DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -2(3), PUNE V. GHANSHYMDAS J. SUKHWANI (HUF), PUNE

MA 283/PUN/2023

AI Insights

The case revolves around a dispute concerning the taxability of income from the sale of land by Ghanshyamdas J. Sukhwani (HUF), who formed an Association of Persons (AOP) and contributed land as capital. The Revenue contended that this income should be taxed as business income. However, the ITAT, referencing the decision in DLF Universal Ltd, held that the land contributed as capital in the AOP is to be treated as a capital asset, and the income from its transfer is taxable as capital gains under Section 45(3) of the Income Tax Act. The Revenue's Miscellaneous Application, which sought to challenge this interpretation, was dismissed by the ITAT.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 30136 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-10-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 23-10-2023
• Other Referred Cases: DLF Universal Ltd (supra)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B. S. RAJPUROHIT
• Keywords: Business income; Capital asset; Capital Gains

Judgement Text

" ।आयकर अपीलीय अिधकरण ”बी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE MS.ASTHA CHANDRA, JUDICIAL MEMBER, AND DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER Miscellaneous Application No.283/PUN/2023 (arising out of ITA No.820/PUN/2018) िनधाᭅरण वषᭅ / Assessment Year: 2013-14 Deputy Commissioner of Income Tax, Central Circle-2(3), Pune. V s Ghanshyamdas J. Sukhwani (HUF), 32, Sukhwani Chamber, Pimpri, Pune – 411008. PAN: AABHS9560G Appellant / Revenue Respondent / Assessee Assessee by None. Revenue by Shri B.S.Rajpurohit – Addl.CIT(DR) Date of hearing 18/10/2024 Date of pronouncement 28/10/2024 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This Miscellaneous Application filed by the Revenue against the Tribunal order in ITA No.820/PUN/2018, dated 05.04.2023. 2. Revenue has raised the ground that ITAT in its order has not adjudicated the issue raised by the Revenue that the income from sale of land should be taxed as business income. MA No.283/PUN/2024 2 3. In this case, assessee was the owner of the land at Survey No.72/2d, Hissa No.2-7, Hadapsar, Pune. During the year, assessee formed an AOP along with J.K.J.Associates and Matra Majestic Associates, vide articles of agreement which was duly registered. As per the said registered articles of agreement, assessee contributed his undivided title and rights in the impugned land as its capital contribution. The ITAT vide its order dated 05.04.2023 in para 7.5 and 9.1 held as under : “7.5 In the case under consideration, the assessee contributed his land as Capital in the AOP. The assessee is liable to receive share of profit of AOP as mentioned in the Article 11 of the “Articles of Agreement” vide which the AOP was formed. Therefore, the facts of the present case are identical to the facts of the case of DLF Universal Ltd (supra). Therefore, respectfully following the ITAT Special Bench (supra) it is held that the land which was introduced as Capital by the assessee in the AOP and has been duly credited to his capital account of AOP, partakes the character of Capital Assets. 9.1 Respectfully following the decision of ITAT Special Bench(supra), we hold that the transaction of impugned land introduced by the assessee as his share of capital in the AOP is taxable u/s.45(3) of the Act. The AO shall consider the value of Rs.5,00,00,000/- which is credited in the books of accounts , as value of land shall be deemed to be the full value of consideration as a result of transfer of land as provided in Section 45(3) of the Act. The AO shall accordingly calculate the Capital gain.” MA No.283/PUN/2024 3 4. Thus, ITAT hold that it is taxable as Capital Gain. Once we have held that it is taxable as capital gains, obviously we have answered the question raised by the Revenue that it is not taxable as business income. Therefore, in these facts and circumstances of the case, we do not find any merit in the Miscellaneous Application filed by the Revenue, accordingly, grounds raised by the Revenue are dismissed. 5. In the result, Miscellaneous Application raised by the Revenue is dismissed. Order pronounced in the open Court on 28th October, 2024. Sd/- Sd/- (MS.ASTHA CHANDRA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 28th Oct, 2024/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. MA No.283/PUN/2024 4 आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. "