| The Tax Publishers2020 TaxPub(DT) 2140 (Jod-Trib) INCOME TAX ACT, 1961
Section 14
Mere fact that there was a series of transactions of sale only, by selling the part of the whole land, purchased in one go, or purchased once upon a time, in piecemeal, would not render the activity of sale to be an 'adventure in the nature of trade' especially when it was not shown that assessee was a regular dealer in real estate, therefore, profit arising from sale of land was assessable as capital gain and not as business income.
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Head of income - Business income or capital gain - Series of transaction of sale of plots treated as 'adventure in the nature of trade' - It was not shown that assessee was a regular dealer in real estate
Assessee sold certain piece of land and declared resultant profit as capital gain eligible for exemption under section 54f on account of investment in residential property at Bengaluru. AO owing to series of transaction of sale of plots treated transaction of sale of property business transaction and assessed accordingly. CIT(A) after holding that purchase of property as capital asset, assigned only one reason in treating the ploting of land as 'adventue in the nature of trade' which was agriculture land converted in non-agriculture land'. Held: Mere fact that there was a series of transactions of sale only, by selling the part of the whole land, purchased in one go, or purchased once upon a time, in piecemeal, would not render the activity of sale to be an 'adventure in the nature of trade'. In the instant case, there was nothing to show that the land was purchased with the intention to sell at a profit, or with requisite intention, to bring it within the parameters of 'stock-in-trade'. It was not shown that assessee was a regular dealer in real estate. It appeared, that land was purchased in 1970, which was under cloud of land ceiling laws, and after that cloud was cleared, and other adjoining lands had been developed, and since the land was not yielding any return, it was decided to be sold in piecemeal, by earmarking plots, but then nonetheless it would remain a disposal of the capital asset only, and not a transaction of any 'stock-in-trade' so as to be described as 'adventure in the nature of trade'. Merely conversion of agricultural land into non-agricultural land would not give rise to taxable event until it is actually sold. Thus, assessee had sold capital asset held for long-term, accordinlgy, profit arising from sale of land was assessable as capital gain and was eligible for deduction under section 54F.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2015-16
IN THE ITAT, JODHPUR BENCH
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