Ramesh Raj Bhra, Jalore V. DCIT,BArmer Circle, Barmer

ITA 157/JODH/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2213 (ITAT-JODHPUR)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 01-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset converted into stock in trade; Capital asset; Business income; Date of conversion; Benefit of exemption; Capital Gains
• Section: 54; 143(3); 54F; 142(1); 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 157/JODH/2019 (ASSESSMENT YEAR-2015-16 RAMESH RAJ BOHRA, M-10, SHIVAJI NAGAR, JALORE. VS D.C.I.T., BARMER CIRCLE- BARMER. (APPELLANT) (RESPONDENT) PAN: AAPPB 7135 G ASSESSEE BY SHRI MAYANK TAPARIA & SHRI GOUTAM BAID (CAS) REVENUE BY SHRI K.C. BADHOK (CIT-DR) DATE OF HEARING 18/03/2020 DATE OF PRONOUNCEMENT 20/03/2020 O R D E R PER: R.C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(A)-2, JODHPUR DATED 05/03/2019 FOR TH E A.Y. 2015-16 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS T HE ACT, FOR SHORT]. 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR TA XING CAPITAL GAIN UNDER THE HEAD BUSINESS INCOME AND NOT GIVING BENEF IT OF EXEMPTION U/S 54F OF THE ACT. 2 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD HIS LAND AND OFFERED CAPITA GAIN THEREON AFTER CLAI MING DEDUCTION U/S 54F OF THE ACT. THE CASE WAS SELECTED FOR LIMITED SCRUTI NY. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO REJECTING EXPLANATIO N OFFERED BY ASSESSEE AND HELD THAT ALL TRANSACTION OF SALE OF PROPERTY A RE IN THE NATURE OF BUSINESS AND THE ASSESSEE PURCHASED ALL PROPERTY UN DER CONSIDERATION WITH BUSINESS INTENTION. FURTHER OUT OF EXPENDITURE OF RS.43,90,029/- CLAIMED BY ASSESSEE TOWARD CONSTRUCTION, THE A.O. AL LOWED ONLY RS.21,95,015/-. 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) DID NOT FI ND ANY MERIT IN THE SUBMISSION OF ASSESSEE THAT THE AO ENHANCED THE SCOPE OF ASSESSMENT. FOR INCOME EARNED FROM TRANSFER OF ASSE TS LD. CIT(A) UPHELD THE FINDING OF THE AO THAT SAME IS TAXABLE AS BUSIN ESS INCOME BUT THE ALTERNATIVE PLEA OF ASSESSEE THAT TILL THE DATE OF CONVERSION OF CAPITAL ASSETS INTO BUSINESS ASSET GAIN HAS TO TREATED AS C APITAL GAIN AS PER PROVISIONS OF SECTION 45(2). DISALLOWANCE OF EXPENDI TURE WAS RESTRICTED TO 40% BY CIT(A) AS AGAINST DISALLOWANCE OF 50% SO MADE BY THE AO. 5. AGAINST THE ABOVE ORDER OF THE LD. CIT(A), THE A SSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 3 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT 6. IT WAS ARGUED BY THE LD AR OF THE ASSESSEE THAT THE AO ISSUED NOTICE U/S 142(1) DATED 07/07/2017. AS PER NOTICE C ASE HAS BEEN SELECTED FOR LIMITED SCRUTINY FOR LARGE DEDUCTION CLAIMED U/S 54B, 54C, 54D, 54G, 54GA [PB PG 9-10]. DETAILS OF DOCUMENTS SUPPORTING PURCHASE AND SALE OF CAPITAL ASSETS, DETAILS OF TRA NSFER EXPENSES AND IMPROVEMENT