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TMI Blog2019 (12) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... t does not mean that it becomes sacrosanct and the assessee cannot change the head of income in the revised return. Taking into consideration the entirety of the facts, we are of the considered view that the transaction of sale of agricultural land by the assessee is not adventure in the nature of trade. The gain arising from sale of land is assessable under the head Capital Gains . Disallowance of cost of improvement over the land - HELD THAT:- Though the voluminous paper book filed before the Tribunal by the assessee, the ld. AR has certified that all the details were available before the AO, however, it is not clearly emanating from records whether the expenditure claimed by the assessee ₹ 3.74 crores was part of expenditure already allowed by the AO. Since, there is ambiguity on facts on this issue, we deem it appropriate to restore this issue back to the file of AO for re-examination. The assessee is directed to furnish relevant details of expenditure before the AO and also clarify whether expenditure of ₹ 3.74 crores is part of the expenditure already allowed by the AO. The AO shall decide this issue de novo after affording reasonable opportunity of hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2 The Hon'ble Supreme Court of India in the case of Collector, Land Acquisition Vs. Mst. Katiji Ors. reported as 167 ITR 471 (SC) has held that liberal approach should be adopted in condoning the delay. The Hon ble Apex Court has laid down principles to be followed while dealing with applications / petitions seeking condonation of delay. The said principles are reproduced as under:- 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. Every day s delay must be explained does not mean that a pedantic approach should be made. Why not every hour s delay, every second s delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 27-02-2015 on the revised return filed by the assessee. The Assessing Officer held that the income from sale of land is the Business Income of the assessee and assessed total income of assessee from sale of land as ₹ 15,29,47,270/-. Aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) vide impugned order confirmed the assessment order holding that the income from sale of land is the Business Income of the assessee. The CIT(A) further upheld the findings of Assessing Officer in disallowing expenditure claimed to be incurred by the assessee in connection with the development of land. Hence, the present appeal by the assessee. 5. The assessee has filed revised grounds on 07-06-2019 assailing the findings of CIT(A). The same are reproduced as under: 1. Capital Gains vs alleged Business Income (i) The ld. CIT(A) erred in confirming the solitary ownership transaction of sale of agricultural land as an adventure in the nature of trade as against declared capital gains without appreciating that the same had resulted into transfer u/s. 2(47) r.w.s. 2(14) for an agreed consideration; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land revenue records on 18-08-2006 (at pages 328 to 371 of Paper Book). The ld. AR submitted that till the time assessee was holding land, the assessee carried agricultural activities on the land in question, and the same was evident from 7/12 extracts (at pages 328 to 371 of Paper Book). The assessee cultivated paddy on the land. The assessee sold the land to Nemichand J. Mehta vide registered deed of sale dated 03-06-2008. The assessee filed return of income in response to the notice u/s 142(1) of the Act declaring gain arising from sale of land as business income. Thereafter, the assessee filed revised return of income on 17-03-2011 i.e. before completion of assessment declaring income of ₹ 7.84 crores from sale of land under the head Capital Gains . The ld. AR submitted that the assessee inadvertently in the original return of income had offered gain on sale of land as Business Income . In the revised return, the assessee rectified the mistake and offered income from sale of land under correct head of income. 6.1 The ld. AR submitted that the authorities below have erred in coming to the conclusion that the gain on sale of agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. The confirmations filed by the assessee before the Department were neither considered by the AO nor considered by the CIT(A). The ld. AR finally submitted that statements recorded u/s 133A of the Act without corroborative evidence have no evidentiary value. To support his contentions, ld. AR placed reliance on the following decisions: (i) CIT Vs. Dhingra Metal Works (2010) 328 ITR 384 (Del) (ii) ITO Vs. Vijay Kumar Kesar (2010) 327 ITR 497 (Chhattisgarh) (iii) Paul Mathews Sons Vs. CIT (2003) 263 ITR 101 (Ker) 7. Mrs. Amrita Mishra representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. DR has filed following written submissions to support her contentions: III. The sum total of the grounds of appeal is whether land sold by the assessee is to be assessed as income from business or is it capital gains. The arguments of the revenue are as under:- 1. The assessee is in the business of sale and purchase of land. This is evident in the return of income filed on 16.08.2010 (Page No 1 to 4 of Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Ravindra Joma Bhagat Wife - Smt Reshma Ravindra Bhagat Son - Master Omkar Ravindra Bhagat Daughter - Kumari Aparna Ravindra Bhagat Daughter - Kumari Apeksha Ravindra Bhagat Daughter - Kumari Ankita Ravindra Bhagat My family consist of above members the details of Movable Immovable properties are as under: Myself- Bungalow- Stilt +3, admeasuring area of land is 1900 sq. ft. construction of Bungalow approx 3000 sq. ft. Movable Property-BMW Car, cost of ₹ 64 lakhs purchased in the year 2008, No.6789. -Swift car is in the name of my brother namely Neelkanth Joma Bhagat, Purchased in the month of March, 2009 or earlier, No.1113. -Mercedes 'E' Class, No.7777 in the name of my friend Shri Rajiv Bhingarde resident of Kolhapur. So, this land was not shown as immovable property of the assessee in statement recorded u/s 131 of the I.T. Act, 1961. 6. Even the survey action u/s 133A of the I.T. Act, 1961 was carried out at the business premises of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit of ₹ 1.50 lakh from Union Bank of India, Panvel Branch, Panvel vide letter dated 15.03.2004. It is very relevant to point out here that Term Loan and cash credit facilities are all was taken for the purpose of Business of Profession and appellant has not disclosed any income from business or profession in the return of income except for profits and gains from business or profession from sale of land in question . 13. From all the above facts, it is clear that the transactions of this land was adventure in the nature of trade and Apex Court in the case of Raja J. Rameshwar Rao Vs. Commissioner of Income Tax [42 ITR 179 SC] has stated as under: In our opinion, the High Court answered the question correctly. No doubt, this was only a single venture; but even a single venture may be regarded as in the nature of trade or business. When a person acquires land with a view to selling it later after the developing it, he is carrying on an activity resulting in profit, and the activity can only be described as a business venture. IV. Thus, there are ample evidences on record to show that the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has merely purchased rights in land through unregistered Power of Attorney, hence, conduct of the assessee indicates that the intention of the assessee was to sell the land right from beginning for profit. We do not find merit in the contention of the Revenue. The fact is that registered sale deed of the land in question was executed in favour of the assessee on 4/8/2006. The assessee thereafter sold the land vide registered sale deed dated 3/6/2008 to Nemichand Mehta. If the intention of the assessee would have been to trade in land, the assessee would have done so on the basis of Power of Attorney, without incurring expenditure on executing registered sale deed in his name. The sequence of events and the documents available on record fairly indicates that the intention of assessee was not to engage in the business of trading in subject land. It was standalone transaction carried out by the assessee. 11. The contention of the Revenue that in the original return of income the assessee had declared gain arising from sale of land as business income and it was in the revised return that the assessee declared the gain from sale of land was an afterthought, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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