TaxTMI 
TaxTMI 
2016 (5) TMI 105
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....the appellant and assessed by the A.O, The finding of capital gain treating the same as business income is, therefore, arbitrary, unjust, uncalled-for and in any case illegal. 3. That under the facts & circumstances of the case, the learned CIT (Appeals) was not justified to disallow the development charges at Rs. 5,53,400/-. The confirmation of disallowance at Rs. 5,53,400/- is arbitrary, unjust, uncalled-for and in any case highly excessive and without any basis. 4. That under the facts & circumstances of the case, the learned ITO has erred, not to allow the exemption u/s 54F at Rs. 10,41,901/- for purchase of the residential flat, ignoring the provision of section 45(2). Nor allowance of deduction is, therefore, arbitrary, unjust, uncalled-for and in any case illegal. 5. That under the facts & circumstances of the case, the learned CIT( Appeals) has erred to apply section 68 for cash deposit in bank and treated the same as unexplained to the extent of Rs. 9,76,805/-. The application of section 68 and sustaining the addition of Rs. 9,76,805/- is, therefore, arbitrary, unjust, uncalled-for, illegal and in any case highly excessive. 3. The revenue has raised the followin....
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.... year in which stock in trade is sold. Assessing officer rejected the explanation of the assessee as he has not maintained any books of accounts and the business of the assessee is trading inproperty because of the reason that assessee has purchased severalproperties in earlier years and during the year and has sold many plots and therefore profit shown by the assessee is business income from trading of property. During the year assessee has claimed the development charges of Rs. 9 53400/- against the sale of plots.It was explained that these expenses are incurred for preparing the plan of the plot, approval from the development authority, leveling, filling of the roads, construction of the roads and other expenses without which the products sold could not have been sold in small pieces and fetch good value. All these expenses are incurred and bifurcated over total area of land anddevelopment charges on the proportionate basis of land sold during the year works out to Rs. 623.59 per square meter. Ld. assessing officer also rejected the explanation of the assessee that as assessee has not submitted any bills and vouchers in respect of development ofproperty, so he did not allow the ....
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....developed property in a very professional manner by providing electricity line, transformer,roads andboundary wall etc. This activity clearly showed, according to him, that appellant is developing the property not for his own personal use but by selling it for the commercial consideration. According to him, intention of the assessee was to earn profit out of the sale of land, which was developed by him in a professional manner. Therefore, according to him, the income on sale of plot is not chargeable to tax under the head capital gain, but is chargeable to tax as business income of the assessee. Further regarding the expenditure of development charges of Rs. 953400/- it was noted by CIT (A) that the assessing officer has taken a contradictory stand on this issue, and as appellant is a Trader in property it will have to incur some expenses for development of the property before it can be sold for a profit. Therefore, CIT (A) appeal restricted the disallowance made by the assessing officer of Rs. 953400/- to Rs. 553400/- and in turn allowed a deduction of Rs. 4 lakhs as expenditure under the head development expenses for the property. Regarding the claim of deduction under section 54....
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....ubmitted before us the detailed paper book containing 94 pages and a chart covering ground wise facts. Regarding this ground, he took us to the page No. 85 of the paper book wherein he submitted that assessee purchased plot of land along with Shri Pawan Kumar Arora admeasuring 1672.24 m² on 7th of August 2004 for Rs. 880,000. He further purchased another plot of land admeasuring 4379.10 m² in 2005 for Rs. 2304500/-. At page No. 62 of the paper book, he submitted details of investment in purchase of property. He has made an investment of Rs. 51,95,804/- and properties were converted into 64 small size plots out of which 18 plots have been sold and colony was developed by construction of road and electrification along with transformer installed therein. Therefore, it was a submission that property was purchased on 07/08/2004 andin 2005 which was held by assessee along with others since then and therefore this long period of holding itself proves that the assessee is not a Trader in plots or real estate, but the income arising out of the sale of this plots, shall be capital gain. The only purpose of development of this plot was to earn maximum price on the sale of its assets....
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....d in business in trading of purchase and sale of properties from A Y. 2008 - 09 to 2010 - 11. He vehemently argued that that the property was further developed to exploit commercially by the assessee and therefore the reasons given by the CIT (A) for holding that assessee is a Trader in plot and real estate is correct finding of the fact. Therefore, he submitted that income of assessee is not chargeable to tax on sale of these plots under the head capital gains, but is chargeable to tax as business income. 11. We have carefully considered the rival contentions. It is not in dispute that assessee has purchased the properties way back in 2004-2005 and held these properties for almost 5 to 6 years. Therefore, if the length of holding of those properties is to be seen, one of the characteristics of capital asset is satisfied. However, assessee has also dealt with in numerous properties, which are listed by the assessing officer in remand report based on the report of inspector. However, on looking at the details of the properties, it is apparent that some of the properties included by the assessing officer while holding that assessee has dealt with in numerous properties, he also incl....
