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2016 (9) TMI 292

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..... that a person can plan its affairs in such a manner so as to minimize its tax burden and there would be nothing wrong in it, so long as approach of a taxpayer is not bogus or false and no tax evasion is perpetuated. In the facts brought before us, nothing has been brought on record by the lower authorities to counter the factual assertions made by the assessee. The assessee has consistently kept these amounts as part of ‘investments’ since last so many years. No business at all has been done by the assessee firm. Its income has never been assessed under the head income from business. Nothing has been shown to indicate if the assessee ever treated the impugned land as part of the ‘stock-in-trade’ at any point of time in the past decade, and .....

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..... Accountant Member): This appeal has been filed by the assessee order of Ld. Commissioner of Income Tax(Appeals)-35, Mumbai, {(in short CIT(A) }, dated 24.05.2013 passed against assessment order u/s 143(3) r.w.s. 263 of the Act, dated 31.12.12 for the A.Y.2007-08 on the following grounds: 1.THE LD CIT (A) ERRED IN HOLDING THAT THE INCOME EARNED ON SALE OF LAND BY THE APPELLANT IS A BUSINESS INCOME. 2. THE LD CIT(A) ERRED IN NOT ALLOWING THE CLAIM OF THE APPELLANT THAT THE INCOME EARNED BY THE APPELLANT ON SALE OF LAND WAS CAPITAL GAIN. 3. THE LD CIT(A) ERRED IN NOT ALLOWING SET OFF OF LONG TERM CAPITAL LOSS OF RS. I8,77,377- FOR THE ASSESSMENT YEAR 2006-07 AGAINST THE LONG TERM CAPITAL GAIN FOR THE ASSESSMENT YEAR 2007-08. .....

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..... as income from business , mainly on the ground that the firm was incorporated with the intention of dealing in the business of sale and purchase of immovable properties and/or to develop the immovable properties etc. The relevant portion of the assessment order is reproduced below: 5. During the course of proceedings, the assessee was asked to submit partnership deed and the copies of returns of income f iled from A.Y.1996-97 to 2006-07. As per direction of the Hon'ble CIT, the partnership deed of the assessee has been duly verified and from which it is noticed that the firm was incorporated with the intention of deal ing in the business of sell ing and purchasing immovable properties and or to develop the immovable properties and .....

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..... see f irm had purchased these properties as an stock in trade and not investment. 8. Considering these facts, the capi tal gains shown by the assessee f irm are treated as business income of the assessee and reworked out as under: Sales Price Rs.2,00,00,000/- Less i) Cost of land Rs.43,55,000/ ii) Various exps Claimed Rs.11,79,195 Total Rs.55,33,195/- Business income Rs.1,44,66,805/- 3.1. Being aggrieved, the assessee filed an appeal before Ld. CIT(A) and made exhaustive .....

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..... ncome from business. 3.6. In our considered view, action of the lower authorities is factually incorrect and contrary to law. The assessee had disclosed both the pieces of land (located at two different places) as part of investment in its balance sheet. It is further stated by the assessee that no expenses have been incurred on development of this land. It is further stated that neither any plan was prepared and submitted for approval from the local authorities nor any other step whatsoever was taken towards development of the impugned land. These facts have not been negated by any of the lower authorities i.e. the AO, the CIT or CIT(A). It has been submitted by the assessee that the assessee firm was not having any taxable income, and .....

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..... d conjecture which have no place in the eyes of law. We do not find any justification on the part of lower authorities to re-characterise the income earned from sale of land as income from business . The assessee had rightly shown the same as income under the head capital gains . Therefore, addition made by the AO is directed to be deleted and Ground Nos. 1 2 are allowed. 4. Ground No. 3: In this ground the assessee has challenged the action of lower authorities in not allowing the benefit of set off of brought forward long term capital loss. It was submitted before us that though the return for A.Y. 2006-07 was filed on 30th October 2006 i.e. within the time limit extended by the Central Board of Direct Taxes vide its notification d .....

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