TMI Blog2023 (10) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... 65 (10) TMI 7 - MADRAS HIGH COURT] has clearly held that when the asset is held as a capital asset by the assessee, where the intention of the assessee is to derive higher profits by dividing it into plots cannot alter the nature of income earned by the assessee. Also relying on the case of A. Mohammed Mohideen [ 1988 (11) TMI 95 - MADRAS HIGH COURT] and also SNF (India) Pvt Ltd [ 2023 (6) TMI 219 - ITAT VISAKHAPATNAM] we are of the considered opinion that the direction given by the Ld. Pr. CIT to the Ld. AO to re-do the assessment by invoking the provisions of section 263 of the Act is not in sustainable in law. As assessee is not engaged in systematic series of transactions of purchase and sale of land but, however has divided the land into plots only to derive higher profits in the nature of capital gains and has offered the same while filing the revised return of income which was also not disputed by the Ld. AO. Appeal of the assessee is allowed. - Shri Duvvuru Rl Reddy, Hon ble Judicial Member And Shri S Balakrishnan, Hon ble Accountant Member For the Assessee : Sri GVN Hari, AR For the Revenue : Dr. Satya Sai Rath, CIT-DR ORDER PER S. BALAKR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egating to Rs. 24,11,000/- with respect to certain sale transactions. Considering this fact admitted by the assessee in his documents submitted before the Ld. AO, the Ld. AO came to a conclusion that the assessee had violated the provisions of section 269SS of the Act and therefore the assessee is liable for penalty U/s. 271D of the Act. Accordingly, the Ld. AO completed the assessment U/s. 143(3) of the Act vide order dated 23/12/2018. 3. Thereafter, on examination of the assessment record, the Ld. Pr. CIT, Vijayawada observed that the assessment order was passed without making enquiries or verification which should have been made by the Ld. AO and thereby considered the assessment order in so far it is prejudicial to the interest of the revenue within the meaning and scope of section 263 of the Act. Accordingly, the Ld. Pr. CIT issued a show cause notice U/s. 263 of the Act dated 24/02/2021. In reply, the assessee responded through email dated 12/3/2021 and furnished the information called for. On perusal of the assessee s submissions as well as the assessment record, the Ld. Pr. CIT observed that while responding the show cause notice issued by the Ld. AO, the assessee submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer made necessary enquiries while assessing the capital gains. 4. Any other ground that may be urged at the time of appeal hearing. The only issue emanating from the above grounds is with regard to treatment of income from Capital Gain as Income from Business by Ld.PCIT. 4. At the outset, the Ld. AR argued that the assessee was subjected only to the limited purpose of whether capital gain / loss on sale of property has been correctly shown in the return of income . He further submitted that the Ld. AO only after verification of the ITR filed by the assessee for the AY 2016-17, sought for certain details with regard to the multiple sale and purchase transactions during the year and accordingly, the assessee submitted its computation statement wherein the assessee offered net Long Term Capital Gains of Rs. 1,05,74,973/-. The Ld. AO only after making necessary enquiries and thorough verification of the relevant documents as well as the computation of LTCG submitted by the assessee, accepted the revised return of income of the assessee and assessed the capital gains. The Ld. AR therefore submitted that the Ld. AO has passed the assessment order in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has resorted to sell it to difference buyers by sub-dividing it into various parts to fetch higher price. Merely by selling the entire land after dividing it into various parts, without altering the character of land, cannot be considered as an adventure in the nature of trade as contemplated by the Ld. Pr. CIT. On the identical issue the Hon ble High Court of Madras in the case of CIT vs. Kasturi Estates (P) Ltd (supra) held that: Where one concerned with a gain made out of purchase and sale of lands, whether it is an accretion to capital or capital profits may depend on particular facts and circumstances. The transaction itself should be looked at to see if it is essentially of a commercial character. A purchase and sale of land may be of that character but not necessarily so. If a person is systematically engaged in a series of transactions of purchase and sale of lands with a view to make profits out of them, that may indicate that he is occupied in a trading activity. But it is well settled that ownership of land by itself is not a trade . And so a person may purchase property, hold and enjoy it, derive income from it and, when there is appreciation in its valu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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