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TMI Blog2021 (7) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that the appellant had acquired the land only with the intention to re-sell the land for profit. The assessee is undoubtedly entitled to hold two different portfolios in respect of the same kind of asset i.e. stock in trade and investment. In the facts and circumstances of the present case, it does not indicate that the purchase of land was made with the intention to re-sell. In the present case, undisputedly the appellant had made a distinction between those lands which are stock in trade and those lands which are held by investment - none of the factors considered by the AO can militate against the claim of the appellant that it is an investment and the profit arising out of the sale of this land is assessable to tax under the head capital gains . Therefore, the orders of the lower authorities are hereby reversed and set-aside. Thus, the grounds of appeal raised by the assessee are allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be shown so till the date of sale. During the previous year relevant to the assessment under consideration, the said land was sold to 21 different parties for a consideration of ₹ 1,01,44,000/- and, accordingly, the appellant had computed the capital gains and sought exemption on the capital gains on investment in the residential property as prescribed under the provisions of section 54F of the Act. The claim for exemption u/s 54F of the Act was denied by the Assessing Officer on the following grounds :- (i) The appellant is engaged in the business of builders and developers and a dealer of land. (ii) The appellant had indulged into transactions of purchase and sale of land in the earlier years also and same was treated as business income. (iii) The land was sold to 21 different parties after dividing the plots into 21 pieces, which according to the Assessing Officer indicate the intention of the appellant is only to hold it as business asset. (iv) The Assessing Officer also held that the mere reflecting concerned asset as investment in fixed asset in the balance sheet does not conclusively prove that it is investment not stock in trade and there was no agricult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... motive of assessee to hold the land 'stock in trade'. 10. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to whether or not the surplus arising from the sale of land constitutes "capital gains" or "business income". It is undisputed fact that the appellant had acquired the subject land in the year 2005 for consideration of ₹ 1,01,44,000/- along with one Shri Sadik F. Kachchhi and the land was shown as a part of the fixed asset in the balance sheet and this treatment in books of account continued to be so till the sale of land. Admittedly, no borrowed funds were utilized for acquisition of the said land and assessee also holding some other lands as a part of investment and is also a dealer in lands. In the return of income, the appellant had offered the profit arising on sale of land as "capital gains" and sought the exemption of capital gains by investing of this sale proceeds in the residential house u/s 54F of the Act. The assessee also maintained the distinction between the "stock in trade" and "investment". The appellant is also a dealer in land and the profits on the sale of land in the earlier year were shown a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oing business in shares and the shares purchased by him were held as stock-in-trade. By holding that the Assessing Officer had failed to inquire about the real nature of the transaction, the Commissioner also opined prima facie that the transactions available on record revealed that the assessee was a dealer in shares. [Para 6] However, even if one proceeds on the footing that the Commissioner had not expressed any opinion and had merely set aside the assessment while exercising powers under section 263, nonetheless, when an appeal is preferred against such an order, the Tribunal is well within its jurisdiction to examine as to whether the Commissioner had rightly exercised jurisdiction under section 263. In the process, if the Tribunal examines the facts and evidence which are available on record before the Commissioner at the time of framing of order under section 263, it cannot be stated that the Tribunal has committed any error in recording findings in relation to such facts and evidence on record. In the instant case, all that the Tribunal had done was whether, in light of the record which was available before the Commissioner when he exercised the jurisdiction under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use it is possible to record a different conclusion on the same set of facts and circumstances. [Para 12] On facts, the Tribunal had taken note of the fact that there was a long gap between the date of acquisition of the shares and their sale and that some of the shares sold in the relevant accounting period were purchased at least 3 years ago, while some other shares were purchased as far back as in 1971, i.e., a period of about 14 to 15 years. Furthermore, in the reply to the showcause notice issued, the assessee had categorically stated that he was a partner in a firm having business of building materials, hardware items, etc., and neither the firm nor the assessee were carrying on any business in shares. That the assessee had been duly filing wealth-tax returns right from assessment year 1957-58 and the shareholding on respective valuation dates had duly been shown as wealth on account of investment. These facts had not been disputed by the Commissioner. [Para 13] Therefore, in the light of above discussion, the impugned order of the Tribunal did not suffer from any infirmity. The Tribunal had rightly concluded that the order made by the Commissioner under section 263 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with any amount of frequency could not be regarded as sufficient to establish that these shares had been held by way of investment. Even otherwise it was for the Tribunal to give its decision on facts and since no decision was invited from the Tribunal as to whether the shares in question had been held by way of investment it was not open to the High Court to give its finding on that question which was essentially one of fact and which it was within the jurisdiction of the Tribunal to determine. Hence, the Tribunal was justified in holding that the profit arose to the assessee in the course of its business as a dealer in shares and as such was liable to be assessed as a revenue receipt." 12. In the present case, undisputedly the appellant had made a distinction between those lands which are stock in trade and those lands which are held by investment. Therefore, none of the factors considered by the Assessing Officer can militate against the claim of the appellant that it is an investment and the profit arising out of the sale of this land is assessable to tax under the head "capital gains". Therefore, the orders of the lower authorities are hereby reversed and set-aside. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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