Asst Comm of Income-tax , Central Circle-1(1)., Pune V. Smt. Alpana Surendra Sancheti, Pune

ITA 1081/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1988 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 25-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA; ANN KAPTHUAMA
• Assessee Lawyers: P I PATWA
• Keywords: Capital asset; Business income; Search and seizure; Competent authority
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS. 1081, 1082 & 1083/PN/2011 ASSESSMENT YEAR S : 2005 - 06, 2006 - 07 & 2007 - 08 ASST. COMM. OF INCOME- TAX, CENTRAL CIRCLE-1(1), PMT BUILDING, SWARGATE, PUNE VS. ALPANA SURENDRA SANCHETI, 8, POOJA HOUSING SOCIETY, BIBWEWADI, PUNE (APPELLANT) (RESPONDENT) PAN NO .: AHOPS2336Q APPELLANT BY: MS. ANN KAPTHUAMA & SHRI MUKESH VERMA RESP ONDENT BY: SHRI P.I. PATWA DATE OF HEARING : 12-02-2013 DATE OF PRONOUNCEMENT : 22-03-2013 ORDER PER R.S. PADVEKAR, JM: THIS BATCH OF 3 APPEALS ARE FILED BY THE REVENUE CHALLENGING THE RESPECTIVE IMPUGNED ORDERS OF THE LD.CIT(A), PUNE DATED 20 -01-2011 FOR THE A.YS. 2005-06, 2006-07 AND 2007-08. THE REVENUE HA S TAKEN FOLLOWING GROUND WHICH IS COMMON IN ALL THE APPEALS: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD.CIT(A) WAS JUSTIFIED IN GRANTING RELIEF TO THE ASS ESSEE VIS--VIS ADDITION MADE BY THE ASSESSING OFFICER BY TREATING THE LONG TERM CAPITAL GAIN SHOWN BY THE ASSESSEE AS HER BUSINESS INCOME. 2. AS THE FACTS AS WELL AS ISSUES ARE IDENTICAL IN ALL THE 3 YEARS, HENCE, THESE APPEALS ARE DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE FACTS AS NOTED BY THE ASSESSING OFFICER ARE AS U NDER. THERE WAS A SEARCH AND SEIZURE ACTION U/S.132(1) OF THE INCOME- TAX ACT AGAINST THE ASSESSEE AND OTHER GROUP CONCERNS. THE ASSESSE E IS PROPRIETOR OF M/S. SANCHETI PROMOTERS AND BUILDERS. IN CONSEQUENCE OF THE NOTICE ISSUED U/S.153A OF THE INCOME-TAX ACT, THE ASSESSEE FILED THE RETURN OF 2 ITA NOS. 1081, 1082 & 1083/PN/2011, ALPANA SURENDRA SANCHETI, PUNE INCOME. SO FAR AS THE ISSUE BEFORE US IS CONCERNED I.E. IN R ESPECT OF SALE OF 3 LANDS WHICH PARTICULARS ARE AS UNDER: SL. NO. PARTICULARS YEAR OF SALE YEAR OF PURCHASE SALE CONSIDERATION AMOUNT LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE 1 LAND AT KARTAJ 200 5 - 06 1995 - 96 45,00,000/ - 36,54,900 2 LAND AT BANER 2006 - 07 2001 - 02 49,50,000/ - 34,67,500/ - 3 LAND AT KASAR AMBOLI 2007 - 08 2001 - 02 13,33,334/ - 10,89,125/ - IN RESPECT OF THE SALE CONSIDERATION ON THE SALE OF THE ABOVE LANDS THE ASSESSEE HAS DECLARED LONG TERM CAPITAL GAIN AND ALSO CLA IMED DEDUCTION U/S.54EC OF THE INCOME-TAX ACT. 4. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE TRANS ACTIONS OF THE SALE OF THE LAND AS MENTIONED IN ABOVE CHART ARE TO BE ASSESSED UNDER THE HEAD BUSINESS INCOME AND NOT UNDER THE HE AD CAPITAL GAIN. THE ASSESSEE CONTENDED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE HAD ACQUIRED THE SAID LANDS FOR THE PURPOSE OF INVESTMENT AS WELL AS AGRICULTURE ACTIVITY ONLY. THE ASSESSEE FURTHER CONTENDE D THAT SHE WAS CARRYING OUT AGRICULTURE ACTIVITY REGULARLY SINCE THE PURC HASE OF THE SAID LANDS AND AGRICULTURE INCOME FROM THE SAID LAND WAS DECLARE D IN THE RETURN OF INCOME FILED FOR THE RESPECTIVE ASSESSMENT YEARS . THE SAID LANDS WERE NEVER CONVERTED INTO MAIN AGRICULTURE LAND AND EVEN IF THE ASSESSEE IS IN THE BUSINESS OF CONSTRUCTION BUT UNLESS TH E LANDS ARE CONVERTED INTO NON-AGRICULTURE LANDS NO INFERENCE CAN