TaxTMI 
TaxTMI 
2022 (2) TMI 1453
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....heir contention with material evidence to that effect. Hence the addition of Rs. 12,54,98,299 made as revenue profits deserves to be deleted. 3. The Learned Authorities Below have erred in restricting the credit to be given to TDS at Rs. 39,24,156 as per Original return filed by the Appellant as against a TDS of Rs. 53,62,080 as per 26AS. Hence the difference in TDS of Rs. 14,37,924 deserves to be allowed by lifting the restriction imposed. 4. The Learned Authorities Below ought not to have charged interest under section 234 B on the tax resulting from the addition of Rs. 12,54,98,299 as business income from sale of land. Hence the interest of Rs. 79,40,064 levied deserves to be deleted. 5. The Learned Authorities Below ought not to have charged interest under section 234 C on the tax resulting from the addition of Rs. 12,54,98,299 as business income from sale of land. Hence the interest of Rs. 12,15,071 levied deserves to be deleted. 6. Without prejudice to the foregoing, The Learned Authorities Below are not justified in denying the Appellant indexation cost to the cost of acquisition while arriving at the business income of Rs. 12,54,98,299 fr....
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....threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. ......................................................1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period." Considering the submissions by both sides and respectfully following the observation by Hon'ble Supreme Court, we find it fit to condone the delay of 41 days caused in filing the present appeal before this Tribunal and admit the appeal. 3. Brief facts of the case are as under: The assessee is a company incorporated under Companies Act with the main object to Manufacture & sale of Cancer Medicine. The assessee has an objective of constructing a Big Cancer Hospital to provide medical facility to the patients. The Ld.AO observed that the assessee submitted a project report to KIADB to allot suita....
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....nds as a Business income instead of Long term capital gains and cited following case laws in support of it. * CIT Vs Sudhita Devi Jain 259 ITR671(P&H) * CIT Vs Suresh Chand Goyal 298 ITR 277 (MP). * CIT Vs Mohammed Mahideen 176 ITR 393 (Mad). Inspite of the objections, the Ld.AO passed the order treating the transactions as business income. 4. Aggrieved by the order of Ld.AO, assessee preferred appeal before Ld.CIT(A). The Ld.CIT(A) considered the issue by observing as under. "4. Since the assessee had intetion of selling the land in future, he entered into an agreement for 'Project Management Services' with on M/s Sunlarge consultants Private Ltd. Bangalore, dated 02.04.2012. On perusal of the facts of the case as brought out by the Assessing Officer I am of the opinion that though at the point of time of allotment of the land by KIADB it was for specific purpose since it was not carried out by the appellant and during the course his intention had been changed to sell the land for a profit thereby in the transactions while selling the land in piece meal the intention of the appellant was surfaced clearly that it was a prof....
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....appointed consultants for carrying on sale of the land. 6.4 The Ld.AR thus submitted that the sale could not be treated as adventure in the nature of trade rather it has to be treated as capital gains in the hands of the assessee and the benefits arising thereof needs to be given to assessee. 7. In support of, the Ld.AR placed reliance on the following decisions. i. CIT (Central) v. Bagmane Developers (P.) Ltd [2017] 392 ITR 379 (Karnataka) ii. Janki Ram Bahadur Ram v. CIT [1965] 57 ITR 21 (SC) iii. Sri Gajalakshmi Ginning Factory Ltd. V. CIT [1952] 22 ITR 502 (Madras) iv. CIT v. Kasturi Estates (P.) Ltd. [1966] 62 ITR 578 (Madras) v. CIT v. A. Mohammed Mohideen [1989] 176 ITR 393 (Madras) vi. CIT v. Raunaq Singh Swaran Singh [1972] 85 ITR 220 (Delhi) vii.Bhogilal H. Patel v. CIT [1969] 74 ITR 692 (Bombay) viii. CIT v. Suresh Chand Goyal [2007] 298 ITR 277 (Madhya Pradesh) ix. CIT v. Sushila Devi Jain [2003] 259 ITR 671 (Punjab & Haryana) x. CIT v. Mohakampur Ice & Cold Storage [2005] 281 ITR 354 (Allahabad) xi. Deputy CIT v. Smt. Thankamma Simon [2015] 55 taxmann.com 331 (Cochin - Trib.....
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....pital asset rendering it to be brought to tax under the head "capital gains" or as adventure in the nature of trade rendering it to be brought to tax as a disposal of stock-in-trade under the head "profits and gains from business". 11.1 We note that assessee treated the land acquired as fixed asset by including it in the block of assets and not as current asset. In the present facts, the asset is acquired as capital asset for purposes of business carried on by the assessee, the intention at the time of purchase or acquisition and the intention at the subsequent point in time, through conduct and affirmative actions, reveal that the capital asset so purchased initially was converted or treated as stock-in-trade of the business carried on by the assessee. 11.2 The legislature has in its wisdom envisaged such a situation and has brought on the Statue books the provisions of section 45(2) of the Act by virtue of the Taxation laws (Amendment) Act, 1984 w.e.f 1.4.1985 and there is now a statutory recognition that even asset initially acquired as investment can be subsequently converted into stock-in-trade. Apparently, none of the decisions cited by the Ld.AR considers the impact of....
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....n the converted stock-in-trade is sold or otherwise transferred. For the purpose of section 48 also this section has provided the method for computing capital gain in such circumstances, i.e., the fair market value of the asset on the date of such conversion shall be deemed to be the full value of the consideration received or accruing as a result of transfer of capital asset. There is no ambiguity found in the said provision. Under section 2(47)(iv ), which provision also came into effect from 1-4-1985, when an asset is converted by the owner as stock-in-trade of business, such conversion is to be treated as transfer. Corresponding amendment was made in section 45 for computing capital gain arising out of such transfer. In the present case the asset was converted into stock-in- trade before 1-4-1985. Even assuming that before 1-4- 1985 such conversion could not be said to be transfer within the meaning of section 2(47 )(iv) but admittedly, after 1-4-1985, the extended meaning of the word 'transfer' was applicable in respect of such conversion. However, capital gain could not be computed unless such stock-in-trade was sold or otherwise transferred. The gai....
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....r his proprietary concern. Besides, the manufacturing and sale of furniture, the assessee can also deal in trading in shares in the name of same proprietary concern keeping the stock in trade of shares separate. From any angle, if the facts of the case are viewed, we would find that the conversion of investment in shares and securities in stock in trade is valid and the assessee is entitled to benefit of section 45(2) of the Act in the light of huge volume of transactions in shares." 11.6 We draw reference to the decision of the Hon'ble Madras High Court in case of CIT v. Essorpe Holdings (P.) Ltd. (2017) 83 taxmann.com 280, upheld the view taken by the Hon'ble Chennai Tribunal in case of M/s. Essorpe Holdings(P.) Ltd. vs. ACIT reported in (2015) 44 CCH 920. Hon'ble Madras High Court held as under: '21. A part of the land measuring 5.075 acres, out of the total extent of 10.150 acres, were sold even before filing the demerger application before this Court. The aforesaid sale was not brought to the notice of the High Court. The High Court of Madras, as per the Scheme of Demerger approved EML demerging with M/s. EHPL, transferring the real estate division of E....