2015 (12) TMI 1871

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....g that the gain on sale of agricultural lands was taxable as business income of the appellant as against the claim of the appellant that the same was exempt from tax. 2] The learned CIT(A) erred in holding that the appellant firm was engaged in the business of trading in lands and accordingly, the gain of Rs.11,12,595/- was taxable as business income of the appellant. 3] The learned CIT(A) failed to appreciate that the lands sold in this year were capital asset of the firm and since the said lands were agricultural lands and beyond 8 kms from the municipal limits, the gain arising on sale of lands was exempt from tax. 4] The learned CIT(A) ought to have appreciate that- a. The lands sold in this year were capital assets of the appel....

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....ds and in view thereof, the gain offered as capital gain should have been offered as business income. The assessee furnished written submissions to the show cause notice issued by the Assessing Officer in this regard, which is incorporated at pages 2 to 4 of the assessment order. The Assessing Officer was of the view that the profit from sale of agricultural lands was to be taxed as business income as the principal business of the assessee was to sell land. The said lands were acquired with the motive of dealing and not for the purpose of cultivating. Further, the assessee had not shown any agricultural income in the past years. Ever since the agricultural lands were acquired, the assessee had shown the agricultural lands as business assets....

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....irm had been and shall continue to be dealing in lands, development of lands, conducting business of manufacturing rice, etc. The said Deed of Partnership was filed by the assessee along with submissions dated 01.12.2011 and further, copies of balance sheet filed for assessment years 2003-04 to 2006-07 were perused by the CIT(A) and they revealed that the lands were shown in the balance sheet under the head 'List of Sundry Debtors related with land transactions Scheme - VII'. The details of lands as shown in the schedule are tabulated at para 4 at pages 9 and 10 of the appellate order. Similarly, the said lands were shown in the assessment year under consideration. Some of the lands were sold by the assessee resulting in profit under disput....

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....iness income in view of the facts and in view of declaring the same as assets in the hands of the assessee. 9. We have heard the rival contentions and perused the record. The assessee is a partnership firm and the main activity in which the assessee is engaged is in dealing the lands. The factual finding of the CIT(A) in this regard is that the assessee had owned various lands, which have been declared in the balance sheet under the 'list of Sundry Debtors related with land transactions - Scheme - VII' starting from assessment year 2003-04 and then in assessment year 2004-05. During the year under consideration, there is certain movement in the lands and two of the lands have been sold by the assessee. In view of the large number of transa....