BE DRAWN THAT THE INVESTMENT IN THE LAND WAS A PART OF ASSESSEES BUSINESS ACTIVITY. THE ASSESSEE ALSO CONTENDED THAT THE LAND AT KASAR AMBOLI W AS PURCHASED IN THE YEAR 1996 AND LAND AT BANER AND KATRAJ WERE PUR CHASED IN THE YEAR 2001. THE ASSESSEE HAD ALSO ANOTHER AGRICULTURE LAND AT WARJE SINCE 2001 WHICH WAS NOT SOLD TILL DATE OF THE ASSESSMENT. THE ASSESSEE ALSO CONTENDED THAT THOSE LANDS WERE HELD BY HER AS A MATT ER OF PRIDE 3 ITA NOS. 1081, 1082 & 1083/PN/2011, ALPANA SURENDRA SANCHETI, PUNE POSSESSION. IT WAS ALSO CONTENDED THAT THERE WAS NO R EGULAR PURCHASE AND SALE OF ANY LAND DURING THE PERIOD AND LANDS WERE PUR ELY HELD AS AN INVESTMENT. THE ASSESSEE ALSO PLEADED THAT TO BRING THE SALE OF HER ABOVE 3 LANDS INTO THE BASKET OF THE BUSINESS INCOME T HERE MUST BE CONTINUOUS ACTIVITY IN TERMS OF FREQUENCY OF THE TRANSACT IONS OF THE REGULAR NATURE. 4.1. MOREOVER, INTENTION OF THE ASSESSEE IS ALSO DECISIVE AS THE ASSESSEE NEVER SOLD THOSE LANDS AS A PART OF HER BUSINESS. THE A SSESSEE HAS NEVER SHOWN THE SAID LANDS AS A BUSINESS ASSETS. THE ASSESSE E RELIED ON THE PLETHORA OF THE DECISIONS IN SUPPORT OF HER CLAIM THAT THE SALE TRANSACTIONS OF THE LANDS CANNOT BE TREATED UNDER THE HEAD BUSINESS INCOME. THE ASSESSING OFFICER WAS NOT IMPRESSED WITH THE EXPLANATION OF THE ASSESSEE. HE BROUGHT TO TAX THE SALE CONSIDERAT ION UNDER THE HEAD BUSINESS INCOME. THE REASONS GIVEN BY THE ASSESSING O FFICER IN A.Y. 2005-06 FOR NOT ACCEPTING THE CONTENTION OF THE ASSESSEE ARE AS UN DER: I) DURING THE COURSE OF SEARCH, IT IS NOTICED THAT MRS. ALPANA S. SANCHETI, THOUGH SEEMS TO BE A HOUSE WIFE ONLY, IS SHOWING BUSINESS OF SHARE TRADING AND ALSO BUYING AND SELLING PROPERTIES IN THE RETURNS FILED BY HER. IT HAS BEEN STATED BY SHRI SURENDRA SANCHETI IN Q NO 6 OF HIS STATEMENT THAT HE IS LOOKING AFTER ALL THE BUS INESS ACTIVITIES AND INVESTMENTS DONE IN THE NAME OF WIFE. II) THE ASSESSEE HAS ALSO DEVELOPED SOME PROJECTS BY HERSELF IN HER PROPRIETARY CONCERN M/S SANCHETI PROMOTERS AND BUILDERS. III) THE ASSESSEE IS ALSO A PARTNER IN M/S JAIRAJ DEVELOPER S UNIT-3 AND M/S GAGAN DEVELOPERS WHICH ARE ALSO ENGAGED IN BUSINESS OF DEVELOPMENT AND REAL ESTATE. IV) EVEN HER HUSBAND SHRI. SURENDRA SANCHETI, WHO IS LOOKING AFTER THE BUSINESS ACTIVITIES OF THE LAKE TOW N PROJECT AS PARTNER, HAS ADMITTED TO BE LOOKING AFTER BUSINESS ACTIVITIES OF THE ASSESSEE. V) THERE IS NO ELEMENT OF ' PRIDE POSSESSION ' INTO IT AND THE ASSESSEE HAS DEALT INTO PURCHASE AND SALE OF THESE LANDS IN THE SAME MANNER AS A PERSONS ENGAGED IN REAL ESTATE BUSINESS WOULD DO AND SUCH TRANSACTIONS 4 ITA NOS. 1081, 1082 & 1083/PN/2011, ALPANA SURENDRA SANCHETI, PUNE WOULD BE IN THE NATURE OF VENTURE INTO THE NATURE O F TRADE. VI) T HUS IT IS QUITE VIVID THAT THE INTENTION OF THE ASS ESSEE IS TO EARN QUICK PROFIT. VII) IT WOULD BE PERTINENT TO NOTE THE CASE LAWS OF JANK I RAM BAHADUR RAM (1965) 57 ITR 21 (SC), KHAN BAHADUR AHMAD ALLADIN & SONS VS. CIT (1968) 68 ITR 573 (SC). WHEREIN SIMILAR VIEWS HAVE BEEN HELD. I HAVE ALSO GONE THROUGH THE CASE LAWS CITED BY THE ASSESSEE. THOSE HAVE BEEN FOUND TO BE IN DIFFERENT FACTUAL CONTEXTS. 