The ACIT, Circle-6, Ahmedabad V. Shri Sikandarali Kasamali Qureshi, Ahmedabad

ITA 1731/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8469 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 05-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: T P HEMANI
• Keywords: Capital asset; Business income; Cost of acquisition; Wrong claim
• Section: 143(3); 54F

Judgement Text

, *MH *MH*MH *MH* ** * IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T.A. NO. 1731/AHD/2014 ( / ASSESSMENT YEAR : 2010-11) ACIT CIRCLE 6, AHMEDABAD. VS. SHRI SIKANDARALI KASAMALI QURESHI 1463, TAJPUR TANDI SHERI, PANCH PIPALI, JAMALPUR, AHMEDABAD - 380001 ! PAN/GIR NO. : AAAPQ 4178 K ( ' / APPELLANT ) .. ( #' RESPONDENT ) '$ APPELLANT BY : SHRI V. K. SINGH, SR. D.R. #'%$ / RESPONDENT BY : SHRI T. P. HEMANI, A.R. & ' (%) * / DATE OF HEARING 11/08/2017 +,-. %) * / DATE OF PRONOUNCEMENT 12/09/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XI, AMBAWADI, A HMEDABAD, DATED 31/03/2014, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR TH E ASSESSMENT YEAR (AY) 2010-11, ON THE FOLLOWING GROUNDS: I. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG THE ASSESSING OFFICER TO TREAT THE RECEIPT OF RS.1,42,00,000/- AS ARISING OUT OF TRANSFER OF CAPITAL ASSET AS AGAINST THE ASSE SSING OFFICER'S FINDING TO TREAT THESE RECEIPTS AS BUSINESS INCOME. ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 2 - II. THE CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO TREAT THE RECEIPT OF RS. 1,42, 00,000/- AS ARISING OUT OF TRANSFER OF CAPITAL ASSET AND WORK OUT THE L ONG TERM CAPITAL GAINS AFTER ALLOWING THE DEDUCTION OF RS.40 ,74,249/- U/S.54F OF THE ACT AS AGAINST THE ASSESSING OFFICER'S FINDING TO TREAT THE RECEIPTS WERE NOT FROM TRANSFER OF CAPITAL ASSET AND THE ASS ESSEE WOULD NOT BE ENTITLED FOR DEDUCTION U/S.54F OF THE ACT. III. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) OUGHT TO HAVE UPHELD THE ORDER OF TH E ASSESSING OFFICER. IV. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) MAY BE SET-ASIDE AND THAT OF THE ASS ESSING OFFICER BE RESTORED. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- DURING F.Y. 2009-10 RELEVANT TO A.Y. 2010-11, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING & DISMANTLING OF ST BUSES. DURING THE F.Y.2009-10, THE ASSESSEE HAS SHOWN TOTAL TURNO VER OF RS.2,14,71,523/- AS AGAINST THE TOTAL TURNOVER OF R S.72,45,914/- IN F.Y. 2008-09. GROSS PROFIT EARNED IN THE YEAR IS RS.16,8 3,534/- AS COMPARED GROSS PROFIT OF RS.5,47,290/- FOR F.Y. 2008-09. 2.2 DURING THE YEAR, THE ASSESSEE HAS SHOWN CAPITAL GAIN OF RS.L,40,58,291/- ON SALE OF LAND BEARING SURVEY NO. 1134/1, 1134/2, 1135/2 & 3. 2.4 THE LAND AT SURVEY NO.1134/1 WAS PURCHASED BY S HRI HAKIMALI KASAMALI QURESHI, SIKANDARALI KASAMALI QURESHI AND OTHER 5 PERSONS ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 3 - FROM M/S. GENERAL MACHINERY STORE ON 14/05/2003 FOR THE COST OF RS.10,000/-. AS PER THE REGISTERED SALE DEED NO. 89 2/2010, 1830 SQ.MT. OF LAND WAS SOLD BY SHRI HAKIMALI KASAMALI QURESHI, SIKANDARALI KASAMALI QURESHI AND OTHER 4 PERSONS TO M/ S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD. ON 30/01/2010 FOR TOTAL S ALE CONSIDERATION OF RS.85,00,000/-. 2.5 THE LAND AT SURVEY NO.1134/2 AND 1135/2 & 3 ADM EASURING 10218.5 SQ.MT. ORIGINALLY BELONGED TO LATE CHAMPAGA R KEVALGAR. THE LAND WAS SOLD TO CHHOTALAL BHAGVANBHAI ON 21/02/193 3. THE LAND WAS INHERITED BY THE SUCCESSORS OF LATE CHHOTALAL BHAGV ANBHAI WHICH INCLUDED CHANDRIKABEN NARANBHAI AND KALAVATI NARANB HAI. THEREAFTER THE LAND WAS PURCHASED BY SHRI SHAILESHPURI ISHVARP URI GOSWAMI AND BHURABHAI TALJABHAI RABARI ON 04/03/2006 FOR VALUE OF RS.9,91,146/-. 