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2023 (8) TMI 287 - AT - Income TaxRevision u/s 263 - Profit earned from the sale of land as assessable under the head “Capital Gains” OR "Business income" - deduction u/s 54EC allowed to the assessee resulting in Nil capital gain being charged to tax - HELD THAT:- The factum of conversion of land from agricultural land into non-agricultural land cannot be alone picked up for determining the intention of the assessee. PCIT having done exactly the same by picking out only one factor relating to the land sold, his inference that the land sold by way of adventure in the nature of business, we hold, is not appropriate. The other facts noted by the PCIT for arriving at his finding of the transaction of sale of land being in the nature of adventure in trade we find are entirely irrelevant and do not have any bearing on the finding. We fail to understand how the fact that the firms in which assessee was a partner indulged in real estate transactions can lead to the inference that the assessee in his individual capacity was also intended indulging in such business. For that matter the assessee’s affidavit in proceedings before the Civil Court stating that he and his son were involved in real estate business also is of no relevance and consequence since the entire affidavit is not reproduced in the order and until it is read in entirety the import of it cannot be gathered. PCIT‘s reference to the contents of the affidavit can only be treated as his inference from the same and the affidavit could very well be also read to have been stated by the assessee in the context of the fact that he was indulging in real estate business in partnership. Therefore, we hold that there is no basis with the Ld. PCIT to hold that the facts relating to the transaction in sale of land were indicative of the same being in the nature of adventure in the nature of trade and the AO having accepted assessee’s claim of returning capital gains on the same was an error on his part. In the absence of any finding of error in the order of the AO allowing the assessee’s claim of gains earned from sale of land as being in the nature of capital gains, the order passed by the ld. PCIT u/s 263 of the Act is liable to be set aside. Decided in favour of assessee.
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