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TMI Blog2022 (1) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... erm capital asset. Tribunal being the last fact finding authority, has recorded a finding that the contents of the letter alleged to have been written by the assessee to his partner do not clearly establish as to whether the assessee was really carrying on the activity of adventure in the nature of trade or that these properties were considered as trading assets by the assessee. Similarly, as regards the sale consideration of the property in question, addition has been made by the Assessing Officer merely based on the statement of Sri.Purushotham Reddy which is not substantiated by any other material evidence. Disallowance under Section 40[a][ia] of the Act by the Assessing Officer cannot be sustained in view of the income from the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T S. SUJATHA, J., This appeal is filed by the Revenue under Section 260A of the Income Tax Act, 1961 ( Act for short) challenging the order dated 05.09.2014 passed by the Income Tax Appellate Tribunal, Bangalore Bench C , Bengaluru ( Tribunal for short) in ITA No.705/Bang/2013 relating to the Assessment Year 2007-08. 2. The appeal has been admitted by this Court to consider the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessee was not carrying the activity of adventure in the nature of trade even when the materials on record establish that assessee was in fact carrying activity in the nature of adventure in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act accepting the return of income. Consequent to the assessment proceedings initiated under Section 153C of the Act in the case of M/s.Chamundi Gold Hills Estate and Others, the assessment of the assessee was re-opened under Section 147 of the Act. In reply thereto, the assessee s legal representative filed a letter requesting to treat the return filed earlier as the return in response to the notice under Section 148 of the Act. The Assessing Officer concluded the re-assessment proceedings and held that the activity carried on by the assessee was an adventure in the nature of trade and therefore income from sale of land has to be assessed as the business income and not as capital gains as offered by the assessee. He also disallowed the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri.Purushotham Reddy recorded during search proceedings. The Tribunal grossly erred in setting aside the disallowance under Section 40[a][ia] of the Act and further erred in remitting the matter regarding the issue pertaining to the disallowance of expenditure claimed by the assessee towards construction of the compound wall. 6. Learned counsel for the assessee submitted that the findings of the Assessing officer are incongruous in nature. The Assessing Officer has recorded that the assessee has entered into an agreement with Sri.Jawar Gopal and Sri.U.C.Rami Reddy on 01.12.2003 to sell the land at Amanikere, Bellandur and has taken an advance of ₹ 50,00,000/- each from the said parties but he didn t had even an inch of land. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties and perused the material on record. 8. It is ex-facie apparent that based on a letter said to have been written by the assessee who is no more to Sri.Rami Reddy which is said to have been found in possession of one Sri.Purushotham Reddy, the Assessing Officer has arrived at a conclusion that the transaction in question was taxable as business income and not capital gains. It is significant to note that the said property was held by the assessee as long term capital asset. The Tribunal being the last fact finding authority, has recorded a finding that the contents of the letter alleged to have been written by the assessee to his partner do not clearly establish as to whether the assessee was really carrying on the activity of adve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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