TMI Blog2017 (4) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... e held as valid and sustainable as per provisions of the Act - Decided in favour of assessee Claim of deduction u/s 54F on account of investment in construction of residential house out of the long term capital gains from the sale of land - Held that:- the authorities below, after treating the income as business income of the assessee, preceded to frame assessment and the issue of exemption/deduction u/s 54F of the Act was not properly adjudicated by them. Since by the earlier part of this order, we have allowed ground no.1 of assessee and we have directed the AO to treat the income from sale of plots/land as long term capital gain. Therefore, consequently, the assessee is entitled to claim exemption u/s 54F of the Act, on the expenditure incurred for construction of residential house. However, since there is no adjudication either by the AO or by the Ld. CIT(A) on this issue requires proper examination and verification at the end of the AO. Therefore, the issue is restored to the file of the AO for reconsideration. - ITA No. 170/Ind/2014 - - - Dated:- 31-3-2017 - SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER Appellant by Shri Pankaj Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land received in family partition long back on 08.09.1970. The Ld. AR further submitted that the impugned own agricultural land situated at village Imalia Bohta was purchased on 03.06.1988 measuring total area of 5.15 hectares and the assessee was continuously using said land for cultivation being the major source of his income. The Ld. AR further submitted that considering his requirements of funds the assessee planned to materialize suitable portion of his investment and accordingly, he get the small part portion of the land measuring 0.201 hectares diverted in 2007 by SDO(Revenue) vide order dated 27.02.2007 for non-agriculture purposes and continued cultivation on remaining portion of land. The Ld. AR further elaborated that out of the total diverted land area of 22,364 Sq. Fts., total saleable area was 21,600 Sq. Ft. which was sold by way of 3 registered sale deeds after leaving the space for road, entire diverted land was sold. 5. The Ld. AR further submitted the diversion of land was carried out only because the areas of land was big in size, finding a buyer to sold out such a big piece of land was tough and on top of that the assessee was no in need of that much money s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that even the First Appellate Authority did not properly appreciated the totality of the facts and circumstances of the case and dismissed appeal of the assessee by considering irrelevant facts and he wrongly held that impugned transactions of sale of land is in the nature of trade and profits accrued therefrom were assessable as business profits . The Ld. AR lastly, drew our attention towards para 15 of the judgment of Hon ble High Court in the case of CIT vs. Suresh Chand Goyal (Supra) and submitted that the word business has been defined under section 2(13) of the Act, which includes any trade, commerce or manufacture or nay adventure in the nature of trade, commerce or manufacture. An isolated transaction or activity cannot be a part of business and thus, as per ratio of this decision the appeal of the assessee may kindly be allowed. 9. Replying to the above, the Ld. Departmental Representative (DR) supporting the assessment order as well as first appellate order contended that the assessee sold 3 plots of land measuring 22,364 sq. ft. after diversion on 27.07.2007 for ₹ 27,50,000/- at Chhindwara and income therefrom was wrongly offered to tax as long term capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and business. The Ld. AR strongly pointed out that except impugned transaction on sale of land that too after 19 years of purchase of big land, there is no earlier or subsequent transaction of purchase or sale of land by the assessee during preceding and subsequent period till date. Therefore, sole transaction of sale of land cannot be treated as adventure in the nature of trade business and therefore, the income of the assessee from sale of plots/land cannot be assessed as business income and the same was rightly offered to tax as long term capital gain by the assessee. 11. At the very outset, on careful perusal of the decision of Hon lbe High Court of Madhya Pradesh in the case of CIT vs. Suresh Chand Goyal(Supra), we observe that their lordship speaking for the jurisdictional High Court held Thus: Considering the aforesaid facts and circumstances of the case, we are also of the view that the selling of own land after plotting it out in order to secure better price, is not an adventure in the nature of trade or business. The word business has been defined under section 2(13) of the Income Tax Act, 1961, which includes any trade, commerce or manufacture or nay adventur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of diversion is an activity of adventure in the nature of trade and business because as per ratio laid down by Hon ble High Court of Madhya Pradesh in the case of CIT vs. Suresh Chand Goyal (supra), as reproduced hereinabove, Section 2(13) of the Act, defines the word business which includes any trade, commerce or manufacture or any other adventure or concerned in the nature of trade, commerce or manufacture. Their lordship clearly held that an isolated transactions or activity cannot be a part of business and to consider the question of business there must regular activity of purchasing and selling. In the present case there is no iota of evidence on the record to show that the assessee was regular in the business of purchase and sale of land or plots, therefore, conclusion drawn by the AO and uphold by the Ld. CIT(A) cannot be held as valid and sustainable as per provisions of the Act, as well as in the light of the ratio laid down by the Hon ble High Court in the case of Suresh Chand Goyal(supra). Thus, respectfully following the same Ground No.1 of the assessee is allowed, and the AO is directed to treat the income accrued to the assessee from sale of land/plots as long ter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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