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2014 (11) TMI 258 - AT - Income TaxTransaction of purchase and sale of agricultural land - Business income or capital gains – Investment to be treated as capital asset or not u/s 2(14)(iii)(b) - Land located beyond 8 kilometers from the local limits of any Municipality or not - Held that:- The land is an agricultural land which is so recognized in the land revenue records at the time of purchase by the assessee and nothing has been done by the assessee for putting it to non-agricultural use - the sale of such land cannot be treated as sale of stock-in-trade merely because assessee is otherwise engaged in the business of sale/development of lands - onus has been aptly discharged by the assessee - the assessee has shown the land as a 'Personal Asset' as distinct from 'Business Assets' in the Balance Sheets - the lower authorities erred in treating the income arising on the sale of land at village Dhamane to be sale of stock-in-trade - the income arising on the sale of land at village Dhamane was on account of sale of investment - the land carried the features prescribed in section 2(14)(iii) of the Act, and, it qualifies to be an agricultural land excludible from the expression "capital asset" – thus, the matter is restored to the return of income filed by the assessee regarding the surplus on sale of agricultural land at village Dhamane – Decided in favour of assessee. Nature of income arising on the sale of plot at Kondhwa – Onus discharged or not - Held that:- The aspect that a taxpayer can have two portfolios i.e. investment portfolio comprising of assets which are to be treated as capital assets and a trading portfolio comprising of stock-in-trade which are to be treated as trading asset has already been noted by us in the earlier paras - merely because assessee is dealing in purchase and sale of land also cannot be a conclusive factor in holding that the impugned sale of land was a business transaction - the land has been disclosed in the account books as an 'Investment' and not as a stock-in-trade - the land has been held for a period of 9 to 10 years by the assessee - there is no charge made by the Revenue against the assessee that any steps were undertaken by the assessee for development of the land during the period it has been held by him – the transaction of sale of land at Kondhwa is to be treated as sale of investment chargeable to tax under the head 'capital gains' – thus, the CIT(A) is directed to assess the income on sale of land at Kondhwa as sale of investment chargeable under the head capital gains – Decided in favour of assessee.
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