COST, SUPPORTING DOCUMENTS REGARDING DE DUCTION U/S 54F AND BANK ACCOUNT FOR THE YEAR UNDER CONSIDERATION S OUGHT VIDE THIS NOTICE. DURING THE YEAR UNDER CONSIDERATION ASSESSE E EARNED LONG TERM CAPITAL GAIN ON SALE OF PROPERTIES BEING LAND ON DI FFERENT LOCATION AND CLAIMED EXEMPTION U/S 54F AGAINST SUCH LONG TERM CA PITAL GAIN FOR PURCHASE OF HOUSE PROPERTY AT BANGALORE. NO DEDUCTI ON HAS BEEN CLAIMED U/S 54B, 54C, 54D, 54G, 54GA. ACCORDINGLY, IT WAS AR GUED THAT THE A.OS EXCEEDED THE JURISDICTION, IN SO FAR AS THE CASE WAS SELECTED ONLY FOR THE LIMITED SCRUTINY AND THERE IS NO MENTION OF CASE BE ING SELECTED WITH RESPECT TO THE CLAIMING OF EXEMPTION U/S 54F OF THE ACT. 7. THE LD AR HAS FURTHER CONTENDED THAT AS PER CBDT INSTRUCTION NO. 20/2015 DATED 29/12/2015 AND INSTRUCTION NO. 5/2016 DATED 14/07/2016 THE SCOPE OF ENQUIRY IN THE CASES SELECTED FOR LIMI TED SCRUTINY SHOULD BE RESTRICTED TO THE ISSUE FOR WHICH CASE HAS BEEN SELE CTED FOR LIMITED SCRUTINY. AS PER SAID INSTRUCTIONS WHERE DURING THE COURSE OF ASSESSMENT 4 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT PROCEEDINGS IN 'LIMITED SCRUTINY' CASES, IF IT COME S TO THE NOTICE OF THE ASSESSING OFFICER THAT THERE IS POTENTIAL ESCAPEMEN T OF INCOME EXCEEDING RS. FIVE LAKHS REQUIRING SUBSTANTIAL VERIFICATION O N ANY OTHER ISSUE(S), THEN, THE CASE MAY BE TAKEN UP FOR 'COMPLETE SCRUTI NY' WITH THE APPROVAL OF THE PR. CIT/CIT CONCERNED. SUCH AN APPROVAL SHAL L BE ACCORDED BY THE BY THE PR. CIT/CIT IN WRITING AFTER BEING SATISFIED ABOUT MERITS OF THE ISSUE(S) NECESSITATING 'COMPLETE SCRUTINY' IN THAT PARTICULAR CASE. SUCH CASES SHALL BE MONITORED BY THE RANGE HEAD CONCERNE D. THE AO VIOLATING CBDT INSTRUCTION NO 20/2015 DATED 29/12/2015 AND IN STRUCTION NO 5/2016 DATED 14/07/2016 ENHANCED THE SCOPE OF LIMIT ED SCRUTINY BY INITIATING ENQUIRY TO EXAMINE WHETHER THE GAIN ARIS ING FROM SALE OF PROPERTY BY THE ASSESSEE IS CAPITAL GAIN OR BUSINES S INCOME. SUCH ENHANCEMENT OF SCOPE OF LIMITED SCRUTINY ASSESSMENT WAS WITHOUT ANY APPROVAL FROM PR. CIT. THAT ENHANCING SCOPE OF LIMI TED SCRUTINY ASSESSMENT WITHOUT ANY PRIOR APPROVAL OF PR. CIT IS CONTRARY TO THE CBDT DIRECTION AND THEREFORE THE SAME IS WITHOUT JURISDIC TION AND ANY ADDITION MADE BEYOND THE SCOPE OF LIMITED SCRUTINY IS VOID A B INITIO. 8. WITH REGARD TO MERIT OF ADDITION, IT WAS CONTENDE D THAT THE ASSESSEE WAS HAVING PROPERTY SINCE LAST 20 YEARS, TH E SAME HELD AS 5 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT INVESTMENT THEREFORE, ELIGIBLE TO CLAIM BENEFIT OF LONG TERM CAPITAL GAINS AND UTILIZATION OF CAPITAL GAINS FOR PURCHASE OF HO USE U/S 54F OF THE ACT. 9. ON THE OTHER HAND, THE LD DR HAS CONTENDED THAT THE PROPERTY ON SALE OF LAND TO A CONSTRUCTION COMPANY WERE IN THE N ATURE OF BUSINESS TRANSACTION, THEREFORE, LIABLE TO TAX AS BUSINESS I NCOME. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CA REFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAV E ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LOWER AU THORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY THE LD AR AND DR DURING THE COURSE OF HEARING BEFORE US IN THE CONTEXT OF FACTUAL MATR IX OF THE CASE. FROM THE RECORD WE FOUND THAT DURING THE YEAR UNDER CONSI DERATION THE ASSESSEE DECLARED LONG TERM CAPITAL GAIN EARNED ON FOLLOWING IMMOVABLE PROPERTIES UNDER CAPITAL GAIN HEAD WHILE FILING RETU RN OF INCOME: S. NO. PROPERTY DESCRIPTION SALE CONSIDERATION VALUE TAKEN BY AO 1. F ATEH ROYAL RESIDENCY PLOT G-4 13,50,000 15,72,750 2. FATEH ROYAL RESIDENCY PLOT A-5 10,00,000 10,41,554 3. FATEH ROYAL RESIDENCY PLOT B-4 10,60,000 12,18,300 4. FATEH ROYAL RESIDENCY PLOT B-6 10,60,000 12,18,300 5. FATEH ROYAL RESIDENCY PLOT 17,50,000 1 7,50,000 6 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT G - 2 6. FATEH ROYAL RESIDENCY PLOT G-6 17,50,000 17,50,000 7. FATEH ROYAL RESIDENCY 7458 SQ FEET AREA THROUGH DEVELOPMENT AGREEMENT (DIRECT PATTA IN THE NAME OF BUYER) (LD. AO TAKEN VALUE OF RS. 1193280/- I.E. 1/3 OF 3579840/-) 35,79,840 11,93,280 8. FAT EH HILLS 27,35,000 27,35,000 THAT OUT OF LONG TERM CAPITAL GAIN ARISE FROM THE T RANSFER OF ABOVE REFERRED PROPERTIES, THE ASSESSEE HAD CLAIMED EXEMP TION U/S 54F AGAINST THE PURCHASE OF RESIDENTIAL HOUSE AT MUMBAI. HOWEVER , THE AO WHILE FRAMING ASSESSMENT TREATED TRANSACTION OF SALE OF P ROPERTY REFERRED ABOVE AS BUSINESS TRANSACTION AND ASSESSED ACCORDIN GLY. 11. FROM THE RECORD, WE FOUND THAT THESE PROPERTIES IN THE NAME OF FATEH ROYAL RESIDENCY HAS BEEN PURCHASED BY THE ASS ESSEE IN THE YEAR 1995. THE INVESTMENT SO MADE IN PROPERTY WAS SHOWN AS CAPITAL INVESTMENT IN BALANCE SHEET. INTENTION OF ASSESSEE AT THE TIME OF PURCHASE CAN BE CLEARLY DISCERN FROM THIS, MOREOVER , A GENERAL INFERENCE CAN BE DRAWN FROM THIS THAT WHY ASSESSEE PURCHASE LAN D WITH THE MOTIVE OF BUSINESS AROUND 20 YEARS BACK, WHEN THE MAIN STRE AM LINE OF FAMILY BUSINESS OF ASSESSEE IS GRANITES MANUFACTURING AND TRADING SINCE 1986. 7 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT THAT FROM THE TIME OF PURCHASE OF LAND IN THE YEAR 1995 TILL THE CONVERSION OF THE LAND FOR TOWNSHIP, SUCH LAND HAS B EEN CULTIVATED BY THE ASSESSEE AND AGRICULTURAL INCOME FROM THE SAME HAS BEEN DULY SHOWN IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THREE P ERSONS WHOSE LANDS WERE INVOLVED ARE FAMILY MEMBER. 12. THE PROPERTY IN THE NAME OF FATEH HILLS WERE ACQ UIRED BY THE ASSESSEE DURING 2010-11. THE INVESTMENT SO MADE IN PROPERTY WAS CONTINUOUSLY SHOWN AS CAPITAL INVESTMENT IN BALANCE SHEET. THREE PERSONS WHOSE LANDS WERE INVOLVED ARE FAMILY MEMBER A ND NO OUTSIDE PERSON IS INVOLVED. THE LAND WAS PURCHASED BY ALL TH E FAMILY PERSONS IN THE FINANCIAL YEAR 2010-2011. BOTH THESE PROPERTIES WERE SOLD BY THE ASSESSEE AS HE WAS UNDER REQUIREMENT OF FUND FOR THE PURCHASE OF HOUSE PROPERTY. THE AO DISCUSSED THE ISSUED IN PARA 10 TO 17 AT PAGE 36 TO 40. DETAILED EXPLANATION ON THE FINDING SO RECORDED BY THE AO WAS SUBMITTED BEFORE LD. CIT(A). THE LD. CIT(A) DESPITE HOLDING T HAT ASSETS UNDER CONSIDERATION WERE PURCHASED AS CAPITAL ASSET CONCLU DED THAT SALE OF SUCH ASSETS WAS AN ADVENTURE IN THE NATURE OF TRAD E AND NOT MERELY REALIZATION OF INVESTMENT IN CAPITAL ASSETS. THE BA SIS OF THE CONCLUSION DRAWN BY LD. CIT(A) IS FACTUALLY INCORRECT. FINDING RECORDED BY CIT(A) AT PAGE 13-14 IN PARA 6.3. 8 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT 13. THE INTENTION OF ASSESSEE AT THE TIME OF PURCHA SE OF PROPERTY AND TIME PERIOD OF HOLDING OF PROPERTY NOT AT ALL CONSI DERED BY THE AO IN DETERMINATION OF NATURE OF TRANSACTION UNDER CONSID ERATION. FURTHER TO THIS AO OBSERVED THAT THERE WAS NO URGENCY FOR THE S ALE OF THE PROPERTY UNDER CONSIDERATION. THIS FACT AGAIN CONTRARY TO TH E FACTS ON RECORD. ASSESSEE AND HIS BROTHER PURCHASED DIFFERENT RESIDE NTIAL PROPERTY AT BENGULURE AND SUBSTANTIAL AMOUNT HAS INVESTED IN TH IS PROPERTY OUT OF SALE PROCEED OF PROPERTY UNDER CONSIDERATION. IT IS PERTINENT TO MENTION HERE THAT FOR THE CAPITAL GAIN EARNED OUT OF SALE O F THESE CAPITAL ASSETS ASSESSEE CLAIMED EXEMPTION U/S 54F FOR INVESTMENT I N RESIDENTIAL PROPERTY AT BENGALURU. FURTHER RESIDENTIAL PROPERTY PURCHASED AT BENGALURU WAS FOR PERSONAL USE OF ASSESSEE AND NOT M ERELY A CAPITAL INVESTMENT. 14. IN ITS ORDER, THE LD. CIT(A) AFTER HOLDING THAT PURCHASE OF PROPERTY AS CAPITAL ASSET, ASSIGNED ONLY ONE REASON IN TREAT ING THE PLOTTING OF LAND AS ADVENTURE IN THE NATURE OF TRADE WHICH IS AGR ICULTURE LAND CONVERTED IN NON AGRICULTURE LAND. THE LD. CIT(A) HAD REFERR ED FOLLOWING JUDICIAL PRONOUNCEMENTS. (I) RAJENDRA KUMAR DWIVEDI VS. CIT [2012] 26 TAXMANN .COM 84 (ALL) 9 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT (II) RAMSWAROOP SAUDAGAR VS ITO [ITA NO 329/JP/2017] (II) CIT VS JEHANGIR T. NAGREE [2008] 23 SOT 512 (M UM)] THERE IS SUBSTANTIAL FACTUAL DIFFERENCE IN THE CASE OF RAJENDRA KUMAR DWIVEDI VS. CIT [2012] 26 TAXMANN.COM 84 (ALL) / [20 12] 349 ITR 432 AND CASE UNDER CONSIDERATION. THOUGH THE CASE WAS DE CIDED ON VARIOUS FACTUAL POSITION OF THAT CASE, LD. CIT(A) CONSIDER IT APPROPRIATE TO MENTION ONLY ONE FACT SIMILAR TO PRESENT CASE (IN F ACT EVEN SUCH SIMILARITY NOT EXIST). LD. CIT(A) FIND THAT IN THE CASE OF RAJ ENDRA KUMAR DWIVEDI (SUPRA) HONBLE HIGH COURT HELD THAT SINCE NO AGRICULTURE OPERATION WERE CARRIED ON, THE INCOME TAX AUTHORITIES RIGHTLY CONC LUDED THAT THE CAPITAL ASSET WAS CONVERTED INTO STOCK IN TRADE, AND THAT SA LES OF PLOTS IN