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TMI Blog2023 (2) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... to the above, Id. CIT(A) has erred both on facts and in law, in confirming the action of the A.O. in computing the gain on sale of properties at Rs. 46,29,992/- as against Rs.3,91,539/- declared by the assessee. 5. The appellant craves leave to add, amend or alter any of the grounds of appeal." 2. The only dispute in this case is related to the treatment of surplus fund out of the sale of properties whether it should be the business income as treated by the Assessing Authority or the capital gain as claimed by the assessee. BRIEF FACTS OF THE CASE 3. Facts giving rise to the present appeal are that the assessee e-filed return of income declaring total income of Rs.3,55,190/- on 31.03.2015 for the year under consideration. The case was selected for scrutiny assessment. The Assessing Officer ("AO") observed that the assessee had claimed capital gain out of sale of the properties. However, looking to the facts, same ought to have been treated as income from business. The AO after considering the material available on record, computed the business income as under:- "Looking to the facts of the case it is clearly established that the assessee is during business of real estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed the business profits to be Rs. 46,29,992/-. (Page 3 of the assessment order). 3. The Ld. CIT(A) without considering the facts of the case dismissed the appeal filed by the assessee by merely quoting the findings of the CIT(A) as recorded in the order of the AY 2012-13. The observation of the CIT(A) in the instant case is reproduced as under: "5. During the present appellate proceedings, the assessee filed written submission contesting that the corresponding profit should be assessed under head capital gains only. The assessee's contention is not accepted for the reasons discussed in the order of the CIT(A) in A.Y. 2012-13 of my predecessor. 6. Therefore, the appeal filed by the assessee is dismissed and all the 3 grounds of appeal which relate to the same addition are treated as dismissed. " 4. The details of capital gains on sale of properties as declared in the return of income filed for the year under consideration are at PB page 3. The sale deeds of the properties are placed at PB page no. 10-22, 23-29 and 55-67. The period of holding of such properties is tabulated as under: Particulars E-4/14, Model Town (3rd Floor) C-339, Saraswati Vihar (2nd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee involves various transactions of purchase and sale of immovable properties. When an assessee held the property for more than 3 years without borrowing funds and classified the same in its books of accounts, it cannot be said that the assessee is not an investor. The relevant extract of the said decision is as under: "6 the whole controversy is on the sale of first plot of land, which was purchased in 2007 and sold in 2010 after holding for three years. The learned assessing officer has held that there was no intention of the assessee to hold as an investor but as a trader but there was no material put by the learned AO to substantiate his finding the learned CIT appeal upheld the addition on the issue of substantial investment and intention of the assessee. Both these criteria as are not relevant for deciding unless substantiated by the evidence. Even otherwise, the substantial investment cannot distinguish a particular purchase of land between a trader and investor. Merely because the assessee has entered into few transactions of purchase and sale of plot of land in past, during the year it cannot be said that assessee has sold the property is a trader. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong and all other facts including absence of evidence of any trading activity or speculative venture, we are of the view, therefore, that the Tribunal was right in its conclusion that the surplus from sale of the land did not result from any trade or business in land carried on by the assessee or from any transaction which may properly be described as an adventure in the nature of trade." Commissioner of Income-Tax Versus Smt. Saraswati Jaiswal, [2003] 264 ITR 358, the hon'ble Madhya Pradesh High Court held as under: "Taking into consideration the totality of facts and circumstances of the case, we are of the considered view that in the case at hand, the Tribunal has addressed itself to the factual situation and arrived at the conclusion that the assessee was entitled to be assessed under the head of capital gain and not under the head of profit arising from adventure. We are disposed to think that the whole analysis is based on appreciation of facts and it has been clearly held by the apex court in G. Vankataswami Naidu's case [1959] 35 ITR 594, that it would depend upon all the relevant facts and circumstances. In the case at hand, principally as questions of fact are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s question is returned in favour of the assessee and against the Revenue. " 10. Therefore, in view of the above circumstances and further considering the settled position of law in this regard, the gain on sale of properties should not be treated as business income as the intention of the assessee was to hold the properties for investment purpose only." 7. On the other hand, Ld. Sr. DR opposed these submissions and supported the orders of the authorities below. He submitted that looking to the facts fo the present case and in view of the fact that the assessee is regularly involved in sale and purchase of the immovable properties. Therefore, it cannot be inferred that the assessee is making investments and earning capital gain out of the transactions. 8. In re-joinder, Ld. Counsel for the assessee pointed out that it is the intent of the seller which should be the basis whether a particular transaction is for business purpose and it is an investment. Ld. Counsel for the assessee relied on the judgement of the Hon'ble Bombay High Court rendered in the case Indian Human Pipe Co.Ltd. vs CIT 195 ITR 386 (Bom.). It is also pointed out by the Ld. Counsel for the assessee that in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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