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TMI Blog2024 (11) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... a director in various concerns at that time, therefore, in view of the above discussion and in view of the detailed reasoning given by the Ld. CIT(A) / NFAC on this issue, no infirmity in his order deleting the addition made by the AO. Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed. - Shri R. K. Panda, Vice President And Ms Astha Chandra, Judicial Member For the Assessee : Shri Nikhil Pathak For the Department : Shri Ramnath P Murkunde ORDER PER R.K. PANDA, VP : This appeal filed by the Revenue is directed against the order dated 06.03.2024 of the CIT(A) / NFAC, Delhi relating to assessment year 2013-14. 2. Facts of the case in brief, are that the assessee is an individual and filed her return of income on 30.07.2013 declaring total income of Rs. 71,48,938/- which consisted of income from salary, capital gain and income from other sources. The case was selected for scrutiny under CASS and notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) was issued to the assessee on 02.09.2014 which was duly served on the assessee. Subsequently, notice u/s 142(1) of the Act along with questionnaire was issued to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of the land has been charged under capital gain. 5. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. According to him, the dominant intention of the assessee in this transaction of purchase and sale of land is to earn profit. Following the decision of the Hon'ble Supreme Court in the case of G. Venkataswami Naidu Co. vs. CIT, 35 ITR 594 (SC), the Assessing Officer held that the profit on sale of land at Charoli is business profit. Accordingly, rejecting the long term capital loss on sale of Charoli land at Rs. 6,20,122/-, he made addition of Rs. 3,33,53,000/- as business income and determined the total income of the assessee at Rs. 4,05,01,938/-. 6. In appeal, CIT(A) / NFAC deleted the addition made by the Assessing Officer by observing as under: 6. Adjudication 6.1 The only Ground of Appeal taken by the appellant is 1. The Ld. AO erred in treating sale of land by the appellant as an adventure in the nature of trade and taxing it as business income instead of long term capital gains and thereby denying benefit of indexation of cost of acquisition to the appellant. The appellant therefore pleads Your Honor to kindly direct the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the said land was an agricultural land and therefore, the assessee was not liable to pay Wealth tax in respect of the said land. This fact was also clarified by the assessee to the learned A.O. in the asst. proceedings. Accordingly, since the said land was agricultural land the question of declaring the same in the Wealth Tax simply did not arise. Accordingly, this objection of the learned A.O does not have any merit. 7] The learned A.O. has further stated that the assessee had also sold land in A.Y. 2012-13 and long-term capital gain was offered on the said land. According to him, he has further noted that the claim of exemption u/s 54F was denied. The assessee submits that she had sold land in A.Y. 2012-13 and the gain thereon was offered as long-term capital gain. The said gain was taxed as long-term capital gain by the learned A.O. in the asst. order. Thus, it is to be appreciated that the gain on sale of land in A.Y. 2012-13 was accepted as long-term capital gain and it is not a case that the said gain was taxed as business income of the assessee. Accordingly, the assessee would like to submit that once the gain on sale of land has been taxed as long-term capital gain in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this contention of the A.O. that simply because she is a partner/director in concerns engaged in real estate business does not indicate that the transactions entered into by the appellant in her individual capacity are to be considered as the business transaction. The appellant further submitted that an individual can hold certain assets of the same class as an investment as well as stock in trade. For this proposition, the appellant relied upon the following decisions- a. CIT v/s.Gopal Purohit 1336 ITR 287(Bom)] b. CIT v/s. Yatish Trading Co. Pvt. Ltd. [359 ITR 320(Bom)] c. CIT v/s. Madan Gopal Radhey Lal [73 ITR 652 (SC)] Thus simply because the appellant was a partner/director in concerns which are engaged in real estate activity cannot be a ground to hold that the transaction of sale of land in her individual capacity would take the same colour from the transactions of the firms/companies in which the appellant is a partner/director. In this case, the appellant held the land for more than five years. If the intention of the appellant was to trade in land, she would have acquired the said land in the partnership firm/ company in which she was a partner/director. The very fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, once the income on sale of land has been taxed as long term capital gain for the immediately preceding year by applying the principle of consistency, the Assessing Officer should have followed the same view and the gain on sale of the land should not have been taxed as business income of the appellant. It is also to be noted that for A.Y. 2014-15, the appellant had sold land and the gain thereon was offered as long term capital gain and accepted by the department. Thus, the facts emerge that for the immediately preceding and succeeding year, the appellant had sold land and the gain thereon was offered as capital gain and accepted in scrutiny assessment. 