TaxTMI 
TaxTMI 
2026 (3) TMI 1005
X X X X Extracts X X X X
X X X X Extracts X X X X
....f this land was disclosed under the head "Income from business". According to the AO, the gain derived on sale of land was assessable to tax under the head 'capital gain'. The AO had applied the provision of section 50C of the Act, to compute the short-term capital gain derived by the assessee on the sale of land. It was found that the stamp duty paid on the sale of land was at jantri value of Rs. 1.37 crores. Accordingly, the AO had taken the sale consideration of land at Rs. 1.37 crores and worked out STCG of Rs. 1,05,22,850/- which was added to income. Further, the AO had also disallowed the claim for deduction of interest made by the assessee under the head income from business. The assessment was completed under section 143(3) on 18.03.2015 at total income of Rs. 1,07,58,980/-. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. 4. Now the assessee is in second appeal before us. The following grounds have been taken in this appeal: 1. The Ld. CIT (Appeals), National Faceless Appeal Centre (NFAC) has er....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the first ground taken by the assessee is general in nature. Hence, the ground no.-1 as taken by the assessee is dismissed. 6. Ground no. - 2 pertains to addition of Rs. 1,05,22,850/- on account of short term capital gain on sale of land. The Ld. AR submitted that the finding given by the AO that the assessee was not engaged in business of trading in land was not correct. He explained that the investment made by the assessee in purchase of land was disclosed as stock-in-trade in the balance sheet and, therefore, the intention of the assessee all along was to do trading in land. He explained that the land at survey number 279, 281/2 sold during the year was not a capital asset but stock-in-trade of the assessee. Under the circumstances, the provision of section 50C of the Act was not at all applicable to the facts of the present case. The Ld. AR has drawn our attention to the assessment order passed by the AO for the A.Y 2014-15, wherein the fact that the assessee was engaged in the business of dealing in land and real estate was duly acknowledged. He, therefore, requested that the addition of Rs. 1,05,22,850/- on account of short term capital gain was patently wrong and should....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the assessee, it is found that the assessee derived income from salary, income from house property, income from share in partnership firm, income from other source including rental income from machinery, plants etc. This apart the assessee had also disclosed income from business and profession wherein loss of Rs. 59,37,901/- was claimed. According to the assessee he was engaged in the business of trading of land and the investment made in the land was disclosed as stock-in-trade in the balance sheet. Merely because the investment in purchase in land was disclosed as stock-in-trade in the balance sheet it does not automatically lead to the conclusion that the assessee had carried on business and derived income from business. The conduct of actual carrying on business of purchase and sale of land was required to be demonstrated in order to establish that the assessee was engaged in such activity. From the P&L account for financial year 2010-11 brought on record in the paper-book, it is found that there was no sale of land during that year. The assessee had opening land stock of Rs. 2,89,35,358/- and another land was purchased for consideration of Rs. 2,37,06,580/- and the entire ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee and, therefore, expenses claimed on account of salary, telephone, depreciation, etc. were all disallowed. No evidence has been brought on record that this finding of the AO was challenged by the assessee. In the current year, the only transaction made by the assessee was sale of land for Rs. 35 lakhs, which was purchased 11 months earlier for a consideration of Rs. 30 lakhs, and the gain derived by the assessee in this transaction was disclosed under the head income from business. On the other hand, the AO had treated this gain as income from capital gains. Taking a holistic view of the activities carried on by the assessee and the findings given in the assessment order for A.Y. 2014-15, we are not inclined to interfere with the order of the AO that the income derived by the assessee on sale of land was liable to tax as short term capital gain. At the same time the invocation of provision of section 50C of the Act by the AO is not found to be correctly made. 10. The assessee had contended that the land was sold vide registered banakhat dated 11.04.2011. As per proviso to section 50C(1) of the Act, where the date of agreement fixing the amount of consideration and the date o....