TMI Blog2015 (5) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). - Decided against revenue. - ITA No. 529/JP/2012 - - - Dated:- 29-5-2015 - Shri R.P. Tolani, JM Shri T.R. Meena, AM Revenue by : Mrs. Neena Jeph (JCIT) Assessee by : Shri P.C. Parwal (CA) ORDER T.R. Meena, This is an appeal filed by the Revenue against the order dated 23.03.2012 passed by the Ld. CIT(A)-I, Jaipur for A.Y. 2008-09. The respective grounds of appeal are as under:- Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) is justified in:- i) deleting the addition of ₹ 1,20,52,755/- on account of business profit from sale of land, even though the assessee was engaged in the business of real estate development. ii) Holding that no capital gain was chargeable as the asset referred was agricultural lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 519 measuring 7 Bigha 5 Biswa 2 M/s Grass Field Fire Capital Developers Pvt. Ltd. 01/06/2007 (through registered sale deed) ₹ 2,14,39,685/- Khasara No. 825/4 measuring 6 Bigha 5 Biswa, Khasra No. 825/1/13 measuring 3 Bigha, khasra No. 825/2 measuring 15 Bigha. The Assessing Officer further observed that during the assessment proceedings, the AR of the assessee submitted that the sales as discussed in table No. 2 have been made by the assessee on behalf of and under instructions from M/s Grass Field Farms Resorts Pvt. Ltd. in which the assessee is a working director. However, the assessee has sold the lands as enumerated in table No. 1 to M/s Grass Field Farms Resorts Pvt. Ltd. in his individual capacity as under:- Khasra No. Purchased from date of purchase Amount Sold to date of sale Amount Profit/Gain Khasra No. 519 measuring 7 Bigha 5 Biswa Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mabad, 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 ₹ 1,20,52,755/- is treated his business income and the same is added in his taxable income. 3. Being aggrieved by the order of the AO, the assessee carried the matter before the Ld. CIT(A), who had allowed the appeal by observing that the assessee is a Chartered Accountant by profession. He gets remuneration from the firm M/s A.R. Gupta and Company alonwith interest income, consultancy income and income from salary from the companies in which he is director. He does not maintain a personal capital account or balance sheet. The assessee is consistently investing in land from F.Y. 1989-90 and retained a portfolio of land of ₹ 3,92,49,208/- as on 31/3/2008. There was a survey U/s 133A of the Act at the business premises of M/s Grass Filed Farms Resorts Pvt. Ltd. (GFFR) from 26/2/2008 to 28/02/2008. During the course of survey incriminating documents were found on which the assessee company had declared additional income and paid the tax on it. Agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able 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 determine the character of the transaction and the legal principles that have evolved over a period of time through the judicial pronouncements made by the various High Courts and the Hon'ble Supreme Court on this issue. Business as defined in section 2(13), includes any trade commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. After considering the definition of business and legal position on this issue, she inferred as under:- 1. If for instance a transaction is related to the business which is normally carried on by the assessee, though not directly part of it, an intention to launch upon an adventure in nature of trade may readily be inferred. 2. A similar inference would arise where a commodity is purchased and sub divided, altered, treated or repaired and sold, or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Assessing Officer had not given any findings regarding use of land i.e. whether it was agricultural or not. However, the assessee had submitted that the land was agricultural land in record of the land revenue. Thus, she decided that land was agricultural in nature and was not a capital asset as per Section 2(14)(iii) as it was situated beyond 8 km of municipal limit. Therefore, the gain on transfer of agricultural land is not part of taxable income U/s 45 of the Act. Accordingly, she deleted the addition of ₹ 54,01,006/-. 5. Now the revenue is in appeal. The Ld. DR vehemently supported the order of the AO and argued that there was no agricultural activity on the said land and assessee is in the real estate business individually or through companies. The main int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld 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 on 30/12/2006 and 29/03/2007 and converted the land was sold by GFFR to M/s Grass Field Fire Capital Developers Pvt. Ltd. vide sale deed dated 01/6/2007. Therefore, in sale deed dated 01/6/2007, the seller being engaged in the business of real estate trade has been mentioned. The same was company not as individual assessee. The company GFFR had disclosed business income at ₹ 42,87,937/- on sale of land, this has been accepted by the Assessing Officer. Agricultural land at village Bukni was purchased through sale deed dated 20/04/2007 from Shri Ramu Jat on which registration expenses of ₹ 1,61,450/- was incurred. In sale deed also, there is no mention that the assessee was engaged in the business of land trading. The facts of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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