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TMI Blog2015 (1) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... s in land as 'Business income ' as against the action of the A.O. to treat the same as 'Capital Gain' when the transaction relating to purchase and sale of land are not reflected in the books of accounts particularly when the same is claimed as 'business transaction'. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in considering the plea of the assessee taken during appellate proceedings that profit on sale of rights in land is 'business income' without giving an opportunity to the A.O. as provided under Rule 46A of the IT Rules 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in considering office expenses of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development agreement with the intention to develop the property and the said property was never intended for self use or as an investment. It was further explained by the assessee before the CIT(A) that the property was transferred merely because there was litigation involved and as the initial transaction was the business transaction, the income generated from the same was business income and could not be treated as income from capital gain. The assessee also explained that he was engaged in the business of real estate transactions as well as commission agent and filed the copies of the income tax returns relating to assessment years 2007-08 to 2009-10. The CIT(A) noted that the nature of business of the assessee was civil contractor as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t were applied as the sale consideration shown by the assessee was on the lower side. 7. The learned Authorized Representative for the assessee on the other hand, referred to the Profit & Loss Account placed at page 10 and Balance Sheet at page 11 of the Paper Book filed by the assessee and pointed out that in the said Profit & Loss Account, the sale of the land has been declared and net profit earned by the assessee was similar to the profit shown in the original Profit & Loss Account filed along with the return of income. The learned Authorized Representative for the assessee stressed that the computation of income referred to by the learned Departmental Representative for the Revenue is not signed though available in the assessment reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late order. During the year under consideration, the assessee had entered into a development agreement along with Shri Sameer Moreshwar Mhasulkar and Shri Sharad S. Kokate in respect of land at Sr.No.73, Hissa No.2B at Mauje Rahatni (Kalewadi), Tal - Haveli, Dist. Pune for a total consideration of Rs. 44,00,000/-. The said agreement was executed on 13.02.2007. Thereafter, the land rights were sold to one Shri Ratnani for a total sale consideration of Rs. 1,05,00,000/-. The plea of the assessee in this regard was that the title of the said property was disputed and the same was transferred to another buyer. The assessee's share in the said transaction was 1/3rd i.e. sale price of Rs. 35,00,000/- being assessee's share and cost of the acquisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2(14) of the Act clarifies that the 'property' includes and shall be deemed to have been included the rights in or in relation to any Indian company. The word transfer is also defined under the Act under section 2(47) of the Act and includes sale, exchange, relinquishment of an asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law. 11. Under the provisions of section 50C of the Act which is a special provision in relation to the full value of consideration in certain cases, it is provided that where the consideration is received or accruing, as result of transfer of a capital asset, being land or building or both, is less than the value adopted or assessed by the State government aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be computed in the hands of the assessee to the proportion of his shareholding. We direct the Assessing Officer to compute and include the same in the hands of the assessee under the head 'income from short term capital gain'. 12. The CIT(A) under para 8 held that the said transaction is to be treated as in the nature of business of the assessee. However, while computing the income under para 11 of the appellate order, by error failed to include the income from business in the hands of the assessee. Further, the expenses claimed by the assessee i.e. office establishment expenses, provision for compensation to litigation as held by the CIT(A) under para 11 are not to be allowed as expenses. We find no merit in the grounds of appeal raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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