TaxTMI 
TaxTMI 
2021 (7) TMI 658
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....nces of the case and in law, the learned CIT(A) ought to have considered (i) intention of the assessee (ii) period of holding (iii) consistency in treating the sale of another pieces of same land as income under the head capital gain in subsequent years. 4. On the facts and in circumstances of the case and in law, the learned CIT(A) erred in upholding the denial of exemption u/s 54F of Rs. 51,31,063/- made by the AO rightly claimed as exemption u/s 54F by the appellant. 5. Any other ground which may be preferred at the time of hearing." 3. Briefly, the facts of the case are as under :- The appellant is an individual engaged in the business of builders and land developers. The return of income for the assessment year 2015-16 was filed through e-filing on 25.03.2016 declaring a total income of Rs. 49,64,470/-. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Circle-3, Nagpur ('the Assessing Officer') vide order dated 28.12.2017 passed u/s 143(3) of the Income Tax Act, 1961 ('the Act') at a total income of Rs. 1,01,58,080/-. While doing so, the Assessing Officer made addition of Rs. 1,00,85,013/- being the profits ar....
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.... trade and, accordingly, the Assessing Officer assessed the profits arising on sale of said land as "business profits" as against the claim of the appellant that the profits are in the nature of "capital gains". Accordingly, denied the claim of exemption u/s 54F of the Act. 5. On an appeal before the ld. CIT(A), the CIT(A) after referring to the plethora of judgements upheld the findings of the Assessing Officer. 6. Being aggrieved, the appellant is before is in the present appeal. 7. The ld. AR submitted that the asset was purchased in the year 2005 and was shown as a part of the fixed asset in the balance sheet. It is contended that the finding of the Assessing Officer that the assessee himself had divided the land into pieces is contrary to the facts as the layout of the said land was approved by local authority much before the acquisition by the appellant. He also filed the copy of the permission of the local authorities. He further contended that :- (a) The land was continued to be investment in the books of account till the date of sale. (b) The assessee is entitled to hold two different portfolios i.e. (i) stock in trade and (ii) investment. (c) The fact that the la....
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....purchase and sale of different pieces of land and (ii) the assessee is a dealer in the land. This approach of the ld. CIT(A) while confirming the action of the Assessing Officer cannot be appreciated as it is settled position of law that the assessee is entitled to maintain two different portfolios i.e. stock in trade as well as the investment. This is also clarified 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. The assessee had treated the transaction of purchase of land as investment in the books of account by showing this as a part of the fixed asset. 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). If there is any material on record to indicate that the intention of the party is only to re-sell the asset for profit, no doubt it is a stock in trade. In the present case, the land was sold after the gap of deca....
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....if an enhanced price could be obtained, that by itself is not enough to infer that an assessee is carrying on business. However, though profit motive in entering into a transaction is not decisive, if the facts and circumstances indicate that the purchase of the asset was made solely and exclusively with an intention to re-sell the asset at a profit, it would be a strong factor for inferring that the transaction was in the nature of business. [Para 10] On the application of the aforesaid tests, if the matter was examined, it was apparent that not only the Tribunal had applied the correct tests, but had also drawn the right inference. The findings of fact recorded by the Tribunal on the basis of evidence available before it could not be termed to be without any evidence, and once that was so, it was not possible to state that the Tribunal committed any error when it concluded that the assessment order was not erroneous. That as a consequence, the Commissioner could not have assumed jurisdiction under section 263 as stated hereinbefore, once an assessee has exercised its right to file a statutory appeal against the order of Commissioner made under section 263, the Tribunal is bound t....
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....investment. It had maintained throughout that all the shares were held by it as an investor and that it could not be regarded as a dealer because the shares did not form its stock-in-trade. That case of the assessee was negatived because of the extensive dealings and other facts and circumstances which were taken into consideration. The figure of purchases and sales as also of the profits relating to the years 1954 to 1957 justified the view that although up to a certain point of time it had been assessed as an investor, the multiplicity of the transactions occurring successively over the years supported the departmental stand that the assessee had ceased to be an investor and had become a dealer. Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment. The assessee, in the instant case, made no attempt whatsoever to make out a ....