TaxTMI 
TaxTMI 
TaxTMI 
2016 (11) TMI 1063
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....g that the sale of plot of land by the assessee was a long term capital gains instead of being an adventure in the nature of trade without appreciating the facts that the facts of the case laws relied on were different from the facts of the present case? 3. Whether on the facts and in the circumstances of the case and in law, the Learned CIT (A) was justified in deleting the additions, holding that the sale of plot of land by the assessee was a long term capital gains instead of being an adventure in the nature of trade without appreciating the facts that the assessee was going a very organized, well planned and predetermined activity so as to increase the attractiveness and salability of land which is evident from the fact that the assessee has incurred development expenditure of nearly 3.5 times of the cost of land?" 4. "Whether on the facts and in the circumstances of the case and in law, the Learned CIT (A) was justified in deleting the disallowance of 30% of the development expenses holding that there is no valid reason with A.O. to disallow the same without appreciating the fact that the A.O. has categorically mentioned in the assessment order that no map, no comments o....
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....ssessee had shown longterm- capital gain. The Assessing Officer from the perusal of the material and facts on record noted that, assessee has purchased five plots of land during the AY 2004-05 which was combined together. AO observe that assessee has purchased the land for an amount of Rs. 1,91,75,874/- on which he has claimed to have further spent huge amount of Rs. 8,46,36,147/- on its improvement. The improvement includes the following:  Beautification and leveling of land by filing it with sand;  Getting Electricity connection;  Building Elevated water-tank on the land;  Planting trees;  Building approach roads; and  Building concert pond for natural storage of water. The AO's further observation on the facts and analysis of the submissions of the assessee are as under:- "It is to be noted that the assessee has himself shown that part of land was purchased where the previous owner had built road and walls. No evidence has been produced whether the same has been utilized and why the assessee claimed to be made for construction of wall are genuine, the Ld. Counsel has claimed in his letter dated 23.12.2011 that,....
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....e was in the form of 'adventure in the nature of trade'. "9. The key points emerging but of above are which will be relevant in this case are (a) That improvement and increase in marketability itself indicated intention to trade. (b) That conduct of assessee if it was as conduct of normal business engaged in that trade will indicate adventure in nature of trade (AINOT) (c) Whether efforts have been made by assessee to improve marketability, whether special efforts have been made to advertise the goods (d) Whether any income was even expected from the trade without which assessee's argument that this was to be investment would not be sustainable. (e) That in case of in the case of an isolated transaction of purchase and resale of property there is really no middle course open. It is either an adventure in the nature of trade, or else it is simply a case of sale and resale of property." (f) Whether prior conduct of assessee shows a design and plan and what was the initial intention of the assessee when he entered this business transaction this will give a strong presupposition that this was an adventure in nature of trade AINOT). It may be seen that all the....
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....46,36,147/- on its improvement development beautification leveling, for electrification, for building wall and constructing water tank, planting trees for beautification, constructing approach road etc., Further, it is found from the record that assessee has given development rights to one M/s Sai Venkata and Associates vide development agreement dated 15.07.2007. Against parting of development rights appellant has received Rs. 2.25 crores as advance from the Developers who has got the right to develop, construct and sell the property. By letter dated 21.12.2011, A.R. of the assessee has submitted before the Assessing Officer that land was sold as a solitary transaction and 87% expenses on the same has been capitalized by the appellant in its books of account during the preceding years and only Z. 1.08 crores was spent on the land for the development in this years. This fact itself proves that there was no agricultural activity at this land and it was developed for sale to the buyers. Therefore, it is basically a wrong claim that land was remained an agricultural land. In fact evidences on record prove that no cultivation or agricultural farming was done as agricultural activities.....
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....tematic activity of purchase and sale of plot/ land; and (h) Reliance was placed on various decisions, which has been noted by the CIT(A) in his impugned order in detail. 6. The Ld. CIT(A) after considering the entire facts and circumstances of the case, held that, Assessing Officer has wrongly treated the LTCG as 'business income' without establishing the fact that business activities has been carried out by the assessee. He noted that, assessee has purchased five piece of land in financial year 2003-04 for Rs. 1,91,75,874/- which consisted of various plots situated in Village Karla, Taluka Maval, district Pune. The 7/12 extract submitted by the assessee reveals that, at the time of purchase of land, it was agricultural land. Thereafter, the assessee had merely carried out incurred some expenditure for improvement and development. Hence it cannot be held that, assessee was involved in any business activity of purchase and sale of land nor was there any activity of doing plotting and selling to various purchasers or investors or developer. Most of the expenditure incurred was mainly to improve the quality of the land and to ensure the safety of the land, which was situated near ....
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....(A) even though this fact has been noted by him in Para 3.3. Thus, he submitted that the order and reasoning of the AO should be affirmed. 9. On the other hand, Ld. Counsel for the assessee on the issue raised in the cross objections submitted that, in fact, the land was acquired as an agricultural land which continued to be the agricultural land and was sold as such. Once it has been sold as agricultural land then, under the Income Tax Act such an agricultural land cannot be taxed at all either as a business income or as LTCG. In support, he also drew our attention to the certificate issued by Talathi of Mawal district, Pune which has been placed at page 144 of the paper book, to show that this was an agricultural land and is beyond the limit of Lonawala Municipal Council. He also drew our attention to various title search documents along with 7/12 extracts to show that, these were agricultural land, therefore, same cannot be taxed at all. In support, he strongly relied upon the decision of Hon'ble Bombay High Court in the case of CIT v Smt. Debbie Almano, reported in [2011] 331 ITR 59 (Bom). Further reliance placed on the following decisions:- i) CIT v Nitish Rameshchandra Cho....
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....dditional ground on merits and dismissed the same after detailed reasoning and noting down the various facts. While deciding the additional ground on merits, he categorically held that, assessee had spent huge amount of expenditure for improvement of such land and had also given development rights to a developer under a development agreement for parting of the rights of development in the said land. Further, the assessee even received huge amount of Rs. 2.2 crores as advance from the developer. After recording these facts, he held that there was no agricultural activity carried out by the assessee at all and therefore, it is not an agricultural land. Once he gives such a categorical finding in para 3.3 (which has been reproduced above in the earlier part of our order), he also rejects additional evidences filed by the assessee which goes to show that, these were agricultural land. Thereafter, while deciding the issue on merits on LTCG, he takes contrary stand and holds that, it is an agricultural land at the time of purchase and also at the time of sale. Since assessee had shown investment of land in the Balance sheet, therefore, the same has to be treated and reckoned as long-term....