TaxTMI 
TaxTMI 
2026 (9) TMI 1702
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....the case as per statement of facts are as under :- "The appellant is an individual who had e filed his Return of Income for the AY 2021-22 on 31.12.2021 vide acknowledgement number 756619810311221 declaring Total income of Rs. 1,05,59,170/-. The case of the appellant was selected for complete scrutiny through CASS. An assessment order u/s 143(3) read with section 144B of the Income Tax Act, 1961 was passed on 28.12.2022 by imposing an impugned addition of Rs. 1,93,78,293/- as Long Term Capital Gain on account of conversion of Capital Asset into Stock in trade and Rs. 2,20,98,985/- as Business Income on account of sale of Stock in Trade whereas the fact is there was no such sale in the year under consideration. The appellant had merely transferred the flats (Stock in trade) to his wife Smt. Alka Singh without any consideration. The Ld. AO is unjustified and unlawful in imposing the impugned additions of Rs. 1,93,78,293/- as LTCG on account of conversion of Capital Asset into stock in trade and Rs. 2,20,98,985/- as Business Income on account of sale of stock in trade." 3. During proceedings before us the ld. Counsel of the assessee has filed a brief synopsis on both groun....
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....ied on by the assessee. In the present case, in terms of clause (a) of the JDA (page 40 of the paper book), "the developer M/s Pratinav Constructions shall construct at his own cost a Multistoried Building over the said land...". Thus, the appellant has contributed only land and has not converted his land into stock-in-trade for his business. The land has gone to developer whose business is to develop Multistoried Building. There is not a single contemporaneous piece of evidence to prove conversion: No books of account; No balance sheet; No capital account; No inventory; No trading account; No project account; and No business establishment. The appellant never became a builder or developer. The entire construction was undertaken by the developer. The appellant merely contributed the land and received six flats under the JDA (evidence attached at page 46 of the paper book). The AO has assumed conversion but has not proved conversion. II. UNREGISTERED JDA DOES NOT ESTABLISH CONVERSION. The JDA dated 07.04.2016 is admittedly unregistered. The Revenue has treated the JDA itself as proof of conversion; a joint Development Agreement is merely a contractual arrangement. Further, ....
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.... legal concession. We draw your kind attention to a Judgement of Hon'ble ITAT Delhi Bench C held in the case of Global Health Private Itd vs Dy CIT in ITA no 4237/DEL/2017 placed at page 144- 155 of the Paper Book. In para 5.3 the Hon'ble ITAT has held "that in the present case, the assessee company is in the health care business and not in business related to real estate and as such it cannot be said that assessee, by entering into the Joint Development Agreement, has converted the land into its stock in trade. Therefore, we have no hesitation in holding that there is no scope of applicability of section 45(2) of the Act to the facts of the present case." It is, therefore, humbly prayed that the invocation of Section 45(2) is without authority of law, and the addition of Rs.1,93,78,293 deserves to be deleted in full. Ground No. 2 IV. BUSINESS INCOME ADDITION IS INDEPENDENTLY UNSUSTAINABLE. Without prejudice, the addition under the head "Business Income also deserves to be deleted. There is no evidence that the appellant carried on any business. The appellant never undertook construction: never marketed flats: never maintained business records: ne....
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.....2025, placed at page 162-166 of Paper Book, has held that a deed executed by a husband in favour of his wife, unsupported by actual payment of consideration and corroborated by bank statements and an affidavit, does not constitute a "transfer" for income-tax purposes and cannot give rise to a sale attracting capital gains or business income. Thus, the addition of Rs.2,20,98,985 assessed as Business Income may kindly be deleted. 4. Per contra the Ld. DR relied on the orders of the authorities below. 5. We have considered the findings given by the AO in the assessment order and Ld. CIT(A) in the appellate order. We have considered the arguments of Ld. Counsel of the assessee and that of the Ld. DR. The coordinate Bench order in the case of Global Health Private Limited (supra) it has been clearly held by the coordinate Bench that the assessee company is in the health care business and not in business related to real estate as such it cannot be said that the assessee by entering into joint development agreement has converted the land into its stock in trade. 6. On this finding the coordinate Bench has held that there is no scope of applicability of Section 45(2) of ....