TaxTMI 
TaxTMI 
2017 (4) TMI 395
X X X X Extracts X X X X
X X X X Extracts X X X X
....4/- as business income of the assessee. 2. That on the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals)- 1 Bhopal erred in not accepting the assessee's claim of deduction u/s 54F on account of investment in construction of residential house out of the long term capital gains from the sale of land." 3. We have heard both the parties and also perused the relevant material placed on the record of the Tribunal, inter alia, assessment order, first appellate order along with paper book filed by the assessee spread over 27 pages and report of the Income Tax Inspector dated 25.08.2016 placed on the record by the Ld. Senior DR on 22.03.2017. First of all, we may point out that on the direction of the Tribunal to verify of the status of the land in question measuring 22,364 sq.ft. which was sold by the assessee after diversion, has been placed on record by the Ld. Senior DR and copy of the same was provided to the Ld. Assessee's Representative(AR). The Ld. AR submitted that the assesse does not want to raise any objection to verification and status report submitted by the Income Tax Inspector dated 25.08.2016 and Ld. Senior DR al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as diverted and sold in pieces with the view to secure better price or in other sense, better realization of his investment. 6. The Ld. AR placing reliance on the various decisions of Hon'ble Supreme Court, Hon'ble High Court and Coordinate Benches of the Tribunal including judgment of Hon'ble jurisdictional High Court of Madhya Pradesh in the case of CIT v. Suresh Chand Goyal (2008) 298 ITR 277(MP) submitted that the assessee's sole activities of sale of land did not constitute business or adventure in nature of trade, and the income arising from sale proceed of the said land was only capital gain. He was further submitted there is no regular activity of selling and purchasing of the land, there is nothing on the record to show that the agricultural land was purchased for the purposes of selling into plots. The land was also not fully developed as required under Town and Country Act. The Ld. AR further submitted that the assessee out of 5.15 hectares of land purchased in 1988, after 19 years simply diverted a pieces of land and sold the same in 3 pieces with the view to secure better price and better realization of his investments. 7. The Ld. AR vehemently pointed out that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Ld. DR placing reliance on the decision of Hon'ble High Court of Madhya Pradesh in the case of CIT v. Suresh Chand Goyal, decision in Hon'ble Supreme Court in the case of Raja J. Rameshwar Rao vs. CIT 42 ITR 179 (SC) & decision of Hon'ble Karnataka High Court in case of CIT vs. B. Narasimha Reddy 150 ITR 347(Kar) submitted that when land is situated in a village, but located within the urbanized area and kept it uncultivated for several years and after obtaining permission to convert the land for nonagricultural purposes, layouts for house sites were formed some of them were sold, then taking into consideration the cumulative effect of the entire activities undertaken by the assessee for realizing high value of land is nothing to adventure in the nature of trade and business. Therefore, profit arose therefrom on the sale of such land/plots was assessable as "business profits" and the AO was right and quite justified in treating the same as "business income" and thus the first appellate authority uphold the assessment order on correct premises. 10. Placing rejoinder to the above submissions of the Ld. DR, the assessee's representative(AR) submitted that even in the case of CIT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed the facts and circumstances of the present case, then, first of all, we may point out that on specific query from the Bench the Ld. DR fairly accepted that there was sole transaction of sale of land by the assessee during F.Y. 2007-08 pertaining to A.Y. 2008-09 which was undertaken by the assessee by way of execution for sale deed of three plots on 27.07.2007. It is also not in dispute that the assessee owns various agricultural land and out of these land the assessee get diverted a piece of land measuring 22,364 sq. ft. on 27.02.2007, by the competant authority i.e. SDO(Revenue), with an intention to liquidate his capital asset/investments on higher price and to satisfy his need of funds. At this juncture, it is also relevant to note that the piece of land which was sold by the assessee was a small portion of total area of 5.15 hectare of land which was purchased by the assessee on 03.06.1988 i.e. about 19 years before the sale of land. There is no another transaction of sale of land by the assessee and as per return of income filed by the assessee for A.Y.2008-09. It is amply clear that the assessee only offered to tax the allowance received by him as Member of State Legislat....