TaxTMI 
TaxTMI 
2022 (4) TMI 447
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....e: 1. The order of the Learned CIT (Appeals), in so far as it is prejudicial to the interest of revenue, is opposed to law and the facts and circumstances of the case. 2. On the facts and in the circumstances of the case and in law, is the Ld. CIT(A) justified in deleting the disallowance of the deduction claimed under section 54F of the Income Tax Act, 1961 for an amount of Rs. 4,48,10,155/- on the ground that nature of transaction in the instant case attracts capital gains and not business income. 3. On the facts and in the circumstances of the case and in law, is the Ld. CIT(A) justified in holding that the assessee did not exploit the asset for commercial benefit ignoring the fact that the Joint Development Agreement was entered with the "sole Intention" of profit maximisation. 4. On the facts and in the circumstances of the case and in law, is the Ld. CIT(A) justified in deleting the disallowance of the deduction claimed under section 54F of the Income Tax Act, 1961 by holding that the assessee did not venture into activities which were similar to adventure in nature of trade. 5. On the facts and in the circumstances of the case and....
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....1-A 09-May-14 63,13,436 7 412-A 04-Apr-14 50,00,720 8 312-A 21-Jun-14 46,89,788 Total 5,46,78,839 5. As already stated, the assessee and Ms. Swarupa Bejawada jointly purchased the property located at Harlur Village, varthur hobli and their share in the property and cost of acquisition was as follows: Particulars Owner Total Bhaskar Reddy Swaroopa B Share in Property at the time of Purchase 70% 30% 100% Area 30,492 13,068 43,560 Cost (A) 3,081,372 1,320,588 4,401,960 Super Built-up Area Received(B) 39,208 16,781 Cost Per Square Feet(A/B) 78.59 78.70 Purchase Consideration Total Sold area (sq,ft)(D) 18,009 Cost per square feet(E) 78.70 Cost of Acquisition Rs(D)*(E) 14,15,334 Indexed cost - 2004-05 - Year of Purchase 480 Indexed cost - 2014-15 - Year of Sale 1,024 Indexed cost of Acquisition(Rs.) 30,19,380 The cost of acquisition was claimed by the assessee as Rs. 30,19,380/- in the manner ....
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....stinguished the judgements of G. Venkataswamy & Co 35 ITR 594 (SC) and P.M. Mohammed Meerkhan v, CIT (1969) 73 ITR 375 (SC), which have been relied on by the AO in the impugned Order." 8. Aggrieved by the order of the CIT(A), the Revenue is in appeal before the Tribunal. 9. We have heard the rival submissions. The issue to be adjudicated is as to whether the sale proceeds of the built-up area which the assessee was to receive from the Developer as his share of built-up area under the JDA is to be assessed as Capital Gain or Business Income. In this regard the learned DR submitted that the deduction u/s.54F of the Act ought not to have been allowed to the assessee because the holding period of the built-up area that the assessee received under the JDA was less than 36 months and the capital gain was short term capital gain for which the benefit of deduction u/s.54F of the Act is not available. This argument of the learned DR is reflected is ground No.5 raised by the revenue though such a ground was never invoked by the AO or was discussed by the CIT(A). 10. On the issue whether the sale proceeds received by the Assessee on sale of flats that he obtained under the JDA gives ....
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....plunge may be enough provided it is shown to the satisfaction of the Court that the plunge was in the waters of the trade, but a mere purchase and sale of property-if that is all that is involved in the plunge-it may fall short of anything in the nature of trade. 12. The above tests laid down by the Hon'ble Supreme Court still holds good in deciding cases where the question arises for consideration as to whether a single or isolated transaction can be regarded as an Adventure in the nature of trade so as to characterize the income as business income. 13. The Supreme Court has also laid down that cases of commercial commodities stand on different footing from land. A transaction of purchase of land cannot be assumed without more to be a venture in the nature of trade Janki Ram Bahadur Ram Vs. CIT (1965) 57 ITR 21 (SC) and P.M.Mohammed Meerakhan Vs. (1969) 73 ITR 735 (SC). It was also held that land is not generally or ordinarily a trading commodity unlike, for example, manufactured articles that are normally the subject-matter of trade. Land, on the other hand, is often the subject-matter of investment CIT Vs. Kasturi Estates (P) Ltd. (1966) 62 ITR 578 (Mad). If a land-owner d....
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....7 taxmann.com 137(Guj.) SLP dismissed by Hon'ble Supreme Court reported in (2018) 95 taxmann.com 19 (SC) wherein it was held that to decide the question whether income from sale of shares has to be assessed as "Income from Business" or "Capital Gain", the intention at the time of purchase is very material. The assessee had no intention of doing any business and earn income at the time when he bargained to purchase the property in question and therefore the gain in question has to be regarded only as income chargeable to tax under the head "Capital Gain". The assessee is not in the business of dealing in real estate. The assessee's claim that there are no instances of similar transaction in the past is not disputed or contradicted by any material brought on record. As submitted by the learned counsel for the assessee, intention at the time of acquisition of the property will be a guiding factor. There is no material brought on record to show what the intention of the assessee was at the time when he acquired the property. The assessee claims that his intention was to hold the property as investments and to earn rental income. The Revenue says the circumstances show that the ....
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....ceive flats from the Developer under the JDA. Since that right was with the assessee for more than 36 months i.e., from the date of entering into JDA, the capital asset transferred was a long-term capital asset. 18. In this regard, we find that the AO/CIT(A) has not examined the claim of the assessee under the head "Capital Gain" in accordance with the provisions relating to capital gain as given in the Act. We therefore remand the question of computation of Capital Gain to the AO after due opportunity of being heard afforded to the assessee. The AO will examine the claim of the assessee that it did not sell its share of built-up area under the JDA but sold only it's right to receive built up area from the Developer and therefore the entire gain has to be considered as long-term capital gain as the rights under the JDA was owned by the assessee for more than 36 months. If on the contrary the AO comes to the conclusion that what was sold was the built up area under the JDA, then, the AO has to carry out the exercise of ascertaining as to how the sale consideration has to be bifurcated between land and built up area of flats. In flats/multi-storied apartments/commercial complexes,....
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....long term capital gains could be computed separately for land and building as held by the Hon'ble ITAT, Calcutta in the case of CIT vs Sri Sekhar Gupta[2001]114 Taxmann 122 wherein it was held that the land is an independent, identifiable asset and continues to remain as an identifiable capital asset even after construction of a building thereon. Identical views were taken by the Hon'ble Rajasthan High Court in the case of CIT vs Vimal Chand Golecha reported in [1993]201 ITR 442 and by the Hon'ble Madras High Court in CIT vs Dr. D. L. Ramachandra Rao [1999]236 ITR 51. However in order to claim the above capital gains separately for land and building, the assessee is required to give basic details like the original cost of acquisition of land and building, the year acquisition etc separately duly supported by necessary documentary evidences as they may be required at the time of scrutiny assessment. Based on the holding period of these assets, the capital gain is long term or short term and the indexed cost of acquisition could be computed. Likewise in order to claim the indexed cost of improvement necessary documents in support of the improvements done and the expenditure incurred ....