AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 1263
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....e appellant. 2. In the facts and circumstances of the case and in law, the finding of the learned C.I.T.[A] that the profits of Rs.1,99,02,720.00 earned by the appellant during the relevant previous year on sale of agriculture lands constitute taxable business income of the appellant being arbitrary, perverse and based on surmises and conjectures the same may please be vacated. The various reasons given by the learned C.I.T.[A] in support of his said conclusion being devoid of merits and legally unsustainable the same may please be vacated and the findings of the learned C.I.T.[A] may please be vacated. 3. The appellant denies his liability to pay any interest u/s 234 B and 234 C of the I.T. Act 1961 and hence the same may please be deleted." 3. Briefly put, the controversy is with regard to the taxability of Rs.1,99,02,720/- representing surplus earned on sale of agricultural lands. The contention of the assessee is that the surplus is a capital receipt exempt from tax as the agricultural lands in question do not fall within the meaning of expression "capital asset" in terms of section 2(14)(iii) of the Act. On the contrary, the Assessing Officer as well as the CIT(A) have re....
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....ding in agricultural lands undertaken by the assessee, and therefore he ultimately taxed the surplus as business income. The Assessing Officer noted that assessee is a builder and developer and was engaged in the business of building construction and sale/purchase of plots. In para 3.1 of the assessment order, Assessing Officer has enumerated the profit earned by the assessee out of land trading i.e. sale and purchase of plots in various assessment years, i.e. 2007-08 to 2010-11, including for the year under consideration. Considering that the assessee was regularly engaged in the business of sale and purchase of plots, Assessing Officer proceeded to hold that the impugned transactions by way of purchase and sale of agricultural lands was also undertaken by the assessee as business transactions. The CIT(A) has also affirmed the stand of the Assessing Officer after considering the facts and circumstances of the case. The CIT(A) has decided the issue against the assessee by reaching to the following conclusions : (i) that assessee was a builder and developer and he had shown profit from land development activity in the past as well as in the future assessment years, including the cur....
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.... hand, the learned Departmental Representative appearing for the Revenue has defended the orders of the authorities below by placing reliance thereon. 8. We have carefully considered the rival submissions. Undisputedly, there is a plethora of judicial rulings on the issue as to whether a particular transaction involves sale of investment to be taxed as under the head 'capital gains' or sale of stock-in-trade so as to be taxed under the head 'business income'. So however, it's a trite law that whether a particular transaction is to be understood as sale of investment or a trading activity is liable to be decided having regard to the relevant facts and circumstances of the particular case. In the present case, what is sought to be made out by the Revenue is that though the surplus in question is arising out sale of agricultural lands but the same is liable to be assessed as 'business income' because assessee has undertaken a series of transactions in a systematic way which have generated profits and such activity being in the line of the existing business of the assessee; therefore, it is liable to be treated as a business activity. 9. Firstly, the plea of the assessee that he is n....
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....ement with the inference drawn by the lower authorities that assessee has failed to substantiate that any agricultural activity was genuinely carried out on the said land during the period it has been held by the assessee. Be that as it may, the aforesaid circumstances are enough to deduce that the motive of the assessee to acquire the land in question was not to undertake cultivation or any other agricultural operations on the said land. The aforesaid inference gets strengthened by the fact that other than the lands in question, there is no material to show that the assessee was holding agricultural lands in past for the purpose of undertaking agricultural activities. 11. In view of the aforesaid discussion, we are unable to accept the plea of the assessee that the intention of the assessee to purchase the impugned agricultural lands was to undertake agricultural operations. On the contrary, the manner in which assessee has undertaken acquisition of lands, which are adjacent to each other, by way of multiple acquisitions and thereafter sold the same on proximate dates to the buyer, who is also a land developer, tantamounts to undertaking a trading activity and therefore surplus o....