ITO, Kanpur v. M/s. Udbhav Finance & Investment Co. (P) Ltd., Kanpur

ITA 431/LKW/2010 | 2006-2007
Pronouncement Date: 14-03-2011 | Result: Dismissed

Appeal Details

RSA Number 43123714 RSA 2010
Assessee PAN AAACV6380Q
Bench Lucknow
Appeal Number ITA 431/LKW/2010
Duration Of Justice 9 month(s) 3 day(s)
Appellant ITO, Kanpur
Respondent M/s. Udbhav Finance & Investment Co. (P) Ltd., Kanpur
Appeal Type Income Tax Appeal
Pronouncement Date 14-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Date Of Final Hearing 07-03-2011
Next Hearing Date 07-03-2011
Assessment Year 2006-2007
Appeal Filed On 10-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B : LUCKNOW BEFORE SHRI H. L. KARWA HONBLE VICE PRESIDENT AND SHRI N. K. SAINI ACCOUNTANT MEMBER I.T.A. NO.431/LUC/10 ASSESSMENT YEAR:2006-2007 INCOME TAX OFFICER-5(3) VS. M/S UDBHAV FINANC E & KANPUR. INVESTMENT CO. (P) LTD. 106/88 GANDHI NAGAR KANPUR. PAN:AAACV6380Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ANADI VERMA D. R. RESPONDENT BY: SHRI J. J. MEHROTRA C. A. ORDER PER N. K. SAINI: THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST T HE ORDER DATED 29/03/2010 OF CIT(A)-II KANPUR RELEVANT TO ASSESSM ENT YEAR 2006-2007. IN THIS APPEAL THE DEPARTMENT HAS RAISED THE FOLLOW ING GROUNDS: 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE F ACT THAT IN CLAUSES OF MAIN' OBJECTS AS WELL AS IN ANCILLARY OB JECTS MENTIONED IN THE MEMORANDUM OF ASSOCIATION OF THE A SSESSEE COMPANY THE ASSESSEE WAS LAWFULLY AUTHORIZED TO CO NDUCT THE BUSINESS OF DEALING IN TRANSACTIONS IN TO ALL TYPES OF IMMOVABLE AND MOVEABLE PROPERTIES. 2 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE F ACT THAT THE INTENTION OF THE ASSESSEE COMPANY WAS DOING BUSINES S IN REAL ESTATE ACTIVITIES SOLELY WITH THE VIEW TO EARN PROF IT THEREON AND IS ACCORDINGLY COVERED BY SECTION 28 OF THE INCOME TAX ACT 1961 OF NORMAL BUSINESS ACTIVITIES AND NOT AS CAPIT AL GAIN AS CLAIMED BY HE ASSESSEE COMPANY. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE F ACT THAT THE LAND SOLD :AS FARM HOUSE DURING THE PREVIOUS YEAR W AS SHOWN BY THE ASSESSEE AS FIXED ASSETS TREATED AS STUCK IN TRADE IN FORM OF FIXED ASSETS. 4. THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II KANPUR BEING ERRONEOUS UNJUST AND BA D IN LAW BE VACATED AND THE ORDER OF THE ASSESSING OFFICER R ESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE AND/OR ADD ANY FRESH GROUND AS AND WHEN IT IS CONSIDERED NECESSARY TO DO SO. 2. THE FACTS RELATED TO THIS CASE IN BRIEF ARE TH AT THE ASSESSEE WAS CARRYING ON ACTIVITIES AS FINANCE SERVICE SECTOR SE RVICES AND FILED THE RETURN ON 26/10/2006 SHOWING TOTAL INCOME OF ` 29 64 949/-. THE SAID INCOME INCLUDED LONG TERM CAPITAL GAIN ON THE SALE OF IMMO VABLE PROPERTY BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. THE CA SE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN CAPITAL GAIN OF ` 29 64 949/- AS PER FOLLOWING DETAILS: (I) SHORT TERM CAPITAL GAINS BY SALE OF ` 2 36 573/- 3 ENTITLEMENT IN FLAT (II) LONG TERM CAPITAL GAINS BY SALE OF ` 27 28 421/- FARM HOUSE ----------------- ` 29 64 949/- 2.1 ACCORDING TO THE ASSESSING OFFICER THE ASSESSE E INVOLVED ITSELF IN NOTHING ELSE BUT PURCHASE AND SALE OF LAND AS PROFI T GENERATING ACTIVITIES. HE ALSO OBSERVED THAT THE ASSESSEE PIECED TOGETHER THE LAND MADE VALUE ADDITION AND SOLD THEM AS A FARM HOUSE WHICH DEFIN ITELY WAS A BUSINESS ENDEAVOR AND THAT THE ASSESSEE HAD PAID CAPITAL GAI N @20% ON THE SUM OF ` 27 28 421/- CLAIMING IT AS LONG TERM CAPITAL GAIN ON THE REMAINING SUM OF ` 2 36 573/- THE RATES APPLICABLE ON SHORT TERM CAPIT AL GAIN WERE APPLIED THE INCOME TAX WAS DETERMINED AND PAID ACCORDINGLY. THE ASSESSING OFFICER POINTED OUT THAT THE ASSESSEE DURING THE R ELEVANT PREVIOUS YEAR DID NOT DO ANY BUSINESS TRANSACTION EXCEPT THE TWO TRANSACTIONS OF SALE OF IMMOVABLE PROPERTY. THE ASSESSING OFFICER OBSERVED THAT AS PER CLAUSE 1 OF MEMORANDUM OF ASSOCIATION THE ASSESSEE WAS AUTHO RIZED TO PURCHASE LEASE ETC. LANDS BUILDINGS ETC. AS ITS ANCILLARY OBJECT AND ALSO AS PER CLAUSE 3 OF MAIN OBJECT IT WAS AUTHORIZED TO DO THE BUSINESS OF HIRING OUT LEASING HIRE PURCHASE FINANCE LEASING OPERATION TO DEAL WITH ALL TYPES OF MOVABLE AND IMMOVABLE PROPERTIES ETC. THE ASSESSIN G OFFICER WAS OF THE OPINION THAT THE PROFITS ARISING TO THE ASSESSEE ON THE TRANSACTIONS OF PURCHASE AND SALE OF IMMOVABLE AND MOVABLE PROPERTI ES CONSTITUTED 4 PROFITS & GAINS FROM BUSINESS OR PROFESSION. THE ASSESSEE EXPLAINED TO THE ASSESSING OFFICER THAT THE LAND SOLD DURING THE PREVIOUS YEAR WAS SHOWN AS FIXED ASSETS AND IT WAS NEVER TREATED AS S TOCK IN TRADE. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD SHOWN AGRICULT URAL INCOME FROM THE SAME LAND WHICH HAD BEEN ACCEPTED BY THE DEPARTMENT IN THE EARLIER YEARS. HOWEVER THE ASSESSING OFFICER DID NOT ACCE PT THE EXPLANATION OF THE ASSESSEE BY OBSERVING THAT ONE OF THE MAIN BUSI NESS OBJECT FOR WHICH THE ASSESSEE COMPANY WAS INCORPORATED WAS TO DEAL I N VARIOUS WAYS IN IMMOVABLE PROPERTIES AND THE ASSESSEE HAD SHOWN THE SAME PROPERTIES AS FIXED ASSETS IN ITS BALANCE SHEET SO THAT IT COU LD AVAIL BENEFIT OF INDEXATION CONSEQUENT UPON THEIR SALE AND THAT THE INTENDED BENEFITS ARISING TO THE ASSESSEE CONSEQUENT UPON SUCH INDEXA TION WERE SHOWN AS UNDER: STATED YEAR OF ACQUISITION OF PROPERTIES COST SHOWN ( ` ) COST TO THE ASSESSEE ON THE DATE OF SALE AFTER INDEXATION ( ` ) INCREASE IN COST TO THE ASSESSEE DUE TO INDEXATION TREATING THE SAME AS CAPITAL GAIN ( ` ) JULY 1993 18 63 500 37 95 736 19 32 236 1996-97 20 000 32 590 12 590 1998-99 39 89 863 56 49 464 16 59 601 2000-01 2 41 720 2 95 899 54 179 2003-04 8 395 9 011 616 TOTAL 61 23 478 97 82 700 36 59 222 2.3 THE ASSESSING OFFICER