lands were being transferred within for a period as small as three months. 3.3 For the purpose of facilitating the purchase of land on behalf of Navratna Group, the Ass'essee was to be paid an amount of ₹ 15,000 per conveyance deed or such amount as may be mutually decided. Accordingly, the Assessee has shown the profit of ₹ 31,077 in the Return of Income. 3.4 In view of the above stated facts it is submitted that the Assessee has only facilitated in purchasing and selling of the land on behalf of Navratna Group. This is for the reason that the Company cannot legally purchase the land and the Assessee being an individual was eligible to purchase the said land from the farmers. The same is also evident from the treatment and the disclosure shownjn the Balance Sheet which is reproduced hereunder. A copy of the Balance Sheet has a/ready been furnished to Your Honour vide an earlier communication. Assets Amount(Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set in the hands of the assessee and accordingly the income shown by the assessee as capital gains is not acceptable. The assessee is a trader and the entire transaction entered by the assessee is treated as business income. The same is also accepted by the assessee himself in the written submission filed by him, reproduced above. Hence, as mentioned in para No. 4, the assessee ought to have shown business income of ₹ 1,05,000/- as against the income of ₹ 30,771/- and accordingly, difference of ₹ 74,229 (1,05,000 - 30,771) is treated as business income and therefore, the same is added back to the total income of the assessee. Since the assessee has furnished inaccurate particulars of income and thereby concealed his income and the assessee himself offered the same only after the same is pointed out to him during the course of assessment proceedings, penalty proceedings U/S.271(l)(c) of the I.T. Act is being initiated separately. (8) The appellant submitted a copy of order dated 13.01.2014 u/s.143(3) r.w.s. 147 of the Act for A.Y.2010-11 in the case of Kalaben Narottamdas Patel (ADTPP 7689N) by the ITO.Wd.7(4), Ahmedabad. The AO show caused the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings. In the Audited Balance Sheet so filed in the proceedings the assessee has also classified these lands as asset held for Navratna Group. The funds provided by Navratna Group are also reflected on the liability side of the Balance Sheet Considering the nature of business, the number of transactions entered into during present subsequent assessment year is also high. Accordingly the factors such as the nature of business, the number of transactions entered into and the fact that the lands have been purchased with borrowed funds leads to the conclusion that the said lands are not a capital asset in the hands of the assessee, The assessee is a trader and the entire transaction entered by the assessee is treated as business income, 9. Further, it is stated that as per MOU entered with Navratna Township Pvt. Ltd., the assessee is being compensated at the rate of R.s. 15,000/- per transaction for purchasing land on their behalf as part of business carried out by the assessee, The assessee has carried out two such transactions during the year under consideration and accordingly has shown compensation income of Rs, 30,000/- under the head business income. The compensatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition and other expenses 24,66,165 Net income declared 6,135 In view of the facts related to purchase and sale transactions of this land being co-owned by three members of Shri Devang Dineshbhai Shah i.e. his wife (appellant) and his mother and in their respective cases, the A.O. accepted the credibility of MOU as well as explanation about genuinity of transactions as facilitator. The A.O. in the case of appellant is not justified in treating the transaction coming under capital gain. When it is not doubted as evident from other evidences like MOU, asstt.order in the case of other co-owners particularly in the case of Kalaben by the same AO after reopening, then such explanation of being facilitator cannot be rejected. The difference of stamp value on sale though incurred by M/s.Sagar Sanand Infrabuild PvtLtd. but the same is on account of the fact that initially purchased / acquired land was an agricultural land while the same was transferred as non-agricultural land before sale. It is therefore even if A.O.'s contention is accepted that the land is an asset in the hands of appellant then, I a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Departmental Representative vehemently contends that the Assessing Officer had rightly invoked Section 50C of the Act before making the impugned short term capital gains addition. His case therefore is that the impugned addition is liable to be restored. We find no merit in the instant argument. It has come on record that the assessee s share in the land in question is only to the extent of 1/10th. The department itself has assessed the remaining two co-sharers namely Smt. Kalaben N. Patel (8%) and Shri Devang Dineshbhai Shah(10%) to have derived business income from plotting the relevant capital asset in question. There is no distinction on facts pointed out at the Revenue s behest in assessee s case vis- -vis above two remaining co-sharers. This tribunal in case of Jayantibhai C. Patel (supra) admittedly holds that income derived from sale agricultural land after its conversion to a non-agricultural parcel amounts to an adventure in the nature of business and trade resulting in business income. It has further come on record that the instant assessee had entered into an MOU(supra) with the developer in question. We therefore affirm CIT(A) s findings under challenge treating the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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