2012 (12) TMI 518

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.... has failed to appreciate the fact that other two persons in the purchase of property, namely Sri V. Satyanarayana Reddy and M/s Shanta Sri Ram Construction Pvt. Ltd., are original owner of the land and developer of the land respectively. 2. The CIT (A) has failed to appreciate that having original owner and developer of land as purchasers along with assessee, reflects the capital gains character of the deal rather than business adventure. 3. Non consideration of actual character of two other persons in the purchase deed has resulted in correct inference by CIT (A). 4. CIT (A) has failed to appreciate that non payment of capital gains, on claimed conversion of investment into stock in trade, is additional indicator that transaction....

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....rea was sold. No distinguishing features of a business/trade are seen here and no repetition of the transactions and no activity undertaken by the assessee and it is not related to other businesses being done by the assessee. Moreover, the fact that builder itself was also co-owner of the land shows that outside parties were not involved which is what happens in a regular course of business and therefore there is no regular business by the assessee. 5. The AO on the aforesaid consideration and relying upon a judgment of Madras High Court in the case of Ashok Leyland Finance (230 ITR 398), Jasbir Singh Sarkaria (294 ITR 196) and in the case of Chathurbhuj Dwarakadas Kapadia vs. CIT (260 ITR 491) came to a conclusion that the amount receiv....

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....s contained in section 45(2), the CIT (A) held that such income would be chargeable to income-tax as income of the previous year in which such stock in trade is sold or otherwise transferred. The CIT (A) from the facts available on record found that though the assessee has entered into joint development agreement in the financial year 2004-05 but the sale of stock in trade was made in the financial years 2005-06 and 2006-07. He therefore directed the AO to compute the short term capital gains arising on account of such conversion of investment to stock in trade in the relevant assessment year by adopting the fair market value at the relevant time. So far as the sale of stock in trade is concerned, the CIT (A) held that it has to be treated ....