HELD THAT THE PROFIT FROM BUSINESS BY TREATING THE SALE CONSIDERATION OF ` 1 25 00 000/- WAS NORMAL BUSINESS PROFIT. THE 5 ASSESSING OFFICER ACCORDINGLY WORKED OUT THE PROFIT S FROM BUSINESS AT ` 63 76 522/- (SALE PRICE ` 1 25 00 000/- (-) `COST ` 61 23 478). WHILE TAKING THE ABOVE VIEW THE ASSESSING OFFICER IN THE ASSESS MENT ORDER DATED 17/12/2008 INTER ALIA HAD MADE THE FOLLOWING OBSE RVATIONS: (I) THE ASSESSEE PIECED TOGETHER THE LAND MADE VAL UE ADDITION AND SOLD THEM TOGETHER AS A FARM HOUSE WHI CH IS A BUSINESS ENDEAVOR. (II) DURING THE YEAR UNDER CONSIDERATION THERE WAS NO OTHER ACTIVITY EXCEPT PURCHASE AND SALE OF LAND AS PROFIT GENERATING ACTIVITY. (III) PROFIT ON SALE OF LAND WAS SHOWN BY AUDITOR A S PROFIT ON SALE OF FARM LAND. (IV) THAT THE ASSESSEE BEING A CORPORATE ENTITY WAS GOVERNED BY THE PROVISIONS OF THE COMPANIES ACT 195 6 AND THAT: (A) ONE OF THE OBJECTS OF THE ASSESSEE AS PER CLAUS E 3 OF MAIN OBJECTS AND CLAUSE 1 OF ANCILLARY OBJECTS OF MEMORANDUM OF ASSOCIATION IS TO DEAL IN ALL TYPES OF IMMOVABLE/MOVABLE PROPERTIES AS A BUSINESS AND PURCHASE/SALE OF THE SAME WAS A BUSINESS ACTIVITY. (B) THERE IS NO BUILT IN DISTINCTION UNDER THE COMPANIES ACT 1956 BETWEEN THE MAIN OBJECTS AND ANCILLARY OBJECTS CLAUSES AND THERE IS NO SPECIFIC STATUS OF MAIN OBJECTS CLAUSES. (V) ACCOUNTING OF FARM HOUSE AND ENTITLEMENT OF FL AT AS CAPITAL ASSETS IN THE BOOKS BY THE ASSESSEE IS NO GROUND TO TREAT THE SAME AS CAPITAL ASSETS AND WAS NOT CORRECT AS THE INTENTION OF THE ASSESSEE WAS TO DO 6 BUSINESS IN REAL ESTATE WITH A VIEW TO EARN PROFIT THERE FROM. (VI) EARNING AND RETURN OF AGRICULTURE INCOME FROM AGRICULTURAL LAND BY THE ASSESSEE AND ACCEPTANCE BY THE DEPARTMENT IN EARLIER YEARS HAS NO MERIT AS THE ASSESSEE BEING AN ARTIFICIAL JURIDICAL PERSON CAN N OT INVOLVE INTO THESE ACTIVITIES AND EACH ASSESSMENT YEAR IS A DISTINCT UNIT. 3. THE ASSESSEE CARRIED THE MATTER TO LEARNED CIT(A ) THE SUBMISSIONS MADE BEFORE HIM AS MENTIONED IN PARA 3.3 AND 3.4 O F THE IMPUGNED ARE REPRODUCED VERBATIM AS UNDER: 3.3 (I) LAND WAS NOT PIECED AFTER PURCHASE. NO SUCH ACT IVITY IS NOTED BY ASSESSING OFFICER AND SPECIFIED TO EVIDENC E THE PIECING OF LAND. NO PLOTTING OF LAND WAS DONE NO ACTIVITY OF DEVELOPING LAND WAS UNDERTAKEN AND NO CHARGES PAID TO MUNICIPAL CORPORATION. THE LAND ALO NG WITH CONSTRUCTION WAS SOLD IN THE SAME LOTS IN WHIC H IT WAS PURCHASED AS PER DETAILS ABOVE. AGRICULTURAL ACTIVITIES WERE CARRIED ON THE SAID LAND/FARM HOUSE AS IS EVIDENT FROM THE AGRICULTURAL INCOME EARNED/RETURNE D AS ABOVE. IN CASE OF ENTITLEMENT TO FLAT THE SAME WAS SOLD IN ONE GO. THERE WAS NO BUSINESS ENDEAVOR IN BOTH T HE CASES. THUS THE ALLEGED OBSERVATIONS OF THE LEARNED ASSESSING OFFICER ARE INCORRECT 'AND UNFOUNDED AS P ER RECORDS AND THERE IS NO GROUND TO TREAT THE SALE AS BUSINESS ACTIVITY. (II) TEMPORARY SLOWDOWN IN THE