TaxTMI 
TaxTMI 
2016 (8) TMI 1454
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....r : Return of income declaring total income of Rs. 3,97,701/- was filed on 29- 03-2010. The appellant derived income from retail business of computer spare parts, share profits from the firm and income from other sources. During the course of assessment proceedings it was noted by the AO that appellant has sold immovable property located at mouza Kaldongari, P.H. No. 40/A, S.No. 63/1, Nagpur on 06-05-2009 for consideration of Rs. 60 lakhs to one Shri Rajendra Ramesh Dhore. The said property had purchased by the appellant vide purchase deed executed on 25-03-2008 for a consideration of Rs. 31,50,000/-. The profit arising on this transaction had not been shown by the appellant in his return of income. It was explained by the appellant that he had a certificate from Patwari, Tehsil, Nagpur dated 23-08-2011 to the effect that the said property is around 10 km. away from Nagpur Municipal limit. It was also submitted by the appellant that while the said property has been sold at Rs. 60 lakhs, only part consideration of Rs. 5 lakhs has been received, while the remaining was paid by post dated cheques which were not honoured. The details of payment received was given as under : Sr.No....
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....e conversion of the land to NA was done by the appellant at the behest of the purchaser Shri Rajendra Ramdas Dhore by the original owner and that the appellant was never interested in doing so and sold the land as an agricultural land and that he was not party to the said conversion. It was further stated that it is clear from the record that the conversion was done after the execution of the sale deed by the appellant. The AO after considering the reply, came to the conclusion that the said transaction was entered into with the business purpose and that therefore the net profit should be taxed as business income. 6. Upon assessee's appeal, learned CIT(Appeals) considered the assessee's submissions and held as under : "5. I have carefully considered the facts of the case and the submissions of the appellant. In order to determine the real nature of transaction of purchase and sale, various factors are to be taken into consideration viz. the intention of the assessee at the time of purchase, treatment of the land in question, holding period, actual use of land, location of land, surrounding circumstances near future use of land etc. Thus the question that a particular la....
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....d for non agricultural activities. Thus at the time of purchase he was having complete knowledge that the land will not be used for agricultural purposes. The fact that no agricultural activity what so ever was carried out by the appellant also establishes the business intent of the appellant. 5.4 Thus the above facts of no agricultural operation being carried out in the said property, the efforts to convert the said land into non agricultural land, taking advance from the eventual purchaser even before the said property had been purchased and being aware all along that the said land will be used for plotting by builders clearly reflects the commercial and profit element in the purchase and sale of the said property. The Hon'ble Supreme Court in case of Gemini Pictures Circuit Private Ltd. (220 ITR 43) has observed and held in paragraph 5 are as under: " ... 5 A recent decision of this court in Sarifabibi Mohmed Ibrahim v. CfT [1993J 204 fTR 631, rendered by a Bench comprising one of us (B. P. Jeevon Reddy J.) is relied upon by learned counsel for the Revenue. The Bench observed: "Whether a land is an agricultural land or not is essentially a question....
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.... to the land for agricultural use and accordingly it was not used for agriculture purpose by the assessee as well as even by the purchaser, who is a builder, then the provisions of section 2(14)(ii) would not apply in the case of the assessee. N 6. Thus the real use of the land is very relevant and material for deciding the true intention of the appellant in acquiring and selling the land in question. In the instant case, by his very conduct, even prior to its acquisition, the appellant has never left anyone with any doubt regarding his intention. It was always the business motive that drove the appellant and there never was any intention of holding the said land as an investment. In view of the above facts and circumstances of the case, I hereby hold that the nature of transaction of purchase and sale of the said property was an adventure in the nature of trade and has to be taxed accordingly." 7. Against the above order, the assessee is in appeal before the ITAT. 8. I have heard both the counsel and perused the records. Learned counsel of the assessee submitted that the assessee has sold the agricultural land. That the said land was beyond 8 kms. of the jurisdictio....
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....ly from the builders to whom the said land was eventually sold and who plotted the land and sold it in pieces. The assessee was one of the 'witnesses' who signed the sale deed when the land was sold to Rajendra Ramdas Dhore who had later sold 14 plots to one M/s United Builders and Developers for Rs. 15 lacs and 14 plots to Shri Sahebrao Wadekar for Rs. 15 lacs and the sale proceeds totalling Rs. 30 lacs were directly paid to the assessee by these two purchase parties. Further more the assessee has also made application for conversion of the said land for non agricultural land for residential purpose. Thus the assessee was aware of the purpose for which the entire transaction was being entered at the threshold. 12. Further there is no evidence of any cultivation activity on the said land. The assessee has not disclosed any agricultural activity/income/expenditure on the said land. Rather the facts of the case clearly indicate that the assessee was in the process of converting the land into non agricultural land and he eventually sold for non agricultural activities. 13 As held by Hon'ble Apex Court in the case of Sarifabibi Mohmed Ibrahim vs. CIT 204 ITR 631; "Whe....