ITO, WARD-2(1), Nagpur V. M/S ARSHAD DEVELOPERS PVT. LTD., Nagpur

ITA 335/NAG/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9667 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 20-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE SHRI K P DEWANI
• Assessee Lawyers: RAMJI TOWN NAGPUR PAN AAECAA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Cost of acquisition; Tangible material
• Section: 50C; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P.K. BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 335/NAG./2013 ( ASSESSMENT YEAR : 200405 ) INCOME TAX OFFICER WARD2(1), NAGPUR APPELLANT V/S ARSHAD DEVELOPERS PVT. LTD. 8042, NMV LAYOUT BYRAMJI TOWN, NAGPUR 440 001 PAN AAECA2740A .... RESPONDENT REVENUE BY : SHRI A.R. NINAWE ASSESSEE BY : SHRI K.P. DEWANI DATE OF HEARING 22.06.2017 DATE OF ORDER 27.0 6.2017 O R D E R PER AMARJIT SINGH, J.M. THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E IMPUGNED ORDER DATED 13 TH JUNE 2013, PASSED BY THE LEARNED COMMISSIONER (APPEALS)I, NAGPUR, RELEVANT TO THE ASSESSMENT YEA R 200405. 2. THE GROUNDS RAISED BY THE REVENUE ARE REPRODUCED BE LOW: 1. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW, THE CIT(A) ERRED IN TREATING THE SURPLUS RECEIVED ON SA LE OF LAND BY THE ASSESSEE AS 'BUSINESS INCOME' WITHOUT APPRECIAT ING THE FACT THAT THE LAND WAS SHOWN AS 'CAPITAL ASSET' IN THE B ALANCE SHEET AND NOT AS STOCK IN TRADE AND THEREFORE THE SURPLUS IS TO BE TREATED AS STCG; 2. ON THE FACTS AND CIRCUMSTANCE$ OF THE CASE AND I N LAW, THE CIT(A) ERRED IN DIRECTING THE AO TO ASSESSEE THE SU RPLUS ON SALE OF 2 ARSHAD DEVELOPERS PVT. LTD. LAND IN TWO YEAR I.E. A.Y. 2004-05 AND 0205-06 ON T HE BASIS OF ACTUAL RECEIPTS WHEN THE ASSESSEE HANDED OVER THE P OSSESSION OF LAND IN IN F.Y.2003-04 AFTER RECEIVING PART CONSIDE RATION WHICH IS 'TRANSFER' OF CAPITAL ASSET AS PER SECTION 2(47)(V) AND THEREFORE THE GAINS REQUIRE TO BE ASSESSED IN A.Y. 2004-05; 3. ON THE FACTS AND CIRCUMSTANCE$ OF THE CASE AND I N LAW, THE CIT(A) ERRED IN DIRECTING THE AO TO TAX ONLY RS.75 LACS IN 2 YEARS AS AGAINST THE CONSIDERATION AS PER AGREEMENT WHEN THE ASSESSEE CHOSE NOT TO AGITATE THE BALANCE PAYMENT WHICH WILL NOT CHANGE THE POSITION IN VIEW OF THE PROVISIONS CONTAINED IN SECTION 50C AS PER WHICH SALE CONSIDERATION IS TO BE ADOPTED AS PE R STAMP VALUATION AUTHORITIES; 2. BRIEF FACTS OF THE CASE ARE THAT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME UND ER SECTION 139 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) ON 19 TH AUGUST 2004, DECLARING TOTAL INCOME TO THE TUNE OF ` 1,07,670. THE SAID RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE AC T ON 19 TH NOVEMBER 2004. THE OFFICE OF THE DCIT, CIRCLE8, NA GPUR, FORWARDED THE COPY OF AGREEMENT REGISTERED IN THE OFFICE OF S UBREGISTRAR5, NAGPUR, WHICH WAS EXECUTED BY THE ASSESSEE WITH M/S .ARMOURS DEVELOPERS PVT. LTD., NAGPUR, ON 11 TH AUGUST 2003, FOR A TOTAL SALE CONSIDERATION OF ` 1 CRORE. THE MARKET VALUE OF THE PROPERTY VALUED B Y THE GOVERNMENT OF MAHARASHTRA, NAGPUR, FOR THE PURP OSE OF THE STAMP DUTY VALUATION ON THAT DATE WAS ` 1.20 CRORE. THE ASSESSEE DID NOT SHOW THE SAID TRANSACTION IN HIS RETURN OF INCOME. THEREAFTER, THE CASE WAS REOPENED IN VIEW OF THE PROVISIONS OF SECTION 148 OF THE ACT, AND THE NOTICE WAS ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSING OFFICER AFFORDED OPPORTUNITIES OF BEING HEARD TO TH E ASSESSEE. THE 3 ARSHAD DEVELOPERS PVT. LTD. MARKET VALUE OF THE IMMOVABLE PROPERTY DETERMINED B Y THE STANP DUTY AUTHORITY WAS ADOPTED TO THE TUNE OF ` 1.20 CRORE AND WAS TREATED AS SHORT TERM CAPITAL GAIN AND WAS ASSESSED AS SHORT T ERM CAPITAL GAIN. AFTER DEDUCTING THE COST OF ACQUISITION OF PROPERTY TO THE TUNE OF ` 21,35,677, ON THE COST OF IMPROVEMENT OF PROPERTY T O THE TUNE OF ` 47,83,940 TOTALING TO THE TUNE OF ` 50,80,383. THE ASSESSEE WAS NOT SATISFIED, THEREFORE, FILED APPEAL BEFORE THE LEARN ED COMMISSIONER (APPEALS) WHO ALLOWED THE CLAIM OF THE ASSESSEE. BE ING AGGRIEVED, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 TO 3 3. THESE ISSUES BEING INTERCONNECTED, THEREFORE, THES E ARE TAKEN UP FOR DISPOSING OFF TOGETHER. THE REVENUE HAS CHAL LENGED THE TREATMENT OF INCOME AS BUSINESS INCOME INSPITE OF C APITAL ASSET AND AGAINST THE DIRECTION OF THE LEARNED COMMISSIONER ( APPEALS) IN WHICH THE LEARNED COMMISSIONER (APPEALS) HAS DIRECTED TO TAX THE AMOUNT OF ` 75 LAKH IN TWO YEARS. THE ASSESSEE COMPANY WAS INC ORPORATED ON 2 ND JANUARY 2002, WITH THE OBJECT OF BUSINESS OF LAND D EVELOPMENT. THE ASSESSEE REQUIRED THE LAND FOR THE DEVELOPMENT OF R ESIDENTIAL BUILDING AND INCURRED THE EXPENDITURE. AFTER THE PART DEVELO PMENT, THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S. ARMOUR DEVELOPERS PVT. LTD. ON 11 TH AUGUST 2003, AT ` 1 CRORE. SINCE THE TRANSACTION WAS NOT SHOWN IN THE RETURN OF INCOME AND THEREAFTER ON REC EIPT OF THE 4 ARSHAD DEVELOPERS PVT. LTD. INFORMATION THE SHORT TERM CAPITAL GAIN WAS ASSESSE D TO THE TUNE OF ` 50,80,383, UNDER SECTION 50C OF THE ACT. THE ASSESS EE ENTERED INTO THE AGREEMENT WITH M/S. ARMOUR DEVELOPERS PVT. LTD. AND RECEIVED ONLY ` 20 LAKH IN THE YEAR UNDER CONSIDERATION. FACTUALLY , NO INCOME WAS ACCRUED IN THE SAID YEAR. HOW THE INCOME IS REQ UIRED TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF TAX IS DEPEND ING UPON FACTS AND CIRCUMSTANCES OF EACH CASE. THE AGREEMENT WITH M/S. ARMOUR DEVELOPERS PVT. LTD., WAS NOT PERFORMED SINCE NO PA YMENT WAS FULLY PAID. UNDER THE SAID CIRCUMSTANCES, HOW THE INCOME I S LIABLE TO BE TAKEN INTO CONSIDERATION ON THE BASIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE. THE NECESSARY CONDITIONS ON THE PROVISION S OF SECTION 53A, WAS NOT COMPLIED WITH. HERE, IT IS PERTINENT TO MEN TION THAT THE ASSESSMENT OF THE ASSESSEE FOR THE ASSESSMENT YEAR 200506 WAS COMPLETED BY TREATING THE INCOME AS INCOME FROM BUS INESS. THE PRESENT CASE IS FOR THE ASSESSMENT YEAR 200405. TO MAKE THE THINGS VERY CLEAR, IT IS NECESSARY TO ADVERT THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS). ACCORDINGLY, PARA8 OF THE LEARNED COMMISSIONER (APPEALS)S ORDER IS REPRODUCED BELOW: 8. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE CO UNSEL OF APPELLANT AND PERUSED THE EVIDENCE ON RECORD. THE A PPELLANT IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF REAL ESTA TE. THE MAIN OBJECTS OF MEMORANDUM OF ASSOCIATION INDICATE THAT THE COMPANY IS FORMED WITH AN OBJECT TO CARRY ON BUSINESS OF LAND DEVELOPMENT. THE APPELLANT HAS ACQUIRED LAND AT SUGAT NAGAR FOR CONSIDERATION OF RS.21,35,677/- AND INCURRED EXPENSES TO THE TUNE OF RS.47,83,940/- FOR THE DEVELOPMENT OF THE PROPERTY PURCHASED. THE 5 ARSHAD DEVELOPERS PVT. LTD. COST OF LAND PURCHASED AND DEVELOPMENT EXPENDITURE INCURRED 011 SUCH LAND ARE NOT DISPUTED AND HAVE BEEN ACCEPTED B Y THE AO. 8.1 IN THE BALANCE SHEET, THE PROPERTY ACQUIRED WAS REFLECTED UNDER 'FIXED ASSETS' AND DEVELOPMENT EXPENDITURE ON THE A FORESAID LAND HAS BEEN SHOWN AS 'WORK-IN-PROGRESS' UNDER THE HEAD 'CURRENT LOANS 85 ADVANCES'. THE AO HAS CONSIDERED THE ASSET / PROPERTY AS 'CAPITAL ASSET' WHEREAS THE APPELLANT HAS CLAIMED T HAT SAME AS 'BUSINESS' ASSET. THE INTENT OF ACQUIRING THE LAND AND INCURRING DEVELOPMENT EXPENSES THEREUPON CLEARLY DEMONSTRATES THAT LAND HAS BEEN ACQUIRED IN THE COURSE OF CARRYING ON BUSI NESS ACTIVITY AND IS NOT IN THE NATURE OF 'CAPITAL ASSET'. IT IS SETTLED POSITION OF LAW THAT RECORDING OF TRANSACTION IN BOOKS OF ACCOU NT IS NOT CONCLUSIVE AS REGARD TO NATURE OF TRANSACTION. IN T HE FACTS OF CASE CONSIDERING THE MAIN OBJECT OF DEVELOPMENT OF LAND, EXPENSES INCURRED ON DEVELOPMENT OF LAND HAVING BEEN SHOWN A S WORK-IN- PROGRESS, THE ACQUISITION OF LAND IS ALSO IN THE NA TURE OF ACQUISITION OF STOCK IN TRADE AND, THUS, INCOME ARISING FROM SU CH TRANSACTION CAN ONLY BE CONSIDERED UNDER THE HEAD 'INCOME FROM BUSINESS'. IN VIEW OF ABOVE, THE ACTION OF THE AO IN DETERMINING SHORT TERM CAPITAL GAIN AND INVOKING PROVISIONS OF SECTION 50C OF I.T. ACT 1961 IN THE CASE OF THE APPELLANT IS NOT CORRECT. IN VIE W OF ABOVE, I HOLD THAT THE DETERMINING OF INCOME UNDER THE HEAD 'SHOR T TERM CAPITAL GAIN' BY THE AO IS NOT JUSTIFIED. 8.2 WITH REGARD TO THE OTHER CONTENTION OF THE APPE LLANT THAT IT HAS NOT HANDED OVER THE POSSESSION OF THE PROPERTY AND ALSO THE FULL CONSIDERATION WAS NOT RECEIVED AS PER THE TERMS OF THE AGREEMENT IS TO BE EXAMINED. THIS CLAIM OF NOT HANDING OVER T HE POSSESSION OF THE PROPERTY BY THE APPELLANT IS CONFLICTING AS. TH E PROPERTY WAS HANDED OVER TO THE DEVELOPER AS ON DATE OF AGREEMEN T I.E. 1.08.2003, AS PER CLAUSE NO. 15 OF THE REGISTERED A GREEMENT OF DEVELOPMENT DATED 11.08.2003, WHICH IS REPRODUCED B ELOW: 'THAT THE OWNER HAS ALREADY DELIVERED A VACANT AND PEACEFUL POSSESSION OF AFORESAID PROPERTY TO THE DEVELOPER' 8.3 FROM THE ABOVE CLAUSE, IT IS CLEAR THAT THE TRA NSACTION OF SALE OF PROPERTY IS COMPLETE SINCE THE POSSESSION OF PROPER TY WAS ALREADY HANDED OVER TO THE PURCHASER ON 11.08.2003 ITSELF. THE 'TRANSFER' INCLUDES ANY TRANSACTION WHICH ALLOWS POSSESSION TO BE TAKEN/RETAINED IN PART PERFORMANCE OF A CONTRACT. F ROM THE DEVELOPMENT AGREEMENT, IT IS NOTICED THAT A SUM OF RS.25,00,000/- WAS RECEIVED AT THE TIME OF EXECUTION OF AGREEMENT AND THE BALANCE IS RECEIVABLE AS PER THE TERMS & CONDITIONS OF THE AGREEMENT AND THE CONSIDERATION RECEIVABLE IS FIXED . FURTHER, IT IS NOTICED FROM THE RECORDS THAT THE APPELLANT IS FOLL OWING 'MERCANTILE SYSTEM 7 OF ACCOUNTING. IN NORMAL COURSE NON-RECEIPT OF BAL ANCE AMOUNT OF CONSIDERATION WILL NOT ALTER THE TRANSACT ION. IN THE FACTS 6 ARSHAD DEVELOPERS PVT. LTD. OF THE CASE OF THE APPELLANT/IT CAN BE SEEN THAT TH E AGREEMENT WAS EXECUTED ON 11/08/2003. THE VERY FIRST STIPULATION AS TO RECEIPT OF MONEY AT RS.25,00,000/- WAS NOT IMPLEMENTED. THE SU BSEQUENT MONEY AS PROMISED IN THE AGREEMENT HAS NOT BEEN PAI D BEFORE THE CLOSE OF ACCOUNTING YEAR. THE EFFECT OF NON-IMPLEME NTATION OF THE TRANSACTION BETWEEN PARTIES IS CORROBORATED FROM TH E FINANCIAL STATEMENT AND THE BANK ACCOUNT OF THE APPELLANT. TH E ABOVE FACTUAL POSITION SUBMITTED BEFORE THE AO HAS NOT BEEN DISPU TED AS IS EVIDENT FROM THE ASSESSMENT ORDER. IT IS FURTHER SE EN FROM BANK ACCOUNT THAT CHEQUE NUMBERS WHICH ARE APPEARING IN THE AGREEMENT HAVE BEEN PRESENTED IN .THE BANK AND HAVE BEEN DISHONOURED. THE TRANSACTION AS AGREED HAS NOT BEEN IMPLEMENTED AS AGREED IS EVIDENT FROM THE EVIDENCE ON RECORD. IN VIEW OF THE ABOVE, THERE IS SUBSTANTIAL FORCE IN TH E SUBMISSION OF THE APPELLANT THAT THE AGREEMENT OF DEVELOPMENT WAS NOT IMPLEMENTED AS ENTERED INTO BETWEEN THE PARTIES. TH E CONTENTION OF THE APPELLANT THAT THE PHYSICAL POSSESSION WAS N OT HANDED OVER ALSO GETS SUBSTANTIAL STRENGTH. 8.4 FURTHER, THE APPELLANT SUBMITTED THAT THE ACCOU NTING STANDARD ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA PROVIDES AT PARA 17 THAT PRUDENCE AND SUBSTANCE OVER FORM ARE I MPORTANT FACTORS IN CHOICE OF ACCOUNTING POLICIES. IT IS PRO VIDED THAT IN VIEW OF THE UNCERTAINTY ATTACHED TO FUTURE EVENTS, PROFI TS ARE NOT ANTICIPATED BUT RECOGNIZED ONLY WHEN REALIZED THOUG H NOT NECESSARILY IN CASH. THE ACCOUNTING TREATMENT AND P RESENTATION IN THE FINANCIAL STATEMENTS OF TRANSACTIONS AND EVENTS SHOULD BE GOVERNED BY THEIR SUBSTANCE AND NOT MERELY BY THE L EGAL FORM. THE APPELLANT ARGUED THAT IN THE FACTS OF THE CASE OF A PPELLANT, IT IS EVIDENT FROM THE EVIDENCE ON RECORD THAT THE AGREEM ENT IS NOT IMPLEMENTED AND THE SAME IS EVIDENT FROM THE EVENTS BEFORE THE CLOSE OF ACCOUNTING YEAR. THE APPELLANT AVERRED THA T CONSIDERING THE PRINCIPLE OF PRUDENCE AND SUBSTANCE OVER FORM, THE AUDITORS OF THE APPELLANT HAVE ALSO ACCEPTED THE ACCOUNTING OF THE APPELLANT, IN NOT RECOGNIZING THE INCOME FROM THE TRANSACTION OF ENTERING OF THE DEVELOPMENT AGREEMENT AS UNCERTAINTY WAS LOOMING LA RGE IN RESPECT TO THE IMPLEMENTATION OF THE AGREEMENT BY M /S ARMOUR DEVELOPERS PVT. LTD. THE APPELLANT FURTHER CONTENT ED THAT THE STAND GETS FURTHER FORTIFIED FROM THE FACT THAT OVE R PERIOD OF MORE THAN EIGHT YEARS THE APPELLANT HAS NOT RECEIVED ENT IRE CONSIDERATION AND THERE IS NO RAY OF HOPE OF RECOVERY OF RS.25,00 ,000/- AS PER THE AGREEMENT. THE APPELLANT STATED THAT THE ABOVE FACTUAL POSITION IS EXPLAINED BEFORE THE AO AND SAME HAS NOT BEEN DI SPUTED OR FOUND INCORRECT BY THE AO AT THE TIME OF FRAMING OF REGULAR ASSESSMENT. IN VIEW OF ABOVE THE APPELLANT ARGUED T HAT NO REAL INCOME HAS ACCRUED TO THE APPELLANT AND THUS ADDITI ON MADE AT THE HANDS OF APPELLANT BE DIRECTED TO BE DELETED. 7 ARSHAD DEVELOPERS PVT. LTD. 8.5 THE ISSUE OF RECOGNITION OF REVENUE IN THE CASE OF HYPOTHETICAL REVENUE WAS DECIDED BY THE HON'BLE SUPREME COURT IN THE CASE OF BOKARO STEEL LTD. REPORTED AT 236 ITR 315 (SC). IN THE CASE BEFORE THE HONBLE APEX COURT, IT IS SEEN THAT ASSESSEE HA D SHOWN INTEREST RECEIVED FROM HINDUSTAN STEEL LTD. IN ITS BOOKS OF ACCOUNT. THE ABOVE INTEREST RECEIVED WAS REVERSED IN SUBSEQUENT YEAR AS THE TRANSACTION WAS MODIFIED SUBSEQUENTLY. THE HON'BLE APEX COURT HELD THAT CONSIDERING THE PRINCIPLE OF REAL INCOME INTEREST SHOWN IN THE BOOKS COUNT NOT BE BROUGHT TO TAX. THE RATIO LA ID DOWN BY THE HONBLE APEX COURT FULLY SUPPORTS THE FACTS OF THE CASE OF THE APPELLANT THAT THERE IS NO REAL INCOME ARISEN AND E VEN BEFORE THE CLOSE OF ACCOUNTING YEAR IT HAD BECOME EVIDENT THAT TRANSACTION AS STIPULATED IN AGREEMENT IS NOT IMPLEMENTED. 8.6 IN THE CASE OF APPELLANT, IT IS SEEN THAT THE A PPELLANT HAS ACQUIRED PROPERTY AT RS.21,35,000/- ON WHICH DEVELO PMENT EXPENSES HAVE BEEN INCURRED AT RS.47,84 ? 000/-. THE ACQUISITION OF PROPERTY AS WELL AS THE DEVELOPMENT EXPENSES ARE NO T DISPUTED BY THE AO AND THE AO WHILE COMPUTING THE SHORT TERM CA PITAL GAIN HAS ALLOWED DEDUCTION FOR COST OF ACQUISITION AND DEVEL OPMENT EXPENSES AT RS.69,19,000/-. IN THE EVENT THE ENTIRE AGREEMENT AS MADE BETWEEN THE PARTIES WOULD HAVE BEEN IMPLEMENTE D THERE WOULD BE SURPLUS ARISING TO THE APPELLANT AT RS.30, 81,000/-. IN THE FACTS OF THE APPELLANT'S CASE IT IS SEEN THAT THE A PPELLANT HAS RECEIVED ONLY 20% OF THE AGREED CONSIDERATION DURIN G THE PREVIOUS YEAR UNDER CONSIDERATION. IN THE SUBSEQUENT YEAR TH E APPELLANT HAS RECEIVED RS. 55,00,000/- AND HAS NOT RECEIVED ANY A MOUNT THEREAFTER PURSUANCE TO THE AGREEMENT OF DEVELOPMEN T. THE TAXABILITY OF THESE RECEIPTS NEED TO BE CONSIDERED BASED ON MERCANTILE METHOD OF ACCOUNTING AS BUSINESS RECEIPT . 9. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUM STANCES IN THE CASE OF APPELLANT, I AM OF THE VIEW THAT THE INCOME HAS BE TREATED AS INCOME FROM BUSINESS AT THE HANDS OF THE APPELLA NT AS AGAINST RS.50,80,383/- TREATED AS SHORT TERM CAPITAL GAIN B Y THE AO. ACCORDINGLY THE AO IS DIRECTED TO ASSESS THE CORRES PONDING INCOME UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS AS P ER THE DISCUSSION ABOVE FOR THE RESPECTIVE YEARS. 4. ON APPRAISAL OF THE AFORESAID FINDINGS, WE FIND THA T THE OBJECT OF THE ASSESSEE IN ACCORDANCE WITH THE MEMORANDUM OF A SSOCIATION WAS TO CARRY BUSINESS OF LAND DEVELOPMENT. THE ASSESSEE ACQUIRED LAND AT SUGAT NAGAR, FOR A CONSIDERATION OF ` 21,35,677 AND INCURRED THE EXPENDITURE TO THE TUNE OF ` 47,83,940, FOR THE DEVELOPMENT OF THE 8 ARSHAD DEVELOPERS PVT. LTD. SAID PROPERTY. THIS FACT HAS IS NOT IN DISPUTE. IN THE BALANCE SHEET, THE DEVELOPMENT EXPENDITURE HAS BEEN SHOWN AS WORKINP ROGRESS. IN THE NOTES TO ACCOUNT UNDER INVENTORIES, IT IS SHOWN THA T INVENTORIES CONSIST OF LAND AND ASSESSEE HAS ACCEPTED ADVANCE FOR SALE. THE ASSESSING OFFICER CONSIDERED THE PROPERTY AS CAPITAL ASSET WH EREAS THE ASSESSEE HAS CONSIDERED THE SAME AS BUSINESS ASSET. THE INTE NTION TO ACQUIRE THE LAND CLEARLY SPEAKS ABOUT THIS FACT THAT THE SA ID LAND WAS PURCHASED WITH THE INTENTION TO CARRY OUT THE BUSIN ESS ACTIVITY. THE EVIDENCE IN RECORD ALSO SUPPORT THE FACT THAT THE A CTIVITY OF ASSESSEE IS DEVELOPMENT OF LAND AND BUSINESS ACTIVITY. IN VIEW OF THE SAID CIRCUMSTANCES, NO DOUBT, THE INCOME IS LIABLE TO TR EATED AS INCOME FROM BUSINESS. THE VIEW OF THE ASSESSING OFFICER TO INVOKE THE PROVISIONS OF SECTION 50C TO DETERMINE THE SHORT TE RM CAPITAL GAIN WAS NOT CORRECT. THERE WAS DISPUTE AS TO POSSESSION AS THE ASSESSEE DID NOT RECEIVE EVEN THE FIRST AMOUNT AS OBSERVED IN TH E DEVELOPMENT AGREEMENT. THE COST OF THE PROPERTY AS WELL AS DEVE LOPMENT CHARGES WAS TO THE TUNE OF ` 69,19,617 [AMOUNT OF ACQUISITION OF ` 21,35,667 (+) 47,83,940 TOWARDS EXPENDITURE INCURRED FOR DEVE LOPMENT]. IN THE YEAR UNDER CONSIDERATION, ASSESSEE RECEIVED 20% OF THE AGREED AMOUNT IN THE AGREEMENT AND IN THE SUBSEQUENT YEAR, THE ASSESSEE RECEIVED A SUM OF ` 55 LAKH. THE FULL AMOUNT WAS NOT PAID. NO DOUBT, AS PER THE ACCOUNTING STANDARD, THE LEARNED COMMISS IONER (APPEALS) HAS DIRECTED THE ASSESSING OFFICER TO TREAT THE AMO UNT RECEIVED BY THE 9 ARSHAD DEVELOPERS PVT. LTD. ASSESSEE IN BOTH THE YEARS IN ACCORDANCE WITH THE F ACTUAL POSITION OF THE CASE. NO CASE IS MADE OUT BEFORE US TO FIND FAU LT IN THE FINDINGS OF THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). IN THE CASE OF ASSESSEE, ASSESSMENT FOR ASSESSMENT YEAR 200506 HA S BEEN MADE BY THE ASSESSING OFFICER ASSESSING INCOME ARISING O UT OF RECEIPT OF ` 55 LAKH FOR THIS DEVELOPMENT AGREEMENT WHICH HAS ACHIE VED FINALITY. WE FIND NO TANGIBLE MATERIAL ON RECORD TO INTERFERE WI TH THE FINDING OF THE LEARNED COMMISSIONER (APPEALS) IN QUESTION. IN VIEW OF THE SAID CIRCUMSTANCE, WE ARE OF THE VIEW THAT THE LEARNED C OMMISSIONER (APPEALS) HAS PASSED THE ORDER JUDICIALLY AND CORRE CTLY WHICH IS NOT REQUIRED TO BE INTERFERED WITH AT THIS APPELLATE ST AGE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DECIDED AGAINST T HE REVENUE. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.06.2017 SD/ - P.K. BANSAL VICE PRESIDENT SD/ - AMARJIT SINGH JUDICIAL MEMBER NAGPUR, DATED: 27.06.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR