Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (5) TMI 634 - AT - Income TaxDisallowance of profit in sale of agriculture land - whether transaction in property by assessee company should not be treated as business activity - Held that:- There is no enabling provision in the income-tax law prescribing that even if the assessee's income is exempt by a provision, then it can be forcibly brought into the tax net by assuming the assessee's activity to be adventure in the nature of trade. It is a settled position by Hon'ble Delhi High Court in Delhi Apartments (P) Ltd. (2013 (3) TMI 330 - DELHI HIGH COURT ) that real estate companies can also hold separate portfolio of land as stock-in-trade and as investment portfolio; the sale of investment portfolio is always taxed as capital gains. Thus, assuming worst against assessee, even if it is inferred that it has carried on business activity so long as it holds specified agricultural land in terms of s. 2(14) in,i,e. not being an asset, its transfer will neither attract capital gain tax nor can be treated as business income. In view of the foregoing and respectfully following the case law cited by the assessee we have no hesitation but to held that the assessee's gains were profits from sale of specified agricultural land which does not come within the definition of asset as prescribed under s. 2(14) and by virtue of s. 2(lA)(a) r/w s, 2(14)(iii) r/w s. 10(1) the assessee's gains from sale of such agricultural land are exempt income - Decided in favour of assessee Disallowance under section 40A(3) - Held that:- The activities of the assessee was not in the nature of adventure of trade. However the purchase of land was an investment and was not stock in trade. The cash payment made by the assessee exceeding ₹ 20,000/- have duly been explained by the assessee. The AO has neither doubted the transaction nor it has doubted even the registration of sale deed nor it has doubted the amount. Since the AO has not doubted any of the above and further the land purchase was in the nature of investment and, therefore, following the judgment of the Hon’ble Supreme Court in the case of Attar Singh Gurmukh Singh vs. ITO (1991 (8) TMI 5 - SUPREME Court ) and also following the Hon’ble Jurisdictional High court in the matter of Smt. Harshila Chordia vs. ITO, (2006 (11) TMI 117 - RAJASTHAN HIGH COURT) which was relied upon by the Hon’ble Punjab & Haryana High Court in the matter of Gurdas Garg vs. CIT,(2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT) whereby it has been held that the rigour of section 40A(3) are not attracted - Decided in favour of assessee
|