6.10 Hon'ble Supreme Court in the case of Radha Satsang [193 ITR321] has held that if a view has been taken by the department for a particular year, there is no reason to adopt a different view for another assessment year. Applying the same principle, the Assessing Officer has erred in treating the land at Charoli as a business asset and the appellant was justified in treating the same as a long term capital asset. 6.11 It is further noted that the appellant had purchased the land on 26.11.2007. The said land was sold by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the transaction was an adventure in the nature of trade. In the present case, the Assessing Officer has failed to bring on record any evidence to prove that the land sold was adventure in the nature of trade and accordingly, the action of the A.O. in treating the transaction as a business transaction is hereby rejected. 6.13 In view of above, considering the fact that the appellant has held the land for more than five years and further, in A.Y.2012-13 and 2014-15, the gain on sale of land has been taxed as long term capital gain, the claim made by the appellant is justified and the addition made by treating the said transactions as the business transaction is hereby deleted. 7. Aggrieved with such order of CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds: 1. Whether on the facts and in the circumstances of the case in the law, the CIT(A) is correct in deleting the addition made by the AO amounting to Rs. 3,33,53,000/- on account of treating sale-purchase of land by the assessee as a business transaction completely disregarding the findings of the AO on the impugned issue? 2. Whether on the facts and in the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of Rs. 6,34,01,864/-. The Assessing Officer rejected the claim of deduction u/s 54F of the Act and the exemption was finally allowed by the Tribunal. Similarly, during assessment year 2014-15 also, in the order passed u/s 143(3) of the Act, copy of which is placed at pages 22 to 24 of the paper book, no such disallowance has been made by the Assessing Officer on account of long term capital gain which was shown at Rs. 20,03,319/- by treating the same as business income. He accordingly submitted that when the Assessing Officer in the preceding and succeeding assessment years has accepted the claim of long term capital gain made by the assessee on account of profit on sale of land, for the impugned assessment year, the Assessing Officer could not have deviated from the rule of consistency as held by the Hon'ble Supreme Court in the case of Radha Soami Satsang vs. CIT (1992) 193 ITR 321 (SC). 10. Referring to the decision of Hon ble Bombay High Court in the case of CIT vs. Yatish Trading Co. (P.) Ltd. (2013) 35 taxmann.com 356 (Bom), he submitted that the Hon ble Bombay High Court in the said decision has held that it is open to the trader to hold shares as stock in trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court the assessee firm was acting as managing agent of Janardana Mills Ltd. The assessee bought four contiguous plots of land under four sale deeds. Subsequently, the assessee firm sold the said plots in two lots to Janardana Mills Ltd. The gain arising on sale of the plots was taxed as business income by the Assessing Officer. Under these circumstances, the Hon'ble Supreme Court held that if the asset was purchased solely and exclusively with an intention to resale at a profit, it would be a strong factor indicating that the transaction is an adventure in the nature of trade. However, in the instant case, the assessee had sold the land after holding it for more than five years. This fact itself can show that the intention of the assessee was to hold the land as investment and nothing has been brought on record by the Assessing Officer to prove that the said land sold was stock in trade. He accordingly submitted that the decision relied on by the Assessing Officer is distinguishable and not applicable to the facts of the present case. He submitted that in the instant case the assessee has held the land for more than five years and in the preceding and succeeding assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record by the Assessing Officer to prove that the said land was sold as stock in trade, the decision of the Hon'ble Supreme Court in the case of G. Venkataswami Naidu Co. vs. CIT (supra) relied on by the Assessing Officer is not applicable to the facts of the present case. 17. We do not find any infirmity in the order of the Ld. CIT(A) / NFAC on this issue. Admittedly, the land in question was purchased by the assessee on 26.11.2007 and sold on 26.03.2013 i.e. after holding it for a period of more than five years. It is also an admitted fact that even after holding the land for more than five years, no developmental activity has been taken place. The submission of the assessee before the lower authorities that the land at Charoli is an agricultural land and therefore, it was not included in the wealth tax return filed for the assessment year 2013-14 as per the Wealth Tax Act, could not be controverted by the Ld. DR. It is also an admitted fact that the assessee has not borrowed any money on which the interest has been paid and the assessee has taken loan from L K Jain, HUF in which she is a member. We, therefore, find merit in the submission of the Ld. Counsel for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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