TaxTMI 
TaxTMI 
2021 (7) TMI 287
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....profit arisen on sale of land as "Business Income" at Rs. 11,76,88,305/- as against the claim of respondent/assessee company that the profits on the sale of land as Long Term Capital Gains at Rs. 10,62,38,203/-. The Assessing Officer also made addition of Rs. 70 lac by holding that the respondent / assessee had received consideration in the form of allotment of Corporate Box by Maharashtra Cricket Association (MCA) which was not disclosed in the return of income. 3. The brief factual matrix leads to the above addition is as under : M/s. Adrus Estates & Properties Pvt. Ltd., is a Private Limited Company which was converted into Limited Liability Partnership namely, M/s. Adrus Estates & Properties LLP (the respondent / assessee) herein w.e.f 20.10.2010 purchased an agricultural land admeasuring 262R (2 Hector and 62 R) situated at Gat No.167 Gahunje from M/s. City Park Ltd., vide an agreement dated 22.02.2007 in the name of its Director Dr. Cyrus Poonawalla. The said agricultural land was agreed to be sold to Maharashtra Cricket Association (MCA) vide Memorandum of Understanding (MOU) dated 21.01.2011 for a total consideration of Rs. 13,75,50,000/-. Out of the agreed total conside....
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.... Bombay High Court in respect of CIT Vs. Baguio Investment Pvt. Ltd. According to the respondent / assessee company, the ratio of the decision of Hon'ble Bombay High Court in Baguio Investment Pvt. Ltd., is squarely applicable to the facts of the present case. 5. Considering the above explanation of the respondent / assessee company, the Assessing Officer concluded that the land was purchased out of the proceeds received on allotment of 8% redeemable non-cumulative preference shares each to M/s. Cyzachem Pvt. Ltd. According to the Assessing Officer 8% redeemable non-cumulative preference shares are only in the nature of borrowed funds and taking into consideration the fact that the land was converted into non-agricultural land by the respondent / assessee after the sale to MCA and the fact that respondent / assessee has also generated huge profits establishes that motive is only to sell the property for profit, therefore the transaction is in the nature of adventure in trade and brought tax the profit arising out of the sale as "Income from business". 6. The addition was also on account of alleged un-disclosed consideration of Rs. 70 lacs. 6.1. During the course of assessm....
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....et Stadium, he submits that it should be assessed as a Revenue item as undisclosed income of the respondent / assessee. 11. On the other hand, the learned counsel for the respondent / assessee submitted that there is no material on record to say that the land was originally purchased with an intention to resell for profit. He further submits that mere fact that realization of the capital investment and generation of huge profit would not amount to an adventure in nature of trade. Having regard to the fact that the land was held for a period of six years coupled with the conduct of the respondent / assessee by showing the land as investment, profits can not be assessed to tax under the head Business Profits. he placed reliance on the following decisions : * Janaki Ram Bahadu Ram Vs CIT (SC) 57 ITR 21 * CIT Vs. Baguio Investment Pvt. Ltd - Bomby High Court (ITA 998/2011) * CIT Vs. Nathuram Ramnarayan (P) Ltd - Bombay High Court 151 ITR 767. * CIT Vs. Kasturi Estates P. Ltd - Madras High Court 62 ITR 578. * PCIT Vs. John Poomkudy - Kerala High Court - 101 taxmann.com 244. Finally, he submits that the ratio of the decision of Hon'ble B....
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....o adventure in nature of trade. The mere fact that the respondent / assessee generated huge profit ipso facto not enough to infer that the transaction is in the nature of adventure in trade. 13. The contention of the respondent / assessee that it has not been engaged in any other transaction of purchase and sale of land remains uncontroverted by the Department. Therefore, there is no material on record to prove that the respondent / assessee is a dealer in land. In any event, it is settled position of law that assessee is entitled to maintain two different portfolios i.e., Stock-in-trade as well as Investment. This position is also accepted by the CBDT in the context of taxing the profits in respect of sale transaction and shares and securities vide CBDT Circular No.4 of 2007 dated 04.05.2007. 14. It is settled position of law that to determine whether a particular transaction is an adventure in the nature of trade or investment, the test to be applied is intention of the party at the time of acquisition of the property as held by the Hon'ble Supreme Court in the case of G. Venkataswami Naidu & Co. (supra). "It is therefore, clear that if an asset is purchased by way of i....