TMI Blog2014 (6) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... Property Act – Decided in favour of Assessee. Addition of value of gold and jewellery – Held that:- Following Narasimha Reddy, Hyderabad And Others Versus The Asst CIT Cent. Circle-1, Hyderabad [2014 (6) TMI 587 - ITAT HYDERABAD] – assessee rightly contended that the jewellery found at the residence of the assessee is not only belongs to the assessee but also belongs to the family members of the assessee and the same should be considered as per the CBDT circular 1916 dated 11.5.1994 - thus, the matter is required to the be remitted back to the AO to give credit to gold and jewellery to each member of the assessee's family members in terms of CBDT circular No. 1916 dated 11.5.1994 if they are living under single roof as supported by documentary evidence – Decided partly in favour of Assessee. Addition of undisclosed consideration – Purchase of agricultural land – Held that:- The addition was made on the basis of a statement recorded from the assessee u/s. 132(4) of the Act at the time of search - the assessee filed a letter dated 15.12.2010 ad stated that the consideration paid was only Rs. 8.92 lakhs - There was no other evidence other than the statement recorded u/s. 132(4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acres situated at Sy. No. 212, Madinaguda village, Serilingampally Mandal, Hyderabad. The resultant capital gain was offered for tax in the regular returns and in the return filed u/s. 153A of Income-tax Act, 1961 for A.Ys. 2006-07 and 2007-08 on the basis of handing over of possession and sale effected. According to the lower authorities, the transfer took place on 16.9.2004 and capital gain is to be taxed in the A.Y. 2005-06. 3.2 We have heard both the parties and perused the material on record. Similar issue came up for our consideration in co-owner Sri Ch. Malla Reddy's case in ITA No. 771/Hyd/2013 for A.Y. 2005-06. The Tribunal vide order dated 6.6.2014 held as follows: 27. We have heard both the parties and perused the material on record. In this case the joint development agreement was entered by the assessee along with seven other persons with M/s. RVNPL on 16.9.2014. On entering this agreement, the developer has paid a sum of Rs. 75 lakhs as interest free refundable deposit to the land owners. The land owners delivered vacant physical possession of the property for development to the developer and the developer is allowed to obtain all necessary permissions and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2002-03; Paper Book p. 321 to 327. 30. Thus, the learned AR submitted that the statement made by the assessee in the statement of facts with regard to property owned by the assessee individual is an error. There is ample evidence on record to suggest that the property was owned by the HUF and capital gain arising out of transfer of the said capital asset was offered to tax by HUF in the A.Y. 2007-08 and 2008-09. It cannot be taxed again in the hands of the individual assessee which amounts to double taxation. The CBDT in its circular No. 14 (XL-35) dated 11.4.1955 directed the officers not to take advantage of ignorance of the assessee as to his rights. It is one of the duties to assist the taxpayer in every reasonable way, particularly in the matter of claiming and securing relief and in this regard the officers should take initiative in guiding a taxpayer where proceedings or other particulars where they indicate that some relief is due to him, etc. The purpose of this circular is merely to emphasise that the Department should not take advantage of assessee's ignorance to collect more tax out of him that which is legitimately due from him. 31. It was held by the Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility to pay income tax chargeable under section 4(1) of the Act thus, does not depend on the assessment being made. As soon as the Finance Act prescribes the rate or rates for any assessment year, the liability to pay the tax arises. The assessee is himself required to compute his total income and pay the income tax thereon which involves a process of self-assessment. Since all this is done under authority of law, there is no scope for contending that Article 265 is violated. 33. In the present case, it is an admitted fact that the HUF has declared the income arising out of transfer of property vide Joint Development Agreement dated 16.9.2004 in the hands of HUF for A.Ys. 2007-08 and 2008- 09 and paid tax on 5.8.2009 consequent to the notice issued to the assessee u/s. 153A of the Act on 9.9.2009. For A.Y. 2006-07 the HUF has filed the return of income on the same date admitting long term capital gains which was filed consequent to the search action and notice was issued u/s. 153C of the Act on 9.9.2009. For A.Ys. 2007-08 also return of income was filed on 5.8.2010 consequent to the notice issued u/s. 153C on 9.9.2009. Further, the assessment was framed for these assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of intent; it is the unqualified and unconditional willingness on the part of the vendee to perform its obligations. Unless the party has performed or is willing to perform its obligations under the contract, and in the same sequence in which these are to be performed, it cannot be said that the provisions of Section 53A of the Transfer of Property Act will come into play on the facts of that case. It is only elementary that, unless provisions of Section 53A of the Transfer of Property Act are satisfied on the facts of a case, the transaction in question cannot fall within the scope of deemed transfer under Section 2(47)(v) of the IT Act. Let us therefore consider whether the transferee, on the facts of the present case, can be said to have 'performed or is willing to perform' its obligations under the agreement. 