TMI Blog2016 (1) TMI 1464X X X X Extracts X X X X X X X X Extracts X X X X ..... asset is to be assessed as business income is on change of opinion. It was held in the case of Phool Chand Bajranglal [ 1993 (7) TMI 1 - SUPREME COURT ] where the AO comes into possession of fresh information or new facts, which lead him to form a reasonable belief that income has escaped assessment, he can reopen the assessment. In the present case, AO had not found any fresh information nor new facts. Also held in the case of Tractbel Industry Engg. Vs. Asst. DIT [ 2011 (1) TMI 1470 - DELHI HIGH COURT ], during the course of original assessment proceedings, the assessee was called upon to give information and details regarding the nature of business activities in India, it was stated in the letter that the assessee does not have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income chargeable to tax had escaped assessment and, therefore, a notice u/s 148 was issued. Thereafter, a notice u/s 143(2) was issued and after hearings with the assessee, the assessment was completed by AO u/s 143(3) rws 147 of the Income-tax Act, 1961 (in short Act ) by making an addition of ₹ 91,01,026 and ₹ 33,038/- on account of income from Long term capital gains treated as business income and loss on sale of asset respectively. 4. Aggrieved, the assessee preferred appeal before the CIT(A) and filed elaborate written submissions before him, which were extracted by the CIT(A) in his order from pages 3 to 17 of the order. 4.1 As regards initiation of reassessment proceedings, before the CIT(A), the assessee submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. There is no fresh material before AO except the details filed during the proceedings u/s. 143(3). Relying On the ratio laid down in the case of CIT Vs Kelvinator India Ltd. (320 ITR 561), the reopening, held bad in law. Further, to assess the gains arising on transfer of asset as business income as against the capital gain would only amount to change of opinion, which also cannot be basis for reopening of the assessment. On this account also the initiation of reassessment proceedings fails. Accordingly, grounds 2 to 4 are treated as allowed. 6. As regards the assessment of gains as business income, the assessee submitted as follows: a. The site situated at Madinaguda, Hyderabad was held by the assessee as an asset from the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development agreement with M/s. Noon Homes Pvt. Ltd., which handed over the flats in semi-finished stage only. It was only the super structure that was handed over to assessee. The crucial component of value addition to improve marketability of the flats was undertaken by the assessee himself This activity of assessee carrying on the development work himself shows that the activity needs to be classified as 'trade' and not investment. 7. The CIT(A) allowed the ground of assessee by observing as under: The contention of the assessee and the facts brought out in the assessment order are considered. The assessee contents that the property was brought in 1999 and was held as asset and also shown as asset in balance sheet also. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment activity. He also submitted that having ventured to construct flats with his own financial strength, assessee admits that he could not execute the project as his own. This proves that the project undertaken was beyond his means and that this was not a mere investment proposition out of his available funds but an adventure . 9.1 Ld. DR also submitted that the assessee had entered into a development agreement with M/s Noon Homes Pvt. Ltd. which handed over the flats in semi-finished stage only. It was only the super structure that was handed over to assessee. The crucial component of value addition to improve marketability of the flats was undertaken by the assessee himself. This activity of assessee carrying on the development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the same materials submitted by the assessee. There was no fresh material or any information which gives the impression that the income of the assessee has escaped assessment. The initiation of reassessment proceedings u/s 147 of the Act on the basis of the same material on record and holding there was escapement of income as the income arose from transfer of the asset is to be assessed as business income is on change of opinion. It was held in the case of Phool Chand Bajranglal Vs. ITO, [1993] 203 ITR 456 (SC), where the AO comes into possession of fresh information or new facts, which lead him to form a reasonable belief that income has escaped assessment, he can reopen the assessment. In the present case, AO had not found any fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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