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TMI Blog2014 (9) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... f lands, which are adjacent to each other, by way of multiple acquisitions and thereafter sold the same on proximate dates to the buyer, who is also a land developer, tantamounts to undertaking a trading activity and therefore surplus on such sale is liable to be taxed as a business income. The factum of the assessee having bought and sold an agricultural land which does not fall within the definition of capital assets in terms of section 2(14)(iii) of the Act does not mitigate the taxability of the surplus arising on its sale as business income because the facts and circumstances of the case show that assessee has indeed undertaken trading of agricultural lands. The activity of trading in agricultural lands as stock-in-trade definitely is assessable as business income. We are inclined to uphold the orders of the authorities below treating the surplus on sale of land at village Pusane as a business income. - Decided against assessee. - ITA No. 849/PN/2012 - - - Dated:- 15-9-2014 - SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER For the Assessee : Mr. Sunil G anoo For the Department : Mrs. S. Praveena ORDER PER G. S. PANNU, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of controversy. The assessee has undertaken purchase of agricultural land at village Pusane, (District Pune) on various occasions between 02.12.2002 and 06.07.2006 whereas the total land so purchased, admeasuring approximately 18 acres, was sold during the year under consideration on three dates, namely, 13.09.2007, 04.12.2007 and 11.12.2007. Further, the entire land has been sold to one Shri N.V. Achutdas, a real estate developer. The details of purchase and sale of undertaken by the assessee is tabulated hereinafter :- Sr.No. Gut No. Date of Purchase Total Consideration Date of Sale Sale Consideration 1 Gut No.572 17/03/2005 38,845 04/12/2007 1,781,250 2 Gut No.597 21/10/2004 38,420 04/12/2007 718,750 3 Gut No.579 16/08/2004 22, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sale/purchase of plots. In para 3.1 of the assessment order, Assessing Officer has enumerated the profit earned by the assessee out of land trading i.e. sale and purchase of plots in various assessment years, i.e. 2007-08 to 2010-11, including for the year under consideration. Considering that the assessee was regularly engaged in the business of sale and purchase of plots, Assessing Officer proceeded to hold that the impugned transactions by way of purchase and sale of agricultural lands was also undertaken by the assessee as business transactions. The CIT(A) has also affirmed the stand of the Assessing Officer after considering the facts and circumstances of the case. The CIT(A) has decided the issue against the assessee by reaching to the following conclusions : (i) that assessee was a builder and developer and he had shown profit from land development activity in the past as well as in the future assessment years, including the current assessment year; (ii) that assessee acquired the lands piecemeal which were adjacent to each other for the purposes of consolidation and future sale to earn higher profits; (iii) that assessee was not an agriculturist having regard to the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of judicial rulings on the issue as to whether a particular transaction involves sale of investment to be taxed as under the head capital gains or sale of stock-in-trade so as to be taxed under the head business income . So however, it s a trite law that whether a particular transaction is to be understood as sale of investment or a trading activity is liable to be decided having regard to the relevant facts and circumstances of the particular case. In the present case, what is sought to be made out by the Revenue is that though the surplus in question is arising out sale of agricultural lands but the same is liable to be assessed as business income because assessee has undertaken a series of transactions in a systematic way which have generated profits and such activity being in the line of the existing business of the assessee; therefore, it is liable to be treated as a business activity. 9. Firstly, the plea of the assessee that he is not in the business of land developing or the business of plotting and selling thereof. The said plea, in our view, is quite irrelevant. In any case, the Assessing Officer has factually brought out that during the preceding as well as curr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may, the aforesaid circumstances are enough to deduce that the motive of the assessee to acquire the land in question was not to undertake cultivation or any other agricultural operations on the said land. The aforesaid inference gets strengthened by the fact that other than the lands in question, there is no material to show that the assessee was holding agricultural lands in past for the purpose of undertaking agricultural activities. 11. In view of the aforesaid discussion, we are unable to accept the plea of the assessee that the intention of the assessee to purchase the impugned agricultural lands was to undertake agricultural operations. On the contrary, the manner in which assessee has undertaken acquisition of lands, which are adjacent to each other, by way of multiple acquisitions and thereafter sold the same on proximate dates to the buyer, who is also a land developer, tantamounts to undertaking a trading activity and therefore surplus on such sale is liable to be taxed as a business income. 12. The factum of the assessee having bought and sold an agricultural land which does not fall within the definition of capital assets in terms of section 2(14)(iii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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