2016 (5) TMI 872

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....st the business income treated by the A.O., without appreciating the facts of the case; 2. Deleting the addition of Rs. 7,09,303/- on account of deduction claimed U/s 24(a) on rental income though the same was assessed as business income by the A.O., without appreciating the facts of the case." 2. The assessee filed his return on 31/7/2008 declaring total income of Rs. 1,19,83,441/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act) on 14/12/2010. This order of the Assessing Officer was found erroneous and prejudicial to the interest of revenue to the ld CIT(A), Ajmer, therefore, he gave certain direction on the profit by selling the flats/shops was the income assessable under the "Profit and Gain of B....

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....Being aggrieved by the order of the learned Assessing Officer, the assessee carried the matter before the learned CIT(A), who had allowed the appeal by observing as under:- "3.3 I have considered the contentions of the appellant as well as assessment order. (i) It is seen that the assessee had developed a multi storied commercial complex known as Mall 21 on inherited land through will of grandmother by an agreement with the developer M/s Krishna Pratap & Company and has sold the Flat No. 204, 502 to 509, 108 and 102 during the year under consideration. During the year under consideration, the assessee sold the flats amounting to Rs. 1,45,97,450 against the cost determined at Rs. 11,40,765 thereby deriving profit of Rs. 1,34,83,7....

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.... intention of entering into real estate business. Further, assessee has offered 'the sale consideration in the return as per Sec. 50C of the I.T. Act even when the actual consideration received was lower than the value determined as per Sec. 50C of the I T. Act. Even the AO has also adopted the sale consideration as per Sec. 50C of the I.T. act which is applicable only in case of income from capital gains. The true nature of income has to be determined in context of transactions carried on by the assessee. It is apparent from the record that assessee has received the income from capital gains and not from carrying on the real estate business. Further, the development agreement was entered between the grandmother of the ass....

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....The Ld. DR vehemently supported the order of the ld. Assessing Officer and argued that the assessee has systematically developed the land and constructed through developer into shops and flats and which has been sold out during the year under consideration, therefore, it is an income from business and profession. 5. At the outset, the ld AR of the assessee has supported the order of the ld CIT(A) and reiterated the arguments made before him. It is further submitted that the in accordance with the intents of the last will and testaments dated June 29th, 1985 of Rani Sahiba Smt. Rajkanwar Nathawat Ji, the entire (2/3rd) share in the said property belonging to Rani Sahiba Smt. Rajkanwar Nathawat Ji devolved on her demise, on her grandson Ku....

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....M/s Krisha Pratap & Co. Pvt. Ltd. to build and construct the mall. They made agreement to share the constructed area on 50-50 basis. All the cost was borne by the builder. This land has not been shown as a stock in trade in the books of account by the assessee. The assessee is not in the activity of regularly purchasing and selling the flats/shops and it is not organized business activity of the assessee. There was no intention of the assessee to enter into real estate business. The assessee has also shown sale consideration on the basis of valuation of stamp authority U/s 50C of the Act. Thus, the assessee rightly claimed long term capital gain on sale of shops/flats during the year under consideration. Accordingly, we uphold the order of ....