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2014 (12) TMI 9 - AT - Income TaxAssessment of profit on sale of land – Income to be assessed under business and profession or not – Held that:- The land, gain from sale of which was subject matter of taxation is situated at Bowrampet Village, Dundigal Mandal, RR Dt. - AO has heavily relied upon observations made in the assessment order passed in case of M/s BCPL and others in the group - the picture which emerges is nature of land sold by assessee is similar to the land sold by BCPL and others within the group to M/s Varun Constructions – Following the decision in Bhavya Commissioner Constructions Pvt. Ltd., MS. Raghava Reddy, R. Srinivasa Rao, R. Uma Maheswar, P. Shivakumar, GC. Subbanaidu, T. Gopichand Versus Asst. Commissioner of Income-tax [2014 (9) TMI 85 - ITAT HYDERABAD] - the land is classified in the Revenue records as agricultural land and there is no dispute regarding this issue and actual cultivation has been carried on this land and income was declared from this land in the return of income filed by the assessee for the AY as agricultural income - the assessee has not applied for conversion of the agricultural land for non-agricultural purposes before sale of this property and the assessee has not put the land to any purposes other than agricultural purposes - neither the property nor the surrounding areas were subject to any developmental activities at the relevant point of time of sale of the land as per the evidence brought on record. 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 - when the land which does not fall under the provisions of section 2(14)(iii) of the IT Act and an assessee who is engaged in agricultural operations in such agricultural land and also being specified as agricultural land in Revenue records, the land is not subjected to any conversion as non-agricultural land by the assessee or any other concerned person, transfers such agricultural land as it is and where it is basis, in such circumstances, in our opinion, such transfer like the case before us cannot be considered as a transfer of capital asset or the transaction relating to sale of land was not an adventure in the nature of trade so as to tax the income arising out of this transaction as business income - the asset sold by assessee being in the nature of agricultural land cannot be considered as capital asset within the meaning of section 2(14) of the Act. There is nothing brought on record to suggest that assessee is involved in trading activity - assessee had purchased the land in the AY 2005-06 and has sold part of land in the AY for making investment in Bhavya Cements Ltd., therefore, it cannot be considered as a trading activity because sale of land is for a particular purpose – Decided in favour of assessee.
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