TaxTMI 
TaxTMI 
2017 (10) TMI 993
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Rs. 1.52.302/- on extinguishment of investment in equity shares, as the~name of the company was struck off by the promoters, giving no compensation to the share holders. ii) That the Ld CIT(A) has erred in not regarding extinguishment of rights of the appellant in the equity shares as transfer of capital asset. 4. That the Ld. CIT(A) has erred in confirming lump sum addition of Rs. 55,444/- @20% of following expenses: - Advertisement and Publicity Rs. 60,756/- - Conveyance Rs. 36,962/- - Business promotion Rs.1,14,730/- - Staff welfare Rs. 20,913/- - Entertainment Rs. 43,860/- Total Rs.2,77,221/- ii) That the lump sum disallowance of Rs. 55,444/- is not in conformity with the provisions of section 37 for expenses expanded wholly and exclusively for the purposes of business and the business expediency explained by the appellant has been ignored. 5. That the Ld. CIT(A) has again erred in confirming lump sum addition of Rs. 72,372/- @ 20% of following expenses: - Maintenance and Running (vehicle) Rs.1,45,915/- - Telephone exp Rs.2,15,943/- Total Rs.3,61,858/- ii) That lookin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssesses is involved in the adventure of trade in the field of sale and purchase of properties. Hence, it should be treated as income from business from sale of properties and not as income from capital gain as shown by the assessee. 5. During the course of assessment proceedings the ld. AR of assessee was asked to why these investments should not be treated as stock and Capital Gain arise from selling these plots should not be treated as Business Income. In this regard the AR of the assessee did not give a satisfactory reply. Whether a particular asset is stock-in-trade or capital asset does not depend upon the nature of the article, but the manner in which it is held. The same item may be stock- in-trade m the case of an assessee who deals in that item but it will be capital asset in the case of an assessee who uses it for earning income. Even stock-in-trade may become capital asset in certain circumstances and vice versa. If an assessee who deals in certain goods or commodities as trader, on closure of the business, retains the existing stock as investment, the stocks will become capital asset in his hands from the time of closure, not withstanding that they were stock-in-trad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....venture. Cher uk uri Ramesh v Asstt. CIT (2010) 36 DTR 269 (Visakha) "Assessee having purchased land jointly with his wife and son, applied for sanction for converting the same into housing plots soon thereafter and sold all the plots some years after obtaining the sanction, the obvious intention behind the purchase of land was to sell the same at a profit and. therefore, though an isolated transaction, it was an adventure in the nature of trade and (he income there from has to treated as business Income of the above facts that the income arise due to selling of plots are considered as business income and the calculation of 19 Plots located m Amritsar are as: follows: Total Purchase Price 1,44,99,000/ - Add: Stamp Paper @ 5% 7,25,000/ - Add: Stamp Paper @ 3% 4.35.000/- Total Purchase Cost 1,56,59,000/- Total Area Purchased for 1 9 Plots 6903.85 Square Yards Rate of per square yards 1.56,59.000 = Rs. 2268.15 per square yards 6903.85 7. In view of the above findings, it is clear that the assessee is involved in business of sale and. purchase of the properties. During the year assessee has shown total income from Profit on sale ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by me in the present facts and circumstances of the case and the decision relied upon by6 the ld. counsel for the assessee is not at all applicable in the present case. Moreover, the assessee has not filed any Wealth Tax Return, and if filed, not placed on record showing the said plots as investment as per valuation to be made under the wealth tax rules. This goes to prove that the assessee is carrying on the business of purchase and sale of properties and is a property dealer-direct selling agent holding assets as stock in trade and not as investment. Accordingly, I find no infirmity in the order of the ld. CIT(A) who has rightly confirmed the action of the Assessing Officer. Ground No. 2 of the assessee is dismissed. 12. As regards Ground No. 3, the ld. CIT(A) observing that no transfer of assets is involved in the present case and also the appellant has not been able to adduce any evidence to prove his case, dismissed the claim of capital loss amounting to Rs. 1,52,302/-. 13. I have considered the rival arguments made by both the sides, perused the orders of the A.O and the ld. CIT(A) and the paper book filed on behalf of the assessee. It is evident from record that the a....