2.6 AN AGREEMENT FOR SALE WAS EXECUTED BY SHRI SIKA NDARALI KASAMALI QURESHI AND OTHERS WITH SHRI NARANBHAI PARSOTAMBHAI DALWADI WHICH WAS REGISTERED AT SERIAL NO.15734 IN THE OFFICE OF SUB-REGISTRAR ON 11/08/1989. IN THE AGREEMENT FOR SALE IT WAS MENTIO NED THAT THE POSSESSION OF THE LAND WOULD BE GIVEN BY THE SELLER S OF THE LAND TO THE PURCHASERS OF THE LAND AFTER THE REGISTRATION OF SA LE DEED OR ON RECEIPT OF TOTAL SALE VALUE OF THE LAND. IT WAS MENTIONED IN T HE AGREEMENT FOR SALE THAT THE RATE OF LAND WOULD BE RS.50/- PER SQ. YARD AND THUS THE VALUE OF 11568 SQ. YARD LAND WAS RS.5,78,400/-. OUT OF RS.5, 78,400/-, AN ADVANCE OF RS,2,00,000/- WAS GIVEN AT THAT TIME. THE BALANC E AMOUNT WAS PAYABLE ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 4 - BY THE PURCHASERS OF THE LAND. THERE WAS NO EVIDENC E OF PAYMENT OF BALANCE AMOUNT TO THE SELLERS OF THE LAND. THUS, TH E RIGHT IN THE LAND WAS ACQUIRED BY SHRI SIKANDARALI KASAMAII QURESHI AND O THER AFTER 04/03/2006, I.E. THE DATE OF SALE OF THE LAND. THE LAND WAS CONVERTED INTO NA LAND ON 07/11/2009 BY ORDER OF COLLECTOR, AHMEDA BAD. AS PER FEE REGISTERED SALE DEED NO.958/2010, THE LAND AT SURVE Y NO.1134/2 AND 1135/1, 2 & 3 ADMEASURING 10218.5 SQ.MT. WAS SOLD B Y SHAILESHPURI ISHVARPURI GOSWAMI & BHURABHAI TALJABHAI RABARI TO M/S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD. ON 01/02/2010 FOR TOTAL SALE CONSIDERATION OF RS.3,30,33,000/-. IN THE SAID TRANSACTION SHRI SIKA NDARALI KASAMALI QURESHI ALONG WITH OTHER TEN FAMILY MEMBERS/RELATIV ES WERE FIRST CONFIRMING PARTY AND THEY RECEIVED RS.1,50,22,000/- . 2.7 THE LAND SOLD WAS NON-AGRICULTURAL LAND. THE PU RPOSE OF CONVERTING AGRICULTURE LAND INTO NON-AGRICULTURAL L AND WAS TO SALE THE LAND FOR CONSTRUCTION ACTIVITY BY M/S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD. IT WAS AN ADVENTURE IN THE NATURE OF BUSINESS. THEREFORE VIDE LETTER DATED 18/12/2012, THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE SALE CONSIDERATION OF RS. 1,25,00,000/- RECEIVED BY HIM AS CONFIRMING PARTY SHOULD NOT BE CONSIDERED AS BUSINESS INCOME. 2.8 IN RESPONSE TO THE QUERY THE ASSESSEE HAS FURNI SHED THE REPLY VIDE LETTER DATED 25/12/2012 WHICH IS REPRODUCED AS UNDE R: ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AN D DISMANTLING OF S.T. BUSES. THIS LAND WAS PURCHASED BY THE ASSESSEE IN 1989 AND SOLD IN 2010, THE HOLDING PERIOD IS MORE THAN 10 YEARS, THE PURPOSE OF ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 5 - INVESTMENT IS TO EARN LONG TERM PROFIT FROM THE PRI CE APPRECIATION. THERE IS NO TRANSACTION OF ANY PURCHASE OF LAND ETC DURIN G THE YEAR. THIS IS AN ISOLATED TRANSACTION WHERE THE FAMILY PURCHASED THE PROPERTY AND LATER ON AFTER 10 YEARS IT IS SOLD. INTENTION OF THE ASSESSEE IS ALSO TO BE SEEN WHILE DECIDING WHETHER ANY TRANSACTION WILL FALL WITHIN THE PURVIEW OF NATURE OF TRADE OR BUSINESS. DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS SO LD LAND TO M/S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD. TRANSACTION OF SALE OF LAND IS NOT IN LINE WITH THE ASSESSEE BUSINESS AND IT IS AN ISOLAT ED ONE. IT IS NOT THE REGULAR COURSE OF ACTIVITY AND THEREF ORE IT CANNOT BE SAID IN THE NATURE OF TRADE OR BUSINESS. THEREFORE THE TRANSACTION IS RIGHTLY CLASSIFIED BY THE ASSESSEE AS LONG TERM CAPITAL GAIN 2.9 BUT THE REPLY OF THE ASSESSEE WAS NOT TENABLE I N THE EYES OF THE AO FOR THE REASON GIVEN HERE-IN-BELOW: THE FACTS OF THE PURCHASE AND SALE OF LAND BEARING SURVEY NO.1134/1, 1134/2, 1135/1, 1135/2 AND 1135/3 ARE SU MMARIZED HERE-IN- BELOW: THE LAND AT SURVEY NO.1134/1 WAS PURCHASED BY SHRI HAKIMLAI KASAMLI QURESHI, SIKANSARALI KASAMALI QURESHI AND O THER 5 PERSONS FROM M/S. GENERAL MACHINERY STORE ON 14/05/2003 FOR THE COST OF RS.10,000/-. AS PER THE REGISTERED SALE DEED NO.892/20101 1830 S Q MT. OF LAND WAS SOLD BY SHRI HAKIMALI KASAMALI QURESHI, SIKANDARALI KASAMALI QURESHI AND OTHER 5 PERSONS TO M/S. A. N. PATEL ESTATE DEVE LOPERS PVT. LTD. ON 30/01/2010 FOR TOTAL SALE CONSIDERATION OF RS.85,00 ,000/- AS UNDER: SR. NO. NAME RECEIPT ( RS.) 1. SIKANDARALI KASAMALI QURESHI 4,00,000/- 6,00,000/- ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 6 - 7,00,000/- 17,00,000/- 2. HAKIMALI KASAMALI QURESHI 4,00,000/- 6,00,000/- 7,00,000/- 17,00,000/ - 3. AAZMATALI KASAMALI QURESHI 4,00,000/- 6,00,000/- 7,00,000/- 17,00,000/- 4. ZULFIKARALI KASAMALI QURESHI 4,00,000/- 6,00,000/- 7,00,000/- 17,00,000/ - 5. SAMIMBEN AKARAMALI QURESHI 4,00,000/- 6,00,000/- 7,00,000/- 17,00,000/- TOTAL 85,00,000/ - THE LAND AT SURVEY NO.1134/2 AND 1135/2 & 3 ADMEASU RING 10218.5 SQ.MT. ORIGINALLY BELONGED TO LATE CHAMPAGA R KEVALGAR. THE LAND WAS SOLD TO CHHOTALAL BHAGVANBHAI ON 21/02/193 3. THE LAND WAS INHERITED BY THE SUCCESSORS OF LET CHHOTALAL BHAGVA NBHAI WHICH INCLUDED CHANDRIKABEN NARANBHAI AND KALAVATI NARANBHAI. THER EAFTER THE LAND WAS PURCHASED BY SHRI SHILESHPURI ISHVARPURI GOSWAM I AND BHURABHAI TALJABHAI RABARI ON 04/03/2006 FOR VALUE OF RS.9,91 ,146/-. AN