4.5. FURTHER, IT WOULD BE APPROPRIATE TO RELY UPON THE CIRCULAR NO.4/2007 DATED 15-6-2007 OF THE CBDT. THE CIRCULAR IS RELATING TO TRANSACTION INVOLVING SHARES, BUT THE R ATIO CAN BE USED TO DETERMINE WHETHER THE SALE OF AGRICULTURAL LAND IS BUSINESS TRANSACTION OR OTHERWISE. ON CAREFUL PERUS AL OF THE SAID CIRCULAR, IT APPEARS THAT THE SAID CIRCULAR IS IN FACT CONFIRMING THE CASE OF THE REVENUE AS FAR AS INSTAN T CASE IS CONCERNED. (I) IN THE SAID CIRCULAR, REFERENCE HAS BEEN MADE TO OBSERVATION OF SUPREME COURT IN THE CASE OF ASSOCIA TED INDUSTRIAL DEVELOPMENT CO. PVT. LTD. REPORTED IN 82 ITR 586. THE SAID OBSERVATION IS AS BELOW:- ' WHETHER A PARTICULAR HOLDING OF SHARE IS BY WAY O F INVESTMENT OR FORMS PART OF STOCK-IN-TRADE IS A MATTER WHICH IS WITHIN THE KNOWLEDGE OF THE ASSESSEE WHO HOLDS THE SHARES AND IT SHOULD, IN NORMAL CIRCUMSTANCES, BE IN A POSITION T O PRODUCE EVIDENCE FROM ITS RECORDS AS TO WHETHER IT HAS MAIN TAINED ANY DISTINCTION BETWEEN THOSE SHARES, WHICH ARE ITS STOCK-IN- TRADE AND THOSE WHICH ARE HELD BY WAY OF INVESTMENT .' THE ASSESSEE HAS NOT PROVIDED ANY EVIDENCE FROM HER RECORDS TO WHETHER SUCH DISTINCTIVE BUSINESS AND INVESTMENT PORTFOLIOS WERE MAINTAINED. (II) THE SECOND TEST GIVEN BY THE SAID CIRCULAR IS AS BELOW:- ' WHERE A COMPANY PURCHASES AND SELLS SHARES, IT MU ST BE SHOWN THAT THEY WERE HELD AS STOCK-IN-TRADE AND THAT EXISTENCE OF THE POWER TO PURCHASE AND SELL SHARES IN THE MEMORANDUM OF ASSOC IATION IS NOT DECISIVE OF THE NATURE OF TRANSACTION.' AS THE PRESENT CASE IS OF A PROPRIETOR, THIS TEST D OES NOT APPLY TO THE INSTANT CASE. (III) THE THIRD TEST IS AS BELOW:- 'THE SUBSTANTIAL NATURE OF TRANSACTION, THE MANNER OF MAINTAINING BOOKS OF ACCOUNT, THE MAGNITUDE OF PURC HASES AND SALE AND THE RATIO BETWEEN PURCHASES & SALES AND THE HOLDING WOULD FURNISH A GOOD GUIDE TO DETERMINE THE NATURE OF TRANSACTION.' 5 ITA NOS. 1081, 1082 & 1083/PN/2011, ALPANA SURENDRA SANCHETI, PUNE AS FAR AS THIS TEST IS CONCERNED, FOLLOWING OBSERVATIO NS WILL MAKE US TO CONSIDER INCOME FROM SALE OF LAND OF THE ASSESSEE AS INCOME FROM BUSINESS:- THE ASSESSEE IS CONSISTENTLY SELLING THE PROPERTIES CLAIMED TO BE AN INVESTMENT. THE ASSESSEE HAS SOLD ALLEGED AGRICULTURAL LANDS IN THE PREVIOUS YEARS RELEVANT TO ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08. SECONDLY, FOR THREE OF THESE ASSESSMENT YEARS THERE ARE VERY LITTLE TRANSACTION IN THE PROPRIETOR CONCE RN M/S SANCHETI PROMOTERS AND BUILDERS. THEREFORE FOR THESE RELEVANT ASSESSMENT YEARS THE SALE OF AGRICULTURAL LAND IS THE SUBSTANTIVE TRANSACTION WHICH IS AN ADVENTURE IN THE NATURE OF TRADE. (IV) THE FOURTH TEST GIVEN BY THE CIRCULAR IS AS BELOW.- 'ORDINARILY THE PURCHASE AND SALE OF SHARES WITH TH E MOTIVE OF EARNING A PROFIT, WOULD RESULT IN THE TRA NSACTION BEING IN THE NATURE OF TRADE/ADVENTURE IN T HE NATURE OF TRADE; BUT WHERE THE OBJECT OF THE INVESTMENT IN SHARES OF A COMPANY IS TO DERIVE INCOME BY WAY OF DIVIDEND , ETC., THEN THE PROFITS ACCRUING BY CHANGE IN SUCH INVESTMENT ( BY SALE OF SHARES) WILL YIELD CAPITAL GAIN AND NOT REVENUE RECEIPT.' HERE THE RELEVANT TRANSACTION IS SALE OF AGRICULTURAL LAND HENCE AGRICULTURAL INCOME SHOULD BE CONSIDERED AS ANALOGOUS TO DIVIDEND. THE AGRICULTURAL INCOME CLAIMED B Y ASSESSEE IS AS BELOW: SR. NO. A.Y. AGRICULTURAL INCOME 1. 2002-03 RS. 60,000/- 2. 2003-04 RS. 65,000/- 3. 2004-05 RS. 9.250/- 4. 2005-06 45,000/- 5. 2006-07 NIL 6. 2007-08 NIL ON THIS TEST ALSO, THE CASE OF THE ASSESSEE MISERABLY FAILS. IT IS SEEN FROM THE ABOVE TABLE THAT THE ASSESSEE HAS E ARNED MEAGER AGRICULTURAL INCOME FOR RESPECTIVE ASSESSMENT YEARS. THIS VIVIDLY DEMONSTRATES THAT THE ASSESSEE'S REAL I NTENTION WAS NOT TO USE THIS ASSET AS AN AGRICULTURAL LAND AN D EARN INCOME FROM IT BY WAY OF AGRICULTURAL PRODUCE. THAT IN COME, AS CAN BE SEEN, CAN AT BEST BE DESCRIBED AS ONLY INCIDENTAL . (V) THE FIFTH TEST GIVEN BY THE CIRCULAR IS AS BELO W:- THE CBDT ALSO WISHES TO EMPHASIZE THAT IT IS POSSI BLE FOR A TAXPAYER TO HAVE TWO PORTFOLIOS, I.E. AN INVESTMENT PO RTFOLIO COMPRISING OF SECURITIES WHICH ARE TO BE TREATED AS CAPITAL ASSET AND A TRADING PORTFOLIO COMPRISING OF STOCK-IN-TRAD E WHICH ARE TO BE TREATED AS TRADING ASSET. WHERE AN ASSESSEE HAS TWO PORTFOLIOS, THE ASSESSEE MAY HAVE INCOME UNDER BOTH HEADS, I.E. CAPITAL GAIN AS WELL AS BUSINESS INCOME.' 6 ITA NOS. 1081, 1082 & 1083/PN/2011, ALPANA SURENDRA SANCHETI, PUNE AS ALREADY DISCUSSED IN SUBPARA 4.5(I) ABOVE, THE ASSE SSEE DID NOT PROVIDE ANY EVIDENCE TO ESTABLISH DISTINCTI ON BETWEEN BUSINESS AND INVESTMENT PORTFOLIO. HENCE, THIS TEST AG AIN CONFIRMS THE CASE FOR TREATING INCOME FROM SALE OF AGRICULTURAL LAND AS INCOME FROM BUSINESS. (VI) IN ADDITION TO THE TESTS ABOVE, THERE IS A VERY RECENT DECISION OF PUNE TRIBUNAL ON THE SAME ISSUE IN THE CASE OF GOPAL KASAI VS ITO JALGAON NO. 513, 514/PN/2005 AND 50/PN/2006. THE DECISION HAS BEEN GIVEN ON 22-08-20 08. THE ASSESSEE HAD GONE IN APPEAL AGAINST THIS DECISI ON BEFORE THE AURANGABAD BENCH OF THE HON'BLE MUMBAI HIGH COU RT. THE ASSESSEE'S APPEAL HAS BEEN DISMISSED BY HON'BLE HIGH COURT IN ITS RECENT JUDGMENT. THE MAIN ISSUE INVOLVED HERE IS WHAT CONSTITUTES AN ADVENTURE IN THE NATURE OF TRADE. VERY ELABORATE DI SCUSSION HAS BEEN MADE BY PUNE TRIBUNAL IN THIS DECISION. IT WOULD BE WORTHWHILE TO QUOTE THE FINDINGS OF PUNE TRIBUNA L ON THIS ISSUE. THE FINDINGS ARE AS UNDER: 'IN NUTSHELL, ON THE BASIS OF THE DETAILED DISCUSSI ONS MADE HEREINABOVE, THE CONCLUSION CAN BE DRAWN THAT THE ENTIRE ACTIVITY OF THIS APPELLANT WAS WITHIN THE DOMAIN OF ADVENTURE IN NATURE OF TRA DE. WE ARE AWARE THAT BY PROFESSION, KARTA AN ADVOCATE BUT HE HAS AL SO ENTERED INTO AN ACTIVITY, WHICH CAN BE HELD TO BE INCIDENTAL TO THE BUSINESS ACTIVITY. HIS ACT PRIOR TO THE ACQUISITION WAS DEFINITELY ASSA ILED WITH THE PROFIT MOTIVE. HE WAS AWARE AT THE TIME OF PURCHASE THAT T HE LAND IN QUESTION WAS WITHIN THE ACQUISITION PROCEEDINGS, HE NCE IT CANNOT BE HELD AS AN INVESTMENT FOR A LONG PERIOD. THE LAND I N QUESTION COULD NEVER BE A PRIDE OF POSSESSION SINCE IT WAS ABOUT T O BE ACQUIRED BY THE GOVERNMENT. THE LAND IN QUESTION WAS NOT GOI NG TO BE HELD, LEAST TO SAY, FOR A LONG TIME BUT EVEN FOR SOMETIME BECAUSE THE ACQUISITION PROCEEDINGS WERE IN SUCCESSION. EVEN IT CANNOT BE SAID TO BE A PURCHASE FOR AESTHETIC POSSESSION. WHAT IS IMP ORTANT FOR OUR CONSIDERATION IS ITS DISTINCTIVE CHARACTER, TOTAL EFFE CT OF THE INTENTION OF THIS APPELLANT AT THE TIME OF PURCHASE, ALL THE REL EVANT FACTORS AS ALSO SURROUNDING CIRCUMSTANCES SO AS TO FINALLY DETERMIN E THE TRUE CHARACTER OF THE TRANSACTION. WE HAVE ALSO SEEN FRO M THE ABOVE PRECEDENTS, WHICH HAVE BEEN EITHER APPLIED OR BEEN DISTINCTIVE ON FACTS WHILE DISCUSSING ANTE, THAT THIS APPELLANT HAS N OT SHOWN ANY OTHER INTENTION AT THE TIME OF ACQUISITION OF L AND OTHER THAN THE INTENTION OF EARNING PROFIT BY WAY OF COMPENSAT ION. BEFORE WE PART WITH, WE MAY LIKE TO ADD THAT ONE CANNOT REMAI N UNTOUCHED BY THE PLIGHT OF THE FARMERS THEIR AGRICULTURAL LAND ARE GENERALLY BEING PURCHASED BY INTERESTED PERSONS IMMEDIATELY B EFORE THE ACQUISITION OF LAND AT THROW AWAY PRICES WITH THEIR MOTIVE TO ENCASH HEAVY RETURNS IN THE SHAPE OF HUGE AMOUNT OF COMPEN SATION. WHAT THE FARMERS GET OUT OF SUCH DEAL IS MERELY PEANUTS ON SALE OF THEIR PRECIOUS LAND UNDER OF FEAR AND APPREHENSION OF ACQ UISITION BY THE GOVERNMENT FOR A CONSIDERATION AT A NOMINAL PRICE B EING SALE IN STRESS WHILE THE ASTUTE PURCHASER NOTCHING RICH FRU ITS HAPPENED TO BE THE EXPERT OF THIS TRADE. WE ACKNOWLEDGE THAT WE ARE NOT ACTING AS A MORAL POLICE BEING OUR JOB IS CONFINED WITHIN FOUR CORNERS OF THE INCOME TAX ACT. NEITHER WE ARE MAKING ANY ALLEGATION ON ANY ONE NOR WE HAVE ANY AUTHORITY TO STOP THIS MALPRACT ICE BEING VERY MUCH PREVALENT WHEREVER IN THE COUNTRY THE ACQUISITI ON OF LAND TAKES PACE BUT SIMPLY OUT OF COMPASSION WE HAVE PLACE D OUR SENTIMENTS, THOUGH DEFINITELY NOT SWAYED BY THE OMI SSIONS IN ARRIVING AT UNBIASED DECISION. TO CONCLUDE WE DRAW THE RESULT THAT IT WAS NOTHING BUT AN ADVENTURE IN THE NATURE OF TR ADE, HENCE RIGHTLY TAXED IN THE HANDS OF THE ASSESSEE. GROUNDS N O. 1 AND 2 OF 7 ITA NOS. 1081, 1082 & 1083/PN/2011, ALPANA SURENDRA SANCHETI, PUNE THE CONCISE GROUNDS OR THE GROUND NO. 1 AND ITS SUB -GROUNDS AS PER THE GROUNDS OF APPEAL ARE HEREBY DISMISSED. IN THE INSTANT CASE, THE ASSESSEE IS IN THE BUSINES S OF PROMOTER, BUILDER AND DEVELOPER. THEREFORE THE ASSESSEE WAS WELL AWAR E OF THE EXIT POINT TO FETCH QUICK PROFITS. THE FINDINGS OF ABOVE REFER RED CASE VIVIDLY SUBSTANTIATE THE TRANSACTION INVOLVING SALE OF AGRI CULTURAL LAND AS AN ADVENTURE IN THE NATURE OF TRADE. 5. FOLLOWING REASONS IN THE A.Y. 2005-06 ASSESSING OFFICER ACCORDINGLY BROUGHT TO TAX THE ENTIRE SALE CONSIDERATION IN ALL THE 3 ASSESSMENT YEARS UNDER THE HEAD BUSINESS INCOME AN D DECLINED TO GIVE THE BENEFIT OF SECTION 54EC TO THE ASSESSEE. THE ASSESS EE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD.CIT(A) AND FOUND FAVOUR. THE LD.CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE T HAT THE LANDS WERE HELD AS A PRIDE POSSESSION AND IT WERE IN THE NATUR E OF INVESTMENTS AND NOT HELD AS A BUSINESS ASSETS. MOREOVER THE LD.CI T(A) ALSO CONSIDERED THE LONG PERIOD OF HOLDING OF THE LANDS BY THE ASSESSEE AS WELL AS THE FACT THAT THE ASSESSEE NEVER CONVERTED THOSE LANDS FOR NON- AGRICULTURE USE. 5.1. THE OPERATIVE PART OF THE REASONS GIVEN BY THE LD.C IT(A) IS AS UNDER: I HAVE CAREFULLY CONSIDERED THE GROUNDS OF APPEAL A ND THE FACTS AS WELL AS LAW WHICH ARE APPARENT FROM RECORD. THE APPELLANT IS AN INDIVIDUAL ENGAGED IN THE ACTIVITY OF BUSINESS, AGRICULTURE ETC. AND WAS SEARCHED U/S 132 OF THE IT. ACT ON 08.08.2007 ALONG WITH OTHER MEMBERS OF THIS GROUP. IN VIEW OF THE SAME THIS ASSESSMENT WAS COMPLETED U/S 143(3) R.W .S. 153A. IT WAS FOUND BY THE ASSESSING OFFICER THAT THE APPELLANT HAS SOLD AGRICULTURE LAND IN A.Y. 2005-06, 2006-07 AND 20 07- 08. ALL THE RELEVANT DETAILS IN RESPECT OF SALE OF THESE AGRICULTURE LANDS SITUATED AT KATRAJ, BANER AND KASAR AMBOLI ARE AVAILABLE IN THE ASSESSMENT ORDER AS WELL AS IN TH E SUBMISSIONS OF THE APPELLANT WHICH HAVE ALREADY BEEN QUOTED ABOVE. THE APPELLANT HAS SHOWN THAT THE LANDS SOLD WE RE HELD BY HER AS INVESTMENT IN AGRICULTURE LAND FROM 4 TO 10 YEARS ON THE DATES OF SALE. IT WAS ALSO SHOWN THAT THE ABOVE RE FERRED LANDS WERE 'AGRICULTURE LANDS' AS PER THE REVENUE R ECORDS AND THEREFORE IT WAS NOT ELIGIBLE FOR ANY OTHER COMMERCIA L USE UNLESS THE COMPETENT AUTHORITY HAD GRANTED PERMISSION OF ITS CONVERSION INTO 'NON AGRICULTURAL LAND'. THE APPELLANT HAS FURTHER CONTENDED THAT NO ACTION WHAT SO EVER WAS M ADE FOR ITS CONVERSION TO NA LAND AND THEREFORE ACCORDING TO THE M IT 8 ITA NOS. 1081, 1082 & 1083/PN/2011, ALPANA SURENDRA SANCHETI, PUNE SHOULD BE TAKEN AS AN EVIDENCE FOR THEIR INTENTION T O PURCHASE AND HOLD THE LAND AS AGRICULTURAL INVESTMENT. THE APPE LLANT HAD FURTHER SHOWN THAT AGRICULTURAL ACTIVITIES WERE C ARRIED OUT ON THOSE LANDS ON REGULAR BASIS TILL A.Y. 2005-06 AND I NCOME FROM THIS ACTIVITY RANGING FROM RS.9250/- TO RS. 60,000 /- WAS SHOWN BETWEEN A.Y. 2002-03 TO A.Y. 2005-06. ALL THESE PRIMARY FACTS HAVE NOT BEEN FOUND BY THE ASSESSING O FFICER TO BE INCORRECT. HOWEVER, THE ASSESSING OFFICER, AS COULD BE SEEN FROM THE DISCUSSIONS AVAILABLE IN THE ASSESSMENT ORD ER, CAME TO THE CONCLUSION THAT THE AGRICULTURAL LANDS SOLD WER E BUSINESS ASSETS OF THE APPELLANT (STOCK IN TRADE) AND THEREFO RE THE INCOME ARISING ON THE SALE OF THESE LANDS HAS TO BE ASSESSED UNDER THE HEAD 'BUSINESS AND PROFESSION' BECAUSE TH E APPELLANT IS SHOWING INCOME FROM SHARE TRADING, THE H USBAND OF THE APPELLANT MR. SURENDRA SANCHETI IN HIS STATEME NT RECORDED DURING SEARCH HAD STATED THAT HE LOOKS AFTE R THE BUSINESS ACTIVITY AND THE INVESTMENT MADE IN THE NAM E OF HIS WIFE, THE APPELLANT HAS DEVELOPED SOME PROJECTS IN HER PROPRIETARY CONCERN M/S SANCHETI PROMOTORS AND BUILD ERS, THE APPELLANT IS PARTNER IN FIRMS ENGAGED IN REAL ESTATE DEVELOPMENT, THERE IS NO ELEMENT OF PRIDE POSSESSION IN RESPECT OF LAND SOLD. THE ASSESSING OFFICER FOR COMING TO THE ABOVE CONCLUSION ALSO RELIED ON THE CIRCULAR NO.4/2007 OF CBDT WH ICH IS TO BE APPLIED FOR CASES OF SHARE TRADING TO CLAIM THAT THE PRINCIPLE LAID IN THE SAID CIRCULAR IS ALSO APPLICABLE TO THE FACTS OF THIS CASE AND HOW AS PER THE SAID CIRCULAR THE CA SE OF THE APPELLANT CAN BE COVERED TO HOLD THAT THE LAND SOLD IS TO BE ASSESSED AS A BUSINESS INCOME. THE ASSESSING OFFICER HAS ALSO RELIED UPON THE DECISION OF THE PUNE TRIBUNAL GI VEN IN THE CASE OF GOPAL KASAT VS ITO JALGAON ITA NO. 513.514/PN/2 005 AND 50/PN/2006. AFTER CONSIDERING ALL THESE FACTS THE ASSESSING OFFICER HELD THAT THE INCOME OF RS. 37,65,00 07- ARISING ON THE SALE OF THE LAND IN THIS YEAR IS TO B E ASSESSED UNDER THE HEAD BUSINESS AND PROFESSION. THE APPELLANT IN ADDITION TO THE BASIC FACTS ALREADY MENTIONED ABOVE, H AD ARGUED BEFORE THE ASSESSING OFFICER THAT THE LAND W AS ALWAYS HELD AS AGRICULTURAL LAND FOR CARRYING OUT THE ACTIVIT Y OF AGRICULTURE AND ALSO FOR THE PRIDE OF POSSESSION, AGR ICULTURAL INCOME HAS BEEN EARNED REGULARLY WHICH WERE ACCEPTE D BY THE ASSESSING OFFICER, THESE LANDS WERE NOT SHOWN IN THE BUSINESS BALANCE SHEET, THE LANDS WERE AGRICULTURAL LAND IN R EVENUE RECORD WHICH WERE NEVER GOT CONVERTED TO NA LAND, WE RE HELD FOR LONG PERIOD OF TIME, THE SALE WAS NOT FREQUENT OR R EGULAR SO AS TO CONSTITUTE AN ORGANIZED ACTIVITY ESSENTIAL FOR HO LDING AN ACTIVITY AS A BUSINESS AND BECAUSE OF THE ABOVE FACT S IT WAS CLAIMED THAT THE SALE OF AGRICULTURAL LAND CANNOT BE TREATED AS A BUSINESS ACTIVITY, THE APPELLANT HAS ALSO RELIED ON NUMEROUS JUDGMENT WHICH ARE NOTED IN THE ASSESSMENT ORDER TO CLAIM BEFORE THE ASSESSING OFFICER THAT THE CLAIM MADE BY THEM ARE LEGALLY CORRECT. DURING APPEAL ALSO SIMILAR ARGUMENTS WER E PUT FORTH WHICH CAN BE SEEN FROM THE SUBMISSION ALREADY Q UOTED ABOVE. IT WAS FURTHER ARGUED THAT THE ASSESSING OFFIC ER ERRED IN DRAWING THE CONCLUSION REFERRED TO ABOVE. IT WAS CLAIM ED THAT THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORD ER ON PRESUMPTION AND NOT ON HARD FACTS. IT WAS CLAIMED THAT THE 9 ITA NOS. 1081, 1082 & 1083/PN/2011, ALPANA SURENDRA SANCHETI, PUNE CONSTRUCTION BUSINESS CARRIED OUT BY THE APPELLANT W AS SEPARATE AND ONLY BECAUSE OF THIS IT IS WRONG TO PR ESUME THAT THE APPELLANT WAS ALSO ENGAGED IN THE BUSINESS OF LAND TRADING. RELIANCE FOR THIS WAS MADE ON THE SUPREME CO URT JUDGMENT GIVEN IN THE CASE OF SAROJ KUMAR MAJUMDAR VS. COMMISSIONER OF INCOME TAX REPORTED IN CTR 12 335 P C 54 R 242 (SC). IT WAS FURTHER CLAIMED THAT HER HUSBAND IN I NDIVIDUAL CAPACITY IS NOT ASSOCIATED WITH THE CONSTRUCTION ACTIV ITY, ON THE CONTRARY IT WAS STATED THAT HE WAS INVOLVED IN THIS A CTIVITY AS KARTA OF THE HUF. THEREFORE IT WAS CLAIMED THAT THE I NFERENCE DRAWN BY THE ASSESSING OFFICER WAS INCORRECT. IT WAS STATED THAT HAD THE INTENTION BEEN TO TRADE IN LAND THE APP ELLANT WOULD HAD GOT THE LAND CONVERTED INTO NA AND THEN WOULD HAV E BROUGHT IMPROVEMENTS SO AS TO MAKE THE LAND MORE VALU ABLE AS A TRADING COMMERCIAL PROPERTY. THE DETAILED SUBMIS SION MADE BY THE APPELLANT IS ALREADY QUOTED ABOVE AND CAN BE SEEN FOR DETAILS. ON CAREFUL CONSIDERATION OF THE F ACTS AND THE LAW, I FIND THAT THE ASSESSING OFFICER HAS ERRED IN DRAWING THE INFERENCE. HE HAS TRAVELLED IN THE ARENA OF PRESUMPTIO NS FOR COMING TO THE CONCLUSION. IN THE PROCESS RELEVANT FAC TS AND EVIDENCE AVAILABLE ON RECORD HAVE BEEN IGNORED. NOTHI NG WAS FOUND OR BROUGHT ON RECORD WHICH COULD SHOW THAT THE APPELLANT WAS ENGAGED IN THE BUSINESS OF LAND TRADIN G. ON THE CONTRARY ALL THE FACTS WHICH ARE AVAILABLE ON THE RECO RDS VIZ THE LANDS WERE AVAILABLE IN THE REVENUE RECORDS AS AGRI CULTURAL LAND WHICH WERE NEVER CONVERTED INTO NA LAND, THERE WAS NO ACTIVITY TO IMPROVE THE LAND SO AS TO MAKE IT COMMERC IALLY MORE VALUABLE, ACTUAL ACTIVITY OF AGRICULTURE ON THE LAND OVE R A PERIOD OF TIME EVIDENCED BY THE SHOWING OF AGRICULTURAL/INCO ME IN ALMOST ALL THE YEARS, LONG PERIOD OF HOLDING, ETC. ETC. DEAFLY SHOWS THAT THE APPELLANT WAS HOLDING THE LANDS AS INV ESTMENT IN/AGRICULTURAL LANDS. THE ASSESSING OFFICER IS ALSO F OUND TO HAVE INCORRECTLY BRUSHED ASIDE RELEVANT JUDGMENTS RE LIED UPON BY THE APPELLANTS WHEN THE SAME IN MANY CASES WERE IN FAVOUR OF THE APPELLANT. THE ASSESSING OFFICER HAS IN CORRECTLY HELD THAT THE CIRCULAR OF THE CBDT WHICH WAS FOR DEC IDING THE SIMILAR ISSUE IN RESPECT OF SHARE TRANSACTIONS CAN BE APPLIED IN THIS CASE ALSO AND IN DOING SO HE IS SEEN TO HAVE FU RTHER ERRED IN COMING TO THE CONCLUSION THAT THE FACTS OF THE CA SE MATCHES WITH THE CIRCUMSTANCES MENTIONED IN THE CIRCULAR FO R ARRIVING AT THE CONCLUSION DRAWN BY HIM. HE HAS ALSO CLEARLY ERRED IN APPLYING THE JUDGMENT OF THE ITAT PUNE GIVEN IN THE CASE OF GOPAL KASAT QUOTED SUPRA. THE FACTS OF THE GOPAL KASAT IS ENTIRELY DIFFERENT FROM THE FACTS OF THE APPELLANT. I N THE SAID CASE THE APPELLANT HAD BOUGHT LAND AFTER KNOWING THE FACT THAT THOSE LANDS WERE UNDER ACQUISITION SO AS TO MAKE QUI CK BUCK AND THEREFORE AFTER NOTICING THOSE FACTS THE HONOUR ABLE TRIBUNAL CAME TO THE CONCLUSION THAT E SAID APPELLANT HAD MADE INVESTMENT WITH THE OBJECTIVE OF MAKING QUICK MONEY, BECAUSE OF WHICH THE INVESTMENT WAS HELD AS ADVENTURE IN THE NATURE OF TRADE. THE FACTS OF THE APPELLANT ARE MUCH DIFFERENT AND THEREFORE THE AO CAN BE SEEN TO HAVE ERRED COMPLETEL Y IN FOLLOWING THIS JUDGMENT. CONSIDERING THE ENTIRE FACTS OF THE CASE AND THE LAW I AM OF THE OPINION THAT THE APPELLA NT IS 10 ITA NOS. 1081, 1082 & 1083/PN/2011, ALPANA SURENDRA SANCHETI, PUNE CORRECT IN CLAIMING THE RELIEF AND THEREFORE THE APP EAL IS ALLOWED. NOW THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND ALSO ANXIOUSLY CONSIDERED THE REASONS RECORDED BY THE ASSE SSING OFFICER FOR TREATING THE SALE CONSIDERATION OF THOSE 3 LANDS FOR ASSES SING THE SAME AS A BUSINESS INCOME AS WELL AS THE REASON GIVEN BY TH E LD.CIT(A) FOR ACCEPTING THE CONTENTION OF THE ASSESSEE. THE ASSESSE E IS IN THE BUSINESS AS A BUILDER AND PROMOTER AND WHICH IS AN ADMITT ED FACT. SO FAR AS THE ISSUE IN CONTROVERSY IN RESPECT OF THE HEAD U NDER WHICH THE SALE CONSIDERATION OF THE 3 LANDS IS TO BE ASSESSED, IT IS S EEN THAT THE ASSESSEE HAS SOLD THOSE 3 LANDS IN THE PRESENT 3 ASSES SMENT YEARS ONE BY ONE. IT IS ALSO SEEN THAT THE HOLDING PERIOD OF THOSE LANDS IS QUITE LONG. SO FAR AS LAND AT KATRAJ IS CONCERNED THE SAID LAND WAS HELD FOR THE PERIOD OF THE 4 YEARS. SO FAR AS LAND AT KASAR AMBO LI IS CONCERNED THE SAID LAND WAS HELD FOR THE PERIOD OF 10 YEARS AND LAN D AT BANER IS CONCERNED THE PERIOD FOR HOLDING GOES UP TO 5 YEARS. 7. IF THE ASSESSEE WANTS TO MAKE A QUICK PROFIT THEN SH E WOULD NOT HAVE LOCKED THE MONEY IN THOSE LANDS FOR CONSIDERABLE LONG PERIOD. ANOTHER ASPECT WE FIND HERE IS THAT THOSE LANDS WERE N EVER CONVERTED INTO STOCK IN TRADE NOR THOSE LANDS WERE CONVERTED AS NON-AGRICULTURE LANDS. IT IS ALSO SEEN THAT THE ASSESSEE HAS DECLARED AGRICULTURE IN COME IN RESPECT OF THOSE LANDS. NOTHING IS ON RECORD TO SHOW THAT THE ASSESSEE HAS MADE ANY DEVELOPMENT TO THOSE LANDS AND THEREAFTER SOLD THOSE LANDS. 8. WE HAVE CONSIDERED PLATHORA OF DECISIONS RELIED ON BOTH THE PARTIES. IN OUR OPINION, THE BASIC FACTS ARE DECISIVE TO AP PLY THE PRINCIPLES LAID DOWN IN EACH PRECEDENT OR DECISION. IF WE HA VE TO SUPPORT THE CASE OF THE ASSESSING OFFICER THAT LANDS WERE PURCHASED TO EARN QUICK PROFIT THEN IMPORTANT FACT GOES AGAINST THE AS SESSING OFFICER 11 ITA NOS. 1081, 1082 & 1083/PN/2011, ALPANA SURENDRA SANCHETI, PUNE I.E. PERIOD OF HOLDING AS NO BUSINESS MAN WOULD HOLD THE LAND FOR THE PERIODS OF 5 TO 10 YEARS. QUICK PROFIT CONTEMPLATES QUICK EARNINGS OF INCOME WHICH IS NOT THE CASE HERE. LAW IS WELL SETTLED THA T THE INTENTION OF THE PARTY IS ALSO IMPORTANT FACTOR DETERMINING WHETHER A PARTICULAR ASSET WAS PURCHASED BY THE ASSESSEE AS A INVESTMENT OR AS STOCK IN TRADE. ANOTHER IMPORTANT FACT IN THIS CASE IS THAT NO DEVELOPMENT WHAT-SO-EVER WAS MADE TO THOSE LANDS TO M AKE IT COMMERCIALLY SALABLE. MOREOVER EVEN THE ASSESSEE IS IN R EAL ESTATE BUSINESS BUT THOSE LANDS WERE NEVER CONVERTED FOR NON- AGRICULTURE USE. AFTER GIVING OUR ANXIOUS CONSIDERATION TO THE REASONS REC ORDED BY THE LD.CIT(A), IN OUR OPINION, HE HAS RIGHT HOLD THAT THE SALE CON SIDERATION IS TO BE ASSESSED UNDER THE HEAD CAPITAL GAIN AND NOT AS A BUSINESS INCOME. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) IN ALL THE 3 YEARS AND THOSE ARE CONFIRMED. 9. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2013 SD/- (G.S. PANNU) SD/- (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER RK/PS PUNE, DATED: 22 ND MARCH, 2013 COPY TO 1 THE ASSESSEE 2 T HE DEPARTMENT 3 THE CIT(A) - I, PUNE 4 THE CIT - I, PUNE 5 THE DR, ITATA BENCH , PUNE . 6 GUARD FILE. // TRUE COPY // BY ORDER PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE