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2021 (2) TMI 534 - AT - Income TaxCorrect head of income - surplus on sale of land as short term capital gain or business income treated by the assessee - Setting off business loss against the profit of the firm which included profit on sale of plot which was trading asset of the assessee only - As per assessee inadvertently/on account of typographical error that the said asset was shown as fixed asset in the balance sheet of earlier years ignoring the documentary evidences produced to the effect that it was trading asset only - HELD THAT:- The impugned land was purchased on 16/7/2013. This date is clearly after the amendment in the partnership deed bringing into the deed that the assessee was also dealing in the business of real estate developer. In these circumstances when the said land was sold the revenue authorities have tried to thrust upon the assessee that the said sale of land resulted in short-term capital gain. This has been done solely on the ground that assessee has classified the said land as fixed asset. It is settled law that description in the books of account is not the determinative of the true nature of the transaction. The fact that the partnership deed has been duly amended bringing into account the fact that assessee was dealing in the business of real estate developer prior to the purchase of land and that the tax audit report also showed the assessee to be in the said business cannot be ignored. The assessee's plea that it was an inadvertent mistake to classify the same as fixed asset has to be accepted. No cogent reason has been brought on record by the authorities below to dispute the facts as recorded above. Except for mentioning about the assessee's classification in earlier year authorities will have not at all commented upon the assessee's explanation that the said purchase of land happened after the assessee started the business of dealing in land and real estate and the fact that auditor in the auditor's report did mention the same as the assessee's business. In this view of the matter authorities below action has no legs to stand. The gain is directed to be treated as business income with the necessary consequences. Accordingly set aside the orders of authorities below and decide the issue in favour of the assessee.
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