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2024 (1) TMI 657 - AT - Income TaxLTCG - Exemption u/s. 54F - piece of land was treated by the assessee as stock-in-trade - motive to acquire land - Co-ownership in land - HELD THAT:- AO after detailed verification found that the assessee and seven co-owners in their respective shares formed a new partnership firm with the same ratio of the land holding as their partnership shares. The above land was purchased by the co-owners on 02-01-2006 for a consideration of Rs. 6 lakhs and assessee’s share is 18%. All the co-owners entered into a development agreement dated 30-11-2011 with their own partnership firm Ashirwad Infrastructure to develop the land into 18 bungalows in the prime location at Thaltej. Assessee bought another parcel of land along with seven other co-owners and constituted another partnership firm namely Sudarshan Developers on 06-05-2014 with the very same set of co-owners as the partners and engaged in the business of land development. This clearly establishes the motive, intention and interest of the assessee in doing the real estate business. Thus the motive to acquire land was to earn profit through activity of development of the land through his own partnership firm as builder, contractors of the partnership firm also not paid taxes. If the assessee would have done this construction project in his individual capacity, he should have been liable for higher tax and will not have been eligible for claiming exemption u/s. 54F of the Act. Thus the above transaction of the assessee is clearly to evade legitimate taxes due on the profit of the sale of the property. Thus the profit earned by the assessee on sale of land is correctly treated as business income by the Lower Authorities. It is further evident in other co-owner cases, similar reopening of assessments were done and one of the co-owner as against the reassessment order settled the issue under Vivad Se Vishwas Scheme. Decided against assessee.
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