TMI Blog2022 (4) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... hold certain class of assets as capital assets even while he is dealing with the asset of similar type in business with idea of commercial exploitations. Thus, case built by the AO on the grounds of the assessee engaged in business as developer of land would not ipso facto vitiate the nature and character of land holdings declared in a particular manner. The CIT(A), in our view, has come to a rational conclusion having regard to the corroborative evidences placed and conduct of the assessee over a period of several years in the past. Long period of holding, utilization of own funds, near absence of any trading activity on land except conversion of land in question are amongst vital pointers to lend support the declared intentions of acquiring the land as capital investments. Having regard to totality of facts and circumstances existing in the case, we do not see any justifiable reason to diverge from the conclusion drawn in the first appellate order. - appeal of revenue is dismissed. - I.T.A. No. 2115/Ahd/2018 (Assessment Year : 2014-15) - - - Dated:- 15-11-2021 - SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER Appellant by: Shri Virendra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k note of sequence of events beginning from acquisition of land and actions taken by the assessee thereafter as listed in para 5 of the assessment order. Based on the various actions of the assessee, the AO essentially observed that the predominant motive behind acquisition of land was to generate business profits involving systematic and concerted action of the assessee. The AO thus concluded that the transactions of purchase and sale of land parcels giving rise to the impugned profits essentially bear the character of business income as defined under s.2(13) of the Act. The AO accordingly held that the income arising on sale of land is liable to be taxed under the head business income and as a corollary, concessional tax treatment available under the head capital gains is not entitled to the transactions of the assessee in the factual matrix. The AO accordingly realigned the income from the head capital gains to business income and derived concessional tax treatment on such profits. 4. Aggrieved, the assessee preferred appeal before the CIT(A) for reinstatement of claim of the assessee for chargeability under the head capital gains . The CIT(A) in its appellate orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2 Since the number of transactions of sale was substantial, the Assessing Officer show caused the assessee to justify its claim of long term capital gains. The assessee explained that the land was purchased on 19.06.2007 and was converted for non-agricultural use on 27.11.2010. The entire land was sold to three companies in the F.Y. 2013-14 belonging to the same group controlled and managed by Shri Rashesh Maganlal Vachhani. It was argued by the Ld, Authorized Representative that since the assessee had not undertaken any activity from the purchase till the date of sale, the same cannot be said to be constituted the activity of business and, therefore, the claim was rightly made. 6.3 According to the Assessing Officer, the activity of purchase, conversion to N.A. use and sale in different parts constitute business and trading activity. The Assessing Officer also noted that the assessee has undertaken similar activities in the past and is continuously involved in activity of purchase and sale. It is also noted that this is reflected in the Balance Sheets of the assessee and that he has also inherited ancestral lands and the family concerns are engaged in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer for his comments which are received by a Remand Report under Reference No. VAD/DCIT/Cir.3(10/Remand Report/2018-19 dated 11.06.2018. The same was provided to the assessee and a submission in rejoinder is also received. In the remand report, the Assessing Officer has reiterated the contentions as made in the assessment and has objected to the admission of additional evidences being the copy of Balance Sheets from the F.Y. 2007-08 till the year under consideration which, according to the assessee, could not have been objected particularly when the findings of the Assessing Officer are factually erroneous when he has himself noted that the verification of earlier years' returns as well as balance sheets show the conduct of such transactions on a regular basis whereas the fact remains that the assessee has never, in the past, disclosed any income nor has filed the Balance Sheets. Even in the remand report, the Assessing Officer is silent on this aspect. As mentioned in the table above and in the order of the assessment, the date of purchase of the impugned lands was 19,06.2007 which are sold in 2013 and 2014. This long period of holding coupled with the treatment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial asset is not barred for the purposes of S. 2(14) of the Act defining capital asset . Thus, a non agri. Land can not be regarded as a trading asset without anything more. There is no further development of land as incorrectly observed by the AO. No expenditure has been incurred for development of land. The assessee has not carried out any plotting of land and has merely transferred to three co. mananged by the same person namely Rashesh Maganlal Vacchani. The signatory on behalf of the transferees are common in the sale deed. Hence, the AO has proceeded on misconception of facts on this score as well. Hence, for all intent and purpose, the transaction of sale of land is only one albeit apportioned among three companies of the same person. 6.3 It is further contention of the assessee that the intention since acquisition is to hold the asset as investment which is also evident from the fact that such land was held for substantial period of 6 years before sale. Thus the basic test of intention is in favour of the assessee. Secondly, the treatment meted out to such asset in the books is investment and offered income as capital gains . Thirdly, this is the solitary transac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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