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2015 (10) TMI 2838 - AT - Income TaxGains arising from sale of land - Nature of land sold - correct head of income - business income OR capital gains - period of holding of asset - contention of the assessee was that the assessee has sold part of the land after holding it for a period of 20 years and utilizing it for agricultural purposes during the said period without effecting any kind of improvement on the land, therefore, earning of sale of land has to be treated as capital gain and not profit and gains of business and profession - HELD THAT:- The land has been recorded in the Revenue records as agricultural land, there is nothing on record to show that the entry was wrong. As in the case of CIT v Sohan Khan [2008 (4) TMI 142 - RAJASTHAN HIGH COURT] made a remarkable observations and stated that in the absence of anything to show that assessee had purchased the land with the intention to sell it at a profit or that the assessee is a regular dealer in real estate, piecemeal sale of land by the assessee by earmarking plots constituted disposal of capital asset and not an ‘adventure in the nature of trade’ and therefore, surplus is taxable as capital gains. Also in Pai Provision Stores [2011 (8) TMI 725 - KARNATAKA HIGH COURT] held that even though development and sale of property was one of the object of the assessee firm, the assessee was in fact not carrying on that business hence income from sale of part of developed property, which was utilized in clearing the debts incurred in development of property was capital gains and not business income, more so even the remaining property was used by assessee in carrying out its business and letting out to tenants. In the instant case, the assessee sold part of the agricultural land holding for last 20 years and entire sale proceeds were invested in constructing the residential house, which clearly suggest that assessee is not in the business of sale / purchase of immovable property and, therefore, the stand taken by the authorities below are not sustainable. Decided in favour of assessee.
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