TaxTMI 
TaxTMI 
2017 (4) TMI 1604
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.... directed against the order of the ld. CIT(A)-V, Bangalore dated 12-09-2014 and this appeal is arising out of the assessment order passed by the AO u/s 143(3) r.w.s.263 of the IT Act, 1961. Both these appeals were heard together and are being disposed of by this common order for the sake of convenience. 2. First we take up appeal of the assessee arising in course of proceedings u/s 263 of the IT Act i.e. in ITA No.5969B)/2013. The grounds raised by the assessee in this appeal are as under; "1. The CIT, Bangalore-IV erred in both in law and on the facts of the case in setting aside the assessment. 2. He erred in holdings that the purchase and sale of land should be treated as an adventure in the nature of trade and not as capital gains.....
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....ng judicial pronouncements; 1) CIT Vs Kelvinator India Ltd. 256 ITR 1 (Del.) 2) Malabar Industrial Co. Ltd. Vs CIT 243 ITR 83 (SC) 4. As against this, the ld. DR of the revenue supported the order of the ld. CIT. He also submitted that it is noted by the CIT in para-8 of his order that the property in question was claimed as stock in trade in previous years and a finding has been given by the CIT that as per the provisions of the Act, stock in trade cannot be considered as a capital asset and therefore, a profit on sale of land in question cannot be assessed as capital gain. He has also drawn our attention to para-11 of the order of the ld. CIT and pointed out that in this Para, it is noted by the ld. CIT that the assessment order does....
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....operty on that date and cost of property has to be assessed as business income and only further accretion in value of property after such conversion can be taken as capital gain. In the present case, there is no such claim of the assessee regarding conversion of stock in-trade in to capital asset. The claim of the assessee is this that the property in question was no doubt shown as stock-in trade in all the previous years but because no expenses were incurred and no step was taken to commence the business of dealing in real estate, the business has not been commenced and therefore, the stock-in trade has to be construed as capital asset from day one. We find no merit in this claim of the assessee because as per the P&L account for the year ....
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....al asset. 7. Now, we examine the applicability of the judgment of the Hon'ble Apex Court rendered in the case of Malabar Industrial Co. Ltd( Supra) on which reliance has been placed by both sides. In para-10 of this judgment, it is noted by the Hon'ble Apex Court that the AO had accepted the entry in the statement of account filed by the assessee in the absence of any supporting material and without making any enquiry and under these facts, it was held that the assessment order passed by the AO was erroneous. In the present case also, no enquiry was made by the AO on this aspect that whether the income in question is assessable under the head "Business income or under the head capital gains" and therefore, in our considered opinion, this j....
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....ted the order of the ld. CIT(A). 11. We have considered the rival submissions. We find that the ld. CIT(A) has followed the judgment of the Hon'ble Madras High Court rendered the case of CIT Vs Geo Industries & Insecticides (I)Pvt. Ltd 234 ITR 541 and the relevant portion of this judgment has been reproduced by the ld. CIT(A) in his order. As per the same, in that case, the Commissioner in his order passed u/s 263 of the Act has set aside the assessment order for two years i.e. 1974-75 & 1975-76 and directed the ITO to make a fresh assessment in accordance with the law so as to exclude the losses of the Cashew Department and Hessain Department, if any, after giving adequate opportunity to the assessee. Hence, it is seen that as per the fac....