2014 (10) TMI 548

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....ssessed as income from short term capital gains and not as an income from adventure. 2. The land, which is the subject matter of these proceedings, originally belonged to M/s. GE Power Controls India Pvt. Ltd. They entered into a contract of sale under an agreement dated 31.12.1999 with six persons. On 20.3.2000, a supplementary agreement was executed under which the consideration for sale of the property viz., Rs. 9.46 crores was to be paid. But the assessees were included as two new purchasers by way of a supplementary agreement. Again on 10.8.2000, one more supplementary agreement came to be executed incorporating few new clauses, but retaining the same sale consideration. On 20.3.2000, M/s. Intel Technologies India Limited, a Multina....

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.... and Construction Services Agreement", under which M/s. Prestige was to provide services for carrying out the design and construction of and with reference to the proposed structure for M/s. Intel on the property situated on the Airport Road. On 4.5.2001, a deed of conveyance was executed by M/s. GE Power Controls India Pvt. Ltd. in favour of M/s. Intel with the above eight confirming parties. Now, the matter relates to the proportionate surplus received by the assessees in the surplus paid by M/s. Intel over and above what was payable/paid to M/s. GE Power Controls India Pvt. Ltd. 3. The assessees filed their return of income claiming the said proportionate surplus received by them as short term capital gains and paid tax thereon. Howev....

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....y on the business was never there in view of the assessees being already engaged in the business of development of properties being a real estate developer. The onus lies on the Department to prove the sole intention with which the property was purchased was to carry on the business and therefore, they were of the view that it is not an adventure but a capital gain. However, the income has to be assessed as income from short term capital gains, but the year in which the assessees finally parted with the possession has to be considered. Therefore, the matter was restored to the file of the Assessing Officer to verify on the basis of the documentary evidence to bring to tax the short term capital gains in the appropriate assessment year. On s....

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....develop the property. Under these circumstances, the finding recorded by the Tribunal that the surplus income received by the assessees by sale of the property constitutes short term capital gains and not an income arising out of adventure/business, is erroneous. 7. Per contra, learned Counsel appearing for the assessees supported the impugned order. 8. From the aforesaid facts and the rival contentions, it is clear that, the assessees entered into an agreement to purchase the property from its owners. Thereafter, the very same property, the possession of which was taken by them along with others after paying the entire sale consideration to the owner, was sold to M/s. Intel directly by the owner of the property with these eight perso....