Shri Mahendrabhai Chaturbhai Patel, Baroda V. ACIT, Cir-2(1), Baroda

ITA 2274/AHD/2017

AI Insights

The case involves Sh. Mahendrabhai Chaturbhai Patel, who appealed against the decision of the Commissioner of Income-tax (Appeals) -2, Vadodara, which confirmed the long-term capital gain as business income. The dispute arose from the sale of a plot of land, where the assessee declared the income as long-term capital gains, while the tax authorities treated it as business income, citing it as an adventure in the nature of trade. The Tribunal noted discrepancies in the treatment of similar cases involving co-owners and emphasized the need for a detailed examination of facts to ascertain the true nature of the transaction.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129313 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-08-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 10-10-2017
• Other Referred Cases: CIT v. Jalannagar Tea Estate Private Limited, ITO v. Sitaram Chamaria, CIT v. Sutlej Cotton Mills Supply Agency Ltd., Raja J. Rameshwar Rao v. Commissioner Of Income- Tax, Estate Investment Company Ltd. vs. CIT, Radhasoami Satsang v. CIT, UOI v. Kaumidini Narayan Dalal & Ors., CIT v. Rewashanker A Kothari, Vitta Kristappa Vs. ITO, DCIT Vs. Jalan Nagar Tea Estate (Pvt.) Ltd., Sri Gajalakshmi Ginning Factory Ltd. Vs. CIT
• Laws Referred To: Income-tax Act, 1961, Transfer of Property Act, 1882
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Revision of order; Salary income; Opportunity of being heard; Rule of consistency; Cost of acquisition; Corroborative evidences; Set aside; Capital Gains
• Section: 263; 143(3); 142(1); 143(2); 139(1); 13; 22

Judgement Text

ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No. 2274/AHD/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 1, Krishnadham Society, Makarand Desai Road, Gotri, Baroda-390021, Gujarat v. ACIT, Circle-2(1)(2), Aayakar Bhawan, Race Course Road, Baroda-390007, Gujarat PAN:ACQPP7795P (Appellant) (Respondent) Assesseeby: Sh. Manish J. Shah & Sh. Rushin Patel, ARs Revenue by: Sh. Ravindra, Sr. DR Date of hearing: 17.08.2023 Date of pronouncement: 13 .09.2023 O R D E R PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal bearing ITA No. 2274/Ahd/2017 for assessment year 2014-15, filed by assessee, arising out of the appellate order passed by learned Commissioner of Income-tax (Appeals)-2, Vadodra (hereinafter called “the CIT(A)”) , dated 09.08.2017 in Appeal No. CIT(A)/Vadodara-2/10292/16-17 for assessment year 2014-15, which appeal in turn has arisen from assessment order dated 22.09.2016 passed by ld. Assessing Officer(hereinafter called “the AO”) u/s 143(3) of the Income-tax Act, 1961. 2. The assessee has raised following grounds of appeal in Memo of Appeal filed in ITA no. 2274/Ahd/2017 , for assessment year 2014-15 :- ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 2 “1. The learned CIT(Appeal)-2 Baroda has wrongly confirmed the long term capital gain as business income. 2. The learned CIT(A)-2 Baroda ought to have appreciated that the assessee has rightly claimed the long term capital gain on sale of plot of land.” 3. The brief facts of the case are that the assessee filed his return of income under section 139(1) on 28.09.2014 declaring total income of Rs. 4,11,94,876/-. The case of the assessee was selected for framing scrutiny assessment under section 143(2) r.w.s. 143(3) of the 1961 Act. Statutory notices were issued from time to time , and the assessee participated in assessment proceedings. During the course of assessment proceedings, the AO observed that the assessee claimed to have earned long term capital gain of Rs. 3,20,56,598/- on sale of land bearing revenue survey no. 1915, City survey No. 1793/2, Final plot no. 112 of the proposed T.P. Scheme No. 63. This capital gain represents the sum of Rs. 3,33,54,750/- received by him after deducting the cost of acquisition of Rs. 12,98,152/-. The AO asked assessee to furnish necessary supporting documents including purchase and sale deeds, working of the indexed cost of acquisition etc.. The assessee submitted copies of purchase deed of impugned property and development agreement made with M/s Mahendra Patel Builders Pvt. Ltd. i.e. developer of the impugned land from whom the total sale amount of Rs. 6,71,20,500/- was received by the assessee jointly with his brother Sh. Bipin Chaturbhai Patel , and the assessee being owner of 50% of that property offered Rs. 3,35,60,250/- as long term capital gain during the year under consideration. The AO observed from the records as under:- S. No. Date Fact 1. 19.06.1992 The assessee becomes the Managing Director of M/s. Mahendera Patel Builders P. Ltd. 2. 1.9.2001 The assessee purchases the impugned agricultural land in his individual capacity vide registration no.2463-13/14/2002 registered by the sub registrar, Vadodara-4 3. 27.05.2008 On an application of the assessee, the impugned agricultural land is ordered to be converted into Non Agricultural land vide collector's order no. S.R./4/2006-2007, No. land /D/ Vashi/1355/2008 dated 27.05.2008 ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 3 4. 