2018 (4) TMI 183

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....rm capital gain; and ii) In case the income from sale of land is treated as long term capital gain, whether the assessee is eligible for indexation benefit and deduction under section 54 of the Act. 3. Brief facts are, the assessee an individual is engaged in the business of builders and developers through its proprietory concern M/s. Everest Developers and M/s.Everest Builders. For the assessment year under dispute, the assessee filed its return of income declaring total income of Rs. 1,13,42,620. During the assessment proceedings, the Assessing Officer found that in the relevant previous year, the assessee has sold a land at Khar Danda and profit from which has been shown as long term capital gain. On perusing the agreement for sale,....

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....eing aggrieved of such addition, the assessee preferred an appeal before the learned Commissioner (Appeals). 4. The learned Commissioner (Appeals) though found that in the Balance Sheet of Everest Developer the subject land appears as investment, however, he was of the view that if the intention of the assessee at the time of purchase of land in the year 1995 was for the purpose of investment, the land should have appeared in the personal Balance Sheet of the assessee and not in the Balance Sheet of the Everest Developers. Thus, he was of the view that at the time of purchase of land, the intention of the assessee was to hold the land as business asset and develop it in future. Agreeing with the Assessing Officer that the assessee was in p....

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....ome from business. We have heard rival submissions and perused material available on record. Though, in the assessment order the Assessing Officer has stated that in the Balance Sheet of Everest Developer, the subject land has been shown as stock-in-trade, however, the learned Commissioner (Appeals) has recorded a factual finding that in the Balance Sheet of Everest Developer, the land appears as investment. Though, we agree with the learned Departmental Representative that accounting entries appearing in the books of the assessee are not conclusive and the intention of the assessee while purchasing the land has to be looked into. However, the true intention of the party, whether to hold the land as investment or stock-in-trade (business as....

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....tmental Authorities that assessee's claim has been rejected primarily on two grounds, firstly, because it has not been shown in the personal Balance Sheet, and secondly because assessee has not converted the land to stock-in-trade before its sale. We fail to understand how on the basis of aforesaid reasoning it can be concluded that the assessee was treating the land as business asset. Thus, reasonings on which the learned Commissioner (Appeals) has treated the land as business asset of the assessee are not at all relevant for deciding whether the land in question was held as investment or business asset. It appears from record, in assessment year 2006-07, the Assessing Officer had assessed the money received from Samir Bhojwani in pursuanc....