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of <h1>Tribunal rules property transaction as capital gains, not business income</h1> <h3>Income Tax Officer 19(2) (3) Versus Ms. Kanika Atul Premnarayan</h3> Income Tax Officer 19(2) (3) Versus Ms. Kanika Atul Premnarayan - TMI Issues:- Assessment of consideration received for property 'Indraprastha' under 'capital gains' or 'business income'.Analysis:1. The appellate tribunal heard cross-appeals filed by the department and the assessee against the order of the ld. CIT(A) for the assessment year 2003-04.2. The main issue raised by the department was whether the consideration received by the assessee for the property 'Indraprastha' should be assessed under the head 'capital gains' or 'business income.'3. The department's argument was based on the order of the Assessing Officer (AO), while the assessee's representative cited a decision by the ITAT in a similar case favoring the assessee. The Tribunal had previously dismissed the department's appeal in a related case concerning a co-owner of the same property.4. The property 'Indraprastha' was inherited by co-owners in 1938, and an agreement was made with a construction company to build residential units on the property. The consideration received was treated as capital gains by the co-owners.5. The AO treated the transaction as an adventure in the nature of trade and computed the income as capital gains under section 45(2) of the Income Tax Act. However, the ld. CIT(A) allowed the appeal of the assessee, following a similar decision in another case involving a co-owner.6. The Tribunal examined the MOU between the co-owners and the construction company, concluding that the transaction was not a commercial arrangement but involved the construction of residential units on a capital asset.7. Given the previous decisions and the nature of the transaction, the Tribunal dismissed the department's appeal, stating that the issue was already settled in favor of the assessee.8. Consequently, as the department's appeal was dismissed, the appeal filed by the assessee was also dismissed, and both parties' appeals were rejected.This detailed analysis of the judgment showcases the legal reasoning and precedents considered by the appellate tribunal in resolving the issue of assessing the consideration received for the property under 'capital gains' rather than 'business income.'
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