AGREEMENT FOR SALE WAS EXECUTED BY SHRI SIKANDAR ALI KASAMALI QURESHI AND OTHERS WITH SHRI NARANBHAI PARSOTAMBHAI DALWADI WHICH WAS REGISTERED AT SERIAL NO.15734 IN THE OFFICE OF SUB-REGISTRAR ON 11/08/1989. IN THE AGREEMENT FOR SALE IT WAS MENTIO NED THAT THE ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 7 - POSSESSION OF THE LAND WOULD BE GIVEN BY THE SELLER S OF THE LAND TO THE PURCHASERS OF THE LAND AFTER THE REGISTRATION OF SA LE DEED OR ON RECEIPT OF TOTAL SALE VALUE OF THE LAND. IT WAS MENTIONED IN T HE AGREEMENT FOR SALE THAT THE RATE OF LAND WOULD BE RS.50/- PER SQ. YARD AND THUS THE VALUE OF 11568 SQ. YARD LAND WAS RS.5,78,400/-, OUT OF RS.5, 78,400/-, AN ADVANCE OF RS.2,00,000/- WAS GIVEN AT THAT TIME. THE BALANC E AMOUNT WAS PAYABLE BY THE PURCHASER OF THE LAND. THERE WAS NO EVIDENCE OF PAYMENT OF BALANCE AMOUNT TO THE SELLERS OF THE LAND. THUS, TH E RIGHT IN THELAND WAS ACQUIRED BY SHRI SIKANDARALI KASAMALI QURESHI AND O THERS AFTER 04/03/2006, I.E. THE DATE OF SALE OF THE LAND. THE LAND WAS CONVERTED INTO NA LAND ON 07/11/2009 BY ORDER OF COLLECTOR, AHMEDA BAD VIDE ORDER NO.CB/LAND-1/NA/SR/574-2009. AS PER THE REGISTERED SALE DEED NO.958/2010, THE LAND AT SURVEY NO.1134/2 AND 1135/ 1, 2 & 3 ADMEASURING 10218.5 SQ.MT. WAS SOLD BY SHAILESHPURI ISHVARPURI GOSWAMI & BHURABHAI TALJABHAI RABARI TO M/S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD. ON 01/02/2010 FOR TOTAL SALE C ONSIDERATION OF RS.3,30,33,000/-. IN THE SAID TRANSACTION SHRI SIKA NDARALI KASAMALI QURESHI ALONG WITH OTHER THEN FAMILY MEMBERS/RELATI VES WERE FIRST CONFIRMING PARTY AND THEY RECEIVED RS.1,50,22,000/- . SIMILARLY AS PER THE REGISTERED SALE DEED NO.959/20 10, THE LAND AT SURVEY NO.1134/2 AND 1135/2 & 3 ADMEASURING 10218.5 SQ. MT. WAS SOLD BY KALAVATIBEN NARANBHAI RABARI TO M/S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD. ON 01/02/2010 FOR TOTAL SALE CONSIDERATIO N OF RS.3,30,33,000/-. IN THE SAID TRANSACTION SHRI SIKANDARALI KASAMALI Q URESHI ALONG WITH ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 8 - OTHER THEN FAMILY MEMBERS/RELATIVES WERE FIRST CONF IRMING PARTY AND THEY RECEIVED RS.1,50,22,000/-. THE FOLLOWING AMOUNT WAS RECEIVED BY SHRI SIKANDARA LI KASAMALI QURESHI ALONG WITH OTHER TEN FAMILY MEMBERS/RELATIV ES AS CONFIRMING PARTIES: SR. NO. NAME AMOUNT SHOWN IN REG. SALE DEED NO.958 AMOUNT SHOWN IN REG. SALE DEED NO.959. 1. SIKANDARALI KASAMALI QURESHI 5,00,000/- 10,00,000/- 22,50,000/- 25,00,000/- 62,50,000/- 5,00,000/- 10,00,000/- 22,50,000/- 25,00,000/- 62,50,000/- 2. HASAMALI KASAMALI QURESHI 2,50,000/- 5,00,000/- 1,00,000/- 8,50,000/ - 2,50,000/- 5,00,000/- 10,00,000/- 17,50,000/ - 3. HAKIMALI KASAMALI QURESHI 2,50,000/- 5,00,000/- 1,00,000/- 8,50,000/- 2,50,000/- 5,00,000/- 10,00,000/- 17,50,000/- 4. SAMIMBEN AKARAMALI QURESHI 2,50,000/- 2,50,000/- 5,00,000/- 2,50,000/- 2,50,000/- 5,00,000/- 5. ZULFIKARALI KASAMALI QURESHI 2,50,000/- 2,50,000/- 12,50,000/- 17,50,000/- 2,50,000/- 12,50,000/- 2,50,000/- 17,50,000/- 6. HUSENABANU KASAMALI QURESHI 2,50,000/- 2,50,000/- 5,00,000/- 2,50,000/- 2,50,000/- 5,00,000/- 7. TAJBANU KSAMALI QURESHI 2,50,000/- 2,50,000/- 5,00,000/- 2,50,000/- 2,50,000/- 5,00,000/- 8. SHERBANU KASAMALI QURESHI 2,50,000/- 2,50,000/- ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 9 - 2,50,000/- 5,00,000/- 2,50,000/- 5,00,000/- 9. NAJMUNNISHA KSAMALI QURESHI 2,50,000/- 2,50,000/- 5,00,000/- 2,50,000/- 2,50,000/- 5,00,000/- 10. YASMIN KASAMALI QURESHI 2,50,000/- 2,50,000/- 5,00,000/- 2,50,000/- 2,50,000/- 5,00,000/- 11. AAZAMTALI KASAMALI QURESHI 2,50,000/- 2,50,000/- 5,00,000/ - 2,50,000/- 2,50,000/- 5,00,000/ - TOTAL 1,50,22,000/- 1,50,22,000/- THE ASSESSEE HAS SHOWN PROFIT/GAIN FROM SALE OF TH E LAND UNDER CONSIDERATION AS LONG TERM CAPITAL GAIN. THE LAND A T SURVEY NO.1134/2 AND 1135/1, 2 & 3 ADMEASURING 10218.5 SQ.MT. WAS SO LD BY SHAILESHPURI ISHVARPURI GOSWAMI & BHURABHAI TALJABBHAI RABARI TO M/S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD. ON 01/02/2010 FOR TOTAL SALE CONSIDERATION OF RS.3,30,33,000/-. THE LAND AT SURVEY NO.1134/2 AND 1135/1, 2 7 3 ADMEASURING 10218.5 SQ.MT. WAS SOLD BY KALAVATIBEN NARANBHAI DALWADI TO M/S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD. ON 01/02/2010 FOR TOTAL SALE CONSIDERATION OF RS.3,30,33,000/-. IN BOTH THE TRANSACTIONS SHRI SIKANDARALI KSAMALI QURESHI ALONG WITH OTHER TEN FA MILY MEMBERS/RELATIVES WERE FIRST CONFIRMING PARTY AND T HEY HAD RECEIVED RS.1,50,22,000/- AND RS.1,50,22,000/- AS CONFIRMING PARTY. 2.11 VARIOUS PROVISION OF THE IT ACT MAKES IT CLEAR THAT THE CAPITAL GAIN ARISES ON SALE OR TRANSFER OF CAPITAL ASSET HELD BY THE ASSESSEE. IN THIS CASE, THE CAPITAL ASSET IS LAND BEARING SURVEY NO.1134/1, 1134/2 AND 1135/1, 2 ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 10 - & 3. THE REGISTERED SALE DEED SHOWS THAT THE OWNER OF THE LAND WERE SHAILESHPURI ISHVARPURI GOSWAMI & BHURABHAI TALJABH AI RABARI AND KALVATIBEN NARANBHAI DALWADI RESPECTIVELY. THE ASSE SSEE AND HIS RELATIVES/ASSOCIATES WERE CONFIRMING PARTIES ONLY. WHEN THE LAND WAS SOLD TO M/S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD . ON 01/02/2010, THE LAND WAS HELD BY SHAILESHPURI ISHVARPURI GOSWAMI & BHURABHAI TALJABHAI RABARI AND KALAVATIBEN NARANBHAI DALWADI RESPECTIVELY. IT MEANS THE CAPITAL ASSET BEING LAND BEARING SURVEY N O.1134/1, 1134/2 AND 1135/1, 2 & 3 WAS NEVER HELD BY SIKANDARALI QURESHI AND HIS RELATIVES/ASSOCIATES. SIKANDARALI QURESHI AND HIS R ELATIVES/ASSOCIATES WERE CONFIRMING PARTY. 2.12 AS PER AO, SHRI SIKANDARALI KASAMALI QURESHI & OTHERS HAVE ACTED AS CONFIRMING PARTY IN WHOLE TRANSACTION. HER E IT WILL BE PROPER TO UNDERSTAND THE ROLE OF CONFIRMING PARTY IN SALE DEE D OF LAND TRANSACTION. A CONVEYANCE IS A DOCUMENT UNDER WHICH PROPERLY AND OTHER RIGHTS ARE TRANSFERRED FROM ONE PERSON TO ANOTHER. IN A TYPICA L TRANSFER, THERE ARE OBVIOUSLY AT LEAST TWO PARTIES, NAMELY, THE TRANSFE ROR AND THE TRANSFEREE. DEPENDING ON THE NATURE OF THE DOCUMENT AND THE ISS UES THAT ONE SEEKS TO ADDRESS, FURTHER PARTIES MAY BE NECESSARY TO EFFECT UATE THE TRANSFER. A CONFIRMING PARTY IS ONE SUCH PARTY. 2.13 THE CONFIRMING PARTY IS BROUGHT IN TO MAKE SUR E THAT THE INTEREST OF THE PERSON, USUALLY THE TRANSFEREE, IS PROPERLY ESTABLISHED BEYOND REASONABLE DOUBTS. BY DOING THIS, THE INTEREST OF P ARTIES TO FUTURE ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 11 - TRANSACTIONS IS ALSO SECURED. IT IS IN THE NATURE O F CORROBORATION OR CONFIRMATION OF CERTAIN FACTS, WHICH ARE USUALLY RE CITED IN THE DOCUMENT ITSELF. THE CONFIRMING PARTY IN EFFECT, GIVES AN IM PLIED ASSURANCE THAT THE CONTENTIONS, USUALLY OF THE TRANSFEROR AND AT TIMES OF OTHERS OR PARTIES TO DOCUMENT ARE TRUE AND CORRECT AND IS NORMALLY STOPP ED FROM QUESTIONING THE SAME AT A LATER DATE. THE CONFIRMING PARTY USUA LLY DOES NOT RECEIVE ANY CONSIDERATION THOUGH AT TIMES, SPECIFIC AMOUNTS ARE PAID OUT OF THE CONSIDERATION, AS PER THE INSTRUCTIONS OF THE PARTY CONCERNED. THE CONFIRMING PARTY IS RATHER OBLIGED OR COMES FORWARD TO BE BOUND BY THE TERMS OF THE DOCUMENT OWNING TO A PECULIAR POSITION AS RELATING TO THE PROPERTY OR OTHER PARTIES TO THE DOCUMENT. 2.14 AS PER AO, IT IS EVIDENT THAT RECEIPT OF RS.1, 50,22,000/- AND RS.1,50,22,000/- BY SIKANDARALI QURESHI & OTHERS AS CONFIRMING PARTIES ON SALE OF LAND BEARING SURVEY NO.1134/1, 1134/2, 1 135/1, 1135/2 AND 1135/3 BY SHAILESHPURI ISHVARPURI GOSWAMI & BHURABH AI TALJABHAI RABARI AND KALAVATIBEN NARANBHAI DALWADI RESPECTIVE LY TO M/S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD. IS NOT CAPITAL GA IN BUT IT IS A BUSINESS INCOME. THEREFORE, TOTAL RECEIPTS OF RS.3,00,44,000 /- OF SIKANDARALI QURESHI & OTHERS ARE TREATED AND ASSESSED AS BUSINE SS INCOME AND PROFIT OF RS.1,42,00,000/- EARNED BY THE ASSESSEE IN BOTH THE TRANSACTION IS ADDED AS BUSINESS INCOME IN THE COMPUTATION OF TOTA L INCOME. 2.15 DISALLOWANCE OF EXEMPTION U/S.54F OF THE ACT : DURING THE YEAR, SIKANDARALI QURESHI HAD RECEIVED RS.1,25,00,000/- A S CONFIRMING PARTY IN ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 12 - RESPECT OF SALE OF LAND AT SURVEY NO.1134/2 AND 113 5/2 & 1135/3 BY SHAILESHPURI ISHVARPURI GOSWAMI & BHURABHAI TALJABH AI RABARI AND KALAVATIBEN NARANBHAI DAIWADI RESPECTIVELY TO M/S. A. N. PATEL ESTATE DEVELOPERS PVT. LTD. SIKANDARALI QUREHSI HAS WORKED OUT CAPITAL GAIN TR ANSACTIONS AS UNDER: LAND SURVEY NO. DATE OF PURCHAS E PURCHASE COST DATE OF SALE SALE VALUE GAIN INDEXED GAIN 1134/2, 1135/2&3 01/04/1 988 20,000 31/03/2010 1,25,00,000 1,24,80,000 1,24,21,491 1134/1 30/04/1 978 10,000 31/03/2010 17,00,000 16,90,000 16,36,800 TOTAL 30,000 1,42,00,000 1,41,70,000 1,40,58,291 EXEMPTION U/S.54F OF THE ACT WAS WORKED OUT AS UNDE R: INVESTMENT IN RESIDENTIAL HOUSE = RS.41,00,000/ - EXEMPTION U/S.54F = CAPITAL GAIN INVESTMENT NET SALE CONSI DERATION = RS.1,24,21,491 RS.41,00,000/- RS.1,25,00,000/- = RS.40,74,249/- ACCORDING TO THE ASSESSEE HAS CLAIMED EXEMPTION OF RS.40,74,249/- U/S.54F OF THE ACT. THE ASSESSEE HAS CLAIMED EXEMPTION U/S.54F OF THE ACT. SECTION 54F OF THE IT ACT READS AS UNDER: (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4) , WHERE IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU, UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG T ERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 13 - ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PER IOD OF ONE YEAR BEFORE OR TWO AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN .ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION...... PLAIN READING OF SECTION.54F OF THE I.T. ACT SUGGES TS THAT EXEMPTION UNDER THAT SECTION IS AVAILED WHEN THE AS SESSEE TRANSFER LONG TERM CAPITAL ASSET. FROM THE DISCUSSION MADE IN PRE CEDING PARA 3.2, IT IS EVIDENT THAT THE ASSESSEE NEITHER OWNED THE ASSET N OR HAS ANY RIGHT IN LAND BEARING SURVEY NO. 1134/2 AND 1135/2&3. THEREF ORE, THERE WAS NO TRANSFER OF LONG TERM CAPITAL ASSET BY THE ASSESSEE . THE ASSESSEE DOES NOT QUALIFY THE BASIC CONDITION FOR CLAIMING EXEMPTION U/S.54F OF THE ACT. MOREOVER, AS DISCUSSED IN EARLIER PARAS, THE RECEIP T OF RS.1,25,00,000/- HAS BEEN HELD AS BUSINESS INCOME, THE ASSESSEE IS N OT ENTITLED FOR EXEMPTION U/S.54F OF THE ACT. ACCORDINGLY, EXEMPTIO N OF RS.40,74,249/- U/S 54F OF THE ACT CLAIMED BY THE AS SESSEE IS DISALLOWED. THE ASSESSEE HAS MADE WRONG CLAIM OF THE EXEMPTION U/S 56F OF THE ACT. PENALTY PROCEEDING ARE INITIATED FOR FURNISHIN G INACCURATE PARTICULARS OF INCOME. DISALLOWANCE OF EXEMPTION U/S.54F RS. 40,74,249 /- 2.16 DISALLOWANCE OF COMMISSION U/S.40(A)(IA) OF THE ACT : THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND DISMANTLING OF ST BUSES. DURING THE YEAR, THE ASSESSEE HAS MADE PURCH ASES OF SCRAP BUSES FROM GUJARAT STATE ROAD TRANSPORT CORPORATION. DURI NG THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED THE EVIDENCE S OF MAJOR PURCHASES FROM GUJARAT STATE ROAD TRANSPORT CORPORATION. THE ASSESSEE IN PARA-8 OF THE SUBMISSION DATED 25/12/2012 HAS EXPLAINED TH AT THE ASSESSEE HAD MADE PURCHASES OF SCRAP BUSES FROM GUJARAT STATE RO AD TRANSPORT ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 14 - CORPORATION THROUGH THE COMMISSION AGENT MSTC LTD. PURCHASE AMOUNT WAS PAID TO GSRTC AND THE COMMISSION WAS PAID TO MS TC LTD. BY THE ASSESSEE. IN RESPECT OF PAYMENT OF COMMISSION OF MS TC LTD., TDS WAS REQUIRED TO BE DEDUCTED AS PER THE PROVISIONS OF SE CTION 194H OF THE ACT. HOWEVER, THE ASSESSEE DID NOT MAKE TDS ON COMMISSIO N PAYMENT TO MSTC LTD. THEREFORE, VIDE LETTER DATED 14/02/2013 T HE ASSESSEE WAS ASKED TO EXPLAIN WHY THE COMMISSION PAYMENT TO MSTC LTD SHOULD NOT BE DISALLOWED U/S.40(A)(IA) OF THE ACT. 2.17 IN RESPONSE TO THE QUERY THE ASSESSEE HAS FURN ISHED THE REPLY VIDE LETTER DATED 19/02/2013 WHICH IS AS UNDER: .. IN THIS REGARDS IT IS SUBMITTED THAT THE ASSES SEE IS NOT PAYING ANY COMMISSION TO THE MSTC LTD MSTC IS AN AGENCY APPOIN TED BY GSRTC AND ASSISTS GSRTC IN AUCTIONING AND BIDING OF TENDE RS FOR SALE OF SCRAP VEHICLES. THE WHOLE TRANSACTION OF TENDER AND BIDING IS AS UNDER: I. GSRTC INFORMS THE MSTC ABOUT THE SCRAP VEHICLES TO BE AUCTIONED ALONG WITH RESERVE PRICE FOR AUCTION BIDS . II. MSTC DOES AUCTION ON BEHALF OF GSTRC AND INFORMS GS RTC ABOUT THE BEST BID/PRICE DISCOVERY. III. GSRTC COLLECTS BID PRICE AND ALSO TCS & VAT AMOUNT UPFRONT FROM BIDDERS IV. GSRTC PAYS COMMISSION DIRECTLY TO MSTC LIMITED. SINCE THE ASSESSEE HAS NOT PAID PAY COMMISSION TO M STC LIMITED, IT IS HAD ALSO NOT DEBITED OR CLAIM SUCH E XPENDITURE. PLEASE ALSO NOTE THAT FIRSTLY THERE IS NO CLAIM OF SUCH COMMISSION IN THE COMPUTATION OR PROFIT AND LOSS ACCOUNT THERE FORE THERE IS NO CAUSE FOR DISALLOWANCE. THEREFORE, THERE IS NO QUESTION OF ANY DISALLOWANCE OF COMMISSION EXPENSE U/S.40(A)(IA) OF THE ACT. ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 15 - DURING THE YEAR, THE ASSESSEE HAS MADE PURCHASES OF SCRAP BUSES FROM GUJARAT STATE ROAD TRANSPORT CORPORATON. DURIN G THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED THE EVIDENCE S OF MAJOR PURCHASES FROM GUJARAT STATE ROAD TRANSPORT CORPORATION. THE EVIDENCES SUGGEST THAT THE ASSESSEE APPLIED FOR TENDER TO PURCHASE SC RAP BUSES FROM GUJARAT STATE ROAD TRANSPORT CORPORATION. AFTER QUALIFICATI ON OF THE TENDER OF THE ASSESSEE AN OFFER OF ACCEPTANCE OF CONTRACT WAS SEN T BY GUJARAT STATE ROAD TRANSPORT CORPORATION. THE ASSESSEE HAD TO MAK E PAYMENT OF STIPULATED AMOUNT MENTIONED IN THE CONTRACT AND THE N DELIVERY ORDER WAS GIVEN TO THE ASSESSEE TO REMOVE SCRAPED BUSES. THE DETAILS OF MAJOR OFFER OF ACCEPTANCE OF CONTRACT AND SUBSEQUENT DELIVERY T AKEN BY THE ASSESSEE IS AS UNDER: OFFER OF ACCEPTANCE OF CONTRACT DELIVERY TAKEN DATE REF NO. LOT SIZE VALUE GSRTC PAYABLE MSTC PAYABLE DATE REF NO. LOT SIZE VALUE GSRTC PAID MSTC PAID 16/09/09 3530 1 LOT 569886 2436690 58247 05/11/09 3 530 1 LOT 569136 840953 1087012 12161 20102 25984 3530 1 LOT 942055 13/11/09 3530 1 LOT 940816 3530 1 LOT 343095 18/11/09 3530 1 LOT 342644 3530 1 LOT 429159 18/11/09 3530 1 LOT 428595 3530 1 LOT 445442 18/11/09 3530 1 LOT 444856 29/10/09 4184 1 LOT 650556 9660630 231246 08/12/09 4184 1 LOT 650556 4184 1 LOT 650556 11/12/09 4184 1 LOT 650556 581504 13900 4184 1 LOT 807359 15/12/09 4184 1 LOT 807359 721662 17251 4184 1 LOT 784129 19/12/09 4184 1 LOT 784129 699865 16754 4184 1 LOT 667282 16/12/09 4184 1 LOT 667282 596454 14258 4184 1 LOT 1097153 18/01/10 4184 1 LOT 1097153 986660 23443 4184 1 LOT 787265 11/01/10 4184 1 LOT 791336 706735 15821 4184 1 LOT 923509 05/01/10 4184 1 LOT 923509 827804 19732 4184 1 LOT 794001 13/01/10 4184 1 LOT 794001 713451 16965 4184 1 LOT 756137 08/01/10 4184 1 LOT 756137 4184 1 LOT 701888 08/01/10 4184 1 LOT 700985 1307080 31133 4184 1 LOT 793421 01/01/10 4184 1 LOT 795748 710486 16593 4184 1 LOT 628604 31/12/09 4184 1 LOT 630308 561053 13431 4184 1 LOT 781806 31/12/09 1704 23/12/09 4184 1 LOT 782510 697792 16705 23/12/09 704 18/12/09 5545 1 LOT 794466 2991763 71620 11/02/10 5545 1 LOT 794466 200 3806 17969 1 LOT 802016 11/02/10 5545 1 LOT 802016 1 LOT 648582 11/02/10 5545 1 LOT 648582 1 LOT 662054 17/02/10 5545 1 LOT 662054 590908 14146 1 LOT 444855 06/02/10 5545 1 LOT 444855 397050 9505 18/01/10 6302 1 LOT 866092 1387426 33215 18/03/10 6302 1 LOT 866092 773 019 33215 1 LOT 688383 18/03/10 688383 614407 18459751 16476509 394328 18464064 15420109 857793 ANALYSIS OF TOTAL VALUE OF PURCHASES, AMOUNT PAID T O GSRTC AND AMOUNT PAID TO MSTC REVEALS THAT MSTC HAS BEEN PAID @2.33% OF TOTAL VALUE OF PURCHASES. THIS IS EVIDENT FROM THE FACT T HAT TOTAL VALUE OF PURCHASES SHOWN IN LETTER OF ACCEPTANCE OF OFFER FO R CONTRACT DATED 29/10/2009 HAVING REFERENCE NO.4184 IS RS.98,91,876 /-. OUT OF ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 16 - RS.98,91,876/- AMOUNT PAYABLE TO GSRTC IS RS.96,60, 630/- AND TO MSTC IS RS.2,31,246/-. MSTC HAS BEEN PAID SUCH AMOU NT. THE RATIO OF PAYMENT MADE TO MSTC TO TOTAL VALUE OF PURCHASE COM ES TO 2.33%. THE AMOUNT REFLECTED IN THE DELIVERY ORDER HAVE BEE N VERIFIED WITH PURCHASE REGISTER. THE COMPARISON OF BOTH IS AS UND ER: PURCHASE AMOUNT AS PER DELIVERY ORDER DATE PURCHASE INCLUDING VAT TCS TOTAL DATE REF NO. VALUE GSRTC MSTC PAID - 05/11/09 563501 6385 569886 05/11/09 3530 569136 1 2161 -750 10/11/09 737512 8352 745864 10/11/09 3530 745864 508725 0 13/11/09 931502 10554 942056 13/11/09 3530 940816 840953 20102 -1240 18/11/09 339251 3844 343095 18/11/09 3530 342644 - 451 18/11/09 424351 4808 429159 18/11/09 3530 428595 - 564 18/11/09 440451 4991 445442 18/11/09 3530 444856 1087012 25984 -586 08/12/09 644116 7298 651414 08/12/09 4184 650556 - 858 11/12/09 644116 7298 651414 11/12/09 4184 650556 581504 13900 -858 15/12/09 799366 9057 808423 15/12/09 4184 807359 721662 17251 - 1064 16/12/09 660676 7486 668162 16/12/09 4184 667282 596454 14258 -880 19/12/09 776366 7764 784130 19/12/09 4184 784129 699865 16754 -1 23/12/09 774066 7741 781807 23/12/09 4184 782510 697792 16705 703 23/12/09 0 23/12/09 704 0 31/12/09 622380 6224 628604 31/12/09 4184 630308 561053 13431 1704 31/12/09 0 31/12/09 4184 1704 0 01/01/10 785566 7856 793422 01/01/10 4184 795748 710486 16593 2326 05/01/10 914366 9144 923510 05/01/10 4184 923509 827804 19732 - 1 08/01/10 748650 7487 756137 08/01/10 4184 756137 0 08/01/10 694026 6940 700966 08/01/10 4184 700985 1307080 31133 19 11/01/10 779470 7795 78726 11/01/10 4184 791336 706735 15821 4071 