THE CASE OF SUCH LAND WOULD BE TREATED TO BE BUSINESS AC TIVITY TO MAKE PROFITS. IN THIS REFERENCE WE OBSERVE THAT IN THE CASE UNDER CONSIDERATION AGRICULTURE ACTIVITIES WERE CARRIED ON BY THE ASSESSEE CONTINUALLY AND IN THE YEAR UNDER CONSIDERATION ALS O AGRICULTURE INCOME HAS BEEN DECLARED AND SAME HAS BEEN CONSIDERED FOR INCOME TAX COMPUTATION. THEREFORE RELIANCE PLACED ON BY THE LD . CIT(A) ON THE JUDGEMENT OF RAJENDRA KUMAR DWIVEDI (SUPRA) IS UNCAL LED FOR. IT IS PERTINENT TO MENTION THAT HONBLE JURISDICTIONAL HI GH COURT OF RAJASTHAN IN THE CASE OF CIT VS SOHAN KHAN [2008] 304 ITR 194 (RAJ) HELD AS UNDER: 10 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT 4. THE ASSESSING OFFICER FOUND THE SALE TO BE NOT TAXAB LE AS CAPITAL GAIN, BUT IT WAS FOUND TO BE A BUSINESS INCOME, A ND FOR THAT, THE ASSESSING OFFICER FOUND, THAT THE ORIGINAL LAN D IS SURROUNDED BY MANY LANDS OF HIS NEAR RELATIVES AND FAMI LY MEMBERS, AND IF THE PLOTS WOULD HAVE BEEN CARVED OUT FROM HIS LAND ALONE, THEY COULD NOT HAVE BEEN SOLD FOR WANT OF NETWORK OF ROADS BEING AVAILABLE UP TO THE ADJOINING LANDS ON LY, AND THAT, AT SOME DISTANCE THERE IS GOVERNMENT ROAD MEASURIN G 200 FT. THEN THE OTHER CIRCUMSTANCE IS, THAT ALL THE LA ND OWNERS HAD PLANNED THE SALE OF PLOTS, IN NAGNECHI SCHEME, AN D VALLABH GARDEN, TOGETHER, AND NO LAND COULD BE SOLD FOR RESIDE NTIAL PURPOSES. THEN THE NEXT GROUND CONSIDERED IS, THAT THE PURCHASERS WERE IMPRESSED BY THE FACT THAT ALL THE LAND B ELONG TO THE SAME FAMILY, AND IS BEING PLANNED, AND SOLD TOG ETHER, AT NO STAGE THE HUGE PROPERTY OF THE ASSESSEE OR HIS FAMILY MEMBERS WAS USED FOR PERSONAL PURPOSES, AND THE INTENTIO N WAS TO GAIN PROFIT ONLY. INTER ALIA WITH THIS, IT WA S CONCLUDED, THAT THE TRANSACTION WAS IN THE NATURE OF TRADE. 11. COMING TO THE G. VENKATASWAMI NAIDU AND CO.'S CASE [1959] 35 ITR 594 (SC), THE FACTS OF THAT CASE WERE TEL LING, INASMUCH AS, THE ASSESSEE WAS THE MANAGING AGENT OF THE COMPANY, THE MILL, TO WHOM THE LAND WAS SOLD, AND THE LAND WAS SITUATED ADJOINING THE MILL, A TOTAL LAND MEASURED 5 ACRES 26 CENTS, AND WAS PURCHASED BY FOUR SALE DEEDS DATED OCTO BER 25, 1941, NOVEMBER 15, 1941, JUNE 29, 1942 AND NOVE MBER 19, 1942, AND AFTER ABOUT 5 YEARS IT WAS SOLD IN TWO L OTS TO THE MILL, ON SEPTEMBER 1, 1947 AND NOVEMBER 10, 1947. B Y THIS TRANSACTION, THE ASSESSEE EARNED THE PROFIT OF RS. 43,887 AND ODD. ON THESE FACTS THE TRIBUNAL AND HIGH COURT HAD FOUND THE TRANSACTION IN QUESTION BEING AN 'ADVENTURE IN THE NA TURE OF TRADE', CORRECTNESS OF WHICH VIEW WAS CHALLENGED BEFORE T HE HON'BLE SUPREME COURT. THE EXPRESSION 'ADVENTURE IN T HE NATURE OF TRADE' IS DEFINED IN SECTION 2(4) OF THE ACT, AND THE HON'BLE SUPREME COURT CONSIDERED VARIOUS JUDGMENTS OF HO USE 11 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT OF LORDS AND OTHER DECISIONS OF THE COURT OF APPEAL ETC. , AND THEN, AT PAGE 609 OF 35 ITR IT WAS HELD AS UNDER : 12. THEN IN FINAL CONCLUDING PARA, AFTER RECAPITULATIN G THE RELEVANT FACTS OF THE CASE, IT WAS FOUND, THAT THE PURCH ASE WAS THE FIRST STEP TAKEN BY THE APPELLANT THEREIN IN EXECU TION OF THE WELL CONSIDERED PLAN, TO ACQUIRE OPEN PLOTS NEAR THE MI LLS, AND THE WHOLE BASIS FOR THE PLAN WAS TO SELL THE SAID LANDS T O THE MILLS, AT A PROFIT, AND THEN THE SUBSEQUENT CONDUCT O F THE PURCHASER WAS CONSIDERED, AND AFTER APPRECIATING THE TOTA LITY OF ATTENDING CIRCUMSTANCES, IT WAS FOUND TO BE A SERIES OF TRANSACTIONS, UNDERTAKEN BY THE APPELLANT THEREIN, IN PURSUANCE OF THE SCHEME, AND IT WAS AFTER THE APPELLANT HAD CONSOL IDATED ITS HOLDING, THAT AT A CONVENIENT TIME THE LAND WAS SOL D. THE APPELLANT WAS FOUND TO BE MANAGING AGENT OF THE MILL , WHO WAS IN A POSITION TO INFLUENCE THE MILL TO PURCHASE ITS PROP ERTIES, WHICH CANNOT BE SAID TO BE UNREASONABLE. THUS, IN OUR V IEW, IN VIEW OF THE PRINCIPLE PROPOUNDED THEREIN, AND ON THE FACTS OF THAT CASE AS CONSIDERED, IT IS CLEAR, THAT IN ORDER TO AR RIVE AT A CONCLUSION, AS TO WHETHER IT IS TO BE TAXED AS CAPITAL GAI N OR THE TRANSACTION IS TO BE TREATED TO BE AN 'ADVENTURE IN T HE NATURE OF TRADE', THINGS CANNOT BE PUT IN ANY STRAIT JACKET FORM ULA, AND IT WAS DEPENDENT UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE, TO BE DECIDED ON THE BASIS OF RELEVANT CONSIDERATIONS. 13. IN OUR VIEW, ONE OF THE MOST SIGNIFICANT CONSIDERAT IONS WOULD BE, THE REGULARITY OF TRANSACTION OF PURCHASE AND SALE. MERE FACT THAT THERE WAS A SERIES OF TRANSACTIONS OF SALE O NLY, BY SELLING THE PART OF THE WHOLE LAND, PURCHASED IN ON E GO, OR PURCHASED ONCE UPON A TIME, IN PIECEMEAL, WOULD NOT REN DER THE ACTIVITY OF SALE TO BE AN 'ADVENTURE IN THE NATUR E OF TRADE'. IN THE PRESENT CASE, THERE IS NOTHING TO SHOW THAT THE L AND WAS PURCHASED WITH THE INTENTION TO SELL AT A PROFIT, OR W ITH REQUISITE INTENTION, TO BRING IT WITHIN THE PARAMETERS OF 'STOCK -IN-TRADE'. IT IS NOT SHOWN THAT THE ASSESSEE IS A REGULAR DEALER IN R EAL ESTATE. IT APPEARS, THAT THE LAND WAS PURCHASED IN 197 0, WHICH WAS UNDER CLOUD OF LAND CEILING LAWS, AND AFTER THAT C LOUD WAS 12 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT CLEARED, AND OTHER ADJOINING LANDS HAD BEEN DEVELOPED , AND SINCE THE LAND WAS NOT YIELDING ANY RETURN, IT WAS DECID ED TO BE SOLD IN PIECEMEAL, BY EARMARKING PLOTS, BUT THEN NONE THELESS IT WOULD REMAIN A DISPOSAL OF THE CAPITAL ASSET ONLY, AND NOT A TRANSACTION OF ANY 'STOCK-IN-TRADE' SO AS TO BE DESCRIBED A S 'ADVENTURE IN THE NATURE OF TRADE'. OBVIOUSLY THEREF ORE, IT IS LIABLE TO BE TAXED ONLY, AS THE CAPITAL GAIN. 15. IN THE CASE OF RAMSWAROOP SAUDAGAR VS ITO [ITA N O 329/JP/2017] RELIED ON BY THE CIT(A) ONLY FACTUAL S IMILARITY IS THAT CONVERSION OF LAND INTO PLOTS. OTHERWISE FACTS THAT HOLDING PERIOD, INTENTION OF PURCHASE AND SALE OF PROPERTY AS FUND WERE REQUIRED FOR PURCHASE OF RESIDENTIAL HOUSE PROPERTY AT BENGALURU WERE NOT AT ALL CONSIDERED BY LD. CIT(A). FURTHER TO THIS THE JUDGE MENT IN THE CASE OF RAMSWAROOP SAUDAGAR VS ITO [ITA NO 329/JP/2017] IS C ONTRARY TO THE JUDGEMENT OF JURISDICTIONAL HIGH COURT OF RAJASTHAN IN THE CASE OF CIT VS SOHAN KHAN (SUPRA). ON THE SIMILAR FACTS AS WERE IN THE CASE OF RAMSWAROOP SAUDAGAR (SUPRA) HONBLE RAJASTHAN HIGH C OURT IN THE CASE OF CIT VS SOHAN KHAN (SUPRA) HELD TRANSACTION TAXAB LE AS CAPITAL GAIN. 16. IN VIEW OF THE ABOVE DISCUSSION, WE CAN SAFELY CO NCLUDE THAT THE LAND WAS PURCHASED BY THE ASSESSEE SINCE LONG BACK A S CAPITA ASSET AND WAS CONTINUOUSLY HOLD BY IT FOR 20 YEARS IN CASE OF FATEH ROYAL RESIDENCY AND FOR 4-5 YEARS IN CASE OF FATEH HILLS AS CAPITAL ASSET. THERE WAS NO INTENTION OF ASSESSEE TO TRADE FOR THE LAND SO PURC HASED, CONTRARY IT WAS 13 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT USED FOR AGRICULTURAL PURPOSES CONTINUOUSLY TILL TH E YEAR OF SALE. AGRICULTURAL INCOME SO ERANED WERE OFFERED IN THE RE TURN OF INCOME OF RESPECTIVE YEARS AND ACCEPTED BY THE DEPTT. SIMILAR LY, THE FATEH HILLS PROPERTY WAS ACQUIRED LONG BACK IN THE YEAR 2010-11 AS CAPITAL ASSET AND WAS SO HELD AS CAPITAL ASSET IN THE BALANCE SHEET. M ERELY CONVERSION OF THE AGRICULTURAL LAND INTO NON-AGRICULTURAL LAND WIL L NOT GIVE RISE TO THE TAXABLE EVENT UNTIL IT IS ACTUALLY SOLD. THUS, THE ASSESSEE HAS SOLD THE CAPITAL ASSET HELD FOR LONG TERM, ACCORDINGLY, GAIN ARISING FROM SALE WAS ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT. ACCORDIN GLY, WE DIRECT THE A.O. TO TREAT THE PROPERTY ON SALE OF LAND AS CAPITAL GA INS AND GIVEN THE BENEFIT OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 54 F OF THE ACT. WE DIRECT ACCORDINGLY. 17. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO A LLOWING DEDUCTION EXPENDITURE OF RS. 17,56,012/- AS AGAINST THE EXPEN DITURE OF RS. 43,90,029/- CLAIMED BY THE ASSESSEE. 18. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CA REFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUN D FROM THE RECORD THAT THE A.O. HAS ALLOWED 50% OF THE EXPENDITURE BY STATING THAT NO SUPPORTING BILLS OF EXPENDITURE WERE PROVIDED TO HIM . HOWEVER, THIS 14 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT FINDING OF THE A.O. WAS DISCARDED BY THE LD CIT(A) A FTER OBSERVING AS UNDER: THAT LD. AO ON THE BASIS OF FINDING RECORDED IN PARA 19 & 20 DISALLOWED HALF OF CONSTRUCTION COST CLAIMED ON THE PROP ERTY TRANSFERRED DURING THE YEAR UNDER CONSIDERATION. FROM THE BARE READING OF FINDING RECORDED WHILE DISALLOWING CLAIM OF CONSTRUCTION COST IT APPEARS THAT LD. AO RECORDED FINDING WITHOUT CON SIDERING DOCUMENTS PRODUCED FOR VERIFICATION AND DOCUMENTS SUBMIT TED DURING THE COURSE OF ASSESSMENT PROCEEDING. THE FINDING TH AT NO BILLS SUPPORTING SUCH EXPENDITURE WERE PROVIDED TO THIS OFFICE DESPITE BEING ASKED CLEARLY. IS TOTALLY INCORRECT AS THE DOCUMENTS RELEVANT TO CONSTRUCTION COST HAS BEEN PRODUCED DURING THE COURSE OF HEARING AND SAME HAS BEEN VERIFIED BY THE LD. AO O N TEST CHECK BASIS. IT WAS SUBMITTED THAT PLOT WISE DETAILS HAS NOT B EEN MAINTAINED AND TOTAL CONSTRUCTION COST INCURRED HAS BEEN AVERAGED AND CLAIMED ACCORDINGLY AGAINST PROPERTY SOLD. SUBMISSION MADE HAD BEEN REPRODUCED BY THE LD. AO IN THE ASSESSMENT ORDE R (PAGE 16 OF ASSESSMENT ORDER). THEREFORE FINDING RECORDED WITH REFERENCE TO NON PRODUCTION OF DOCUMENTARY EVIDENCES IS G ROSSLY ERRONEOUS AND CONTRARY THE MATERIAL AVAILABLE ON RECOR D. WITH REFERENCE TO NON REFLECTING OF ENTRIES IN BANK STATEMEN T ON VOUCHER TO VOUCHER AND DAY TO DAY BASIS WAS THAT FOR MUL TIPLE INVOICES/ EXPENDITURE PAYMENT WAS MADE THROUGH SINGLE CHEQUE. A DETAILED SUBMISSION SHOWING EACH PAYMENT FROM BANK ACCO UNT TOWARDS NATURE OF EXPENDITURE AND DOCUMENTS DETAIL THE REOF [PB 33-46 (36-38), 56-66] WERE PRODUCED/ SUBMITTED BEFORE LD. AO. GOING THROUGH SUCH DETAIL YOUR GOOD SELF WILL OBSER VE THAT ALL PAYMENT REFERRED THEREIN ARE NOT IN NEXT YEAR. THE SUBMISSION OF THE ASSESSEE WAS THAT PAYMENT OF MULTIPLE INVOICES WAS MAD E THROUGH ONE CHEQUE AND AT DIFFERENT DATE THAN OF INV OICE. A DETAILED CHART ABOUT THE EXPENDITURE CLAIMED AND PAYM ENT THEREOF THROUGH BANK HAS BEEN SUBMITTED DURING THE ASSESSMENT PROCEEDING. 15 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT 19. IT IS CLEAR FROM THE FINDINGS OF THE LD. CIT(A) THAT HE HAS TOTALLY DISCARDED THE OBSERVED OF THE A.O. FOR NON-PRODUCTI ON OF DOCUMENTARY EVIDENCE IN SUPPORT OF THE EXPENDITURE. HOWEVER, IN RESPECT OF GIVING THIS FACT, THE LD. CIT(A) HAS ALLOWED ON AD HOC BASIS ONL Y 40% OF THE EXPENDITURE SO CLAIMED WAS GENUINE AND INCURRED FOR DEVELOPING THE PROPERTY, THEREFORE, ELIGIBLE TO BE ALLOWED AS A DED UCTION WHILE COMPUTING CAPITAL GAINS ON SALE OF THIS PROPERTY AM OUNTING TO RS. 43,90,029/-. ACCORDINGLY, WE DO NOT FIND ANY JUSTIFI CATION IN THE ORDER OF THE LD. CIT(A) FOR SUSTAINING DISALLOWANCE OF 40% AG AINST THE 50% DISALLOWANCE MADE BY THE A.O., THEREFORE, THE A.O. I S DIRECTED TO ALLOW FULL EXPENDITURE SO INCURRED BY THE ASSESSEE AMOUNT ING TO RS. 43,90,029/-. WE DIRECT ACCORDINGLY. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2020. SD/- SD/- (SANDEEP GOSAIN) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20/03/2020 *RANJAN COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 16 ITA 157/JODH/2019 RAMESH RAJ BOHRA VS DCIT 4. THE CIT(A) 5. THE DR 6. GUARD FILE (ITA NO. 157/JODH/2019) ASSISTANT REGISTRAR JODHPUR BENCH