TaxTMI 
TaxTMI 
2018 (3) TMI 141
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.... in the circumstances of the case and in law, the Learned CIT (A) erred in denying the deduction of Rs. 74,23,333/-being the expenses incurred relating to the property sold being cost of improvement." 3. Before we proceed to adjudicate the specific Grounds of appeal raised, we may briefly touch upon the background of the case. The appellant before us is an individual, who filed his return of income for the assessment year 2010-11 declaring an income of Rs. 2,56,29,804/-. In the course of assessment proceedings, the Assessing Officer noted that assessee had shown an income of Rs. 2,21,60,781/- under the head long term capital gain on sale of a property for a consideration of Rs. 3,75,00,000/-. It was also noted that indexed cost of acquisition was claimed by considering the year of acquisition as 1972, and further expenses of Rs. 74,23,333/- was claimed as cost of improvement of the said property. The Assessing Officer further noted that in spite of giving opportunities, assessee could not furnish the purchase and sale agreements of the property in question and, therefore, he was unable to verify the long term capital gain declared by the assessee. For this reason, the Assessing ....
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.... hands of the erstwhile partnership firm. The Ld. Representative for the assessee pointed out that the said inference of the CIT(A) is based on mere conjuctures and surmises and there is no material to suggest that the property in question was a stock-in-trade in the hands of the erstwhile partnership firm. Even otherwise, the Ld. Representative for the assessee pointed out that the business asset so held by a concern cannot be straightway treated as 'stock-in-trade' and for that matter referred to the ratio of the judgment of the Hon'ble Gujarat High Court in the case of H.Mohammed & Co. vs. CIT, 107 ITR 637 (Guj). It was asserted that there is nothing to suggest that the land was a 'stock-in-trade' in the hands of the erstwhile partnership firm and so far as the assessee is concerned, he has not undertaken any business activity upon such land and, therefore, it was to be taken a 'capital asset' in the hands of the assessee, thereby requiring the assessment of profit on sale of such property under the head 'capital gain'. 5.1 On this aspect, the Ld. Departmental Representative has merely reiterated the stand of the CIT(A), which is to effect that the property in question could ....
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....ies, capital gain and income from other sources. 6.1 The basis for the CIT(A) to treat the impugned plot of land as 'stock-intrade' is the fact that the property devolved to the assessee from the erstwhile partnership firm, where assessee's father was a partner. As per the CIT(A), the property was acquired by the partnership firm in 1972 and assessee's father died in February, 1987. As per the CIT(A), the final accounts of the erstwhile partnership firm were not available for examination, therefore, the manner in which the impugned plot of land was accounted for i.e. whether as capital asset or not, could not be verified. For the said reason, he proceeded to presume that the land was held by the erstwhile partnership firm as a "business asset for the purpose of its business". As per the CIT(A), the onus to establish the character of a land is on the assessee , which according to him was not discharged by the assessee. We have carefully considered the aforesaid presumption by the CIT(A) and find it wholly untenable. Firstly, even if it is assumed that the impugned plot of land was a 'stock-in-trade' in the books of account of the erstwhile partnership firm, yet that by itself is ....
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.....3.7 of the order of the CIT(A). We have perused the same and find that the claim of the assessee was that an expenditure of Rs. 74,23,333/- was incurred on levelling and construction of boundary wall on the plot of land. In support of the expenditure, assessee furnished bills/invoices raised by Mr. Nelson A. D'cruz proprietor of M/s.D'cruz Sons & Developers. A confirmation from the said concern was also filed before the CIT(A). The CIT(A) has called for a Remand Report from the Assessing Officer, whose comments have been reproduced by him para 4.3.5 of his order. Pertinently, as per the report of the Assessing Officer, the examination of the return of income of Mr. Nelson A. D'cruz downloaded from the system showed total credits to the P&L Account of Rs. 62,83,943/- and, therefore, as per the Assessing Officer the cost of land development of Rs. 74,23,333/- claimed to have been paid by the assessee to the said developer was not established. The CIT(A) has concurred with the said stand of the Assessing Officer. The CIT(A) also examined the bills issued by the said concern and he was not satisfied with the detailing of the work done therein. He also noticed that no tax was deducted ....