9911796707
TMI Blog2015 (5) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... as chargeable as the asset referred was agricultural land. The ld Assessing Officer observed that the assessee filed his return on 24/11/2009 declaring total income of Rs. 70,68,740/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The assessee is a Chartered Accountant and is partner in M/s A.R. Gupta & Company. He is also a working director in the following companies:- i) M/s A.R.G. Developers Pvt. Ltd. ii) M/s Grass Field Farms and Resorts Pvt. Ltd. iii) M/s Grass Field Fire Capital Developers Pvt. Ltd. During the year the assessee purchased following lands:- S. No. Name of the seller Date of registration of purchase deed Amount Description of land purchased 1 Shri Ramu S/o Shri Mangu Reswident of Bukni, Tehsil Phagi, dist. Jaipur 20/04/2007 (as per registered purchased deed) Rs. 23,11,450/- Khasra No. 519 measuring 7 Bigha 5 Biswa 2 Shri Sita Ram Meena, S/o Shri Banna Ram Meena, village Hingonia, Tehsil Phagi, dist.- Jaipur. 10/05/2007 (As per registered purchased deed) Rs. 1,05,00,000/- Khasara No. 825/4 measuring 6 Bigha 5 Biswa, Khasra No. 825/1/13 measuring 3 Bigha, khasra No. 825/2 measuring 15 Bigha. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,755/- has been claimed exempt and not disclosed in the return of income. The assessee was given reasonable opportunity of being heard on this issue, which was replied vide letter dated 29/09/2010, 07/10/2010 and 27/12/2010. After considering the assessee's reply, the ld Assessing Officer observed that the assessee had purchased the above land in his own name and in individual capacity. He sold these lands to the company by executing separate registered sale deed on high price as is evident from the sale/purchase amount as stated above. Further the assessee was carrying the business of real estate. In sale deed dated 01/6/2007 at page No. 2, the assessee's name of business has been stated that "whereas the seller is in the business of real estate trade and development and other real estate activities and the seller own and possesses large chunks of lands in village Khatwad, Khatwad, Tehsil Mujamabad, dist. Jaipur." Thus, as per the Assessing Officer, the said land was his stock in trade was sold by him within very short time after purchase of the same. Therefore, the surplus/profits earned by him at Rs. 1,20,52,755/- is treated his business income and the same is added in his taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kms of the municipal limits. Land was not converted into stock in trade by the appellant in his books of accounts. The ld CIT(A) held that the land at village Khatwad do not pertain to this year. In fact even the Assessing Officer in his order on page 2, table-3 has mentioned the date of sale of land by the appellant to GFFR to be 25/10/2006, which clearly the gain of Rs. 66,51,749/- on the transaction of land at Khatwad does not pertain to this assessment year and cannot be added to the income of the assessee in this assessment year. Therefore, she deleted the addition of Rs. 66,51,749/-. She further held that whether the transaction in land under taken by the appellant during the year was business transaction or adventure in the nature of trade or capital accretion is a vexed question that is required to be decided on the facts and law applicable to these facts. It is not possible to evolve any legal test or formula which can be applied in determining whether a transaction is an adventure in nature of trade or business or not. The answer to the question must necessarily depend in each case on the total impression and effect of all the relevant factors and circumstances, which det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt real estate but the assessee has not engaged in the business of real estate development in his personal capacity. She further held that land had not been sub-divided, cut into plots or developed prior to sale. In fact, even the conversion charges were paid subsequently by the company that is purchaser. The frequency of transaction also less as there was no sale of land in subsequent assessment year. During the year also there is only one transaction. She further considered the business definition provided U/s 2(13) of the Act. The gains from these transactions were accepted by the Assessing Officer in the hands of the company GFFR. Both the entities are distinct the case of the assessee in his individual capacity cannot be vitiated by his activities conducted in his capacity as Director of the company. The assessee did not spend any money in developing the land and assessee's activity was not systematic. She further relied on the decision by the Hon'ble Allahabad High Court in the case of CIT Vs. Mohakampur Ice and Cold Storage (2006) 281 ITR 354 (All.) wherein it has been held that intention of purchase of land is to be guiding factor to decide the nature of transaction. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d through sale agreement dated 05/09/2006 from Shri Sitaram Meena, which was executed on 10/05/2007 and incurred expenditure on registration at Rs. 12,55,590/-. In sale agreement there is no recital that the assessee was engaged in the business of real estate. The payment of registration expenses indicates that the assessee's intention to purchase of land was investment not to deal in business of land. The transfer of this land was made through sale agreement dated 25/10/2006 U/s 2(47) of the Act, which falls in A.Y. 2007-08 not in A.Y. 2008-09. Therefore, gain on sale of this land is otherwise not taxable in the hands of assessee in the year under consideration. Subsequent to sale deed dated 01/6/2007 executed by the assessee in favour of M/s Grass Field Fire Capital Developers Pvt. Ltd. is for and on behalf of GFFR and not in the individual capacity of the assessee. The assessee sold this land in individual capacity to GFFR and thereafter for and on behalf of GFFR to M/s Grass Field Fire Capital Developers Pvt. Ltd.. This land was beyond 8 kms from the municipal limits and therefore the capital gain was exempted in the hands of the assessee. The agricultural land used was changed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land in individual capacity from Shri Sitaram Meena and Shri Ramu Jat as agricultural land on agreement to sale. Thereafter the assessee had sold this land to GFFR on agreement to sale as per Section 2(47) of the Act. The NA was got done by GFFR in both the cases. Thereafter land was transferred to M/s Grass Field Fire Capital Developers Pvt. Ltd. The land was beyond 8 kms from the municipal limit which has not been controverted by the ld DR as well as by the ld Assessing Officer. The ld CIT(A) had given detailed findings on it. The assessee claimed this gain on transfer of these lands as exempted. As the use as per land revenue record was agricultural land. Thereafter GFFR has disclosed the income on transfer of this land to M/s Grass Field Fire Capital Developers Pvt. Ltd.. The assessee had purchased these lands for investment not for trading. The frequency of transactions showed that the assessee was not in trading of land. The land transaction of village Khatwad was not even pertained to year under consideration. Therefore, we confirm the order of the ld CIT(A).
8. In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 29/05/2015. X X X X Extracts X X X X X X X X Extracts X X X X
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