Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 1214 - AT - Income TaxGain on sale of plot - capital Income or business income - assessee is engaged in the business of real estate on part-time basis - HELD THAT:- By merely showing the aforesaid pieces of land as stock-in-trade in own books does not substantiate that the assessee is real estate agent, when the totality of facts gives a different picture. The assessee’s real estate business did not have a Firm Name, Proprietorship Name or business address, from where he has been conducting business after office hours. The assessee has not mentioned anything about his Firm name in the return of income nor is the Firm name mentioned in the letter dated 15/09/2007 addressed by SPIL to the assessee. Also, it is a commonly known facts that real estate agents normally earn ‘commission’ on purchase and sale of land and not ‘business income’ on sale of entire property, which again supports the view that the assessee is not a real estate agent. Further, for a real estate agent, it is not common to ‘buy’ the piece of land in his own name and then selling the same to his own employer. Rather, real estate agents earn commission income, which the assessee has never earned throughout his professional career though he claims to be a real estate broker. It is common for a real estate agent to maintain office, cash book, bank book, ledger accounts, vouchers, bills, copy of bank statements etc. which are all missing in the instant set of facts, which leads to the inescapable conclusion that the assessee is not a real estate agent. Whether the assessee can be said to have engaged in ‘adventure in the nature of trade’? - As the assessee has engaged in the transaction to make profit, although the transaction was entered into at the request of his employer, SPIL. Hence, from an analysis of facts, it is apparent that the assessee has entered into a transaction with the intent to sell land at a profit by undertaking the necessary steps to convert their land use from non-agricultural to agricultural, which in our considered view would qualify as ‘an adventure in the nature of trade’. We are of the considered view that the transaction undertaken qualifies as ‘adventure in the nature of trade’ and hence provisions of section 50C would not apply to the instant set of facts. We therefore hold that Ld. CIT(A) has not erred in facts and in law in holding that the present transaction qualifies as ‘adventure in the nature of trade’ and hence section 50C does not apply. Disallowance of interest expenses claimed and set off of earlier year's brought forward business loss - Having held that the aforesaid transaction qualifies as ‘an adventure in the nature of trade’, we are of the view that assessee is entitled to claim interest expenses on account loan taken to give effect to the transaction and also set off of earlier year's brought forward business loss as per law. We are therefore of the view, that Ld. CIT(A) has not erred in facts and in law in holding that assessee is entitled to claim interest expenses on loan taken and allowing set off of earlier year's brought forward business loss - In the result, Ground Nos. 2 and 3 of Department’s appeal are dismissed.
|