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2015 (11) TMI 1213 - DELHI HIGH COURT

2015 (11) TMI 1213 - DELHI HIGH COURT - TMI - Income from sale of flats - ITAT assessed it as business profits and not as long term capital gains - Held that:- Merely, because the Assessee sold two plots that fell to her share pursuant to collaboration agreement in respect of the property owned by her since 1956, it would not render the transaction as an 'adventure in the nature of trade' leading to the resultant receipt as business income in her hand. Further the Assessee offered the long term .....

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sel with Ms Lakshmi Gurung, Junior Standing Counsel with Ms Radhika Gupta, Advocate ORDER S. Muralidhar, J: 1. This is an appeal by the Assessee against the order dated 20th March, 2003 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 3626/D/98 for the Assessment Year 1993-94. 2. While admitting this appeal on 12th November, 2003, the following question was framed the Court for consideration: Whether in the facts and in the circumstances of the case, the Tribunal was correct in la .....

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an agreement with M/s Exclusive Properties (hereinafter the Builder ) on 27th May, 1991 to construct flats on 985 sq. yards of land on her property. In terms of the said agreement the Builder was to develop and construct at its own costs and resources and in lieu thereof the Builder was to be allotted proprietary rights of 40% in the built up area and 60% was to be retained by the Assessee. 5. In the return filed for Assessment year 1992-93 the Assessee claimed that she did not have any residen .....

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; 11,55,802/- as long term capital gain in terms of Section 54 F (3) of the Act. It is not in dispute that she paid the long term capital gains tax computed on the above basis. 7. The return was picked up for scrutiny and on 18th March, 1996 the Assessing Officer (AO) passed an assessment order in which, after setting out the clauses of the agreement entered into with the Builder, the AO concluded that the agreement was "in the nature of adventure for trade on the property". The AO pro .....

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and circumstances of the case, it may be said that having sold two flats that fell to her share pursuant to the collaboration agreement with the Builder, the Assessee had undertaken an adventure in the nature of trade warranting the receipt to be treated as business income. 11. The issue, it appears, is no longer res integra. In G. Venkataswami Naidu and Co. v. CIT [1959] 35 ITR 594, the Supreme Court observed that while a single "plunge" in the waters of trade may be enough, a mere p .....

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, there would be no difficulty in concluding that it was a trading transaction. But where it was not, the facts had to be carefully assessed to determine if it was in the nature of trade. 13. On more or less similar facts, this Court held in favour of the Assessee in Commissioner of Income Tax v R.V. Gupta [2002]261 (Del). In that case the Assessee was a senior IAS officer and was allotted a plot of land admeasuring 664 sq. m by the Delhi Development Authority (DDA) in a group housing society in .....

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