49. Even a cursory look at the admitted facts of the case would show that the transferee had neither performed nor was it willing to perform its obligation under the agreement in the assessment year under consideration. The agreement based on which capital gains are sought to be taxed in the present case is agreement dated 11.05.2005 but this agreement wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct of the developer in this assessment year shows that it had violated essential terms of the agreement which tend to subvert the relationship established by the development agreement. Being so, it was clear that in the year under consideration, there was no transfer of not only the flats as superstructure but also the proportionate land by the assessee under the joint development agreement. As per clause no. 12.11 and 19.1 of Development Agreement-cum Power of Attorney, time is the essence of the contract and as per clause No. 12.11 the said property is to be developed and hand over the possession of the owners allocation to the owners and or their nominees within 24 months from the date of receiving the sanction of the plan from HUDA and Municipality/Gram Panchayat with a further grace period of 3 months. But the fact remains that the transferee was not only failed to perform its obligations under the agreement, but also unwilling to perform its obligations in the assessment year under consideration. Even otherwise, the assessing authorities has not brought on record the actual position of the project even as on the date of assessment or he has not recorded the findings whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l ingredients to cover a transaction by the scope of Section 53A of the Transfer of Property Act. Revenue does not get any assistance from this judicial precedent. The very foundation of Revenue's case is thus devoid of legally sustainable basis. 50. That is clearly an erroneous assumption, and an the provisions of deemed transfer under Section 2(47)(v) could not have been invoked on the facts of the present case and for the assessment year in dispute before us. In the present case, the situation is that the assessee has received only a meagre amount' out of total consideration, the transferee is avoiding adhering to the agreement and there is no evidence brought on record by the revenue authorities to show that there was actual construction has been taken place at the impugned property in the assessment year under consideration and also there is no evidence to show that the right to receive the sale consideration was actually accrued to the assessee. Without accrual of the consideration to the assessee, the assessee is not expected to pay capital gains on the entire agreed sales consideration. When time is essence of the contract, and the time schedule is not adhered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in refunding such deposit, the same shall be adjusted at the time of final delivery, by the developer against the area to be handed over to the assessee applying a mutually agreeable rate. Considering these specific clauses and peculiar facts and circumstances of the case, we are of the considered view that the capital gains in the case on hand, are liable to be taxed only in the year, in which the developed area, coming to the share of the assessee, has been handed over to the assessee, in terms of the development agreement. In the present case, as the undisputed facts on record reveal, the developer has not undertaken any developmental activity to execute the construction work even today, even though in the final supplemental agreement dated 18th October, 2007 provided extension of time for the execution of the construction, by stating that the construction activity should be completed and developed area coming to the share of the assessee should be handed over within a further time of 48 months from the date of that supplemental agreement. 12. It is an undisputed fact that as on date, there was no developmental activity on the land which is subject matter of dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Chaturbhuj Dwarkadas Kapadia v. CIT (supra) undoubtedly lays down a proposition which, more often that not, favours the Revenue, but, on the facts of this case, the said judgment supports the case of the assessee inasmuch as 'willingness to perform' has been specifically recognized as one of the essential ingredients to cover a transaction by the scope of Section 53A of the Transfer of Property Act. The Revenue does not get any assistance from this judicial precedent. The very foundation of Revenue's case is thus devoid of legally sustainable basis. 60. That is clearly an erroneous assumption, as the provisions of deemed transfer under Section 2(47)(v) could not have been invoked on the facts of the present case and for the assessment year in dispute before us. In the present case, the situation is that the assessee has not received any consideration, and there is no evidence brought on record by the Revenue authorities to show that there was actual construction taken place at the impugned property in the previous year relevant to the assessment year under consideration and also there is no evidence to show that the right to receive the sale consideration was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by the assessee for A.Ys. 2006-07 and 2007-08, since the same income was held to be assessed in the A.Y. 2005-06. 