TMI Blog2011 (5) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. That on the facts and circumstances of the case in law the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate the fact that the land has been treated as stock in trade and not as investment and the profit arising from sale of the land has rightly been taxed as business income instead of long term capital gain. That on the facts and circumstances of the case in law the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate the fact that had the assessee treated the land as investment it was required to file the return of wealth as per the provisions of Wealth Tax Act. The assessee has never reflected these as investment as its Wealth and in fact failed to file the Wealth Tax Return. 3. Assessing Officer in this case observed that three companies namely M/s Lynex Estates (P) Ltd, M/s Monnet Estates (P) Ltd and M/s World class Properties (P) Ltd. merged With the assessee company in accordance with the scheme of merger approved by the Hon'ble High Court, Delhi vide order dated 14.02.2005. The assessee had declared its sources of income as from agriculture and dividend. During the year under consideration the assessee company had sold land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any apartments flats, rooms etc. To carryon of the business of builder and civil contractor, decorators etc. To accept advance for the construction of such flats, dwelling houses, shops. To the above objects of the company it clarifies that the company is in to the business of real estate business and the land acquired is to be consider as stock in trade. Further the assessee s claim that the properties were held as investment for the purpose of earning agricultural income appears altogether hollow considering the quantum of income earned by it during the last three years against the cost of acquisition. The following facts and circumstances speak for themselves regarding the real character of the transactions and the intention of the assessee company in purchasing and selling the properties:- The assessee has not been engaged in any other activity which can qualify as business in any systematic and continuous manner. Indeed, no other business activities been undertaken by it in all these years. Dealing in land, buildings has been its dominant object. Thus, at the time of acquisition, it had a clear intention to resell it at a profit as against the intention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its fixed assets in its return of income being filed from that year onwards. The agricultural income declared to have been earned from this land has also been accepted by the Department every year. Similarly in the case of the appellant company, it had purchased agricultural land and had shown this land as part of its fixed assets year after year, which was also accepted by the then assessing officer. The appellant company had also earned agricultural income from this land which was duly accepted by the assessing officer. Merely because the name of the appellant company is M/s Neon Properties P. Ltd., it does not imply that every land purchased by it was done with the intention of the business of sale and purchase of properties. In fact, Clause 58 of the Articles of Association of the company lays down the activity of farming, agriculture and horticulture as one of the objects of the company. Neither the appellant company nor M/s Lynx Estates P. Ltd. which amalgamated with the appellant and whose land was sold during the year, engaged in frequent buying and selling of land which would be evident from details of their earlier years income and investments provided by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case as discussed above, it is obvious that the land in question was not stock-in-trade of the appellant company but was part of its long term investments and the profits arising from sale thereof was rightly taken by the appellant as long term capital gain. The assessing officer is directed to treat this surplus as long term capital gain and not business income as held by him in the assessment order. 5. Against the above order Revenue is in appeal before us. 6. We heave heard the rival contentions and perused the relevant records. 6.1 Ld. Departmental Representative submitted that the main object of the company includes dealing in land. Hence, the activity of the assessee i.e. purchase and sale of land can only be considered as business activity. He claimed that land was situated in Hauz Khas, New Delhi were farm houses are there. He said that the said land cannot be considered as agricultural land. He submitted that the income from agriculture shown was very low. He strongly relied upon the order of the Assessing Officer . 6.2 Ld. counsel of the assessee on the other hand supported the orders of the Ld. Commissioner of Income Tax (Appeals). He inter-alia subm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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