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....e plots. As these vital facts are not brought on record, either by the assessee or by the revenue, in the interest of the Justice, we set-aside these grounds of appeal to the file of the assessing officer to verify the facts and then to decide issue accordingly. That assessing officer shall afford proper opportunity to the assessee to substantiate its claim before deciding the issue on the merit. In the result,we allow ground No. 1 and 2 of the appeal of the assessee with above direction. 12. The third ground of appeal was against conformation of the disallowance of the development charges at Rs. 553400/-. It was noted that assessee has incurred an expenditure of Rs. 9 53 400/- out of which assessee has been granted deduction of Rs. 4 lakhs only and the balance of Rs. 5 53 400 /- was disallowed and confirmed by CIT (A). 13. Before us ld. AR has submitted detailed expenditure chart at page No. 25 of the paper book which showed that total development charges are amounting to Rs. 4785909/- and actually incurred and claimed by the assessee is only Rs. 45 lakhs. Therefore, it was argued that that CIT (A)has arbitrarily restricted the disallowance to Rs. 553 400 /- where he should have....
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....ble to tax under the head business income. As we have already set aside Ground No. 1 and 2 of the appeal of the assessee to the file of assessing officer, we also set aside this ground of appeal to the file of assessing officer and to grant deduction under section 54F if income of the assessee is chargeable to tax under the head capital gains. We also direct assessing officer to verify the claim of the assessee in accordance with the provisions of the law while granting deduction under section 54F of the income tax act after affording reasonable opportunity of hearing and to produce relevant evidence before him. In the result ground No. 4 of the appeal is allowed with above direction. 18. Ground No. 5 of the appeal is against the addition of Rs. 976805/- confirmed by the CIT (A) for the cash deposited in IDBI bank account of the assessee. During the course of assessment proceedings. It was found that the assessee has deposited Rs. 29,25,000/- in bank account maintained with the IDBI -. The assessee submitted that that the source of such cash depositsmoney, which was received from sale of plot of land. It was further submitted by the assessee that though the deposit is of more than....
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....e peak deposited never exceeded the Rs. 8 Lacs. Before the assessing officer assessee has further submitted a chart of deposited source of deposited wide letter dated 26th may 2012. However, AO has rejected all the contentions of the assessee and made an addition of Rs. 2925000/-. 22. Before us, appellant submitted a chart, which it is placed at paper book paper book page No. 47 to 48. According to the chart Rs. 28,35,000/- has been deposited in cash in the IDBI bank account of the assessee. The assessee is stated that out of those Rs. 34 lakhs are withdrawn on various dates from syndicate bank and IDBI bank by the assessee. Precisely an amount of Rs. 5,75,000/- has been withdrawn from IDBI bank account itself and Rs. 34 lakhs from Syndicate bank on various dates. These facts were shown by a cash flow chart. Argument of taxing peak credit is only an alternative argument and it was not the only contention of the assessee when it is submitted the detailed cash flow chart before lower Authorities.The particular chart either was not controverted by the assessing officer, CIT (A) or learned DR before us. In view of this, we are of the view that the addition of rupees, 976805/- confirme....
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....lability of the cash of Rs. 3 8,63,905/-. Out of that investment in residential flat on 08/02/2010 has been made of Rs. 19,62,400/-. Therefore, it was submitted that assessee had enough cash on hand available for the purpose of purchase of the property. Hence, he submitted that the addition made by the assessing officer because of purchase of property in cash may be deleted. 30. We have carefully considered the rival contentions. It is an admitted fact that assessee has purchased residential flat on 08/02/2010 for an investment of Rs. 1962400 in cash. For the purpose of availability of the cash assessee has shown that it is received Rs. 3863905/-as its source, which has derived from sale of plot before date of investment in residential house and firm. This statement of the funds is not disputed. Therefore, in our opinion assessee has enough sources of funds available to buy that property in cash on 08/02/2010. In the result ground No. 2 of the appeal is dismissed and the action of the CIT (A) in deleting the addition of Rs. 1962,400/- is confirmed. 31. The next round of appeal is against the deletion of addition of Rs. 29,25,000/- made by the AO is being unexplained cash deposite....