4.1 The assessee also filed a petition for admission of the additional ground stating that the additional ground is purely on legal issue and no investigation of facts is required as the facts are already available on record. The AR also placed reliance on the judgment of Gujarat High Court in the case of S.R. Koshti vs. CIT (276 ITR 165) and C. Parekh Co. vs. CIT (122 ITR 610) for the proposition that an income cannot be assessed twice. 4.2 We have heard both the parties. This additional ground is dismissed as infructuous as we have already allowed the assessee's main ground in earlier para. 5. In the result, ITA No. 735/Hyd/2013 is partly allowed. ITA No. 736/Hyd/2013 (A.Y. 2006-07) 6. In this appeal the assessee raised the ground that the CIT(A) erred in upholding the assessment of the AO mentioning the income declared as Rs. 6,93,054 as against the declared income of Rs. 46,25,600. 6.1 At the time of hearing, the learned AR not pressed this ground. Accordingly, this ground is dismissed as not pressed. 6.2 In the result, ITA No. 736/Hy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sides, he also referred to their decision in the case of Dr. Maya Shenoy [124 TTJ (Hyd) 692], holding that the Development Agreement has the effect of transferring the land from the owner to the developer. The Assessing Officer also relied on the decisions in the cases of Chaturbhuj Dwarakadas Kapadia vs. CIT (260 ITR 491) (Bom) and Jasbir Singh Sarkaria (2007 294 ITR 196 AAR). Accordingly, he opined that in the instant case also, the assessee was liable for Capital Gains in the Financial Year 2006-07, the year in which the Development Agreement was entered into and the transfer took place. 7.3 On appeal, the CIT(A) observed that in addition to being evidenced by seized material, M/s. Krishna Ventures Pvt. Ltd, vide their letter dated 2-12-2010 had also confirmed that the impugned Development Agreement had indeed been entered into in respect of the land admeasuring Ac. 67 and 30 Gts. at survey Nos. 74, 82, 81, etc., Yellampet. The cost thereof was Rs. 45 crores and the sharing ratio between the land owners and the developer too had been specified at 33.33% and 66.67%, respectively. Besides, possession of the land has also been handed over to the developer for the construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferee is enabled to exercise general control over property and to make use of it for the intended purpose. Therefore, the CIT(A) did not find any merit in the contention of the assessee that the Development Agreement amounted to only an empty permission to enter the property and carry on construction. 7.6 The CIT(A) further observed that even if the developers subsequently did not even obtain any approvals from the Local Authorities or undertook any construction of bungalows in the impugned land, and even if the land is standing as it is even after the lapse of five years, the Development Agreement dated 28-3-2007 cannot be said to have lost its legal sanctity. Clearly, there is no stipulation in the said agreement that the agreement itself will lapse or would become invalid if construction is not undertaken or plans are not got approved from the Local Authorities within a certain period of time. 7.7 The CIT(A) observed that the contention with regard to willingness of the developer to perform its part of contract, there is no evidence to the effect that no such willingness existed or there was any change or cancellation of the proposed development itself. In fact, in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill the time the impugned Development Agreement is itself rescinded, the assessee and others continue to have an enforceable right to receive the consideration as stipulated therein. 7.9 The CIT(A) observed that the reliance of the AR of the assessee in the case of K. Radhika vs. DCIT [149 TTJ (Hyd) 736], it was held that handing over of possession is only one of the conditions u/s. 53A of the Transfer of Property Act, it is necessary to go into whether the transferee is willing to perform its obligation. The Tribunal felt that if the transferee, by its conduct and its deeds, demonstrates that it is unwilling to perform its obligations under the agreement, the date of agreement ceases to be relevant and in such a situation it is only the actual performance of transferee's obligations which can give rise to the situation envisaged in sec. 53 of the Transfer of the Property Act. In the case of the present assessee however, the unwillingness of the developer has not been established with any evidence. On the other hand, since the Development Agreement continues to remain in force and possession of the lands has been taken in part performance thereof, it can be reasonably conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, his wife, elder daughter and daughter in law. However, the assessee could not substantiate such claim with proper evidence and the investment in gold jewellery was not properly explained. During the course of assessment proceedings, the assessee was once again given an opportunity to substantiate his claim. However, no evidence could be furnished to substantiate the source of acquisition. On the other hand, the Assessing Officer noticed that there were no entries/items relating to jewellery in the cash flow statement. In the absence of any explanation, the entire gold jewellery of Rs. 17,47,512 was treated as undisclosed investment for the Assessment Year 2009-10. 