TMI Blog2021 (2) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. The fact that the partnership deed has been duly amended bringing into account the fact that assessee was dealing in the business of real estate developer prior to the purchase of land and that the tax audit report also showed the assessee to be in the said business cannot be ignored. The assessee's plea that it was an inadvertent mistake to classify the same as fixed asset has to be accepted. No cogent reason has been brought on record by the authorities below to dispute the facts as recorded above. Except for mentioning about the assessee's classification in earlier year authorities will have not at all commented upon the assessee's explanation that the said purchase of land happened after the assessee started the business of dealing in land and real estate and the fact that auditor in the auditor's report did mention the same as the assessee's business. In this view of the matter authorities below action has no legs to stand. The gain is directed to be treated as business income with the necessary consequences. Accordingly set aside the orders of authorities below and decide the issue in favour of the assessee. - I.T.A. No. 4280/Mum/2019 - - - Dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as shown in the balance sheet under the head Fixed Assets as plot at Ambernath valued at ₹ 1,10,99,954/- (including registration fees and various expenses) during the A.Y 2014-15. 4. Assessing Officer further observed that on going through the deed of retirement of partners and reconstitution of firm wherein it is seen that assessee had shown nature of business of sale and purchase of Electronic/Electrical Appliances. That in this agreement no business activity was mentioned against business and developers. That a stamp paper was purchased on 11.03.2013 for amendment in partnership deed under the name of Nancy Traders wherein the signature was executed adding builders and developers, dealing in real estate, dealers in sale and purchase of TDR (Transfer of Development Rights) also as nature of business for Nancy Traders. That subsequently, the said plot was sold out on 26.11.2014 before 36 months. That the profit/gain of ₹ 2,44,32,077/- has been credited in the profit and loss account as profit on sale of plot. The net profit of ₹ 2,44,49,627/- has been set off with brought forward business loss of ₹ 15,97,358/- and brought forward depreciation of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In case the assessee intended to regard the same as business asset, then it would have converted this capital asset into stock in trade and would have reported the same in column no. 15 of the tax audit report for mere repetition, it is brought to notice that the assessee group is technically aware of the statutory and legal provisions as discussed in para above. Since the assessee itself has put the assessee in the block of assets, the sale of which is resulting in the value of that block becoming Nil and the resultant gain/profit is taxable as short term capital gains. Hence, it seems to be a deliberate attempt on the part of the assessee to hood wink the department with the motive of escaping the taxation provision. Therefore, the brought forward business loss of ₹ 15,97,358/- cannot be set off against the short term capital gain as per provision of section 73A(2) of the Act. The penalty proceedings u/s. 271(1)(c) are separately initiated for furnishing inaccurate particulars of income of ₹ 15,97,358/-. 7. Upon assessee's appeal learned CIT(A) summarised the facts as under:- (a) That originally appellant firm was engaged in the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised the contention that, the assessing officer has not commented a word on this issue but has simply held it to be a capital asset only due to an inadvertent error having been made while finalising the books of accounts, for earlier year. The A.R of appellant has relied upon on various judgements in support of his contention that mere entry/treatment given by appellant to a particular transaction does not and/or is not conclusive in determining the actual nature of transaction. 9. However without making any discussion on the assessee's submission he confirmed the Assessing Officer's action and held as under:- In view of the above discussions, as also bearing in mind entirety of the case, I am of the considered view that, the assessing officer has rightly disallowed the claim of set-off of business loss, treating the profit on sale of land as Short Term Capital Gain. In support of the AO, the undersigned has further observed that, the aforesaid land was shown in the balance sheet under the head capital asset in the year of purchase of the land i.e. F.Y. 2013-14 relevant to A.Y. 2014-15 and the appellant has also not converted' from capital asset to stock ..... X X X X Extracts X X X X X X X X Extracts X X X X
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