26.8.2008 The assessee obtains the requisite permission of Vadodara Municipal Corporation for developing the land as a commercial property. 5. 23.07.2012 The permission obtained on 26-8-2008 is revised on the application of the assessee 6. 8.4.2013 The assessee enters in to a Development Agreement with M/s. Mahendera Patel Builders P Ltd and confers the right to develop land and receives the sum of Rs. 6,71,29,500/- jointly with his brother 7. 28.09.2014 The corresponding return of income is filed treating therein the income representing the sum received from the builder as Long Term Capital Gains as against the Profits and Gains from Business or Profession 3.2 The AO observed that the assessee had purchased agriculture land, thereafter converted it into non-agriculture category in 2001, then converting into a non-agriculture(N.A.) land in the subsequent years , getting the plan approved from the Vadodara Municipal Corporation and later giving right for development of remaining land to the company in which the assessee himself is a Managing Director, since is not found to be in the nature of investment. The AO observed that the nature of above activity is basically business activities. The AO issued show cause notice to the assessee as to why the impugned transaction should not be treated as a business transaction , and why the claim of the assesse of offering to tax as LTCG be not rejected. The contents of SCN are as reproduced as hereunder:- “2. On verification of the computation of total income filed, it came to notice that you claimed to have earned an amount to the extent of Rs.3,20,56,598/-as long term capital gain on sale on plot of land bearing R.S.No. 1915, City survey No.1793/2, Final Plot no.112 of the proposed T.P. Scheme NO.63. As per the records, you have purchased the above plots of land vide purchase deed dated 01.09.2001 vide registration no.2463- 13/14/2002 sub registrar, Vadodara 4, gorwa. You got the category of the above land converted from 'agriculture' to 'non-agriculture' vide collectors order no. S.R./4/2006-2007, No. land/D/Vashi/1355/2008 dated 27.05.2008 and taken the permission for construction by Vadodara Municipal corporation on 26.08.2008 which was revised on 23.07.2012. As per the Development agreement dated 08.04.2013 made by M/s. Mahendra Patel Builders private Limited with you, you have given the land to develop admeasuring to 4629 sq. which includes 4553 sq.mt as N.A. Land The above ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 4 transaction was decided for sum of Rs.6,66,20,500 +5,00,000/-= Rs. 6,71,20,500/- out of which an amount of Rs.5 lac has been received jointly by you and balance as per the agreement within 19 month approx. On the basis of the same, you have jointly received Rs.6,71,20,500/- during the year under assessment and shown the above income as L.T.C.G. on the same. 3. In this matter, it is important to state that the whole issue from purchase of such land to development there-from was starting from 2001. It is also important to see that the land so purchased is an agricultural land which you got converted into non-agriculture' category which shows that your prime motive behind such purchase is to make business of development of such land. If you want just to invest in this land, you would not have converted into N.A. land. It is also pertinent to note here that after converting the land to N.A. you have taken approval form V.M.C. to construct on these land and later on you claimed to have made the above development agreement with Mahendra Patel builder pvt.Ltd. 4. The above factual position reveals that your main intention was commerce and not investment as you are trying to portray. 5. You are therefore given an opportunity to show cause as to why the above amount received by you from M/s. Mahendra Patel Builders pvt. Ltd. As discussed above, should not be treated as your business receipt and income should be taxed accordingly. 6. You are requested to furnish your explanation on the above matter with supporting evidences, if any, for which a hearing is fixed on 08.08.2016 at 11.30 P.M. Failure to furnish the reply will entail to decide the issue on the basis of material available on record. " 3.3 Thereafter, fresh SCN was issued by AO on 22.08.2016 , show causing the assessee why the above said transaction should not be treated as the business transaction and brought to tax under the head income from Profit & Gain from Business or Profession. The show cause notice is reproduced as under:- “Subject-Proceedings under Section 142(1) of the IT Act, 1961 (The Act, for short)-AY 2014-15-Notice to Show Cause-re The aforesaid proceedings are pending before the undersigned. 