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2022 (10) TMI 1159 - AT - Income TaxCorrect head of income - Transaction of sale of land at Nagpur - Business Income Vs. Capital Gain - HELD THAT:- The assessee has used its capital to purchase the said land and what is recovered is the said capital. The transaction cannot be treated to be an adventure in the nature of trade since the transaction of sale was forced upon the assessee due to circumstances which are enlisted hereinabove. This transaction cannot be classified as an adventure in the nature of trade. It was not a transaction which was actively intended at the time of acquisition of land. The judgments of courts relied upon Assessee is squarely applicable to the facts of the case on hand. The Ld. DR of the Assessee has not brought on record any contra decision or shown that the decisions relied upon by the Assessee and as relied upon by the CIT (A) are over ruled - DR has neither raised any additional argument other than what the AO has stated and already dealt with by the CIT (A) in an elaborate order nor stated as to why the findings and reasoning of CIT(A) is incorrect either on facts or in law. We uphold the order of CIT(A) on this ground and hold that the Assessee has rightly offered the gain on sale of Nagpur land under the head "Capital Gain". Long Term v. Short Term Capital gain - HELD THAT:- We are of the opinion that the date of finality of contract is the date of this AGM resolution dated 24/09/2007 passed by the Vendor Company and not the date of MOU as submitted by Assessee. Although as stated by CIT(A) in his order, the MOU grants right of termination only to the Assessee, yet a company operates through resolutions and hence, the date when the AGM resolution was passed, the contract became binding on the Vendor Company giving unfettered rights to the Assessee here to purchase the property. Hence, we direct the AO to take the said date of resolution being 24.09.2007 as the date of when the property can be said to be held by the Assessee for the purpose of section 2(42A) of the Act and compute the long term capital gain accordingly. To that extent, the order of the CIT(A) stands modified. This ground is partly allowed. Project Completion Method Vs Percentage Completion Method - CIT(A) allowed the appeal of the Assessee upholding the validity of the Project Completion Method - HELD THAT:- Merely because percentage completion is a better method as per AO, does not make project completion method as invalid. The choice as to which accounting method to be followed is with the Assessee - AO has not rejected the books of accounts or invoked section 145 of the Act before rejecting the accounting method followed by the Assessee. The decision of Bombay High Court in the case of Aditya Builders [2015 (9) TMI 1304 - BOMBAY HIGH COURT] is squarely applicable to the facts of the case here. More importantly, the entire exercise is tax neutral as the Assessee has offered the income of the project under project completion method in A.Y.s 2013-14 to 2017-18 as detailed which is accepted by the Revenue. Hence, we uphold the order of CIT (A) in this ground and dismiss this ground of the Revenue.
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