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2019 (12) TMI 250 - AT - Income TaxNature of land - capital asset or stock in trade - assessment u/s 153A - Assessee has declared the plot as capital asset - But after search, the same was shown as stock in trade and shown the income as business income - adventure in the nature of trade or not - whether the assessee is entitled in law to take a different position about the character of income in the return filed under section 153A of the Act or not - assessee submitted that, the assessee and the co-owners got the said land converted into non-agricultural land in August 2008 i.e. barely few months later and put up the residential housing plot scheme known as 'Krish Villa' while providing for common infrastructure and internal roads. Held that:- The narrated sequential action clearly seeks to pronounce the indomitable intention of the appellants to acquire/approach land parcels with commercial motives. From the real, substantive and systematic course of activity or conduct with a set purpose clearly underscores the real intent of the assessee. The concrete material on record leaves no manner of doubt that the acquisition of land under sale was induced by commercial spirit. At this juncture, it will be pertinent to observe that the intention of the assessee is to be judged not with reference to the income declared under a particular head of income as prescribed in the statute, but is required to be decided on the basis of commercial principles. The assessee has moved swiftly and did everything possible to exploit the divided land commercially at the first available opportunity. This type of activity cannot be, in our considered opinion, regarded as capital acquisition taxable under the head 'capital gains'. Such organized course of commercial exploitation of land portfolio carries all trappings of adventure in the nature of trade, commerce etc. and thus falls within the ambit of expression 'business' as defined under section 2(13) of the Act. In so far as the taxability of an income under the appropriate head is concerned, the question is answered by the Hon'ble Gujarat High Court in the case CIT v. Pranjay Mercantile Ltd. [2014 (2) TMI 793 - GUJARAT HIGH COURT] In the light of the decision of the Hon'ble Gujarat High Court, it is trite that the income of the assessee is to be assessed under different heads enumerated in Section as per the true nature and character of income and not merely on the basis of classification given by the assessee. We thus find considerable merit in the plea of the assessee herein for eligibility of claim of the assessee for taxability of profits arising on sale of plots under the head 'business income' as claimed in the return filed under section 153A of the Act. We however now turn to the yet another related aspect in controversy. It is the case of the Revenue that the provisions of Section 153A of the Act are for the benefit of the Revenue in the light of the decision of the Hon'ble Supreme Court in case of Sun Engineering Works [1992 (9) TMI 1 - SUPREME COURT]. - It is thus claimed on behalf of the Revenue that assessee is not permitted to make a fresh claim or alter its original stand to its advantage in the course of assessment proceedings pursuance to search. We do not see any force in such plea either. The decision of the Hon'ble Supreme Court in Sun Engineering (supra) was rendered in the context of Section 147 of the Act which seeks to assess the chargeable income escaped assessment. Assessee is not prevented from making a claim to its advantage in the proceedings under section 153A of the Act unlike Section 147 of the Act. - Decided in favor of assessee.
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