INCOME TAX ACT, 1961

Section 14

Head of income - Income from Capital gains or Business Income - Assessee had sold agricultural land alogwith another property - Business of buying and selling of properties

Assessee indicated that firm had acquired agricultural land and this land along with another property was sold by assessee. He claimed deduction inter alia on the ground that the amount received towards the sale of the properties were assessable as long-term capital gains which were entitled to be deducted in terms of section 54E and 54EC. AO did not agree with the contention of assessee on the ground that property fell within a distance of 8 kms. from the limits of Municipal Council and held the sale proceeds as business income of assessee. Held: Business of the appellant-assessee very specifically includes buying and selling properties situated in various places either wholly or in plots. It was obvious that business of assessee includes buying and selling even agricultural properties. Accordingly, it could not be accepted that sale of the properties by assessee had no nexus with the business. Assessee had not merely sold the agricultural property but also another property. Therefore, this is not a case of sale of a solitary property, by way of a one off transaction. Assessee had indeed sold the properties purchased by it for a considerable profit. This material was more than sufficient to sustain the findings recorded by AO and accordingly appeal of assessee was dismissed.

Distinguished:Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax AIR 1955 SC 176 : 1954 TaxPub(DT) 0121 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2007-08

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