TaxTMI 
TaxTMI 
2017 (7) TMI 954
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....irmed may please be deleted. 2. In not appreciating the facts and/or law that the volume of transaction and/or investment made through borrowed fund is not a criteria to decide as to whether it is Long Term Capital Gain or business income, and therefore, erred in confirming the addition. 3. In not appreciating the facts and/or law that the Income Tax Department has himself accepted the said land as investment for wealth tax purposes and accordingly wealth tax has been collected also, and therefore, no separate view is required to be taken for income tax purpose, and therefore, addition made may please be deleted. 4. In not appreciating the facts that the whole purpose of the assessee was to make investment as can be verifiable from wealth tax records and accepted as such, and therefore, there is no question of treating the said land as business asset and/or stock in trade, and therefore, the addition confirmed may please be deleted. 5. In not appreciating the facts that no wealth tax is payable on stock-in-trade/business assets and since the assessee has shown investment of the land sold, no different view can be taken in Income Tax proceedings unless the wealth tax pai....
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....his again indicates the motive or purpose of investing in land/purchasing land. Further, this is confirmed by the fact that the appellant has not shown any agricultural income from all the agricultural land that he holds. As said above also, the appellant owns forty four (44) plots of land. But no agricultural income has been shown. If a person has made investments in any asset, the least he would expect from that investment is to get some return on investment. In case of agricultural land, this would be in the form of agricultural income. But the appellant, whose investment in agricultural land is around Rs. 6.64 crores (as shown in his balance sheet), is getting NIL return on this huge investment. The appellant as per his own admission started making investment in land in F.Y.2005-06 and we are in F.Y.2010-11. All these years, investment of crores has not fetched any return. Which prudent investor would make such investments that fetch him no return? The appellant contended that he has agricultural income which is shown in revenue records. This contention is of no help to the appellant since what is relevant for purpose of taxing income under the income Tax Act, 1961 is what inco....
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....land use from agricultural use to non-agricultural from Government Authorities so as to bring the land to a more marketable condition. (b) Subsequently in order to earn profit, the plots of land were sold to Venus Townships (India) LLP (developer). (c) Venus Townships (India) LLP (developer) consisted of designated partners Sri Deepakbhai Vaswani & Rajesh S. Vaswani and Authorised signatory Sri Ashok S Vaswani (Assessee's Father). Rajesh S. Vaswani partner in the LLP and Authorised signatory Sri Ashok S Vaswani are real brothers. The other partner in the LLP is also a close relative of the assessee. (d) Thus all the main persons of the LLP are closely related to assessee. The LLP was formed after conversion of the company M/s Venus Townships (India) (P) Ltd., which was also a developer. (e) The assessee purchased all the plots out of loan raised from Saffron Entertainment & Saffron Traders and paid interest on loan from year to year. The assessee is partner in the firm Saffron Entertainment alongwith Sri Deepakbhai Vaswani & Rajesh S. Vaswany, having 5% shares each in the firm, who are also designated partners in Venus Townships (India) LLP to which all the plots we....
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....ng the view that, on the facts and circumstances proved in this case, the transaction in question is an adventure in the nature of trade." The appellant in support of his contention that income from sale & purchase of land was capital gains and not business income submitted that In his Wealth Tax Returns he has shown the said lands as investment and this has been accepted by the Department. This contention does not help appellant since the declaration by the appellant in the wealth tax return does not bind the AO while scrutinizing an income tax return. Further, the contention of the appellant that during A.Y.2008-09 also he had sold land and shown income from the same as Short Term Capital Gain and the same was accepted by the AO while passing assessment order u/s. 143(3) of the Act, also does not help the appellant. This is because in A.Y.2008-09 he sold only two plots of land while in the year under consideration he sold nine plots of lands. Looking at the behavior of the appellant from A. Y. 2008-09 to A.Y.2011-12, the AO can always reconsider his earlier view. Further, the Courts have held that if a mistake has happened once, that does not mean that the mistake should be all....
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....ading assets. Therefore, the intention of the assessee to hold the plots/lands as capital asset was loud and clear. The Ld.AR pointed out that the observation of the Revenue that no agricultural activity was carried out on these parcel of land is not correct. The assessee did carry out agricultural activity in the past before the said land was converted into non agriculture as can be seen from revenue records, i.e.7/12 extract. The Ld.AR thereafter submitted that some borrowed funds are involved for acquisition of the plots/lands on which interest has been paid. However, in the same vain, the ld.AR submitted that employment of borrowed funds by itself is not sole determinative factor for ascertaining the character of the asset. The ld.AR thereafter submitted that for the AY 2008-09, the assessment order was passed under s.143(3) wherein also the assessee has sold Rakanpur land which was accepted as a capital gain. However, interest cost claimed therein was not allowed as cost of improvement under s.48 of the Act. He thus submitted that there is no reason to take a different view in the subsequent year under appeal. The Ld.AR submitted that these lands were shown as investment in th....
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....s of real estate and therefore the entire exercise was to exploit the plot/land commercially in the nature of adventure which is akin to business. Therefore, the action of the Revenue is fully justified. Addressing the argument of the Ld.AR that the assets have been included for wealth-tax purpose and wealth-tax paid thereon the Ld.DR contended that it is not an indicator of any sort. The assessee has suo motu included the property as capital asset which has been accepted as such. Such passive act cannot operate as estoppel against the Revenue. The Ld.DR therefore submitted that the order of the CIT(A) is on legally sound basis and no interference is called for. 8. We have carefully considered the rival submissions and the assessment order as well as the order of the CIT(A) appealed against. The substantive issue in the present appeal is whether gains arising on sale of plot/land by the assessee in the relevant assessment year is required to be taxed under the head 'capital gains' as offered by the assessee or is to be treated as 'business income' of the assessee. The issue is essentially factual in nature and depends on the facts and circumstances prevalent in a given case. It is....