2017 (6) TMI 521 - CALCUTTA HIGH COURT

Whether development of immovable property is in the nature of trade - profit from sale of such property is treated as business income or capital gains - Held that:- This was gain from improvement of the assessee’s property which the assessee held since 1965 and had all along shown in its books as fixed assets - there was no finding on the part of the AO that the assessee was involved in the business of real estate at any point of time - the intention to hold the property was not an adventure in the nature of trade - hence the transaction could not come within the ambit of adventure in the nature of trade - also the gain from sale of such property cannot be held as business income - Decided in favor of assessee

Whether the Loan advanced can be treated as deemed dividend u/s 2(22)(e) - Held that:- deemed dividend is to be charged to income tax at the hands of the common shareholder but not at the hands of the recipient of money unless the recipient company is also the shareholder of the company from whom the amount has been received - Assessee had not furnished any explanation in respect of the intention of showing trading of share - AO has also not doubted the genuineness of the documents placed on record by the assessee - hence no disallowance can be made - Decided in favor of assessee