AI Drafter 
TaxTMI 
TaxTMI 
2018 (3) TMI 893
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....e Ld Assessing officer in treating the income arising from Long term Capital Gains as income arising on account of adventure in nature of trade. 2. That the Learned Commissioner of Income Tax (Appeals) has further erred in confirming the action of the Ld Assessing officer in denying the benefit of indexation to the assessee. 3. The Learned Commissioner of Income Tax (Appeals) has further erred in confirming the action of the Assessing Officer, in not allowing compensation paid to VLS capital Ltd amounting to Rs. 3.40 crores as cost of improvement to be deducted from sale consideration for the purposes of Capital Gains. 4. The Learned Commissioner of Income Tax (Appeals) has further erred in ignoring the fact that ....
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..... 1995 - 1996 to F.Y. 1998 - 1999. Thus meeting the total cost of land to the assessee of Rs. 3,55,61,243/-. The assessee from the sale consideration has reduced an amount of Rs. 3,40,00,000/- stated to be paid to one M/s. VLS Capital Ltd.. Accordingly capital gain after indexation has been worked out in loss.income. The circumstances of the company to purchase the land, then develop it and then gv., adventure in the nature of trade. The assessee had purchased this land from around 50 different villagers in West Bengal then developed it and sold the developed land to Housing Board at a considerable profit. Even the sale consideration receipt has been further invested by the assessee in lands as advances to various persons in some other town....
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....ads business income. 3. Now I come to the issue of payment of Rs. 3,40,00,000/- to M/s. VLS capital Ltd. It is intimated that the original title deeds of the land were in the possession of M/s. VLS Capital Ltd. They were not releasing these original title deeds. It is also stated that an MOU is entered between the assessee and M/s. VLS Capital Ltd., whereby the assessee was obliged to pay this amount of Rs. 3,40,00,000/- to M/s. VLS Capital Ltd. It is found that this transaction of the assessee company with M/s. VLS Capital Ltd. is not a real one. The original title deeds as such do not contain any financial value so long as the title and possession of the land is with the assessee company. Secondly, VLS Capital Ltd. had been a sha....
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....sue in hand is two folds. Firstly, the assessee has claimed investment of land and on selling the same in the impugned year has claimed capital gains whereas the Assessing Officer has considered the same as adventure in the nature of trade. Secondly, deduction of Rs. 3.40 crores being payment made to VLS Ltd where the assessee claims to have pledged original title deeds to the said company and they were not releasing the said title deeds and hence the assessee was obliged to pay Rs. 3.40 crores which had been claimed as cost for computing the capital gains and included in the indexed cost of acquisition. Our attention was drawn by the ld. counsel for the assessee to page 23 of the paper book being balance sheet of the assessee company as on....
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....t and have been accepted under assessment proceedings from time to time, as investments is not under dispute. 6. Regarding the expenditure made necessary evidences were placed on record and no dispute in that regard has ever been made. These submissions were submitted before the DCIT, Central circle - 17, New Delhi placed at pages 41 and 42 of the paper book. The assessee also submitted a letter to the DCIT, Central Circle 17, New Delhi dated 7.12.2011, available at pages 43 & 44 of the paper book in this regard. The Assessing Officer has not pointed out any defect in the same. For the years since 1995 there is no dispute in this regard as to the cost of land i.e. purchase of land and the improvement of the same. It is also not in disput....
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....ature of trade and at least, the interest part to the extent of Rs. 1.40 crores has to be allowed in view of the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Mithlesh Kumari [1973] 92 ITR 9 [DEL] wherein it has been held as under: "We are in respectful agreement with the observations of the Calcutta and the Bombay High Court in the decisions referred to above. In the present case, we find that the assessed in order to purchase the land had not only to borrow the amount of Rs. 95,000.00 which was the consideration for the purchase of the land but also had to pay interest of Rs. 16, 878.00 on the amount borrowed by her. The amount of Rs. 95,000.00 plus the interest paid by the assessed constitutes the actual co....