8.2 On appeal, the CIT(A) observed that in the course of search, the gold jewellery, totally weighing 1336.6 g was claimed as belonging to the assessee himself, his wife, elder daughter and daughter-in-law. Though such claim could not be established with proper evidence, explaining the source of Investment In jewellery by the said persons either in the course of search or even in the assessment proceedings, it is the contention of the AR that in view of Instruction No. 1916 of the Board dt. 11-5-1994, no addition co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, even if benefit of the said Instruction was given in her aspect also in the course of search, no such benefit could have been given at the assessment stage. Likewise, in the case of the daughter-in-law of the assessee also, no evidence regarding any acquisition of gold jewellery by her could ever be produced. The assessee has not even proved the social standing of her parents so as to give full benefit of the limits as per the said Instruction in her case. However, considering the social traditions, he was of the view that gold jewellery to the extent of 250 g can be considered as explained on account of her holding. 8.5 The CIT(A) held that out of the total gold jewellery of 1336.6 g found in the course of search, that to the extent of 850 g can be considered as reasonably explained. The Assessing Officer is therefore, directed to consider the difference of 486.6 g only as unexplained investment in gold jewellery. Accordingly, the proportionate addition of Rs. 6,36,196 was sustained by him. Against this the assessee is in appeal before us. 8.6 We have heard both the parties and perused the material on record. Similar issue came for consideration in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land had been handed over to the developer for construction of residential units. The Assessing Officer noticed that the land owners possessed Ac. 2.00 Gts. of land in survey No. 212 (part), situated at Madinaguda village, Serilingampally Mandal since 20-9- 2001. The individual share holdings of 7 owners of the said land were 10 Gts. each while Smt. Sakuntala Yadav and the assessee HUF owned 5 Gts. each. All of the same was given for development. The land owners and developers were entitled to 36% and 64% of the built up area including parking and terrace, whereas the total constructed space as per the Development Agreement was shown at 70,000 square feet. 9.2 Since in terms of the above said Development Agreement cum GPA dated 16-9-2004, the land owners had handed over vacant and peaceful possession of the entire land to the developer, the Assessing Officer opined that the said agreement, as per the provisions of sec. 2(47)(v), constituted a transfer. He noted that in several judicial pronouncements, it has been held that any transaction which allows the possession to be taken would constitute transfer within the meaning of sec. 2(47): and that any transaction which involves a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) have also expressed a similar view after referring to the above mentioned decision of the Hon'ble Bombay High Court Accordingly, following the above mentioned judicial pronouncements, it is clear that since the assessee and others had entered into the above referred Development Agreement on 16-9-2004 and had also given possession of land for construction of residential units thereon, on the said date itself, the capital gains arising from such transfer was indeed chargeable to tax in the assessment year 2005-06. 9.5 The CIT(A) observed as regards the contention that the above Development Agreement gave the developers the limited right to seek necessary permission from authorities and to enter the property and construct buildings as per approved plans only, that as observed by the Cochin Bench of the Tribunal also in the above mentioned decision, it is a fact that the builder/developer cannot start any construction, unless physical possession of the land is handed over to him. Therefore, he found no merit in the contention of the assessee that the Development Agreement amounted to only an empty permission to enter the property and carry on construction. Obviously, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2005-06. Against this the assessees are in appeal before us. 9.8 We have heard both the parties and perused the material on record. Similar issue came up for adjudication in ITA No. 735/Hyd/2013 in earlier paras 3.2 to 3.6 of this order in the case of Sri G. Narasimha Yadav. Following the same ratio and taking a consistent view, we are inclined to allow this ground in both the appeals. 9.9 The assessee raised an additional ground in this appeal that the CIT(A) is not justified in not directing the AO to delete the income from capital gains, admitted by the assessee for A.Ys. 2006-07 and 2007-08, since the same income was held to be assessed in the A.Y. 2005-06. 