13/01/10 786140 7861 794001 13/01/10 4184 794001 713451 16965 0 18/01/10 1086290 10863 1097153 18/01/10 4184 1097153 986660 23443 0 06/02/10 440450 4405 444855 06/02/10 5545 444855 39 7050 9505 0 11/02/10 786600 7866 794466 11/02/10 5545 794466 2003806 17969 0 11/02/10 794076 7941 802017 11/02/10 5545 802016 -1 11/02/10 662160 6422 668582 11/02/10 5545 648582 - 20000 17/02/10 655499 6555 662054 17/02/10 5545 662054 590908 14146 0 18/03/10 857517 8575 866092 18/03/10 5545 866092 773019 33215 0 18/03/10 681567 6816 688383 18/03/10 6302 688383 614407 0 TOTAL 19030031 198328 19228359 19209928 15420109 857793 -18431 FROM ABOVE TABLE IT IS SEEN THAT THE VALUE OF PURC HASE RECORDED IN THE BOOKS OF ACCOUNT IS EQUAL TO THE AMOUNT SHOWN I N DELIVERY ORDERS. THE PURCHASE VALUE IS INCLUSIVE OF AMOUNT PAYABLE T O GSRTC AND THAT PAYABLE TO MSTC. BOTH GSRTC AND MSTC HAVE BEEN PAID ACCORDINGLY TO THE AMOUNTS MENTIONED IN THE DELIVERY ORDER. ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 17 - THE ASSESSEE IN PARA 8 OF THE SUBMISSION DATED 25/ 12/2012 HAS EXPLAINED THAT THE ASSESSEE HAD MADE PURCHASES OF S CRAP BUSES FROM GUJARAT STATE ROAD TRANSPORT CORPORATION THROUGH TH E COMMISSION AGENT MSTC LTD. THE PURCHASE AMOUNT WAS PAID TO GSRTC AND THE COMMISSION WAS PAID TO MSTC LTD. BY THE ASSESSEE. F ROM ABOVE TABLE IT IS SEEN THAT PAYMENTS TO GSRTC AND MSTC WERE MADE S IMULTANEOUSLY AND PRIOR TO TAKING OF THE DELIVERY OF SCRAPED BUSE S BY THE ASSESSEE. THE PURCHASE ACCOUNT IS A COMPOSITE ACCOUNT IN WHICH PU RCHASES AS WELL AS COMMISSION ARE INCLUDED. THE EVIDENCES INDICATE THA T THE ASSESSEE HAD MADE PAYMENT OF COMMISSION TO MSTC FOR MAKING PURCH ASES FROM GSRTC. THEREFORE, IN RESPECT OF PAYMENT OF COMMISSI ON OF MSTC LTD., TDS WAS REQUIRED TO BE DEDUCTED AS PER THE PROVISIO NS OF SECTION 194H OF THE ACT. HOWEVER, THE ASSESSEE DID NOT MAKE TDS ON COMMISSION PAYMENT TO MSTC LTD. DISALLOWANCE OF COMMISSION OF RS.8,57,793/- WAS MAD E. TOTAL INCOME OF THE ASSESSEE WAS RECOMPUTED AS UNDE R: I. BUSINESS INCOME I. AS PER COMPUTATION OF TOTAL INCOME II. ADDITION IN RESPECT OF RECEIPTS FROM LAND TRANSACTION III. DISALLOWANCE OF COMMISSION U/S.40(A)(IA) OF THE ACT. RS. 6,35,032/- RS.1,42,00,000/- RS. 8,57,793/- RS.1,56,92,825/- II. LONG TERM CAPITAL GAIN: I. AS PER COMPUTATION OF TOTAL INCOME II. LESS: LTCG CONSIDERED AS BUSINESS INCOME RS. 99,84,042/- RS. 99,84,042/- RS. NIL III TOTAL INCOME TOTAL INCOME ROUNDED OFF TO RS.1,56,92,852/- RS.1,56,92,830/- ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 18 - 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A), WHO PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER PASSED BY THE AUTHORITIES BELOW. THE SHORT CONTROVE RSY BEFORE YOUR US THAT WHETHER TWO ISOLATED LAND TRANSACTIONS, ENTERE D INTO OVER A PERIOD OF TWO DECADES, CAN BE TREATED AS AN ADVENTURE IN THE NATURE OF BUSINESS SO AS TO TAX PROFIT ON SALE OF SUCH LANDS AS BUSINESS INCOME AS AGAINST CAPITAL GAIN, AS OFFERED BY THE ASSESSEE, BROADLY ON TWIN COUNTS VIZ. (1) ASSESSEE SIGNED AS A CONFIRMING PARTY IN ONE OF T HE DEALS AND (2) THE ULTIMATE BUYER WAS TO USE SUCH LANDS FOR CONSTRUC TION WORK I.E. BUSINESS ACTIVITY. ASSESSEE IS ENGAGED IN THE BUSIN ESS OF TRADING AND DISMANTLING OF S.T. BUSES. ASSESSEE ENTERED INTO LA ND TRANSACTIONS W.R.T. PURCHASE AND SALE OF TWO PIECES OF LAND OVER A PERI OD OF TWO YEARS. DETAILS OF LAND TRANSACTIONS ARE AS PER ANNEXURE A . FROM SUCH ANNEXURE, FOLLOWING ASPECTS BECOME CLEAR: PARTICULARS 1134/1 1134/2 1135/2 & 3 BANAKHAT 19/10/79 11/08/89 POSSESSION 17/05/89 11/08/89 PURCHASE DEED/IRREVOCABLE POA 14/05/03 11/08/89 SALE DEED 01/02/10 01/02/10 TIME BETWEEN POSSESSION & SALE DEED 20 YEARS 20 YEARS SALE DEED SIGNED IN THE CAPACITY OF OWNER CONFIRMING PARTY ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 19 - 4.2 ASSESSEE OFFERED GAIN ON SALE OF LANDS AS CAPI TAL GAIN. HOWEVER, AO HELD THAT SUCH TRANSACTIONS WERE AN ADVENTURE IN THE NATURE OF BUSINESS AND HENCE, HE TREATED SUCH GAIN AS BUSINE SS INCOME BROADLY ON FOLLOWING TWO COUNTS: ASSESSEE ACTED MERELY AS A CONFIRMING PARTY AND H ENCE, ASSESSEE WAS NOT THE OWNER OF SUCH LANDS; THE LANDS SOLD WERE NON-AGRICULTURAL LAND AND THE U LTIMATE BUYER (I.E. M/S. A. N. PATEL ESTATE DEVELOPERS P. LTD.) CONSTRUCTION WORK I.E. BUSINESS PURPOSE; 4.3 AO FAILED TO APPRECIATE SALE DEED W.R.T. ONLY T HE SECOND LAND WAS SIGNED AS A CONFIRMING PARTY. THE FIRST LAND WAS PURCHASED AND SOLD BY ASSESSEE ALONG WITH OTHER PARTIES AND EVEN THE DEED S WERE EXECUTED IN THE CAPACITY OF OWNERS AS IN EVIDENT FROM PAGE 4, PARA 2.2 OF ASST. ORDER. 