2022 (4) TMI 1054

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....income from other sources' aggregating to Rs. 5,72,34,280/-. In the course of scrutiny assessment, it was noticed by the AO that the assessee had sold certain properties tabulated hereunder and an income of Rs. 5,63,49,034/- was earned thereon. Location of Property Date of Sale Date of purchase/Cost (Rs.) Sale Consideration Indexed cost of purchase Indexed Cost of Improvement Transfer Expenses Gain Profit Block No.409/Paiki 31.05.2013 19.06.2007 33,61,722 2,23,11,000 20,22,560 1,69,095 1,95,667 1,99,23,678 Block No.409/Paiki 14.08.2013 2,06,00,000 20,22,560 1,69,095 1,95,667 1,82,12,678 Block No.409/Paiki 28.01.2014 2,06,00,000 20,22,560 1,69,095 1,95,677 1,82,12,678       6,35,11,000     5,87,001 5,63,49,034 3.1 The profit arising on sale of land/property tabulated above was claimed as 'capital gains' in the return of income filed by the assessee for AY 2014-15 in question. The AO took note of sequence of events beginning from acquisition of land and actions taken by the assessee thereafter as listed in para 5 of the assessment order. Based on the various actions of the assessee, the AO essentially observed that the....

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.... 2,23,11,000 20,22,560 1,69,095 1,95,667 1,99,23,678' Block No. 409/ Paiki 14.08.2013 2,06,00,000 20,22,560 1,69,095 1,95,667 1,82,12,678 Block No. 409/Paiki 28.01.2014 2,06,00,000 20,22,560 1,69,095 1,95,677 1,82,12,678       6,35,11,000     5,87,001 5,63,49,034 6.2 Since the number of transactions of sale was substantial, the Assessing Officer show caused the assessee to justify its claim of long term capital gains. The assessee explained that the land was purchased on 19.06.2007 and was converted for non-agricultural use on 27.11.2010. The entire land was sold to three companies in the F.Y. 2013-14 belonging to the same group controlled and managed by Shri Rashesh Maganlal Vachhani. It was argued by the Ld, Authorized Representative that since the assessee had not undertaken any activity from the purchase till the date of sale, the same cannot be said to be constituted the activity of business and, therefore, the claim was rightly made. 6.3 According to the Assessing Officer, the activity of purchase, conversion to N.A. use and sale in different parts constitute business and trading activity. The As....

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....ng the necessary tests laid down therein to determine the chargeability to tax a transaction as business or otherwise also would clearly bring out that the transaction would be required to be treated as resulting into capital gains. The submissions of the appellant were forwarded to the Assessing Officer for his comments which are received by a Remand Report under Reference No. VAD/DCIT/Cir.3(10/Remand Report/2018-19 dated 11.06.2018. The same was provided to the assessee and a submission in rejoinder is also received. In the remand report, the Assessing Officer has reiterated the contentions as made in the assessment and has objected to the admission of additional evidences being the copy of Balance Sheets from the F.Y. 2007-08 till the year under consideration which, according to the assessee, could not have been objected particularly when the findings of the Assessing Officer are factually erroneous when he has himself noted that the verification of earlier years' returns as well as balance sheets show the conduct of such transactions on a regular basis whereas the fact remains that the assessee has never, in the past, disclosed any income nor has filed the Balance Sheets. E....

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....ultural land with a view to exploit for agricultural produce. The conversion into non agri. Land did not involve any substantial activity. Such act of conversion maximizes the value and liquidity but does not per se cast aspersions on the investment intentions. The holding of commercial asset is not barred for the purposes of S. 2(14) of the Act defining 'capital asset'. Thus, a non agri. Land can not be regarded as a 'trading asset' without anything more. There is no further development of land as incorrectly observed by the AO. No expenditure has been incurred for development of land. The assessee has not carried out any plotting of land and has merely transferred to three co. mananged by the same person namely Rashesh Maganlal Vacchani. The signatory on behalf of the transferees are common in the sale deed. Hence, the AO has proceeded on misconception of facts on this score as well. Hence, for all intent and purpose, the transaction of sale of land is only one albeit apportioned among three companies of the same person. 6.3 It is further contention of the assessee that the intention since acquisition is to hold the asset as investment which is also evident from the fact that su....