BUSINESS ACTIVITIES OF DEALING IN SECURITIES/CONSULTANCY WORK/FINANCING AN D LEASING ACTIVITIES DOES NOT CHANGE THE NATURE OF CA PITAL ASSET HELD FOR LONG AND ON SALE TO REALIZE MONEY TO BE TREATED AS BUSINESS ACTIVITY. PURCHASE/SALE OF CAPI TAL 7 ASSET COULD BE IN ANY YEAR WHETHER THERE IS BUSINES S ACTIVITY OR NOT. HENCE IT IS NO GROUND TO TREAT THE SALE AS BUSINESS ACTIVITY. (III) THE ASSESSEE IS A COMPANY AND THE ACCOUNTS OF THE COMPANY ARE TO BE PREPARED UNDER THE PROVISIONS OF THE COMPANIES ACT 1956. UNDER THE COMPANIES ACT 1956 THERE IS NO CONCEPT OF LONG TERM/SHORT TERM GAINS. ON SALE OF ASSET SIMPLY THE PROFIT/LOSS AS P ER COST /SELLING PRICE IS DEPICTED IN THE PROFIT & LOSS ACC OUNT AND THE AUDITORS HAVE TO SHOW THE TRANSACTIONS AS SUCH. (IV) THERE IS NO DISPUTE THAT COMPUTATION OF INCOME UNDER THE INCOME TAX ACT IS MADE AND CONSIDERED. ASSESSMENT OF INCOME IS TO BE MADE UNDER THE IT ACT AND NOT AS PER THE PROVISIONS UNDER THE COMPANIES ACT 1956 OR UNDER ANY OTHER ACT.' (V) IT IS SUBMITTED THAT EVEN FOR ARGUMENT SAKE MER E EXISTENCE OF A CLAUSE IN THE MEMORANDUM OF ASSOCIATION DOES NOT CHANGE THE NATURE OF TRANSACTI ON AND EXISTENCE OF SUCH CLAUSE IS NOT CONCLUSIVE TO ESTABLISH THAT IT WAS A BUSINESS TRANSACTION. (VI) THE INVESTMENT IN LAND/FARM HOUSE HAS ALL ALON G BEEN TREATED AS FIXED ASSETS IE. CAPITAL ASSET AND NOT TRADING ASSET IN THE BALANCE SHEET OF THE ASSESSEE. THE SAID LAND/FARM HOUSE WAS NEVER USED IN THE BUSINESS ACTIVITY OF HIRING/LEASING. THIS FA CT HAS NEVER BEEN CONTROVERTED AND HAS BEEN ACCEPTED BY TH E DEPARTMENT ALL ALONG SINCE 1993 WHICH IS EVIDENCED BY THE BALANCE SHEETS FILED ALONG WITH RETURN OF INCOM E AND TILL 31.03.2006. THERE WAS NO CHANGE OF SITUATI ON IN A.Y. 06-07. (VII) THE INTENTION TREATMENT BY THE ASSESSEE AND PERIOD OF HOLDING THE CAPITAL ASSET ARE DOMINANT FACTORS. THE ASSESSEE HELD THE FARM HOUSE AS CAPITAL ASSET FOR OVER 11 YEARS. THIS ESTABLISHES BEYOND DOUBT THE INTENTION OF THE ASSESSEE AND ACCEPTANCE OF THE DEPARTMENT IN HOLDING IT AS CAPITAL ASSET. 8 3.4 THE ASSESSEE FURTHER RELIED ON THE PROVISIONS O F I.T. ACT AND JUDICIAL PRONOUNCEMENTS AS UNDER: (I) TO TREAT AN ACTIVITY AS A BUSINESS ACTIVITY IT IS TO BE CARRIED ON CONTINUOUSLY AND SYSTEMATICALLY BY APPLICATION OF LABOUR AND SKILL - 129 ITR 295 (SC). (II) BUSINESS CONNOTES SOME REAL SUBSTANTIAL AND SYSTEMATIC OR ORGANIZED COURSE OF ACTIVITY - 26 ITR 765 (SC). (III) MERE HOLDING OF PROPERTY OR INVESTMENT WOULD NOT AMOUNT TO BUSINESS. 