TaxTMI 
TaxTMI 
TaxTMI 
2011 (2) TMI 63
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.... the business loss, and at the same time income from agriculture on the purchase and sale of the agriculture land. The Assessing Officer took a view that agriculture income, as shown by appellants, was in fact, business income, and accordingly, taxed the same as business income at the hands of the assessees. The assessee preferred an appeal before the CIT(A) which was dismissed upholding the findings of the Assessing Officer. Further, appeal to the ITAT has met the same fate as Tribunal vide impugned order has upheld the findings of the CIT(A) as well as Assessing Officer thereby returning the finding and holding that income in question from the purchase and sale of the land was business income as the main business of these firms was that of real estate as well as sale and purchase of property. 2. Learned counsel for the appellant, at the outset submitted that it was a mistake on the part of the assessee to show the aforesaid income as agricultural income. It is thus conceded that income from the sale of the land was not agricultural income. It is however, sought to argue that the purchase of land in question was an investment by the assessee and that the sale of the land a....
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....p deed shows that the business had already commenced even prior to the relevant period. The clause 02 is extracted for proper appreciation of facts: "That the business of firm shall be deemed to have commenced from the date of execution of this deed." The word used is "SHALL" and not "MAY". The one and only one inference can be drawn from this clause is that the business of the appellant firm has commenced from the date of execution of the deed. v) The clause 04 of partnership deed is extracted for proper appreciation of facts: "That the firm shall do the business of real estate developers & building construction and sale & purchase of property or any other business or businesses which the parties hereto may mutually decide from time to time." The word used is "SHALL" and not "MAY". Thus the sale and purchase of property is one of the business activities of the appellant, firm. No inference other than this can be drawn from this clause. Here, the appellant has not been debarred from trading of any specific kind of land. vi) The investment in the land has been done wholly and exclusively from the borrowed fund. vii) In general, the enhancem....
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....). This profit therefore, is nothing but profit derived from business and profession only. Such an intention is clearly discernible from the gamut of facts and circumstances in the present case as the assessee is engaged in the business of real estate developers, building construction and sale & purchase of property. This inference is buttressed by the ratio laid down by the Hon‟ble Supreme Court in case of Delhousie Investment Trust Co. Ltd. v. CIT reported in 68 ITR 486 at page 490 & 491 held that where shares were actually sold at a very high profit leads to the inference that the purchases and sales were an adventure in the nature of trade. If this analogy is applied to the case of the appellant, it is absolutely clear that the appellant is engaged in business of land dealings, what to say adventure in the nature of trade. (c) Regarding the ground of the appellant that assessee held the impugned land on „investment a/c and not as „trading asset, it may be mentioned that such a submission on part of the appellant has no merit because what is to be seen is the real nature and effect of such transactions, which is subject matter of dispute between the assessee a....
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.... land was consolidated and improved. There were improvement costs of Rs. 21,51,075/- incurred upon the said land in financial year 2005-06. For the purchase of this land, no capital was contributed by the partners, instead, money was borrowed and the land was purchased. This itself would show that the land could not have been purchased for the purpose of investments. The intention of the assessee further became clear when the land after developing, as aforesaid, was sold within the span of fourteen months, that too at a price which was 2.5 times of the cost of acquisition of land. From the above, it becomes crystal clear that the intention was to purchase the land and sell the same as business activity. Thus, it cannot be said that the business had not commenced, more so, when in the return itself the loss under the head 'business from income' was shown and insofar as this amendment is concerned, the assessee made an endeavor to exhibit the same as agricultural income. 6. We also find that the arguments which are taken note of by the Tribunal in para 6 of the order are dealt with in paras 10 onwards. After discussing the legal position about the strength of case law which i....