The Tax Publishers2020 TaxPub(DT) 4792 (Bang-Trib)

INCOME TAX ACT, 1961

Section 14 Section 45 Section 54F

Where assessee along with other co-owners purchased agricultural land and as per co-ownership agreement, nature of business of said co-ownership arrangement was to have joint purchase of land and income arising to this co-ownership after deduction of all expenses was to be shared by co-owners in accordance with deed of co-ownership, thus, co-ownership agreement was taxable as business income.

Heads of income - Capital gains or Business income - Assessee along with other co-owners purchased an agricultural property under Co-ownership agreement - Gain arising on sale of land, whether taxable as business income

Assessee along with other co-owners purchased an agricultural property. Claim of assessee was that purchase of land was not for any business purpose and therefore, gain arising on sale of said land in relevant year was taxable as long-term capital gain and not as business income. Assessee also contended that period of holding should be considered from the actual date of purchase and therefore, it should be assessed as long-term capital gain, and not as short term capital gain and deduction should also be allowed under section 54F of the Income Tax Act, 1961. Held: Purchase of the land in question was in pursuance to co-ownership agreement and as per that co-ownership agreement, this was business of this co-ownership to have joint purchase of land and the net income of the co-ownership after deduction of all expenses was to be shared by co-owners in accordance with the manner provided in the co-ownership agreement. Nothing further was required to be seen and it could be concluded without any hesitation that the income arising on purchase and sale of land in pursuance to this co-ownership agreement was taxable as business income and this was not relevant as to whether any other activity was done by the co-owners on the land purchased or in any other manner.

Distinguished:Navin Jindal v. Asstt. CIT (2010) 320 ITR 708 (SC) : 2010 TaxPub(DT) 1303 (SC), CIT v. Frick India Ltd. (2014) 369 ITR 328 (Del) : 2014 TaxPub(DT) 3776 (Del-HC), CIT v. Rama Rani Kalia (2014) 358 ITR 499 (All) : 2014 TaxPub(DT) 676 (All-HC), CIT v. Suresh Chand Goyal (2008) 298 ITR 277 (MP) : 2008 TaxPub(DT) 470 (MP-HC), CIT v. Manna Lal Nirmal Kumar Surana (2003) 264 ITR 116 (Raj) : 2003 TaxPub(DT) 892 (Raj-HC) and CIT v. Ved Parkash Deepak Kumar (1994) 207 ITR 148 (P&H) : 1994 TaxPub(DT) 0466 (P&H-HC).

REFERRED : X

FAVOUR : Against the assessee.

A.Y. : 2013-14



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