19 ITR 571 (CAL). (IV) THE ASSESSEE HOLDING LAND/TREATING THE SAME AS FIXED ASSET AND SOLD AS A WHOLE FOR A FIXED CONSIDERATION . IT WAS HELD THAT PROFIT EARNED ON SALE OF LAND WAS NOT AN ADVENTURE IN THE NATURE OF TRADE BUT WAS IN THE NAT URE OF CAPITAL GAIN. - CIT VS. MOHAKAMPUR ICE AND COLD STORAGE - (2005) 149 TAXMAN 593 (ALL). (V) AN ISOLATED TRANSACTION OR ACTIVITY OF SELLING LAND CAN NOT BE PART OF BUSINESS ACTIVITY AND THERE MUST BE REG ULAR ACTIVITY OF PURCHASING / SELLING FOR TREATING SAID ACTIVITY AS BUSINESS -CIT V SURESH CHAND GOYAL (2007) 163 TAXMAN 54 (MP). COPY OF JUDGMENTS ARE ENCLOSED AS ANNEXURE 23. EVEN AFTER PLOTTING OF LAND TO FETCH B ETTER PRICE IS NOT BUSINESS ACTIVITY. (VI) PERIOD OF HOLDING AN ASSET IS AN IMPORTANT FAC TOR IN DETERMINING THE NATURE OF ASSET I.E. WHETHER CAPIT AL OR TRADING ASSET UNLESS HELD AS TRADING ASSET BY THE ASSESSEE WHERE THE ASSET WAS HELD FOR OVER 20 YEARS AND SOLD IT WAS HELD NOT BE AN ADVENTURE IN THE NA TURE OF TRADE - CIT VS. DR. INDU BALA CHHABRA (2002) 258 ITR 111 (DEL). COPY OF THE JUDGMENT IS ENCLOSED AS ANNEXURE-24. 9 VII) SALE OF AGRICULTURAL LAND EVEN AFTER PLOTTING OUT FOR BETTER REALISATION OF PRICE IS NOT AN ADVENTURE IN THE NAT URE OF TRADE - CIT MEERUT V SHASHI KUMAR AGARWAL (2003) (1 ) MTC 803 (ALL). COPY OF JUDGMENT IS ENCLOSED AS ANNEXURE- 25. 3.1 THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE OBSERVED THAT THE FARM LAND WAS BEING HEL D BY THE ASSESSEE FOR ALMOST 11 YEARS. THE SAID LAND WAS HELD AS A CAPIT AL ASSET AND WAS CLEARLY SHOWN SO IN THE BALANCE SHEET. HE FURTHER OBSERVED THAT THE LONG PERIOD OF HOLDING ITSELF INDICATED THAT THE PURPOSE WAS NOT THAT OF TRADING. ACCORDING TO THE LEARNED CIT (A) THE ASSESSING OFF ICER HAD LAID OVEREMPHASIS ON NOT ONLY WHAT WAS WRITTEN IN THE ME MORANDUM BUT ALSO IN WHICH PART OF THE OBJECT CLAUSE SUCH A THING HAD B EEN MENTIONED. THE LEARNED CIT (A) WAS OF THE VIEW THAT FOR THE PURPOS ES OF INCOME TAX PROCEEDINGS MEMORANDUM OF ARTICLES OF A COMPANY DO ES NOT HAVE ANY SIGNIFICANT BEARING ON THE TAXABILITY OR OTHERWISE OF A RECEIPT OR THE HEAD UNDER WHICH THE INCOME HAS TO BE TAXED AND THAT THE TRANSACTION HAS TO BE SEEN PURELY WITH INCOME TAX PERSPECTIVE. THE LEAR NED CIT (A) HELD THAT THE FARM LAND IN QUESTION WAS A CAPITAL ASSET AND T HE SURPLUS ON SALE OF SUCH CAPITAL ASSET WAS EXIGIBLE TO CAPITAL GAINS AN D NOT BUSINESS PROFITS. NOW THE DEPARTMENT IS IN APPEAL. 10 4. THE LEARNED D. R. STRONGLY SUPPORTED THE ORDER O F THE ASSESSING OFFICER AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER DATED 17/12/2008 BY THE ASSESSING OFFICER. 5. IN HIS RIVAL SUBMISSIONS THE LEARNED COUNSEL FO R THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LEARNED CIT (A). THE RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE ALLA HABAD HIGH COURT IN THE CASE OF CIT VS. MOHAKAMPUR ICE AND COLD STORAGE - (2005) 149 TAXMAN 593 (ALL). THE RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DR. INDU BALA CHHABRA [2002] 258 ITR 111 (DEL). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN T HE INSTANT CASE IT IS NOTICED THAT THE ASSESSEE WAS HAVING AGRICULTURAL L AND AND SOLD THE SAME ALONG WITH FARM HOUSE. THE SAID LAND WAS SHOWN IN THE BALANCE SHEET AS FIXED ASSET AND THE AGRICULTURAL INCOME FROM THE SA ID LAND WAS ACCEPTED IN THE EARLIER YEARS BY THE DEPARTMENT. IN THE PRESEN T CASE THE LAND IN QUESTION WAS HELD AS FIXED ASSET BY THE ASSESSEE FO R OVER 11 YEARS AND THERE WAS NO INTENTION TO TREAT THE SAME AS STOCK I N TRADE THE LAND WAS 11 SOLD IN THE SAME LOTS IN WHICH IT WAS PURCHASED SO IT CANNOT BE SAID THAT THE SALE OF THE FIXED ASSET WAS THE BUSINESS ACTIVI TY OF THE ASSESSEE. ON A SIMILAR ISSUE THE HON'BLE JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT VS. MOHAKAMPUR ICE AND COLD STORAGE - (2005) 149 TAXMAN 593 (ALL ) HAS HELD AS UNDER: 'TO TREAT A TRANSACTION WITH IN THE PURVIEW OF ADVE NTURE IN THE NATURE OF TRADE IT IS TO BE SEEN WHETHER THE PROPE RTY HAD BEEN PURCHASED OR ACQUIRED BY THE ASSESSEE WITH THE INTE NTION TO SELL THE PROPERTY TO EARN PROFIT BY INVOLVING IN SE VERAL TRANSACTIONS OF SALE OR TO EARN PROFIT ON ITS INVES TMENT. IN THE INSTANT CASE THE COMMISSIONER (APPEALS) AND THE TR IBUNAL FOUND AS A FACT THAT THE INTENT WAS TO SELL THE PRO PERTY AS A WHOLE ON A FIXED AMOUNT. THE LAND IN QUESTION WAS U SED AS A FIXED ASSET OF THE FIRM AND EXPLOITED FOR THE BUSIN ESS OF FIRM AND WAS NOT TREATED AS STOCK-IN-TRADE. LAND WAS BRO UGHT IN THE BOOK OF THE FIRM NOT WITH AN INTENTION TO RESELL TH E SAME FOR PROFIT. THE LAND WAS AGREED TO BE SOLD AS A WHOLE T O THE FIRM WHICH WAS COLONIZER AND AFTER DEVELOPMENT ASKED TH E ASSESSEE TO TRANSFER THE PLOT OF LAND TO ITS NOMINE E. DEVELOPMENT EXPENSES HAD BEEN BORNE BY THE SAID FIR M. ON THOSE FACTS THE VIEW OF THE COMMISSIONER (APPEALS) AND THE TRIBUNAL COULD NOT BE HELD TO BE ERRONEOUS AND THEY WERE RIGHT IN CONCLUDING THAT PROFIT EARNED DID NOT ARISE FROM THE ADVENTURE IN THE NATURE OF TRADE BUT WAS IN THE NA TURE OF CAPITAL GAIN. 7. IN THE INSTANT CASE ALSO THE INTENTION OF THE A SSESSEE WAS TO SELL THE PROPERTY AS A WHOLE ON A FIXED AMOUNT. THE SAID AG RICULTURAL LAND WAS USED AS A FIXED ASSET FROM WHICH AGRICULTURAL INCOM E WAS EARNED WHICH WAS ACCEPTED BY THE DEPARTMENT. IT WAS NEVER TREAT ED AS STOCK IN TRADE AND NOTHING WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT THE SAID 12 LAND WAS BROUGHT IN THE BOOKS OF ACCOUNT WITH AN IN TENTION TO RESELL THE SAME FOR PROFIT. THEREFORE RATIO LAID DOWN IN THE AFORESAID REFERRED TO CASE OF CIT VS. MOHAKAMPUR ICE AND COLD STORAGE (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN TH AT VIEW OF THE MATTER WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE F INDINGS OF LEARNED CIT (A). CONSEQUENTLY WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 8. IN THE RESULT THE APPEAL IS DISMISSED. (THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 14/0 3/2011) SD/. SD/. ( H. L. KARWA ) (N. K. SAINI) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 14/03/2011 *SINGH COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR