The ACIT, Circle-2(2), Ahmedabad V. Shri Bharat C. Pathak, Ahmedabad

ITA 1541/AHD/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1720 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 11-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Capital Gains

Judgement Text

ITA No.1541/Ahd/2018 A.Y. 2014-15 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.1541/Ahd/2018 Assessment Year: 2014-15 The Asstt. Commissioner of Income Tax, vs. Shri Bharat C. Pathak, Circle - 2(2), Ahmedabad. 1, Shreepath Apartment, Opp. Swastik Society, St. Xavier School, Navrangpura, Ahmedabad – 380 009. [PAN: ABNPP 5434 F] (Appellant) (Respondent) Appellant by : Shri Vijaykumar Jaiswal, CIT D.R. Respondent by : Shri S.N. Divatia, A.R. & Shri Samir Vora, A.R. Date of hearing : 07.04.2022 Date of pronouncement : 20. 05.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This is an appeal filed by the Revenue against the order dated 26.03.2018 passed by the CIT(A)-10, Ahmedabad for the Assessment Year 2014-15. 2. The Revenue has raised the following ground of appeal : “1. The Ld. CIT(A) has erred in law and facts in deleting the addition made by the AO treating the Long term capital gain of Rs.9,08,00,252/- and Short term capital gain of Rs.2,38,95,450/- as the business income of the assessee. 3. The assessee filed return of income on 31.12.2014 declaring total income of Rs.12,07,79,012/-. During the assessment proceedings, the Assessing Officer observed that the assessee sold 3 pieces of land situated at Sanathal. On the sale consideration received in respect of the said immovable property, the assessee worked out Long Term Capital Gain and Short Term Capital Gain and offered the appreciation as income under the head capital gain after claiming the cost of ITA No.1541/Ahd/2018 A.Y. 2014-15 Page 2 of 3 acquisition. The Assessing Officer held that the assessee is actively and frequently engaged in sale and purchase of various immoveable properties particularly land. The assessee is also partner in the firm namely Sanskruti Developers which is carrying on the business of land development and construction. The show-cause notice dated 09.12.2016 was issued to the assessee which was replied by the assessee on 16.12.2016. The Assessing Officer on verification of Balance Sheet for previous year observed that the assessee had shown closing stock in the form of stock-in-trade amounting to Rs.2,50,89,161/-. During the year under consideration, the assessee had shown Rs.4,16,48,427/- as closing stock of stock-in-trade. Thus, the Assessing Officer noted that the assessee had purchased land amounting to Rs.1,65,59,266/- in this year as well. Thus, the assessee continuously made purchases of land year to year and shows it as stock-in-trade and thus it cannot be said as investment. The Assessing Officer passed assessment order thereby making addition of Rs.1,10,56,478/- and income from Profits & Gains of Business & Profession Rs.9,08,00,252/- and Rs.2,38,95,450/-. Thus, the Assessing Officer assessed total income of Rs.12,65,59,205/- 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. 5. The Ld. D.R. submitted that during the year under consideration 3 lands were sold and on 2 lands the assessee claimed Long Term Capital Gain and on one land the assessee claimed Short Term Capital Gain. There was increase in stock-in-trade during the year under consideration which demonstrated that the assessee is in the business of making investment in land which can be seen from the Balance Sheet as well. The Ld. D.R. further submitted that the CIT(A) erred in deleting the addition in respect of Long Term Capital Gain of Rs.9,08,00,252/- and Short Term Capital Gain of Rs.2,38,95,450/- as the business income of the assessee. 6. The Ld. A.R. submitted that the CIT(A) has taken cognisance of all the material available on record and particularly the assessee was not at all dealing in land particularly for his professional purpose but has strategic investment in the properties and sold it at the time of utilising the investment. Thus, the gain which was credited to the assessee was a strategic movement and cannot be held as business and ITA No.1541/Ahd/2018 A.Y. 2014-15 Page 3 of 3 profession. The Hon’ble High Court of Bombay in the case of Gopal Purohit, 336 ITR 287, has clearly held that in relation to the shares and securities, profit on sale of shares held in investment portfolio was liable to capital gains. In the present case, the capital gain was received by the assessee as the investment was in land and was rightly sold during the A.Y. and claimed as Long Term Capital Gain and Short Term Capital Gain. The Ld. A.R. relied upon the order of the CIT(A). 7. We have heard both the parties and perused the material available on record. The assessee at no point of time held that the land was stock-in-trade and thus this cannot be termed as stock-in-trade. The Assessing Officer’s observation that the land is a stock-in-trade has no footing as such. The CIT(A) has rightly observed that the assessee has not sold any land as no income shown under the capital gain i.e. in A.Ys. 2011-12, 2012-13 & 2013-14. Thus, it is clear that the assessee is not trading in land but is a mere investor. We further observed that the assessee has sold 2 lands in this particular year after almost 8 years which is strategic investment. Thus, the assessee has rightly shown this as Long Term Capital Gain. The CIT(A) has given a detailed finding and there is no need to interfere with the same. 8. In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on this 20 th day of May, 2022. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 20 th day of May, 2022 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad