TMI Blog2018 (7) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has not taken any risk in the construction and development of flats, this Tribunal is of the considered opinion that the profit on sale of the land in the hands of the assessee-firm cannot be treated differently than as it was treated in the case of Mrs. Saroj Agarwal. This Tribunal is of the considered opinion that the profit on sale of land has to be necessarily assessed as capital gain and not as business income - I.T.A. No. 621/CHNY/2018 And C.O.NO.61/CHNY/2018 - - - Dated:- 24-7-2018 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER For The Appellant : Shri. Sailendra Mamidi, PCIT. For The Respondent : Shri. T. Banusekar, C.A. ORDER PER ABRAHAM P. GEORGE, ACCOUNT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of the income arising from sale of the land at Nolambur held by the assessee. Submission of the ld. Authorised Representative was that in the preceding as well as subsequent assessment years where also ld. Assessing Officer treated the gains as income under the head business income , this Tribunal held it to be assessable under the head capital gains . As per the ld. Authorised Representative, fact situation being the same, the order of the ld.CIT (Appeals) had to be upheld. 4. On the other hand, ld. Departmental Representative submitted that ld. Commissioner of Income Tax (Appeals) though he followed an earlier order of the Tribunal in assessee s own case, still facts could show that assessee was doing a business of real esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-partnership firm was formed on 05.04.2005 by means of partnership deed. However, the payment for purchase of land at Nolambur was made by M/s Petro Plast Industries Ltd. in February-March, 2005. Therefore, it is obvious that before formation of partnership firm, the partners, namely, the members of the Agarwal family decided to purchase the property by making payment. Therefore, the intention of the partners of the firm has to be ascertained as to whether they intended to trade in real estate or they intended to keep the land as investment. Even though the entries in the books of account would not determine the nature of the land held by the assessee, however, the entries in the books are circumstantial factors to be taken into co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd as investment, merely because the same was used for development by entering into a Memorandum of Understanding within a short span of time, that cannot be a reason to treat the subject land as stock-in-trade. The assessee in order to generate funds for business might have entered into Memorandum of Understanding with another trader who is dealing in real estate. If the intention of the assessee is to deal in real estate, the assessee would have developed the land by itself. In the case before us, the assessee has not dealt with the land by itself. The land was in fact handed over to other trader in real estate for development. The matter would be entirely different if the assessee constructed the multistory building and developed the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lementary work was carried on by the assessee-firm in the subject land; no organized effort was made other than simply entering into Memorandum of Understanding with the builder. As all risks and rights relating to construction of building were vested with the builder and the assessee has not taken any risk in the construction and development of flats, this Tribunal is of the considered opinion that the profit on sale of the land in the hands of the assessee-firm cannot be treated differently than as it was treated in the case of Mrs. Saroj Agarwal. 10. In view of the above, this Tribunal is of the considered opinion that the profit on sale of land has to be necessarily assessed as capital gain and not as business income. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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