2. During the course of aforesaid proceedings while verifying the computation of total income filed by you, it is noted that during the PY under consideration, you have claimed to have earned long term capital ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 5 gain of Rs.3,20,56,598/- on the sale of plot of land bearing revenue survey Nos. 1915, City survey No. 1793/2, Final Plot no.112 of the proposed T.P Scheme No.63. This alleged capital gain represents the sum of Rs 3,33,54,750/- received by you after deducting the cost of acquisition of this plot of land Rs 12,98,152. 3.For the sake of brevity, the facts giving rise to this transaction, in a nutshell are as:- Date Fact 19.06.1992 You became the Managing Director of M/s Mahendera Patel Builders P. Ltd. 1.9.2001 You purchased the impugned agricultural land in your individual capacity jointly with your brother vide registration no. 2463-13/14/2002 registered by the sub registrar, Vadodara-4 On your application, the impugned agricultural land is ordered to be converted into Non Agricultural land vide collector’s order no. S.R./4/2006-2007, No. land/D/Vashi/1355/2008 dated 27.05.2008 26.8.2008 You obtained the requisite permission of Vadodara Municipal Corporation for developing the land as a commercial property. Copy of the permission is annexed herewith as Annexure-A 23.07.2012 The permission obtained on 26-8-2008 is revised on the application of the assessee . 8.4.2013 You enter into a Development Agreement with M/s. Mahendera Patel Builders P. Ltd. (The entity in which you are the Managing Director and enjoy substantial interest) and confers the right to develop the impugned land and receive the sum of Rs. 6,71,29,500/- jointly with your brother 28.09.2014 The corresponding return of income is filed treating therein the income representing the sum received from the builder as Long Term Capital Gains as against the Profits and Gains from Business or Profession 4- The series of events illustrated above leads the undersigned to infer that your income subsequent to the events specified at 2 to 8 above in the particular background fact that you yourself were the managing director of the entity of with which you entered into the development agreement in your individual capacity and conferred the right to develop it as a commercial property, does not constitute Capital Gains for the purposes of S 45 of the Act as no capital asset has been transferred by you. On the contrary, it is found that the receipt of the sum of Rs 3,35,60,250/ subsequent to the granting of development right to the builder was in the nature of adventure duly covered under the term business defined in S 2(13) of the Act. ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 6 5. For the purposes of computation of total income under the Act, S 14 of the Act provides that all income shall, for the purposes of charge of income-tax and computation of total income, are to be classified under the following heads of income- S. No. Heads of Income Charging sections of the Act 1. Salaries 15 to 17 2. Income from house property 22 to 27 3. Profits and gains from business or profession 28 to 44 4. Capital Gains 45 to 55 5. Income from other sources 56 to 59 6- The computation of income under these distinct heads is made after allowing specified corresponding deductions provided therein. No deviation is permitted in treating an income falling under a distinct head to another head of income. The Hon'ble Supreme Court in United Commercial Bank Limited v CIT reported in 32 ITR 688 has categorically held that when an income falls under a particular head, it has to be charged under that head only. 7- For the sake of clarity and in order to ensure a logical conclusion, the provisions contained in S 28 of the Act providing for computation of Profits and gains of business or profession are quoted below verbatim- "The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession" (i) the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year; 8-The term business is further defined in S 2(13) of the Act. These are reproduced below verbatim "business" includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture; 9- Accordingly, the undersigned is of the opinion that your income of Rs 3,20,56,598/- against granting and/or transferring development right in respect of the impugned plot of land constitute your income from business or profession chargeable to Income- tax u/s 28 of the Act as against your claim of treating it as Long Term Capital Gains. 10- You are hereby given an opportunity to show cause as to why the aforesaid income be not included in your Total Income as Profits and Gains of business or profession. You may file your written reply duly supported by cogent documentary evidences including certified copies of all the sale deeds, agreements with all the annexure thereto on 26-8- 2016 at 11-00 am either personally or through a duly authorized representative. ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 7 11- In case no reply is preferred on the given date and time, the undersigned shall be constrained to arrive at the conclusion that you have no objection to the proposed addition and the assessment order shall be passed accordingly without any further opportunity. 12. Notice u/s 142(1) of the Act is enclosed herewith for statutory purposes.” 3.4 The assessee, in response to SCN, submitted before the AO that he has declared long term capital gain on sale of land in his return of income filed with the department. It was submitted that that the land was sold to earn long term capital gain. The assessee submitted that he purchased the land before 12 year in the year 2001 bearing survey no. 1915, City survey no. 1793/2, Final plot no. 112 of the proposed T.P. Scheme No. 63, vide registration no. 2463 with Sub Registrar, Baroda on 13.04.2002. The land was converted from agriculture to non-agriculture vide Collector’s Order No. S.R./4/2006-07 land/D/Vashi/1355/2008 dated 27.05.2008 , and taken the permission for construction by Vadodara Municipal Corporation on 26.08.2008 which was revised on 23/07/2012 . It was further submitted by assesse that as per development agreement dated 08/04/2013 made by Mahendra Patel Builders Pvt. Ltd. , the assessee had given the land to develop the same. It was submitted that the assessee and his brother Sh. Bipinbhai Chaturbhai Patel who was co-owner with the assesse of the impugned land, entered into a development agreement with M/s Mahendra Patel Builders Pvt. Ltd. for development and sale of the above said land and received full payment of a sum of Rs. 3,33,54,750/- as share of sale consideration of land. It was submitted that his brother Sh. Bipinbhai Chaturbhai Patel also received similar amount , and both have offered the same to tax as income from Long Term Capital Gains. It was submitted that land was converted from agriculture to non-agriculture to earn more gain and intention was to earn more capital gain on investment on land before 12 years. The intention was to make more gains on land on purchase of this land from beginning , and the land was held for long term as capital asset and not as stock-in-trade. It was submitted that the assessee has income from salary, income from house property, interest ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 8 income and during the year , the assessee has earned long term capital gains , and hence, no books of accounts have been maintained for earlier year assessment year 2013-14. It was submitted that the assessee received the full amount and possession was handed over and long term capital gains were declared in the return of income filed with the department. Thus, it was submitted that the intention was not to undertake business or commerce but to make investment and to make money from long term capital gains. As an alternative plea , it was submitted that if the income is to be treated as business income , then the expenditure incurred towards such business income should be allowed as deduction on same principles. The assesse relied upon the decision in the case of CIT v. Jalannagar Tea Estate Private Limited 45 ITR 626(Assam). The assesse submitted that he does not have his own business and has not shown as stock in trade. The assesse relied upon the decision in the case of ITO v. Sitaram Chamaria (2006) 6 SOT 594(Bom.) The assessee referred to the provisions of Section 45 and 2(47)(v) of the 1961 Act as well to provisions of Section 53A of The Transfer of Property Act, 1882. 3.5 The AO rejected the contentions of the assessee. The AO observed that immediately after purchase of the agriculture land in 2001 bearing survey no. 1915, City survey no. 1793/2, Final plot no. 112 of the proposed T.P. Scheme No. 63 vide registration no. 2463 with Sub Registrar, Baroda on 13.04.2002, the assessee applied for getting non-agriculture(NA) permission from the Collector’s Order No. S.R./4/2006-07 land/D/Vashi/1355/2008 dated 27.08.2008 , and was granted permission for construction by Vadodara Municipal Corporation on 26.08.2008. The AO observed that it can be easily concluded that the only intention of the assessee was to develop a scheme for business purpose for which he took the initiative and got the plan approved from the town planner as well as applied for converting his agriculture land to a Non-agricultural land with the sole purpose of earning profit from the above mentioned land in commercial manner which is adventure in the nature of trade being covered u/s 2(13) of the 1961 Act. The assessee had converted ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 9 the land use from agricultural to non-agricultural, and paying the prescribed requisite fee including the betterment charges, development charges, scrutiny charges, mapping fees, zoning certificate fees and sketch plan and other charges, and hence it could be concluded that it is an adventure in the nature of trade. The AO observed that the land was purchased, and subsequently substantial expenses were incurred for improvement to make it useful for business purposes and to exploit it in commercial way. The AO observed that the contention of the assessee are not correct and merely keeping the asset for long time is not the only criteria of classification of asset into business stock or capital asset. The AO referred to Hon’ble Gujarat High Court decision