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TMI Blog2021 (1) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... e of land is to be regarded as income under the head capital gain . Consequently, the Assessee should be entitled to all the deductions permissible while computing income under the head Capital Gain .is a decision on facts of that case.- Decided in favour of assessee. - ITA No. 887/Bang/2019 - - - Dated:- 28-1-2021 - SHRI N. V. VASUDEVAN , VICE-PRESIDENT Assessee by : Smt. Soumya K, Advocate Revenue by : Shri. Ganesh R. Ghale, Jr. Standing Counsel ORDER This is an appeal by the assessee against the order dated 20.02.2019 of CIT(A), Bangalore-2, Bangalore, relating to Assessment Year 2014-15. 2. The only issue that arises for consideration in this appeal is as to whether the Revenue authorities were justified in treating a sum of ₹ 7,12,016/- and ₹ 18,01,718/- which were declared as long term capital gain on which exemption under section 54/54F of the Income Tax Act, 1961 (hereinafter called the Act ) was claimed by the Assessee as income under the head Income from Business and consequently denying the deduction under section 54F of the Act to the assessee. 3. The assessee is an individual. He is proprietor of M/s. Bangalore Sales and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss activity i.e. Adventure in the nature of Trade only and all the deductions and exemptions claimed by computing the income under long term capital gains is not allowed. The entire sale consideration of ₹ 16,10,000/- is considered as .business income and reduced the cost of the plot sold during the year proportionatel from the sale consideration. 'The proportionate cost of the plot sold worked out as under: i. Total area of the land 26,000 Sft and the total Cost is Rs. (18,82,190 + 79,825 + 23,500) = ₹ 24,85,515/- ii. Total cost for 6300 Sft works out to ₹ 2485515 X 6300 = 6,02,260/- 26000 ₹ 16,10,000 - 6,02,260 = ₹ 10,07,740/- 13.In view of the above discussions and calculations, the business profit from the activity of sale of plots is computed at ₹ 10,07,740/- and brought to tax under income from business for the Asst.Year 2013-14. 7. On appeal by the assessee, the CIT(A) confirmed the order of the AO. Aggrieved by the order of the AO, the Assessee has preferred the present appeal before the Tribunal. 8. We have heard the submission of the learned AR who reiterated submissions made before the revenue auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o do business in selling sites. The treatment of the larger extent of land in the books of account of the Assessee is as capital asset and not as stock in trade. This plea of the Assessee has not been disbelieved by the AO nor is there any material brought on record to disprove the claim of the Assessee. 10. The definition of business in the Act is an inclusive definition and includes any trade, commerce or manufacture or any adventure or conern in the nature of trade, commerce or manufacture. The Supreme Court in G.Venkataswamy Naidu (1959) 35 ITR 594 (SC) held that even if there is absence of regularity, frequency or continuity in the transaction/s even an isolated transaction can be regarded as carrying on of business and as an adventure in the nature of trade for the purpose of treating it as business carried on. The supreme court in several cases laid down tests to determine as to when a single or isolated activity can be regarded as resulting in Adventure in the nature of trade . The principles for determination of the question whether a particular transaction/s would constitute an adventure in the nature of trade and, if so, what tests would apply to arrive at a decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the contention that the transaction is in the nature of trade. These and other considerations are set out and discussed in judicial decisions which deal with the character of transactions alleged to be in the nature of trade. In considering these decisions it would be necessary to remember that they do not purport to lay down any general or universal test. The presence of all the relevant circumstances mentioned in any of them may help the Court to draw a similar inference ; but it is not a matter of merely counting the number of facts and circumstances pro and con ; what is important to consider is their distinctive character. In each case, it is the total effect of all relevant factors and circumstances that determines the character of the transaction; and so, though we may attempt to derive some assistance from decisions bearing on this point, we cannot seek to deduce any rule from them and mechanically apply it to the facts before us. In this connection it would be relevant to refer to another test which is sometimes applied in determining the character of the transaction. Was the purchase made with the intention to resell it at a profit? It is often said that a transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment CIT Vs. Kasturi Estates (P) Ltd. (1966) 62 ITR 578 (Mad). 12. In cases of purchase and sale of land as laid down by the Hon ble Supreme Court in the case of Raja J.Rameshwar Rao (supra), a decision on which the learned DR placed reliance, the intention at the time of purchase will be a relevant factor. When a person acquires land with a view to selling it later after developing it, he is carrying on an activity resulting in profit, and the activity can only be described as a business venture. Where the person goes further and divides the land into plots, develops the area to make it more attractive and sells the land not as a single unit and as he bought it but in parcles, he is dealing as his stock-in-trade; he is carrying on business and making a profit. In the present case however the intention at the time of purchase was to construct a house for self occupation and that intention was given up due to the fact that the land was outside Mysore city and due to financial crunch. Therefore the tests laid down in the decisions support the plea of the Assessee that he did not do any adventure in the nature of trade when he sold the larger extent of property after dividing the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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