TaxTMI 
TaxTMI 
2017 (3) TMI 1978
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....he assessee and without giving adequate opportunity of hearing. 2) That in any case and in any view of the matter, action of Learned CIT-A in not assessing long term capital gain at NIL and by assessing the business income at Rs. 62,39,059/- is bad in law and against the facts and circumstances of the case and that too by adopting wrong facts and figures. 3) That having regard to the facts and circumstances of the case learned CIT-A has erred in law and on facts in confirming the action of Learned AO in making aggregate disallowance of Rs.3,90,000/- under the head expenses of soil and pathai and that too without giving adequate opportunity of hearing and without bringing anything contrary on record. 4) That in any case and in any view of the matter, action of learned Commissioner of Income Tax (Appeals) in confirming the action of learned A.O in making aggregate disallowance of Rs.3,90,000/- under the head expenses of soil and pathai is beyond jurisdiction, illegal, bad in law and against the facts and circumstances of the case. 5) That in any case and in any view of the matter, action of learned Commissioner of Income Tax (Appeals) in confirming....
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....consideration, the assessee converted the agriculture land into residential plots, built service roads and developed the entire property in the name of a colony, namely, Prahlad Nagarq. According to the assessee during the year, he sold plots measuring 4665 square yards for sale consideration of Rs.66,50,000/- and built service roads having area of 1100 square yards during the year. The assessee claimed expenses of Rs.4,00,300/- towards development/sales of plot. According to the Assessing Officer, the assessee sold plots having area 4665 square yards and 1476 square yards covered by service roads. According to the assessee, the entire property was sold in three assessment years having details as under: Assessment Year Land Sold Land used for Development Total land used Sale consideration Exp. Of sale 2010-11 4,665 1,100 5,765 6,650,00 400,300 2011-12 6,035 1,423 7,458 10,178,500 251,840 2012-13 604 142 746 1,274,000 25,480 Total 11,304 2,665 13,969 18,102,500 677,620 3.1 The assessee computed capital gain on sale considera....
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.... Gain A/c =1376682*6250000/7206250 Taxable Capital Gain 1,82,682.00 Business Income Calculation: Sales consideration of converted plot 66,50,000.00 Less: Cost of such land (treated as stock after conversion) (F.M.V.) 72,06,250.00 Gross Business Income (Loss) (-)5,56,250.00 Less: Expenditure on sale of plots 4,00,300.00 Net Income (-)9,56,550.00 3.5 The learned CIT(A) did not accept the above contention of the assessee on the ground that the valuation report dated 25/05/2013 was filed first-time before him subsequent to the completion of the assessment, but no request for admitting this additional evidence under rule 46A of the Income Tax Rules, 1962 was made before him. The Ld. Commissioner of Income Tax (Appeals) confirmed the action of the Assessing Officer relying on the judgment of the Hon'ble Supreme Court in the case of Raja J Rameshwar Rao Vs. CIT (1961) 42 ITR 179(SC) . He referred the observation of the Hon'ble Supreme Court that %where a person goes further and divides the land into plots, develops the area to make it more attractive and sells the land not as a single unit and as h....
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....nstruction of roads or development of land and sold the residential plots. The assessee developed the entire area of land in the form of a residential colony called % Prahlada Nagart . 3.9.1 In the present case the issue involved is whether the entire transactions of purchase of agriculture land and subsequent resale of developed residential plots constitute an activity of adventure in the nature of trade or merely a sale of capital asset and alternatively, whether the conversion of agriculture land into residential plots should be treated as conversion of capital asset into a stock in trade liable for 'capital gains' under section 45(2) of the Act and subsequent profit on sale of plots as business profit liable for tax under the head #profit and gains of business or 'profession'. 3.9.2 First, we examine whether the entire transaction of purchase of agriculture land and subsequent sale in the form of residential plots, is as an adventure in the nature of trade. 3.9.3 The Ld. AR argued that the transaction was not an adventure in the nature of the trade because at the time of purchase of the land there was no intention to resale it at a profit. For the propo....
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....oubt a relevant factor and unless it is offset by presence of other factors, it would raise a strong presumption that the transaction is an adventure in the nature of trade. Even so, the presumption is not conclusive and it is conceivable that, on considering all the facts and circumstances in the case, the court may despite the said initial intention, be inclined to hold that the transaction was not an adventure in the nature of trade. The Hon'ble Supreme Court then held that the decision about the character of a transaction in the contexts cannot be based solely on the application of any abstract rule, principal test and must be in every case depend upon the relevant facts and circumstances. 3.9.7 In the case of Sureshchandra Goyal (supra), also the Hon'ble High Court of Madhya Pradesh held the issue whether the converting of the land into plots and subsequent sale would be capital gain or adventure in the nature of the trade, is a question of fact. In the said case tax effect involved was less than Rs. 2.00 lakhs and the appeal was finally dismissed by the Hon'ble High Court in view of circular issued by the CBDT for not filing or withdrawing appeals in low tax rate cases. ....
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....nq and first part of the transaction becomes liable for capital gain tax in terms of section 45(2) of the Act, which reads as under: "Capital gains. 45. (1). .......................... (2) Notwithstanding anything contained in sub-section (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into, or its treatment by him as stock-in-trade of a business carried on by him shall be chargeable to income-tax as his income of the previous year in which such stock-in-trade is sold or otherwise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset." 3.9.12 The assessee also submitted computation of capital gain on first part of the transaction and business income from the second part of the transaction before the Ld. CIT (A). We find that evidences required for computation of capital gain were not requested by the assessee for admission as additional evidence and thus Ld. CIT-A did not decide the submissi....