Property sale treated as capital asset; Revenue appeal dismissed. Construction cost evidence lacking. Partial appeal allowed, remanded for reevaluation.

The Tribunal upheld that the property sold was a capital asset and dismissed the Revenue's appeal. However, it found fault with the allowance of the cost of construction without proper evidence and remitted this aspect for reevaluation. The appeal was partly allowed, and the matter was remanded for further proceedings in accordance with the Tribunal's directions.

---

---

Issues:
1. Assessment of profit arising on the sale of land under different heads of income.
2. Allowance of cost of construction of shed as cost of acquisition.

Analysis:
1. The appeal was filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals) for the assessment year 2011-12. The respondent-assessee, an individual deriving income from house property, had filed a return of income declaring total income of Rs.5,30,35,008/-. The Assessing Officer completed the assessment at a total income of Rs.10,31,85,008/-, assessing the profit from the sale of land under the head "Income from business." The ld. CIT(A) confirmed that the land was not agricultural and assessed the gains under "Income from capital gains," allowing deductions for construction of a shed and indexed cost of acquisition. The Revenue challenged this decision, arguing that the property should be treated as a business asset, not a capital asset, and that the cost of construction was allowed without proper evidence before the Assessing Officer.

2. The Revenue contended that the property sold should be treated as a business asset due to the intention of the assessee to earn rental income. They also argued that the cost of construction of the shed was allowed based on a valuer's report not presented during the assessment proceedings, violating Rule 46 of the Income Tax Rules, 1962. On the other hand, the respondent argued that the property was held as a capital asset, given the long holding period and previous assessments under "Income from house property." The Tribunal found that the property was intended as a capital asset, dismissing the Revenue's appeal on this ground. However, regarding the cost of construction, the Tribunal remitted the decision back to the ld. CIT(A) for proper consideration based on the valuer's report and compliance with procedural rules.

3. The Tribunal upheld the ld. CIT(A)'s decision that the property sold was a capital asset and dismissed the Revenue's appeal on this issue. However, the Tribunal found fault with the allowance of the cost of construction without proper evidence before the Assessing Officer, remitting this aspect for reevaluation. The appeal filed by the Revenue was partly allowed, and the matter was remanded for further proceedings in line with the Tribunal's directions.

---