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TMI Blog2021 (4) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer has arrived at a conclusion that income derived by assessee from sale of lands is assessable under the head income from business or profession without carrying out an independent enquiry with regard to land sold by the assessee. Hence, we are of the considered view that the issue needs to go back to the file of Assessing Officer for both assessment years to ascertain the fact with regard to the land sold by the assessee in her individual capacity to determine nature of income and assessability of such income under the head income from business or profession or capital gains. Hence, we set aside both appeals to the file of the Assessing Officer and direct him to reconsider the issue in light of various evidences filed by the assessee including settlement deed executed in favor of M/s. Sri Kumaran Educational Charitable Trust and to ascertain nature of income declared by the assessee under the head income from long term capital gains. Appeal allowed for statistical purposes. - I.T.A. Nos. 2200 & 2201/Chny/2019 - - - Dated:- 19-3-2021 - V. Durga Rao , Member ( J ) And G. Manjunatha , Member ( A ) For the Appellant : R. T. Vijayaraghavan , C.A For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as the Income of your appellant without considering the expenses involved. 9. Your appellant submits that funds transferred are the amounts received from transactions and while considering the income from business the necessary expenses like cost of purchase, developmental charges, plan permission expenses, and incidental expenses are to be deducted to arrive at the correct income from the business. The principle of commercial expediency has not been followed in (sic) at the income for the year. 10. Your appellant submits that the authorities below had not considered this point and made the assessment on the premises that the whole amount received was the income of the year which your appellant submits that not correct and the income of ₹ 34,07,600/- determined for the year is to be re-determined 11. In view of the above facts and circumstances, your appellant prays that the Honourable Tribunal may be pleased to direct the Assessing Officer to allow the expenses connected with the business transactions and determine the income. 3. At the outset, we find that appeal filed by assessee is barred by limitation of 2 days for which necessary petition for condo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer, Vellore and upon further enquiry came to the conclusion that assessee was engaged in the business activity of purchase and sale of land in line with other members of AOP, M/s. Kumaran Real Estate Builders and hence, profit derived from purchase and sale of lands is assessable under the head income from business or profession. The Assessing Officer to arrive at such conclusion has taken support from findings recorded during the course of survey, admission of Mr. P.S. Mani, one of the Members of AOP. Therefore, he opined that there is no merit in the contention of the assessee that she is not engaged in the activity of buying and selling of lands and whatever lands sold by her is investment activity and profit derived from such activity is assessable under the head capital gains. The relevant findings of the Assessing Officer are as under:- 15. The submissions, survey folder and orders passed on other members of the trust are carefully perused. That the assessee had been involved in the affairs of M/s. Kumaran Real estate has been clearly put out as in all the submissions made by Shri P.S. Mani. The Family members were carrying on the business as a whole was well broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd her involvements in the sale of land and in particular with M/s. Kumaran Real Estate Builders have been proved beyond doubt during the scrutiny proceedings sworn statements etc. After having recorded so many statements, deep verification carried out and also after a number of hearings, the conclusion was drawn by the ITO Ward-2, Vellore. In line with the same, the assessments in the case of M. Mageswari is also completed based on the reports as under: Total income returned : ₹ 82,600/ Income from house property (as returned) ₹ 82,600/- Income from business ₹ 33,25,000/- Total income assessed : ₹ 34,07,600/- 5. Being aggrieved by the assessment order, the assessee preferred an appeal before learned CIT(A). Before the learned CIT(A), the assessee submitted that the Assessing Officer has erred in arriving at a conclusion that income derived by the assessee from sale of land is assessable under the head income from business or profession, as against income admitted under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in activity of selling lands on the basis of one settlement deed executed by the assessee for a piece of land in favour of M/s. Sri Kumaran Educational Charitable Trust, Minjur, Chennai, ignoring the fact that said land was settled in favour of the charitable trust for objective of the trust, whereas business activity was carried out by M/s. Kumaran Real Estate Builders as an AOP at Vellore. 8. The learned DR, on the other hand, supporting the order of learned CIT(A) submitted that facts brought out by the Assessing Officer and learned CIT(A) in light of findings of survey and further survey report clearly indicate that the assessee is also involved in the activity of buying and selling of lands, like other members of AOP and hence, once income from sale of land is assessed under the head income from business in case of other members, no different view can be taken in the case of the assessee, unless assessee demonstrates that lands sold by her are different from lands sold by AOP and further, she has sold lands as investment activity. In this case, the assessee has failed to file any further evidences to prove that admission during the course of survey is incorrect to assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons without any consideration. The assessee further clarified that she has not derived any income from property settled in favour of charitable trust, whereas, income declared under the head long term capital gain is derived from some other lands, which were sold in her individual capacity as an investment activity. She further clarified that lands sold by AOP at Vellore and lands sold by her in her individual capacity are different lands and there is no connection between the activities carried by AOP and herself. 10. We have gone through various averments made by the assessee in light of facts brought out by the Assessing Officer as well as learned CIT(A) and find that the Assessing Officer having accepted the fact that assessee is not a member of AOP, ought to have verified the income declared under the head long term capital gain with reference to lands sold by her in her individual capacity by ascertaining the fact that whether the assessee has sold lands as part of AOP or not. In case, lands sold by the assessee are not part of activity of AOP, but are independent lands, then assessability of profit from sale of lands should be independently examined without any influenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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