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TMI Blog2021 (7) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... son to interfere with the findings of Ld.CIT(A) that the profits arising on sale of land should be assessed as Capital Gains. Undisclosed consideration should be assessed as part of the sale consideration of land and the findings of CIT(A) is based on the consideration of material evidence like there is an established link between the transaction of sale of land to the MCA and grant of Corporate Boxes in the Cricket Stadium - Findings of Ld.CIT(A) is also based on the material on record and we do not find any material on record contrary to the findings of the Ld.CIT(A). Thus, this ground of appeal also stands disallowed. - ITA No.544/PUN/2018 - - - Dated:- 5-7-2021 - Shri Inturi Rama Rao, AM And Shri Partha Sarathi Chaudhury, JM For the Assessee : Shri Percy Paridwala / Shri Sukhsagar Syal For the Revenue : Shri Sudhendudas ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the Revenue directed against the order of learned Commissioner of Income Tax (Appeals), Pune 5, Pune dated 27.11.2017 for the assessment year 2013-14. 2. The brief facts of the case are as under : The respondent / assessee is a Limited Liability Partnership (LLP) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of ₹ 4.13 crores and ₹ 2,75,10,000/- was paid on 30.04.2011 and the land was converted into non-agricultural land on 15.02.2012. Thereafter, the sale deed was executed in favour of the MCA on 01.03.2012 and the balance consideration was also paid on 30.03.2012. In the return of income, the respondent / assessee has offered the profit on the sale of the said land under the head of Capital Gains . 4. The Assessing Officer by observing that the respondent/assessee company was formed only for the purpose of dealing in the land and the source of acquisition of property of land was out of borrowed funds had called upon the respondent / assessee to show cause as to why the profits on the sale should not be assessed under the head Income from Business . In response to the said show cause notice, the respondent / assessee company vide its letter dated 20.11.2015 had filed a detailed explanation which is extracted by the Assessing Officer at 4.2.2. of the assessment order. The gist of the explanation offered by the respondent / assessee is that the land was reflected as Investment in the Balance-Sheet and never forming part of stock-in-trade and no development activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of lower authorities, the respondent / assessee preferred an appeal before the learned Commissioner of Income Tax (Appeals) who vide impugned order after considering the detailed submissions made by the respondent / assessee concluded that the land was sold after a period of six years and was shown as Investment in the Balance-Sheet and not as Stock-in-trade, was purchased out of its own funds and held that the ratio of the decision of Hon ble Bombay High Court in the case of Baguio Investment Pvt. Ltd.(supra) was squarely applicable and directed the Assessing Officer to treat the profits arising on sale of land as Capital Gains . 8. As regard to the addition of ₹ 70 lacs as undisclosed consideration on account of allotment of Corporate Box in Cricket Stadium constructed by the Maharashtra Cricket Association, the ld.CIT(A) held that allotment of Corporate Box is directly linked with the sale of land and therefore should be treated as part of sale consideration of land. 9. Being aggrieved by the findings of ld.CIT(A), the Revenue is in appeal before us. 10. The ld.CIT.DR contended that the fact that the land was converted for non-agricultural purpose on 15.02. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e land was converted into non-agricultural land by the respondent / assessee himself as a part of obligation in the terms of MOU entered into to sell the property. The chargeability of the profits to tax is not in dispute. In the return of income, the respondent / assessee has shown the profits arising on sale of land under the head Capital Gains . The Assessing Officer had disputed the claim of the respondent / assessee on the ground that the borrowed funds were used for acquiring the agricultural land and the lands were sold for huge consideration of ₹ 13.75 lakhs and the land was converted into non-agricultural land. The observations of the Assessing Officer that the lands were acquired out of the borrowed funds is rebutted by the respondent / assessee company by stating that the proceeds on allotment of 8% redeemable non-cumulative preference shares does not come under borrowed funds . This submission of the respondent / assessee company came to be accepted by ld.CIT(A) placing reliance on the decision of Hon ble Karnataka High Court in the case of Kirloskar Electric Company Ltd., Vs. CIT 228 ITR 674 and no contrary position of law was pointed out to us by the Ld. Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted fact that the land was recorded in the books of account as part of investment. It is settled position that the treatment given in the books of account gives an indication as to the intention of the assessee to hold asset as an investment or stock-in trade. In the present case, the fact that the said land was shown as part of investment in the books of accounts coupled with the fact that the land was sold after a gap of six years would prima facie go to show that the intention on the part of the respondent / assessee is to hold the said land as investment . It is settled position of law that the onus lies upon the Department for bringing the relevant material on record to prove that the transaction is an adventure in nature of trade. In the present case, the inference drawn by the Assessing Officer that the subject transaction is in nature of trade is not based on any material on record. The Department had failed to prove the allegation that the transaction is in the nature of adventure of trade. Whether holding of a particular asset is by way of investment or forms part of stock-in-trade is a matter which is within the exclusive knowledge of the assessee and it should be in a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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