TMI Blog2011 (1) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... isposing of the same by this common order. 2. The only issue arises for consideration in all the three appeals is with regard to classification of profit earned by the assessees on sale of landed property. 3. Sri K.E. Sunil Babu, the learned DR, submitted that the assessees' father Shri K. Mohan Prasad purchased agricultural land in the year 1967. However, on the application filed by the assessees' father the patta was granted in the name of all the three assessees and their father Shri K. Mohan Prasad. Subsequently, the agricultural land was divided into several housing plots and the layout was approved by concerned authorities. All the three assessees sold the land and the profit was claimed as capital gain. However, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. The housing plots were made after 35 years from the date of purchase. The intention of the assessees' father at the time of purchase of the property is only to keep it as agricultural land and as an investment. According to the learned representative for the assessee the intention of the assessee at the time of purchase of property has to be seen for the purpose of classification of income, whether it is a capital gain or business income. The sale of property after 35 years from the date of purchase by dividing into housing plots for the purpose of getting more profit does not mean that the assessees were doing real estate business. Though the assessees were partners in M/s. KNB Constructions the subject matter of the land was not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or as several sub-plots, the same has to be construed as business activity. The intention of the assessees has to be find out from the circumstances which existed at the time of purchase of property including the period of holding. 7. In this case, admittedly, the property in question was purchased by the assessees' father in the year 1967. It is also not in dispute that the property was purchased by the assessees' father individually. However, the patta was obtained from the State revenue authorities in the names of all the three sons and their father Shri K. Mohan Prasad. It is well settled principles of law that patta is not a document of title. Patta is only an extract for the purpose of collecting land revenue in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exes and develops real estate properties. M/s. KNB Constructions is admittedly a partnership firm and an independent assessable unit. It is not the case of the Revenue that the property in question was transferred to the partnership firm at any point of time. It is also not the case of the Revenue that the property in question was treated as stock-in-trade of the assessees at any point of time. Therefore, merely because the assessees were partners in M/s. KNB Constructions, we cannot presume that the assessees were dealing in real estate activities. Under the Income-tax Act, the partnership firm is different and the assessee individual is different. Therefore, merely because the assessees were partners in M/s. KNB Constructions it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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