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TMI Blog2009 (3) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax (Appeals) and also the Income-tax Appellate Tribunal concurrently held that it is not in the nature of a trade and the profit earned thereby cannot be under the head “Business” and it has to be under the head “Capital gains.” – Order of CIT(A) and ITAT maintained – appeal dismissed. - 50 of 2004 - - - Dated:- 18-3-2009 - K. L. MANJUNATH and A. S. PACHHAPURE JJ. M. V. Seshachala for the appellants. S. Parthasarathy for the respondent. JUDGMENT The judgment of the court was delivered by A. S. PACHHAPURE J.- This appeal is by the Revenue challenging the concurrent findings of the order passed by the Commissioner of Income-tax (Appeals) and further confirmed by the Income-tax Appellate Tribunal, Bangalore Bench, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Authority pre-emptively purchased this property as per the provisions of Chapter XX-C of the Act. The assessee was paid a sum of Rs. 93,03,711 as consideration amount and Mrs. Sayeeda Fathima Begum was paid a sum of Rs.11,30,930. This amount was paid with the consent of the parties. 4. Out of the sum of Rs. 93,03,711, the assessee declared a sum of Rs. 88,62,897 as taxable income under the head "Capital gains" and claimed the expenditure of Rs. 4.40 lakhs for conversion and improvement of the said property. The Assessing Officer found that the assessee had spent a huge amount for conversion of agricultural land to the industrial use and thereafter to residential plots with the sole object of carrying on a business activity and the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings, this appeal has been filed. 6. After hearing, we have formulated the substantial questions of law as hereunder: "1. Whether the appellate authorities were correct in holding that the consideration received by the assessee of Rs. 93,03,711 for selling the land bearing Sy. Nos. 35 to 39 of Mayam Gutta Village, which had been acquired under an agreement for Rs.1 lakh should be brought to tax under the head 'Capital gains' and not under the head 'Business' despite the assessee carrying on a systematic activity of converting agriculture land to non-agricultural by making a huge investment ? 2. Whether the appellate authorities failed to take into consideration a number of materials relied on by the Assessing Officer to arrive a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is a private trust and entered into an agreement of sale on April 6, 1989, with Mrs. Sayeeda Fathima Begum to purchase the land bearing Sy. Nos. 35 to 39 and an advance amount of Rs.1 lakh was paid and the process was initiated to convert the land into an industrial land and the permission was accorded on March 19, 1992. It is, at this stage, that M/s. Hara Housing and Land Development P. Ltd. agreed to purchase the said land for an amount of Rs. 1,22,00,000 and the agreement came to be executed on October 29, 1992, and the agreed purchaser obtained the permission of BDA to change the industrial land to residential purpose and it is in these circumstances that the Appropriate Authority pre-emptively purchased this property as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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