TaxTMI 
TaxTMI 
2010 (4) TMI 272
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....cross appeals bearing ITA No. 838/CHANDI/2008 and ITA No. 1007/CHANDI/2008, in respect of Assessment Year 2005-06. The question of law in both the cases revolves around the taxability of the income declared by the assessee-respondent on the sale of ancestral property, known as 'Leela Bhawan', situated at Patiala. The assessee-respondent had declared long term capital gain of Rs. 4,15,47,048/- and on that basis claimed deduction amounting to Rs. 2,42,61,810/- and 1,31,15,147/- under Sections 54EC and 54F respectively of the Act. Accordingly, a net taxable long term capital gain was declared for an amount of Rs. 21,17,913/- after setting off the brought forward long term capital loss for the assessment year 2004-05. The question is whet....
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.... the transaction is under consideration. The Tribunal also placed reliance on another judgment of Hon'ble the Supreme Court in the case of Raja Bahadur Kamakhaya Narain Singh v. CIT, 77 ITR 253 and also considered the view of this Court in the case of CIT v. Paragaon Utility Finances (P) Ltd., 152 ITR 7 (P&H). On the question whether the assessee-respondent has converted his capital asset in stock -in- trade, the Tribunal in para 10 has held as under:- "10. In the instant case, the residential house owned and sold by the assessee was a historical building in Patiala known as 'Leela Bhawan'. This building was constructed by grand father of the assessee, Late Maharaja Bhupinder Singh in 1925 and gifted to the assessee by his late father....
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....s 'Leela Bhawan', which was built by his grand father in 1925. It was gifted to him by his late father Maharaja Yadvindra Singh, vide Deed of gift dated 10.08.1961. (b) A part of the building was sold during assessment years 1977-78 to 1979-80. The sale of aforesaid building was regarded as 'sale of a capital asset' by the revenue and no capital gain was levied because the actual cost of acquisition was not capable of computation. In that regard the Tribunal has cited its earlier order dated 19.12.1994 passed in ITA 501/Chandi/1990 and ITA No. 404/Chandi/92. (c) As a result of the aforesaid sale multi-storeyed buildings had come up and vide a notification dated 17.2.1999, the area in which the building was located was declared commerc....
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....sessing Officer. Moreover, the view of this Court in the case of Kaur Singh v. CIT, (1983) 144 ITR 756(P&H), is absolutely clear where huge land attached to a bungalow was divided into plots for sale. Some of the plots were sold in the relevant assessment year and the revenue has treated the transaction as adventure in the nature of trade. This Court has held that mere fact of carving out the plots in a portion of the land, without proof of anything more, could not give rise to the conclusion that it was an adventure in the nature of trade. Accordingly, the Tribunal has held that the assessee-respondent did not convert his 'capital asset' to 'stock-in-trade' in the financial year 2001-02 by obtaining the approval and developing the land by ....