TMI Blog2014 (9) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the facts of the case before us are similar to the facts in the assessee s own case for earlier assessment year, respectfully following the decision of the co-ordinate Bench to which one of us i.e. the Judicial Member is the signatory, we uphold the findings of the CIT(A) that income from sale of land is to be taxed as income from capital gains . The Revenue s ground of appeal is accordingly rejected. Addition on account of suppression of sale consideration of the land - HELD THAT:- AO has made addition only on the basis of the statement of Shri Purushotham Reddy recorded during the course of search that the assessee has received sale consideration at the rate of ₹ 1224/- per sq.ft. as against ₹ 975/- per sq.ft. claimed by the assessee. Except for the statement of Shri Purushotham Reddy, there has been no evidence brought on record to show that the sale consideration was at the rate of ₹ 1224/- per sq.ft.. In the absence of any material on record to substantiate the statement recorded during the course of search of the third party, we are not inclined to accept the contention of the Revenue that there is suppression of sale consideration by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for payments made subsequent to the date of sale of land and allow the expenditure incurred for such construction of compound wall, if it is found that compound wall was in fact, constructed by the GK Associates at the behest of the assessee - cross objection of the assessee is allowed for statistical purposes. - ITA No.705/Bang/2013 AND Cross Objn.No.98/Bang/2013 (In ITA No.705/Bang/2013) - - - Dated:- 5-9-2014 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER and SHRI JASON P. BOAZ, ACCOUNTANT MEMBER For the Revenue : Shri T.S.N. Murthy, CIT-III(DR). For the Assessee : Shri G. Rohit, CA. ORDER Per Smt. P. MADHAVI DEVI, JM: The appeal filed by the Revenue and the cross objection filed by the assessee are against the order of the CIT(A)-VI, Bangalore, dated 28-3-2013 for the assessment year 2007-08. 2. In the appeal, the Revenue is aggrieved by the order of the CIT(A) in (i) holding that profit on sale of land amounting to ₹ 6,72,792/- is assessable under the head capital gains instead of profits and gains of business or profession (ii) deleting the addition of ₹ 2,95,99,571/- made on account of suppression of sale consideration of the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s.Chamundi Gold Hills Estate, the assessee s LR had filed a letter dated 26-3-2009 stating as follows: i ₹ 35,00,000/- paid to Jawahar Gopal and Rami Reddy towards cancellation of Original Agreement ii ₹ 3,01,00,000/- paid to Prakruthi Infrastructure and Development Company cancellation of subsequent Agreement. iii ₹ 17,59,322/- paid to Bifora towards interest on Short term borrowing for payment of above. iv ₹ 70,83,188.50 paid to Mr.Dhananjay Pandey towards settlement of unauthorized tenants residing on the said land. v ₹ 1,11,47,319/- paid to G.K.Associates towards construction of compound walls for the above said property. vi ₹ 57,50,000/- paid towards earth filling and leveling of low lying land. vii ₹ 13,77,620/- paid to the government towards land betterment and conversion charges. The AO after considering the contentions of the assessee and the details filed therewith, held that the activity carried on by the assessee is nothing but an adventure in the nature of trade and therefore income from sale of land has to be assessed as the business income and not as capital gains as offered by the assessee. He, acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in financial years 1988-89, 1989-90, 1991-92, 1992-93, etc., At that relevant point of time when lands were purchased by the assessee, they were agricultural lands. The assessee sold those holdings in the financial year 2005-06 which means after a period of five to seven years. The holding of land for that long a period is primarily an indication of the fact that the assessee held the agricultural lands purchased by him as investment. There is no evidence on record to show that the assessee has been carrying on the activities as adventure in the nature of trade. Only for the reason that the agricultural land previously purchased by the assessee were developed and plotted and sold at a huge price, does not mean that the assessee was carrying on the activities in an organized manner in the nature of business. As a prudent investor, the assessee started saving his investments in land in anticipation of good price on sale. This prudence of the late assessee cannot be equated with an object of indulging in adventure in the nature of trade. Because of the development of Bangalore city, like many other persons, the assessee also might have benefited by a windfall. The rise in pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the construction of the compound wall and paid to G.K.Associates. The CIT(A) has also confirmed the disallowance on the ground that some of the payments are subsequent to the date of sale of the land and therefore it is not understandable as to how the assessee has constructed the compound wall after sale of the land. The learned counsel for the assessee submitted that most of the payments are to GK Associates and the CIT(A) has reproduced the details as Schedule Eat page 5 of his order which are all by account payee cheques except for three payments i.e. from 17-2-2007 to 19-3-2007. He submitted that there is no dispute as regards the construction of compound wall by the AO but the CIT(A) has only gone on the premise that since payments were made after the sale of land, construction of compound wall is doubtful. He submitted that the wall was constructed much prior to the date of sale but the payments were actually made subsequent to the sale and that it is no ground to disallow the expenditure which has genuinely been incurred by the assessee and therefore it should be allowed as cost of improvement to the land. We find that the sale of land had taken place in March 2007. Up to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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