TMI Blog2020 (6) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... lar facts and circumstances the Hon ble Tribunal Jodhpur has decided the issue in favour of the assessee in the case of Marudhar Hotels Pvt. Ltd v/s ACIT [ 2013 (2) TMI 840 - ITAT JODHPUR] wherein held that share of sale consideration received by the appellant from developer on sale of plots under the development agreement was in the course of realization of a capital asset held by the appellant for over 30 long years, giving rise to income taxable under the head 'Capital gains'. Such an activity could not, on the undisputed facts of the case, be regarded as carrying on an adventure in the nature of trade. Thus we hold that the income generated by the assessee from the sale of the property in dispute is taxable under the head capital gain. - Decided in favour of assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ] - ITA No. 377/AHD/2011 - - - Dated:- 8-6-2020 - Shri Rajpal Yadav, Vice Presid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter 21st March, 2000 were not entitled to indexation. The appellant submits that in view of provisions of section 48 each and every capital expenditure of ₹ 8317516/- was entitled to indexation. The appellant submits that the conclusion in para 12 of the assessment order is unilateral in nature, and not in consonance with the provisions of law. The said conclusion be quashed and the assessing officer be directed to allow indexation. 3.0 The appellant without prejudice to above further submits that the Commissioner of Income tax (Appeals) erred in concluding that the gain was taxable as short term capital gain. The appellant submits that the capital asset was a long term capital asset and therefore gain was long term capital gain. The appellant submits that it be so held now. 3.1 The appellant submits that conclusion has been arrived at by the CIT(A) without affording any opportunity of being heard. The appellant submits that conclusion being unilateral and in violation of principles of natural justice be quashed. 4.0 The CIT(A) erred in upholding erroneous demand in the case of the appellant. It is submitted that the assessing officer be directed to make corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng had been computed under section 45 of the Income Tax Act. 9. As per the assessee there was the isolated transaction for the sale of the building which was held for more than 10 years. Thus in this way the resultant loss had been arisen after providing indexed cost of acquisition and indexed cost of improvement. 10. However, the AO observed that the assessee had been incurring the expenditure continuously, knowing fully well that such building was not economically viable to run the corporate house. Thus the intention of the assessee was very clear to sell the property ultimately at a good point of time after development. Thus the AO was of the view that the activities carried out by a developers/builders to run his business are similar to the activities carried out by the assessee. The AO therefore considered the transaction as adventure in the nature of the trade and accordingly the transaction would be covered under the head business and profession. The AO accordingly denied the indexation on cost and improvement incurred by the assessee. 11. The AO further while computing the business income, improvement cost incurred by the assessee before 21-03-2000, did not allow f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the same are not repeated here. However in brief following facts go against the appellant's claim as to how the transaction cannot fit in the category of adventure in the nature of trade.- 1- Appellant demolished the old bungalow purchased in auction and then commercial construction was carried on the plot of land after demolition. The construction continued till the year of sale which shows that appellant constructed the same for commercial benefit. The whole thing cannot be treated as improvement of capital asset. 2- Appellant has not disclosed the construction of commercial building as capital work in progress to indicate that it wasconstructing its own office building. If it would have been the case, appellant would have transferred the same to office building account and the same would have been business asset. The sale of depreciable business asset would have resulted in short term capital gain in section 50 of IT act. Even as per this also appellant would have paid taxes at the same rate as business head. Therefore even if appellant would have treated this as its own office building construction, the tax effect would be the same as done by the AO. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt chose not to comply. Even during appeal hearings several opportunities were given right from August 2009 but no compliance was made till 18th November 2010 when written submission were submitted. Therefore appellant can't claim that the reasonable opportunities were not provided. 9- Appellant's claim that it made investment is not correct since the purchase of bungalow was not the mere investment. Subsequentactivities including demolition of the same and construction thereon show that it was not simply an investment but adventure in the nature of trade for the purpose of earning profit. In view of the above and judicial decisions relied upon by the assessing officer, I am of the clear view that appellant carried out regular organized activity in constructing a commercial premise which was later on sold to outside parties and this constituted adventure in the nature of the trade. Result of this activity is definitely business profit taxable in business head and not capital gain. The addition made by the assessing officer is therefore confirmed. Even otherwise, as mentioned earlier, the appellant is liable to short term capital gain under section 50 if this premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of trade. Such aspects can be enumerated as under: i. The intention of the assessee at the time of acquisition of the land. ii. The period of holding of such land by the assessee. iii. The treatment made by the assessee in the books of accounts with respect to such land. 21. However, none of the authority below has brought out anything on record on the aspects as discussed above but arrived at the conclusion that the assessee has been carrying on business of property development on the basis that the assessee has been incurring the expenditure on continuous basis for the development of the land. The contention as raised by the assessee before the authorities below that it wanted to development the impugned land for its business activities has not been challenged. 22. We also find that in the similar facts and circumstances the Hon ble Tribunal Jodhpur has decided the issue in favour of the assessee in the case of Marudhar Hotels Pvt. Ltd v/s ACIT reported in 40 taxmann.com 161 wherein it was held as under: Thus, in the given facts and the circumstances of the case, and in view of the above stated legal (position) inescapable conclusion that follows is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)] , Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suo motu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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