9.10 The assessee also filed a petition for admission of the additional ground stating that the additional ground is purely on legal issue and no investigation of facts is required as the facts are already available on record. The AR also placed reliance on the judgment of Gujarat High Court in the case of S.R. Koshti vs. CIT (276 ITR 165) and C. Parekh Co. vs. CIT (122 ITR 610) for the proposition that an income cannot be assessed twice. 9.11 We have heard both the parties. This additional ground is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular sources of income. During the course of assessment proceedings, the assessee was once again given an opportunity to explain the fact. However, it was reiterated that the same was purchased for Rs. 8,92,000 only. 11.2 From the statement u/s. 132(4), which was recorded in the local language, viz., Telugu only, the Assessing Officer observed that while giving the details of immovable properties owned by him and his family, the assessee had clearly stated that they had purchased 35 acres of land at the cost of Rs. 2 lakhs per acre and that the total amount of Rs. 70 lakhs was paid to the landlords. It was also admitted that the registered Value per acre was Rs. 2,240 only though he had purchased the same for Rs. 2 lakhs per acre. The assessee had given the date of agreement as of Oct. 2005 and registration specifically as 9-12-2005. He had also given details of mode of payment of sale consideration, giving the details of cheque Nos. and amounts to the vendors and had categorically admitted that the balance amount of Rs. 61 lakhs was part paid on the agreement date and partly on the date of registration. In view of the above, the Assessing Officer concluded that the said stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT (55 SOT 45) (UR) (Mum) it is held that addition made by the AO on the basis of statement recorded u/s. 132(4) alone is not justified, unless there is corroborative evidence linking the statement with undisclosed income. 11.5 Being so, in our opinion, the addition cannot be confirmed in the absence of corroborative evidence. Accordingly, the addition is deleted. 11.6 In the result, ITA No. 742/Hyd/2013 is allowed. ITA No. 743/Hyd/2013 (A.Y. 2007-08) 12. The assessee in this appeal raised the ground that the CIT(A) erred in upholding the addition of Rs. 87,72,500 representing the alleged undisclosed consideration paid for the purchase of agricultural lands at Velluru despite the fact no evidence attributable for such investment has been in the possession of the Department. 12.1 Facts of the case are that the assessee had purchased acres 7 guntas 39 of agriculture land at Velluru Village Warangal Mandal for Rs. 27 lakhs Sri Durgaiah Yadav the assessee in his statement u/s 132(4) stated that the total consideration paid was Rs. 87,72,500 and that the land was purchased in the name of his son Sri Suresh Yadav. In the return filed u/s 153A the assessee admitted Rs 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me time. Consequently the addition of Rs. 87,72,500 made in A.Y. 2007-08 may be deleted. 12.4 As discussed in earlier para in ITA No. 742/Hyd/ 2013, herein also the addition is made on the basis of a statement recorded from the assessee u/s. 132(4) of the Act. In our opinion, the statement recorded u/s. 132(4) alone cannot be a basis for addition in the absence of corroborative material. Following the above ratio and taking a consistent view, we are inclined to delete the addition placing reliance in earlier para in ITA No. 742/ Hyd/2013. This ground is allowed. 12.5 In the result, ITA No. 743/Hyd/2013 is allowed. ITA No. 744/Hyd/2013 (A.Y. 2008-09) 13. In this appeal, the assessee raised the ground that the CIT(A) erred in upholding the addition of Rs. 86,76,307 representing the alleged undisclosed long term capital gains on sale of lands at Seetharampuram despite the fact no evidence attributable for such investment has been in the possession of the Department. 13.1 Facts of the case in brief are that the assessee in his statement u/s. 132(4) dated 7-8-2008 had stated that he had sold 400 sq. yards of land at Bowenpally to Shri Nagaraju of Karimangar for Rs. 87 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the recorded consideration of Rs. 32,22,000/- only. Subsequently, he retracted from such admission on the ground of confusion at the time of recording of statement, despite the fact that capital gains of Rs. 25,05,700/- had been admitted by him earlier. However, it is clear that in view of discussion in para 6 above, such retraction cannot be accepted as true and correct, in view of the fact that the subsequent claim is not supported by any corroborating evidence. The mere mistake in stating the month of sale being April 2008 cannot establish that the above statement u/s. 132(4) was made under any confused state of mind. On the other hand, it is clear that the in addition to the evidentiary value of a statement u/s. 132( 4), the consideration admitted by the assessee therein was also supported by the prevailing rate of Rs. 25,000/- per sq. yard in the residential area of Bowenpalli in the year 2007-08. Considering both the factors together, the CIT(A) held that he had no hesitation in upholding the addition of Rs. 86,76,307/- on this ground in the assessment year 2008-09. 