in the case of CIT v. Rewashanker A Kothari, 283 ITR 338. The AO observed that the assesse purchased the impugned agricultural land in 2001 not with the intention of doing any agricultural activity but with the intention of earning profit from the land, therefore within a short duration , the assesse converted it from agricultural land into non-agriculture land with the intention to develop business scheme. The assessee applied for getting non-agriculture(NA) permission from the Collector’s order dated 27.05.2008 and taken the permission for construction by Vadodara Municipal Corporation on 26.08.2008 and got his layout map. Thus, the intention of the assesse was to maximize the gains arising from sale of land. The AO observed that the sale of the land by the assesse is not in one go but in a planned and organized way. The development agreement was executed with the company in which assessee himself is Managing Director, and the main activity of the said company is to develop building of complete construction or part thereof and other civil engineering work. The AO observed that as business practice , the directors of the company purchase the land in their name and later they do development agreement with the company in order to avoid paying taxes at a higher rate of 30%. The AO referred to the decision of Hon’ble Supreme Court in the case of CIT v. Sutlej Cotton Mills Supply Agency Ltd. (1975) 100 ITR 706(SC). The AO was of the view that it was adventure in the nature of trade. The contention of the assesse was rejected by the AO that land was acquired ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 10 mainly for the purpose of getting capital appreciation. The AO observed that even after transferring the rights in the land , the assessee deferred the receipt from sale of land to more than 20 months and the assessee is sharing the risk with the developers. The AO referred to clause 14 of the agreement, that if the full amount in respect of land is not received till the time frame mentioned in the agreement, seller is free to start proceeding to cancel the agreement, and the assesse was sharing the risk with the developer. The AO observed that it is not necessary that there should be a series of transactions to constitute adventure in the nature of trade , and even a single transaction is sufficient to be categorized as business. The AO referred to the decision of Hon’ble Bombay High Court in the case of Estate Investment Company Ltd. vs. CIT(1980) 121 ITR 580(Bom.). The AO also referred to Hon’ble Supreme Court decision in the case of Raja J. Rameshwar Rao v. Commissioner Of Income- Tax 42 ITR 179(SC). 3.6 The AO held that the receipts arising against the ‘development agreement of immovable property’ is in the normal course of business squarely covered u/s 2(13), being adventure in the nature of trade, and chargeable to tax under the head profits and gains from business or profession as provided u/s 14 , and was assessed and brought to tax u/s 28 by the AO, vide assessment order dated 22.09.2016 passed by AO u/s 143(3) of the 1961 Act. 4.Aggrieved by assessment framed by the AO vide assessment order dated 22.09.2016, the assessee filed first appeal before ld. CIT(A) and raised similar contentions as were raised before the AO, which were rejected by ld. CIT(A) by holding as under:- “4.2 Ground No. 2 pertains to taxation of Long Term Capital Gains disclosed by the appellant as income from business or profession by treating the transaction as "adventure in the nature of trade". Undisputedly, appellant is a Managing Director of Mahendra Patel Builders Pvt. Ltd. which is engaged in the business of real estate development. He along with his brother Shri Bipin Chaturbhai Patel purchased agricultural land on 01.09.2001. This land has been got converted into non- agricultural on 27.05.2008. Admittedly, prescribed conversion fee including the ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 11 betterment charges, development charges, scrutiny charges, Map fee, Zoning Certificate fee and sketch plan and other charges have been borne by the appellant himself., The appellant did not stop at this stage, but further obtained requisite permission from Vadodara Municipal Corporation for development of land as a commercial property. As a matter of fact, the appellant has never used the land for agricultural purposes and hence it was a well-thought plan to buy a land and develop the same commercially and then sell for a commercially competitive price. The commercial exploitation of land is also reflected from the fact that the said land has been sold to appellant's own company on 08.04.2013 through a Development Agreement for a very high consideration of Rs.6,71,29,500/- alongwith his co-owner, brother, though the cost of acquisition was only Rs.4,68,550/-. Therefore, in view of the reasons mentioned above as also the reasons recorded by the Assessing Officer, the transaction of purchase and sale of land under consideration was nothing but an "adventure in the nature of trade." 4.2.1. It is worthwhile to mention here that the Hon'ble Supreme Court in the case of Raja J. RameshwarRao Vs. CIT, 42 ITR 179 (SC) has categorically held that when a person acquires land with a view to selling it later after developing the same, he is carrying an activity resulting in profit and hence such activity can only be described as a business venture. Hon'ble ITAT (Third Member Bench) in the case of Vitta Kristappa Vs. ITO (2005) 92 ITD 1 (Hyd.) (TM) has held that when land was purchased and sold under a well-thought scheme to make profit, it was a clear case of "adventure in nature of trade". The ratio laid down in these cases, very clearly support the case of revenue that the transaction of purchase and sale of land under a pre-planned scheme of earning huge profit by the appellant was nothing but an "adventure in the nature of trade". Accordingly, I hold that the Assessing Officer has rightly assessed the profit from sale of land as business income. 4.2.2. The Ld. Authorized Representative has also relied upon the decision of DCIT, Circle-1(2), Baroda dated 14.10.2016 for A.Y. 2014-15 in the case of co-owner, Shri Bipinbhai Chaturbhai Patel wherein income from same land has been assessed as Long Term Capital Gains. On perusal of copy of assessment order, I find that in that case, the Assessing Officer has not examined this issue in details, but simply accepted the claim made in return of income. Moreover, it is an established legal position that every assessee is an independent entity and decision in its case will depend upon the facts emerging on investigation. Therefore, this type of reliance of Ld. Authorized Representative is not acceptable. 4.2.3. The decisions relied upon by the Ld. Authorized Representative are also distinguishable on facts and the same are discussed as under:- (a) DCIT Vs. Jalan Nagar Tea Estate (Pvt.) Ltd. 45 ITR 626 (Assam) In this case, the land was purchased for tea cultivation and hence at this stage, there was no Intention to dispose of for profit. However, in the case of appellant, the intention from day one was to dispose of the agricultural land for profit by converting the same into non-agricultural. ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 12 (b) Sri Gajalakshmi Ginning Factory Ltd. Vs. CIT, 22 ITR 502 (Mad.) In this case, the Hon'ble Court held that land was purchased with no intention of selling it along with factory and Plant & Machinery. This decision was considered by Hon'ble Allahabad High Court in the case of Rajendra Kumar Dwivedi Vs. DCIT (2012) 349 ITR 432 (All.) wherein agricultural land (no agricultural operation carried out) belonging to HUF was sold after carving out plots and hence sale was treated as business activity. In the case of appellant also, no agricultural operations were carried out and that land was purchased with clear-cut intention to sell for profit after developing partially i.e. conversion and approval for commercial use. (c) ITO Vs. Sitaram Chamaria (2006) 6 SOT 594 (Bom.) In this case, the assessee along with his wife and son entered into a development Agreement with builder and transferred rights only. The development was done by builder only. However, in the case of appellant, conversion of agricultural land, approval for commercial exploitation etc. were done by the appellant himself. In view of the above distinguishable facts, the decisions relied upon by the Ld. Authorized Representative are of no help to the assessee-appellant. 4.2.4. The Ld. Authorized Representative has also raised an alternative argument that the expenses incurred on conversion of land and obtaining approval from Vadodara Municipal Corporation, should be allowed as deduction. In this regard, I find that neither at assessment stage nor at appellate stage, the appellant has furnished details of such expenses along with source thereof. Thus, for want of proper details and evidences, no relief on this account can be allowed to the appellant. 4.3. In view of the above factual and legal position, the action of the Assessing Officer in treating the purchase and sale of land as "adventure in the nature of trade" and then assessing the income as business income is confirmed. Thus, Ground No. 2 is dismissed.” 5. Aggrieved by the decision of ld. CIT(A) , the assessee has filed second appeal with Tribunal. The learned counsel for the assessee opened argument before the Bench. The ld. Counsel for the assesse drew our attention to assessment order as well as to the appellate order passed by learned CIT(A). It was submitted that the assessee is the co-owner of the land along with his brother. It was submitted that both the brothers sold their land to M/s Mahendra Patel Builders Private Limited. It was submitted that the assessee has declared long term capital gain on sale of the land and paid due taxes, but the Revenue is of the view that this is not a sale of ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 13 investment but it is an adventure in the nature of trade. It was submitted that the brother of the assesse who is co-owner of the said land also declared long term capital gains on the sale of his share of the land , which was accepted by department. It was submitted that in case of co-owner, ld. PCIT invoked revisionary proceedings under Section 263 , which were later dropped by ld. PCIT itself. The copies of assessment order u/s 143(3), dated 14.10.2016 in the case of assessee’s Brother Mr. Bipinbhai Chaturbhai Patel and also revisionary order dated 28.03.2019 passed by ld. PCIT,Vadodra u/s 263 , are placed on record in file. The ld. Counsel for the assessee submitted that in the case of co-owner i.e. brother of the assessee, the income as declared as LTCG was accepted both by AO as well by ld. PCIT and there are no reasons why it should not be accepted in the hands of the assessee also. The reliance was also placed on the decision of ITAT in ITA No. 1013/Ahd/2014 in the case of Kumari Nalini Surrendrabhai Patel v. ITO, in which one of us being Judicial Member was part of the Bench who pronounced the order. It was submitted that rule of consistency is to be followed. The reliance was placed on the decision of Hon’ble Supreme Court in the case of Radhasoami Satsang v. CIT, reported in (1992) 60 Taxman 248(SC). The reliance was also placed on decision of Hon’ble Supreme Court in the case of UOI v. Kaumidini Narayan Dalal & Ors. , reported in (2001) 249 ITR 219(SC). The reliance was also placed by ld. Counsel for the assesse on the order passed by ld. PCIT u/s 263 in the case of brother of the assesse namely Mr Bipinbhai Chaturbhai Patel. 5.2 The ld. CIT-DR relied upon the appellate order passed by ld. CIT(A). 6. We have considered rival contentions and perused the material on record including cited case laws. The return of income was filed by assessee on 28.09.2014 u/s 139(1), declaring income of Rs. 4,11,94,876/-. The assesse has ,inter-alia, declared income from salaries, income from house property, long term capital gains and interest income. The assesse is Managing Director of M/s Mahendra Patel Builders Private Limited. The case of the assesse was selected by Revenue for ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 14 framing scrutiny assessment u/s. 143(2) read with Section 143(3) . Statutory notices were issued by the AO. The assessee participated in assessment proceedings. The assesse has sold land bearing revenue survey no. 1915, City survey No. 1793/2, Final plot no. 112 of the proposed T.P. Scheme No. 63 for Rs.3,33,54,750/- and after deducting cost of acquisition of Rs. 12,98,152/-, and has declared long term capital gains of Rs. 3,20,56,598/- and paid taxes to Revenue. The assesse is co-owner of the land holding 50% share , wherein his brother Mr. Bipinbhai Chaturbhai Patel is also co-owner of the said land holding 50% share. Both the brothers sold their share of aforesaid land to M/s Mahendra Patel Builders Private Limited. The assesse is Managing Director of M/s Mahendra Patel Builders Private Limited, while as per facts emerging from records, the brother of the assesse namely Mr. Bipinbhai Chaturbhai Patel is farmer( contentions of the tax-payer namely Mr. Bipinbhai Chaturbhai Patel recorded in para 3.1 of ld. PCIT order dated 28.03.2019 passed u/s 263). As per facts emerging from the records, the brother of the assesse declared income from sale of his share of aforesaid land as Long Term Capital Gain earned to the tune of Rs. 3,22,62,090/- in the return of income filed with department , which was accepted by department in the scrutiny assessment framed by the AO u/s 143(3) vide assessment order dated 14.10.2016 passed by the AO. The revisionary proceedings initiated by ld. PCIT u/s 263 on this issue in the case of brother of the assesse namely Mr. Bipinbhai Chaturbhai Patel, culminated into dropping of the revisionary proceedings u/s 263, vide order dated 28.03.2019. The genesis of the dispute in the case of the assesse is that the Revenue is of the view that the assesse has carried on adventure in the nature of trade with respect to the aforesaid land , and the income arising therefrom is chargeable to tax as income from ‘Profit and Gains from Business or Profession’ and not the long term capital gains as declared by the assesse. It is well settled that principles of res-judicate are not applicable to income-tax proceedings, but consistency is to be maintained , as held by Hon’ble Supreme Court in the case of Radhasoami Satsang(supra), which is later followed in catena of judgments. If it is proved that the facts are different and distinguishable, ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 15 then there is no question of consistency to be applied with , as the law is to be applied to the proven facts which may vary from assesse to assesse as well from year to year. Whether the gains have arisen from transfer of capital assets held as an investment to be brought to tax as long term capital gains, or the solitary asset held is a business asset wherein solitary transaction of transfer of an asset held as business asset shall be chargeable to tax as income under the head “Profits and Gains from Business of Profession” being adventure in the nature of trade, is a mixed question of fact and law . Thus, it is the intention of holding of the asset before being transferred, which is material and relevant, which requires investigation of facts. It is not necessary that there should be series of transactions in the nature of business, before the income is brought to tax as business income , as it is well settled that even one transaction in the nature of sale and purchase which is an adventure in the nature of trade is sufficient to classify income as business income. Reference is drawn to the decision of Hon’ble Supreme Court in the case of CIT v. Sutlej Mills Agency Limited (1975) 100 ITR 706(SC). In the instant case, it transpires that the assesse is Managing Director of the Company M/s Mahindra Patel Builders Private Limited, since 1992. The said company is engaged in building/construction activities, while the brother of the assesse namely Mr. Bipin Chaturbhai Patel who happens to be co-owner with assesse holding 50% share in the said land is admittedly a farmer. Thus, the facts are distinguishable. Now, coming to the background of the land of which the assesse is co-owner with his brother Mr. Bipinbhai Chaturbhai Patel , both holding 50% share each in the aforesaid land .The said land was admittedly acquired in 2001. The said land was agricultural land, and it is an admitted position that no agriculture activities were ever carried on in the said land since it was acquired in 2001 by the assesse and his brother, both as co-owner . The assesse applied for getting NA(Non agriculture ) permission from Collector order No. S.R./4/2006-07 land/D/VASHI/1355/2008 dated 27/05/2008 and taken the permission for construction from Vadodra Municipal Corporation on 26.08.2008. The assesse also got his lay out map. The ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 16 assesse entered into development agreement with the company M/s Mahindra Patel Builders Private Limited on 08.04.2013 and given the land for development. The assesse has claimed that permission for construction was revised on 23.07.2012. The assessee had converted the land use from agricultural to non-agricultural, and paid the prescribed requisite fee including the betterment charges, development charges, scrutiny charges, mapping fees, zoning certificate fees and sketch plan and other charges. The AO observed that the land was purchased, and subsequently substantial expenses were incurred for improvement to make it useful for business purposes and to exploit it in commercial way.The department has claimed that the payments for sale of land was not received immediately on development agreement entered into by the assesse on 08.04.2013 , but were received in 20 months and the assesse shared the risk with developer, while the assesse is claiming that the entire consideration was received in one go.These are disputed facts, as well detailed investigation of facts are required to identify the true intention of the assesse in acquiring the said land, converting the same into non-agricultural land, taking permission for construction from vadodra municipal corporation , the manner of executing development agreement so on and so forth . The Tribunal is last fact finding body. The assesssee has chosen not to file factual paper book. The adjudication of this appeal requires detailed study of all the factual documents , to enable Tribunal to discern the true intention of the assesse while holding the said land from 2001 to 2013. The manner in which land was acquired, the various applications/plans filed with government authorities , terms of development agreement entered into by the assesse etc. are all required to be analyzed in depth to arrive at true intentions of the assesse, as to whether land is held as investment or as business asset. The complete facts/evidences/documents are not on record before us as well some facts are disputed. Thus, keeping in view the entire facts and circumstances of the case and in the interest of justice, we are inclined to set aside and restore the matter back to the file of the AO for fresh adjudication. The appeal of the assesse is allowed for statistical purposes. The AO shall give proper and ITA No.2274/Ahd/2017 Assessment Year: 2014-15 Sh. Mahendrabhai Chaturbhai Patel 17 adequate opportunity of being heard to the assesse in accordance with principles of natural justice , in set aside remand proceedings. The assesse is directed to co- operate in set aside remand proceedings. We clarify that we have not commented on the merits of the issues in this appeal and all the contentions are kept open. We order accordingly. 7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 13/09/2023 at Ahmedabad, Gujarat in accordance with Rule 34(4) of the Income-tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- [T.R. SENTHIL KUMAR] [RAMIT KOCHAR] JUDICIAL MEMBER True Cop ACCOUNTANT MEMBER DATED: 13/09/2023 sh Copy forwarded to: 1. Appellant – 2. Respondent – 3. CITDR 4. CIT, 5. The CIT(A)