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TMI Blog2020 (7) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... RS.6,78,41,691/-? (ii) Whether in the facts and circumstances of the case, the tribunal was correct in law in holding that the cost of the properties received in partial partition of HUF to be adopted as claimed by the assessee under Section 37 (1) of the Income Tax Act as deduction while computing the income under the head 'Profit and Gains of Business or Profession', ignoring the fact that the assessee did not incur any cost on such properties other than the cost incurred by the HUF at Rs. 9,09,050/-? 2. Facts giving rise to filing of the appeal in nutshell are that assessee is an individual engaged in the real estate business. The assessee filed return of income on 20.11.2006 declaring total income of Rs. 1,37,71,300/-. The case was selected for scrutiny and a notice under Section 143(2) of the Act was issued. The assessee in the profit and loss account had shown purchase and sale of sites and net profit of Rs. 1,13,18,182/- was shown and was declared as income from business. Thereupon a query was made as to how the cost of the site was worked out and the assessee was asked to submit relevant documents. The assessee vide communication dated 18.12.2008 submitted copy of memor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue is in appeal before us. 4. Learned counsel for the revenue submitted that the tribunal ought to have appreciated that lands belong to joint family which were subjected to partition and were allotted to the assessee and sold by him and that such a sale gives rise to capital gains and therefore, provisions of Section 45(2) of the Act are attracted. It is further submitted that the HUF neither filed any return nor any books of accounts and also did not have any Permanent Account Number and therefore, existence of HUF itself was doubtful and the assessee was unable to prove the existence of HUF before the authorities. It is also submitted that the cost of acquisition of lands was low and cost or fair market values of the properties as on the date of family arrangement was highly inflated. The entire arrangement made by the assessee was designed to evade the tax liability. It is also urged that the findings recorded by the tribunal are perverse as the findings recorded by the assessing officer as well as the Commissioner of Income Tax (Appeals) have been reversed without there being any material on record. It is also argued that the findings recorded by the tribunal are withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude- any stock-in-trade [other than the securities referred to in sub-clause (b)]], consumable stores or raw materials held for the purposes of his business or profession ; xxxxxxx 2(47) "transfer", means in relation to a capital asset, includes,- .................... 45(2) Notwithstanding anything contained in sub- section (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into, or its treatment by him as, stock- in- trade of a business carried on by him shall be chargeable to income- tax as his income of the previous year in which such stock- in- trade is sold or otherwise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset." 49(1) Where the capital asset became the property of the assessee- (i) On any distribution of assets on the total or partial partition of a Hindu Undivided family; (ii) Xxxxxxx (iii) Xxxxxxx (iv) Xxxxxxx the cost of acquisition of the asset shall be deemed to be the cost for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The character of assets received on partition did not change and there is no provision in the Act to indicate that assets received on partition are capital assets, as no deeming provisions have been enacted by the Legislature. Section 45(2) of the Act are not applicable in the fact situation of the case as the asset received is stock in trade. Alternatively, it is worth noticing that there is nothing on record to indicate that any capital asset has been converted to stock in trade and provisions of Section 49(1) are not applicable to stock in trade. The definition of 'capital asset' in Section 2(14) expressly excludes stock in trade. 12. The substantial questions of law framed by this court are in fact questions of fact and the findings on the questions involved in this appeal have been arrived at by the tribunal on the basis of meticulous appreciation of material on record. The relevant extract of the order passed by the tribunal reads as under: 7.10 From the facts and circumstances of the case on this issue, as discussed in the preceding paragraphs, 7.3 onwards and the clear wording of the Memorandum of Family Arrangement and Oral Partition, we are of the considered view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal is a fact finding authority and a decision on the facts of the tribunal can be gone into by the high court only if a question has been referred to it, which says that the finding of the tribunal is perverse. [SEE: 'SUDARSHAN SILKS AND SAREES VS. CIT', 300 ITR 211 (SC)]. A three judge bench of the supreme court in 'SANTOSH HAZARI VS. PURSHOTTHAM TIWARI', (2001) 3 SCC 179 while dealing with the expression 'to be a question of law involving in the case', there must be first a foundation for it laid in pleadings and the questions emerged from sustainable findings of fact arrived at by courts of fact and it must be necessary to decide that question of law for a just and proper decision of the case. In the instant case, it is pertinent to note that no factual foundation has been made in the pleading with regard to the findings of fact arrived at by the tribunal and no material has been placed on record to demonstrate that the findings of fact recorded by the tribunal are perverse. Therefore, the substantial question of law framed by a bench of this court in fact do not arise for consideration in this appeal as the matter is concluded by findings of fact. 14. In view of the precedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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