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TMI Blog2021 (7) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... nto small parts of residential units to realise optimum value on sale. The conversion of agricultural land into residential stock in trade of his business of selling the plots of land is for earning profit. In this case, the assessee himself has developed residential plots and then sold it to individual buyers. Therefore, we affirm the findings of the AO that by such plotting of land, the agriculture land has been converted into stock-in-trade in the form of residential plots of assessee s business. The said conversion and development of residential plots has happened by assessee s own admission during and the intent of assessee has thus been demonstrated through his own actions. The fair market value of the asset on the date of convers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Assessing Authority in treating the profit on sale of sites as income from business by holding the activity as adventure in the nature of trade. 2. The learned Commissioner (A) ought to have appreciated the sites in question had been formed out of the agricultural lands held by the appellant for several years and appellant investment in agricultural land was a capital investment and consequently he ought to have accepted the appellant's claim that the profit was to be assessed under the head income from capital gains. 3. The learned Commissioner (A) ought to have followed the various cases cited by the appellant which included the jurisdictional High Court judgment without giving any valid reason to distinguish and accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouse. 4. The AO while passing the assessment order u/s. 143(3) has treated the amount received on sale of sites as income from business instead of capital gain and denied exemption u/s. 54F of the Act. The CIT(Appeals) confirmed the order of the AO. Against this, the assessee is in appeal before us. 5. We have heard both the parties and perused the material on record. In this case, the assessee purchased agricultural land measuring 3 acres 32 guntas on 7.12.1982. No agricultural activity has been carried out in this land which was converted for non-agricultural purposes on 18.3.1983. Later, the assessee converted the land into sites measuring 112 ft. x 203 ft. and sold 16 sites. The assessee declared the income as capital gain and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ization of the land is pointed out towards carrying out adventure in the nature of trade so as to maximise profit from this transaction. As noted earlier, though assessee purchased agricultural land, no agricultural activity has been carried out. However, it was converted into non-agricultural land within 3 months of purchase and later land was converted into small parts of residential units to realise optimum value on sale. The conversion of agricultural land into residential stock in trade of his business of selling the plots of land is for earning profit. The very nature and purpose of the agricultural land has been changed and we agree with the findings of the CIT(Appeals) that such change is an irreversible change where the very nat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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