9911796707
TMI Blog2016 (7) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... g on sale of plot. The case of the assessee before the authorities below was that the same is to be assessed as income from long term capital gains, whereas the same has been assessed as income from business in the hands of assessee. 4. Briefly, in the facts of the case, the assessee was engaged in the business of builder and developer. The assessee had purchased NA property measuring 5834 sq.mtrs., located at TPS No.4, Sr.No.45/1H1/CTS 2142, final plot No.81/1, at Shrirampur in August, 2000. Thereafter, he applied for subdivision of plots which were sub-divided in 2001. Out of which, six plots were converted into stock in trade for construction of ownership flats and the balance plots were kept as such. The capital gains arising on conversion of plots into stock in trade has been paid by the assessee in the respective years. During the year under consideration, the assessee sold one of the plots which he claims to have held as investment and worked out the income from long term capital gains by indexing the cost of plot. The claim of assessee before the authorities below was that it had only one investment in immovable property which was purchased with an intention of investment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of six plots into stock in trade were disclosed as long term capital gains which has been accepted by the Assessing Officer. He further stated that he was not continuously carrying on the activity of purchasing agricultural land and converting the same into NA land and thereafter, developing and selling the said plots. The learned Authorized Representative for the assessee before the CIT(A) stressed that the Assessing Officer was wrong in observing that the assessee had purchased agricultural land which was converted into NA land, in fact the assessee had purchased NA land and in support the CTS extracts were produced. Further, the assessee pointed out that there was big time gap between investment in land and sale of plots, where the investment in plot was made in financial year 2000-01, whereas the conversion of some of the plots and construction was in assessment years 2005-06 and 2008-09 and sale of one of the plots in assessment year 2009-10. The learned Authorized Representative for the assessee stressed that from the above facts, intention of the assessee was clear to hold the said plot as investment and not as business or in the adventure in the nature of trade. The CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment. The learned Authorized Representative for the assessee pointed out that the assessee owned one piece of land and was still holding the balance land. He further stressed that where the Department had already accepted his mode of transaction that the asset was capital asset, then in deciding the second mode, the said asset itself could not be treated as business asset and it was treated to be a capital asset. He further stressed that unless there was change of facts, the principles of res judicata are applicable. In this regard, he placed reliance on the ratio laid down by the Hon'ble Bombay High Court in CIT Vs. Gopal Purohit (2011) 336 ITR 287 (Bom). The learned Authorized Representative for the assessee further pointed out that there was no change in facts and only mode was changed. He further brought to our notice that even after 14 years, the assessee was holding balance land. 8. The learned Departmental Representative for the Revenue drew our attention to the order of conversion to NA plot dated 11.06.2001, which is placed at page 8 of the Paper Book. The learned Departmental Representative for the Revenue pointed out that the assessee applied for conversion and thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plots. Admittedly, the assessee provided for road within the said earmarking of plots. Out of 12 plots on the said piece of land, the assessee had utilized six plots for construction activity. The construction on plot Nos.7, 8 and 12 was completed in assessment year 2005-06 and the income arising therefrom was offered as short term capital gains i.e. the assessee declared income from conversion of investment held by it into stock in trade and offered the same to tax, in addition to profits on sale of flats. Further, plot Nos.9, 10 and 11 were also utilized by the assessee for construction activity and in assessment year 2008-09, it offered income from long term capital gains on conversion of investment held by it into stock in trade along with profits @ 8% on sale of flats. The assessee time and again has stressed before the authorities below that it had only made one investment in immovable property which is being held by it from the year 2000 and even till date, some of the plots are held by the assessee. In the year under consideration, the assessee sold two plots and the income arising therefrom was offered as income from long term capital gains. The Assessing Officer did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in trade and thereon, the profits from venture undertaken by it. All these plots i.e. 7 to 12 were on one side of dividing road and on the other side of the plot numbered 1 to 6 and for the year under consideration, the assessee had sold only plot Nos.1 and 2. It may be pointed out herein that the assessee till date is holding certain plots as the same have not been sold by the assessee. 12. Now, let us consider the reasons for rejecting the claim of assessee by the authorities below. The first objection was that where the assessee had purchased an agricultural land and had converted into NA property by resorting to very complicated, costly and time consuming process, the same was for carrying on the business activity and as per the CIT(A), it was adventure in the nature of trade. This contention of the authorities below is not correct as the extract of property card itself which is dated 05.09.2001, copy of which reflects the land to be residential non-agricultural. The assessee had purchased the said property vide purchase deed dated 30.08.2000, copy of which is placed at pages 10 to 22 of the Paper Book and on the date of purchase, the nature of land was residential non-agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade? It may further be pointed out that the assessee had sold ownership flats on the two projects developed by it and the profit on sale of plots shown in the earlier years was on account of conversion of investment into stock in trade and also profit on sale of ownership flats by adopting 8% to 10% of GP to work-in-progress, since the assessee was following project completion method for the said schemes. Where there is long time gap between the investment made by the assessee in purchase of land and in sub plotting and thereafter, sale of plots, then the intention of the assessee is to be considered in totality. The assessee claims that on the date of purchase, his intention was to invest in the said land. 14. Another aspect to be kept in mind is that the assessee in the earlier years claims to have converted its investment into stock in trade and had worked out the income from short term capital gains / long term capital gains respectively, which was accepted by the authorities below, undoubtedly, by intimation passed under section 143(1) of the Act. However, the transaction of investment in the said plot of land has been accepted by the Department in the hands of assessee ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
