9911796707
TMI Blog2009 (2) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 Guntas of land at Chikkalasandra Village, Uttarahalli, Bangalore South Taluk, to several persons as residential sites. This was brought to tax by the AO as income from business being adventure in nature of trade as it was not a mere transfer under s. 2(47). The assessee had ventured the entire consideration invested under s. 54EC amounting to Rs. 95,00,000. The assessee appealed before the first appellate authority pointing out the errors committed by the AO in assessing the entire sale proceeds as business income instead of considering it as having generated capital gains. The learned CIT(A) considered the submissions of the assessee appellant before him and held the same as transaction of sale of an asset resulting in capital gains fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had indulged in an 'adventure in the nature of trade' when developed sites were sold resulting in gain. A copy of the order is being furnished. He prayed that the order of the learned CIT(A) be reversed and that of the AO restored. 4. The learned counsel for the assessee fully supported the order of the learned CIT(A) who intricately considered the facts of the assessee's case especially the fact that the assessee is a farmer and an agriculturist. He had acquired by purchasing 2 acres 11 Guntas of agriculture land on 25th Dec., 1961 and was cultivating the said land from 1961 to 2003. The intention was to hold on to the land for these 42 years when the assessee in order to fetch a better price, sold the same by getting approval for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for carrying out petty agriculture operation thereon. He, therefore, concluding his arguments, fully supported the order of the learned CIT(A) by submitting that the AO relied on the Hon'ble apex Court decision in the case of G. Venkataswami Naidu & Co. vs. CIT (1959) 35 ITR 594 (SC) which facts were distinguished by the learned CIT(A) as not applicable to the assessee appellant's case before him. There was no such intention by the assessee to hold the land for a period of more than 40 years for a business and therefore the sale consideration received on the transfer of land was pure and simple capital gains entitled for exemption under s. 54EC. 5. We have heard the rival contentions and perused the material available on record. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how that the assessee at any time did any business. (b) If the commodity purchased is generally the subject-matter of trade and if it is purchased in very large quantities, it would tend to eliminate the possibility of investment. In the present case, what was purchased was agriculture land and that too in a small quantity of 2 acres and 11 Guntas. There is a strong inference to be drawn that there was no intention to resell. Further, the assessee was carrying on agriculture operations on the said land. Coupled to this is the fact that the assessee held the land for a long period of 40 years or more, which is against the inference that the assessee intended to trade in the land. The further tests laid down in the above judgment are, (c) Did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee did carry on agricultural operations thereon. (c) The land was held by the assessee for more than 40 years. (d) The assessee obtained the permission of the concerned authorities for conversion of the land into residential plots only because of the relevant laws requiring him to do so. (e) The assessee in these 40 years did not make any further purchase or sale of any land. (f) Though it may not be entirely relevant but we cannot ignore the fact that the sale proceeds were invested in approved bonds and were not invested in any business. For these reasons, we are of the view that the CIT(A) was right in holding that the sale proceeds should be assessed as capital gains and since they were invested in bonds approved under s. 54E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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