13.4 We have heard both the parties and perused the material on record. This issue is similar to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng parking and terrace, whereas the total constructed space as per the Development Agreement was shown at 70,000 square feet. 15.2 The CIT(A) by placing reliance on the order of the Tribunal in the case of Dr. Maya Shenoy (cited supra) confirmed the addition. Against this the assessee is in appeal before us. 15.3 We have decided similar issue in paras 3.2 to 3.6 in ITA No. 735/Hyd/2013 wherein we have allowed the claim of the assessee. Accordingly, in the instant case, there was no development activity by the developer. We cannot say the condition laid down u/s. 2(47)(v) of the Act has been fulfilled. Being so, taking a consistent view, we are inclined to allow this ground of the assessee. 15.4 The assessee raised an additional ground in this appeal that the CIT(A) is not justified in not directing the AO to delete the income from capital gains, admitted by the assessee for A.Ys. 2006-07 and 2007-08, since the same income was held to be assessed in the A.Y. 2005-06. 15.5 The assessee also filed a petition for admission of the additional ground stating that the additional ground is purely on legal issue and no investigation of facts is required as the facts are already a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transfer within the meaning of sec. 2(47): and that any transaction which involves a transfer of title in future or exchange of a property to be put up in future, would necessarily constitute a transfer , within the meaning of sec. 2(47). For this proposition, he relied on the decision of Tribunal in the case of Smt. Shantha Vidya Sagar Annam (cited supra). Besides, he also referred to their decision in the case of Dr. Maya Shenoy (cited supra), holding that the Development Agreement has the effect of transferring the land from the owner to the developer. The Assessing Officer also relied on the decisions in the cases of Chaturbhuj Dwarakadas Kapadia (cited supra) and Jasbir Singh Sarkaria (cited supra). Accordingly, he opined that in the instant case also, the assessee was liable for Capital Gains in the Financial Year 2006-07, the year in which the Development Agreement was entered into and the transfer took place. 16.3 We have heard both the parties and perused the material on record. Similar issue came up for consideration in earlier paras in ITA No. 737/Hyd/2013. Following the same ratio and taking a consistent view, this ground of the assessee is allowed. 16.4 In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The CIT(A) confirmed the order of the AO. Against this, the assessee is in appeal before us. 17.3 The assessee's primary contention is that the property is an agricultural land and is situated at beyond 8 km from any notified municipality which fact is supported by VRO's letter placed at Paper Book page Nos. 78 to 79. The AR also submitted that the assessee is offering agricultural income in its regular return of income and also proceedings u/s. 153A. He submitted that though the assessee filed additional evidence before the CIT(A), he has failed to admit the same stating that these are additional evidences. He submitted that purchasing of land and selling the same at higher rate cannot be a reason to hold that the assessee's property is a nonagricultural land. He relied on the judgement of Gujarat High Court in the case of CIT vs. Manilal Somnath (106 ITR 917). 17.4 The learned DR relied on the order of the CIT(A). 17.5 We have heard both the parties and perused the material on record. Similar issue came for consideration before this Tribunal in the case of Kapil Chit Funds Pvt. Ltd. vs. ITO in ITA No. 1424/Hyd/2012. The Tribunal vide order dated 5.9.2013 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rritorial limit of any municipality without notification of Central Government as held by the Karnataka High Court in the case of Madhukumar N. (HUF) (cited supra). 10.23 From the facts and circumstances of the case, as narrated before us, it is important to note that what was the intention of the assessees at the time of acquiring the land or interval action by the assessee between the period from purchase and sale of the land and the relevant improvement/development taken place during this time is relevant for deciding the issue whether transaction was in the nature of trade. Though intention subsequently formed may be taken into account, it is the intention at the inception is crucial. One of the essential elements in an adventure of the trade is the intention to trade; that intention must be present at the time of purchase. The mere circumstances that a property is purchased in the hope that when sold later on it would leave a margin of profit, would not be sufficient to show, an intention to trade at the inception. In a case where the purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land is subjected to agricultural operations as the assessee declared the agricultural income from the said land. This ground of the assessee is allowed. 17.7 In the result, ITA No. 748/Hyd/2013 is allowed. 18. In the result, Sl. No. ITA No. Result 1. 734/Hyd/2013 Dismissed 2. 736/Hyd/2013 Dismissed 3. 735/Hyd/2013 Partly allowed 4. 738/Hyd/2013 Partly allowed 5. 739/Hyd/2013 Partly allowed 6. 740/Hyd/2013 Partly allowed 7. 745/Hyd/2013 Partly allowed 8. 746/Hyd/2013 Partly allowed 9. 737/Hyd/2013 Allowed 10. 741/Hyd/2013 Allowed 11. 742/Hyd/2013 Allowed 12. 743/Hyd/2013 Allowed 13. 744/Hyd/2013 Allowed 14. 747/Hyd/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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