TMI Blog2016 (2) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... r under consideration, even though on a much reduced volume and scale, the expenditure claimed in respect of such business income is to be allowed to the extent that they are necessary for maintaining the corporate existence of the assessee or those expenses which are related to such business - Decided against revenue Sale consideration received on sale of ‘ownership land’ - business income or capital gain - Held that:- CIT(A) observing that since the actively of sale of ‘ownership lands’ plots was quite frequent, that the land was treated as stock-in-trade and the assessee had to execute conveyance deeds and maintain its rights and in this context requires legal consultation and other expenses to be incurred; concurred with the view of the AO that the income from sale of ‘ownership lands’ is business income . Except for raising the ground that income from sale of ‘ownership lands’ should be assessed as capital gains, since the assessee had declared the same as income from capital gains, no cogent reasons or evidence has been put forth by the Ld. DR to controvert the factual findings of the Ld. CIT(A) and also those of the AO that the income from sale of ‘ownership lands’ is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This appeal by the revenue is directed against the order of the CIT (Appeals)-4, Mumbai dt. 30/11/2012 for Asst. Year 2009-10. The assessee has also preferred Cross Objection ( CO ) in respect of the aforesaid order of the CIT (Appeals). 2. The facts of the case, briefly, are as under:- 2.1 The assessee is a company engaged in investment in derivatives, other securities and money lending and also derives income from sale of land and sale of rights in land situated in Bhayander, Mira Road and Ghodbunder in Thane District, Maharashtra. For Asst. year 2009-10, the assessee filed its return of income on 30/09/2009 declaring income of ₹ 2,80,70,760/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short the Act ) and the case was subsequently taken up for scrutiny. 2.2 From the record, it is seen that up to Asst. year 2008-09, the income of the assessee from trading in derivatives and other securities was assessed as business income and business expenses were accordingly allowed. However, in the year under consideration, the Assessing Officer ( AO ) observing that there is a nominal business activity held that the expenses claimed were excessive an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment of business income on protective basis was determined at ₹ 6,28,08,800/-. 3. Aggrieved by the order of assessment for Asst. year 2009-10 dt. 30/12/2011, the assessee preferred an appeal before the CIT(Appeals)- 4, Mumbai raising various grounds. The Ld. CIT(A) disposed off the appeal by order dt. 30/11/2012 allowing the assessee partial relief. 4. Revenue, being aggrieved by the order of the CIT(Appeals)- 4, Mumbai dt. 30/12/2011, has preferred this appeal raising the following grounds:- 1. The order of the CIT(A) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the claim of expenditure under the head business income even when there is hardly any activity relating to derivatives and finance during the previous year. 3. (a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the sale consideration received on sale of ownership land as business income. The Ld. CIT(A) did not appreciate the fact that the land was owned by the assessee for a long period of time and it had shown in the Balance sheet as investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction in the revenues would not warrant disallowance of business expenses claimed which are fixed in nature from year to year. It was argued that the Ld. CIT(A) after examining the issue in detail has observed that the assessed is in the business of derivative transactions, other securities and money lending for the last 2 decades, but though their revenues have reduced considerably recently, the assessee s business activity is in existence in the year under consideration. The Ld. AR submits that it is in this context that the Ld. CIT(A) allowed the expenses necessary for both maintaining the corporate existence of the assessee and for the assessee s trade in derivatives, other securities and money lending. 5.3.1 We have heard the rival contentions and perused and carefully considered the material on record. From the details on record, it emerges that the assessee has been in the business of derivate transactions, other securities and money landing for over two decades and that the income from such transactions have all along been declared and assessed as business income. As observed by the authorities below, the income/revenue and volume of such transactions has reduced consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such it should have been assessed as capital gains. It was also contended that the provisions of Section 50C were applicable on sale of Capital assets for computation of LTCG. It was further contended that the Ld CIT(A) wrongly held that the AO had allowed the expenses claimed by the assessee at para 9 of the order of assessment. The Ld. DR supported the grounds raised and placed strong reliance on the order of the AO on these issues. 6.2 Per Contra, the Ld. AR for the assessee supported the findings in the order of the Ld. CIT(A). 6.3.1 We have heard the rival contentions and perused and carefully considered the material on record. It is seen from the order of assessment that the assessee had declared the income from sale of Ownership Lands as capital gains/loss. The AO while completing the order of assessment, at para 9 thereof has also assessed the income from sale of ownership lands as business income on a protective basis, while at the same time accepting the same as capital gains as declared by the assessee in the return of income. We find that on appeal, the Ld. CIT(A) observing that since the actively of sale of ownership lands plots was quite frequent, that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses in respect of transfer of ownership lands left him with no other option than to conclude that land dealings constitute that main business of the assessee and that the nature of expenses are such that it is apparent that the assessee has been employing various resources for maintaining its rights in land, for disposing the assets through lawyers, brokers, employees, directors etc. In this factual matrix as laid out above, we concur with the order of the Ld. CIT(A) in holding that all expenses, other than that part of the legal expenses, relating to Eksali lands and those for maintaining the corporate existence of assessee and for the assessee s trading in derivatives, other securities and money lending, are to be allowed against business income from sale of ownership lands . We consequently dismiss ground No: 4 raised by the assessee. 7. In the result, Revenue s appeal for Asst. year 2009-10 is dismissed. 8. The assessee has also raised CO No. 65/Mum/2014 in respect of the order of the CIT(A)-4, Mumbai dt. 30/11/2012 for Asst. year 2009- 10. We have perused the grounds at Sr. No. 1 to 3 raised in the C.O and find that they do not challenge any matter pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X
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