TMI Blog2020 (5) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as the Act , for short]. 2. The grievance of the assessee relate to explaining the scope of limi ted scrutiny and treating the property on sale of capita asset as business income in place of capi tal gain and declined exemption U/s 54F of the Act. 3. We have considered the rival contentions and carefully gone through the orders of the authorities below and found that exactly similar issue has been dealt by the Tribunal in the case of brother of the assessee namely Shri Ramesh Raj Bohra in ITA No. 157/Jodh/2019 dated 19/03/2020 wherein the Tribunal have deleted the addi tion after having the following observation: 2. In this appeal, the assessee is aggrieved for taxing capital gain under the head business income and not giving benefit of exemption U/s 54F of the Act. 3. Rival contentions have been heard and record perused. Facts in brief are that during the year under consideration, the assessee has sold his land and offered capita gain thereon after claiming deduction U/s 54F of the Act. The AO rejecting explanation offered by assessee held that all transaction of sale of property are in the nature of business and the assessee purchase all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial verification on any other issue(s), then, the case may be taken up for 'Complete Scrutiny' with the approval of the Pr. CIT/CIT concerned. Such an approval shall be accorded by the by the Pr. CIT/CIT in writing after being satisfied about merits of the issue(s) necessitating 'Complete Scrutiny' in that particular case. Such cases shall be monitored by the Range Head concerned. The AO violating CBDT instruction No 20/2015 dated 29/12/2015 and Instruction No 5/2016 dated 14/07/2016 enhanced the scope of limited scrutiny by initiating enquiry to examine whether the gain arising from sale of property by the assessee is capital gain or business income. Such enhancement of scope of limited scrutiny assessment was without any approval from Pr. CIT. That enhancing scope of limited scrutiny assessment without any prior approval of Pr. CIT is contrary to the CBDT Direction and therefore the same is without jurisdiction and any addition made beyond the scope of limited scrutiny is void ab initio. 8. With regard to merit of addition, it was contended that the assessee was having property since last 20 years, the same held as investment therefore, eligible to cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the assessee in the year 1995. The investment so made in property is shown as capital investment in balance sheet. Intention of assessee at the time of purchase can be clearly discern from this, moreover, a general inference can be drawn from this that why assessee purchase land with the motive of business around 20 years back, when the main stream line of family business of assessee is granites manufacturing and trading since 1986. That from the time of Purchase of land in the year 1995 till the conversion of the land for township, such land has been cultivated by the assessee and agricultural income from the same has been duly shown in the return of income filed by the assessee. Three persons whose lands were involved are family member. 12. The property in the name of Fateh Hills were acquired by the assessee during 2010-11. The investment so made in property is shown as capital investment in balance sheet. Three persons whose lands were involved are family member and no outside person is involved. The land was purchased by all the family persons were in the Financial Year 2010-2011. Both these properties were sold by the assessee as he was under requirement of fund f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jehangir T. Nagree [2008] 23 SOT 512 (Mum)] There is substantial factual difference in the case of Rajendra Kumar Dwivedi vs. CIT [2012] 26 taxmann.com 84 (All)/[2012] 349 ITR 432 and case under consideration. Though the case was decided on various factual position of that case, Ld. CIT(A) consider it appropriate to mention only one fact similar to present case (in fact even such similarity not exist). Ld. CIT(A) find that in the case of Rajendra Kumar Dwivedi (supra) Hon ble High Court held that since no agriculture operation were carried on, the income tax authorities rightly concluded that the capital asset was converted into stock in trade, and that sales of plots in the case of such land would be treated to be business activity to make profits. In this reference we observe that in the case under consideration agriculture activities were carried on by the assessee continually and in the year under consideration also agriculture income has been declared and same has been considered for income tax computation. Therefore reliance placed on by the Ld. CIT(A) on the judgement of Rajendra Kumar Dwivedi (supra) is uncalled for. It is pertinent to mention that Hon ble Jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was found, that the purchase was the first step taken by the appellant therein in execution of the well considered plan, to acquire open plots near the mills, and the whole basis for the plan was to sell the said lands to the mills, at a profit, and then the subsequent conduct of the purchaser was considered, and after appreciating the totality of attending circumstances, it was found to be a series of transactions, undertaken by the appellant therein, in pursuance of the scheme, and it was after the appellant had consolidated its holding, that at a convenient time the land was sold. The appellant was found to be managing agent of the mill, who was in a position to influence the mill to purchase its properties, which cannot be said to be unreasonable. Thus, in our view, in view of the principle propounded therein, and on the facts of that case as considered, it is clear, that in order to arrive at a conclusion, as to whether it is to be taxed as capital gain or the transaction is to be treated to be an adventure in the nature of trade , things cannot be put in any strait jacket formula, and it was dependent upon the facts and circumstances of each case, to be decided on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s acquired long back in the year 2010-11 as capital asset and was so held as capital asset in the balance sheet. Merely conversion of the agricultural land into non-agricultural land will not give rise to the taxable event until it is actually sold. Thus, the assessee has sold the capital asset held for long term, accordingly, gain arising from sale was eligible for deduction U/s 54F of the Act. Accordingly, we direct the A.O. to treat the property on sale of land as capital gain and given the benefit of exemption claimed by the assessee U/s 54 of the Act. We direct accordingly. 17. The next grievance of the assessee relates to allowing deduction expenditure of ₹ 17,56,012/- as against the expenditure of ₹ 43,90,029/- claimed by the assessee. 18. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the A.O. has allowed 50% of the expenditure by stating that no supporting bills of expenditure were provided to him. However, this finding of the A.O. was discarded by the ld CIT(A) after observing as under: That Ld. AO on the basis of finding recorded in Para 19 20 d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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