4.4 EVEN THOUGH SALE DEED W.R.T. SECOND LAND WAS EX ECUTED IN THE CAPACITY OF CONFIRMING PARTY, ASSESSEE HAD POSSESS ION AND RIGHTS IN SUCH LAND AS IS EVIDENT FROM VARIOUS DEEDS AS PER A NNEXURE A. 4.5 IN FACT, WHEN A DISPUTE AROSE BETWEEN THE PARTI ES AND THE MATTER WENT UP TO THE COURT, AN OFFICER WAS DEPUTED BY SUC H COURT SO AS TO VERIFY AS TO WHO WAS IN POSSESSION OF SUCH LAND. FROM THE REPORT OF SUCH OFFICER, IT WAS EVIDENT THAT ASSESSEE HAD POSS ESSION OF SUCH LANDS. (PAGE 34 OF CIT(A) ORDER). 4.6 AT THE TIME OF EXECUTION OF FINAL SALE DEEDS, A SSESSEE WAS TO HAND OVER 'POSSESSION' AND RELINQUISH 'RIGHTS IN SUCH LA NDS' IN FAVOR OF THE ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 20 - ULTIMATE BUYER. ACCORDINGLY, THE SALE DEED WAS SIGN ED AS 'CONFIRMING PARTY' AND IN LIEU THEREOF, ASSESSEE RECEIVED THE C ONSIDERATION. 4.7 IT WOULD NOT HAVE BEEN POSSIBLE TO SELL SUCH LA NDS WITHOUT ASSESSEE'S CONSENT OWING TO POSSESSION AND RIGHTS I N SUCH LANDS WITH THE ASSESSEE. HENCE, BY OBTAINING ASSESSEE'S SIGNATURE AS A 'CONFIRMING PARTY', IT WAS ENSURED THAT OWNERSHIP IS TRANSFERRE D IN FAVOR OF ULTIMATE BUYER IN A SMOOTH MANNER. 4.8 RELINQUISHMENT OF RIGHT IN A CAPITAL ASSET ('LA ND' IN THIS CASE) IS 'TRANSFER' AS PER S.2(47) AND HENCE, GAIN ARISING O N SUCH TRANSFER HAS BEEN CORRECTLY TREATED AS 'CAPITAL GAIN'. 4.9 AS REGARDS THE SECOND COUNT, THE FACT THAT THE ULTIMATE BUYER IS LOOKING FORWARD TO USE SUCH LANDS FOR CONSTRUCTION WORK (I.E. BUSINESS) IS NOT TO BE CONSIDERED AT ALL WHILE DECIDING AS TO W HETHER THE TRANSACTION OF SALE TO SUCH BUYER IS AN ADVENTURE IN THE NATURE OF BUSINESS IN THE HANDS OF THE ASSESSEE. 4.10 LEARNED AO FAILED TO APPRECIATE FOLLOWING VITA L ASPECTS: ASSESSEE HAS POSSESSION AND RIGHTS IN SUCH LANDS FO R ALMOST 20 YEARS; SUCH LANDS DEALS ARE ISOLATED TRANSACTIONS; NO OTHER LANDS TRANSACTIONS HAVE BEEN ENTERED INTO BY THE ASSESSEE; ASSESSEE IS ENGAGED IN BUSINESS OF TRADING AND DISM ANTLING ST BUSES; ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 21 - ASSESSEES INTENTION BEHIND BUYING SUCH LANDS WAS T O EARN MONEY FROM APPRECIATION OF LAND PRICES OVER A PERIOD OF T IME. ASSESSEE NEVER INTENDED TO COMMERCIALLY EXPLOIT SUC H LANDS IN THE COURSE OF BUSINESS. ASSESSEE IS NOT REGULARLY DEALING IN PURCHASE AND S ALE OF LAND; 4.11 IN OUR OPINION, IT CAN BE INFERRED THAT TRANSA CTIONS ENTERED INTO BY THE ASSESSEE ARE NOT IN THE REGULAR COURSE OF BUSIN ESS. RATHER, THE SAME IS ISOLATED TRANSACTIONS AND HENCE, IT CANNOT BE TREAT ED AS AN ADVENTURE IN THE NATURE OF TRADE. 4.12 IN OUR CONSIDERED OPINION, LEARNED CIT(A) HAS RIGHTLY DIRECTED AO TO TREAT GAIN SHOWN BY ASSESSEE ON SALE OF BOTH THE LANDS AS LONG TERM CAPITAL GAIN 5. LEARNED AO AFTER HOLDING THAT GAIN ARISING ON SA LE OF THE CONCERNED TWO LANDS IS BUSINESS INCOME AND NOT CAPI TAL GAIN, DENIED EXEMPTION U/S.54F. 5.2 CIT (A) HELD THAT SINCE GAIN ON SALE OF LANDS H AS BEEN HELD TO BE LONG TERM CAPITAL GAIN (LTCG), ASSESSEE IS ELIGIB LE FOR EXEMPTION U/S.54F SINCE ALL THE CONDITIONS FOR CLAIMING SUCH EXEMPTION HAVE BEEN FULFILLED BY THE ASSESSEE AS IS EXPLAINED ON PAGE N O.39 OF CIT(A)S ORDER. 5.3 ONCE INCOME ON SALE OF LANDS IS TREATED AS LTC G AND ALL THE CONDITIONS PRESCRIBED U/S.54F HAVE BEEN FULFILLED B Y THE ASSESSEE, ASSESSEE IS RIGHTLY ELIGIBLE FOR SUCH EXEMPTION. ITA NO. 1731/AHD/2014 ACIT VS. SIKANDARALI KASAMALI QURESHI ASST.YEAR 2010-11 - 22 - 6. IN OUR CONSIDERED OPINION LD. CIT(A) HAS RIGHTLY ALLOWED THE ABOVE EXEMPTION. THEREFORE, WE DISMISS THIS APPEAL. 7. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 12/09/2017 SD/- SD/- IZEKSN DQEKJ EGKOH J IZLKN IZEKSN DQEKJ EGKOH J IZLKN IZEKSN DQEKJ EGKOH J IZLKN IZEKSN DQEKJ EGKOH J IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRAMOD KUMAR) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 12/09/2017 PRITI YADAV, SR. PS !'# $#! COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) 45 / THE CIT(A)-XI, AHMEDABAD. 5. 67 8)'12 *12. 0 / DR, ITAT, AHMEDABAD 6. 8 9: ( GUARD FILE. % & / BY ORDER, # 6)) //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY