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2014 (2) TMI 1349 - AT - Income TaxGain from sale of the plots after claiming indexation benefit - income from business or LTCG - plot so sold constituted its stock-in-trade - correct head of income - HELD THAT:- The ledgers of the assessee firm in books of the partners shows that the plots were introduced as a capital contribution by the said partner, and the said plots of lands were introduced as capital assets and have been so held and shown as investments in the books of accounts since many years in the past and such position were accepted in earlier years. We also found that plots no. 23B and 23C were held for more than 5 years. Plots no. 256 and 257 were held for more than 3 years 5 months .Had it been held as stock in trade, no developer would held it vacant for such a long period clearly indicate that they were held as investment with a motive to earn profits. All these aspects were not considered by lower authorities while reaching to the conclusion that plots were held as stock-in-trade and not as investment. Vide Tripatite Deed dt.03.08.2005 CIDCO formally transferred the said plots in favor of the assessee firm effecting the full transfer of the plots by Shri. Rahimtulla Abdul Hamid Mukri and others to M/s Sea Queen Developers. The transfer of the said plots were further formalized by CIDCO by transfer order dt. 19.09.2005. Subsequently, the said plots held as Long Term Capital Asset and shown as such in the balance sheets of respective years were transferred under an Agreement of Sale dt. 01.08.2008 to M/s Ravechi Properties on consideration of ₹ 10,55,00,00 and the capital gains of ₹ 8,26,04,800 after deducting the indexed cost of ₹ 2,28,95,200 was offered for taxation by the assessee firm. All these important factual aspects and documentary evidences have not been properly appreciated by lower authorities which resulted into wrong conclusion of holding that profit arising on sale of plots held as investment is liable to tax as business income rather capital gains. We set aside the orders of lower authorities and restore the matter back to the file of the AO for examining these documents in detail and for deciding afresh the taxability of profit arose on sale of plot as capital gains or as business income - Decided in favour of assessee for statistical purposes. Deemed dividend addition u/s 2(22)(e) - advances received by the assessee as deemed dividend - whether shares were held by the firm in the names of the partners - HELD THAT:- No investment was made by the assessee firm in the shares of said SHIPL nor any shares were issued to the assessee firm which were held in the names of its partners. No merit in the action of Assessing Officer for applying provisions of Section 2(22)(e), when the assessee firm is neither a registered shareholder nor beneficial shareholder of shares of SHIPL. Accordingly, the Assessing Officer is directed to delete the addition made u/s 2(22)(e) of the Income-tax Act, 1961. - Decided in favour of assessee
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