DCIT 2(1)(2), MUMBAI V. ESTATE INVESTMENT CO. P. LTD, MUMBAI

ITA 5048/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8511 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: SHRI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Business expenditure; Valuation report
• Section: 45(2); 143(3); 50C; 142(1); 28

Judgement Text

1 ITA NO. /MUM/201 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.5048/MUM/2015 (ASSESSMENT YEAR: 2010-11 ) THE DCIT 2(1)(2), MUMBAI VS ESTATE INVESTMENT CO PVT LTD 4 TH FLOOR, SAKSARIA BHAVAN 139, N.M. ROAD, FORT, MUMBAI-400 001 PAN : AAACE2566J APPELLANT RESPONDEDNT APPELLANT BY SHRI RAM TIWARI RESPONDENT BY SHRI PANKAJ JAIN DATE OF HEARING 26-10-2017 DATE OF PRONOUNCEMENT 08-11-2017 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-4, MUMBAI DATED 23-07-2015 AND IT PERTAINS TO AY 2010- 11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1. 'ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF E XPENDITURE UNDER THE HEAD BUSINESS INCOME AS THERE IS HARDLY ANY ACT IVITY RELATING 2 ITA NO. /MUM/201 TO DERIVATIVES AND FINANCE DURING THE PREVIOUS YEAR .' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN TREATING THE SALE CONS IDERATION RECEIVED ON SALE OF OWNERSHIP LAND AS BUSINESS INCO ME. THE LD. CIT(A) DID NOT APPRECIATE THE FACT THAT THE LAND WA S OWNED BY THE ASSESSEE FOR A LONG PERIOD OF TIME AND IT HAD SHOWN IN THE BALANCE SHEET AS INVESTMENTS.' 3. 'ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AN D IN LAW, THE ID. CIT(A) ERRED IN NOT APPRECIATING THE FACT T HAT THE PROVISION OF SECTION 50C OF THE /. T. ACT, 1961 IS CODE BY IT SELF AND APPLICABLE ON THE SALE OF A CAPITAL ASSET IN COMPUT ING THE LONG TERM CAPITAL GAINS.' 4. 'ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AN D IN LAW, THE ID. CIT(A) ERRED IN ALLOWING THE BUSINESS EXPENSES AS WELL AS THE CONVERSION OF CAPITAL ASSET INTO STOCK IN TR ADE.' 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A LIMITED COMPANY, ENGAGED IN THE BUSINESS OF DEALING IN OWNERSHIP LAN DS, SHARES, DERIVATIVES AND ALSO ENGAGED IN MONEY LENDING BUSINESS. THE ASSESS EE HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 24-09-201 0 DECLARING TOTAL INCOME OF RS.1,86,89,776. THE CASE WAS SELECTED FOR SCRUT INY AND NOTICES U/S 143(2)AND 142(1) WERE ISSUED. IN RESPONSE TO NOTIC ES, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME T O TIME AND FILED NECESSARY DETAILS, AS CALLED FOR. THE ASSESSMENT WAS COMPLET ED U/S 143(3) ON 25-03-2013 DETERMINING THE TOTAL INCOME AT RS.2,75,04,044 INTE RALIA MAKING ADDITIONS TOWARDS RE-WORKING OF CAPITAL GAIN FROM SALE OF OWN ERSHIP LANDS UNDER THE HEAD, INCOME FROM CAPITAL GAIN. 3 ITA NO. /MUM/201 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PRE FERRED APPEAL BEFORE THE CIT(A). BEFORE CIT(A), THE ASSESSEE FILED ELAB ORATE WRITTEN SUBMISSIONS TO CHALLENGE ADDITION MADE BY THE AO TOWARDS REWORKING OF INCOME FROM SALE OF OWNERSHIP LAND UNDER THE HEAD CAPITAL GAINS ON T HE GROUND THAT THE ASSESSEE HAS CONVERTED ITS OWNERSHIP LAND FROM INVESTMENTS I NTO STOCK IN TRADE U/S 45(2) OF THE INCOME-TAX ACT, 1961 AND THE RESULTANT GAIN ON SALE OF SUCH LANDS HAS BEEN ASSESSED UNDER THE HEAD INCOME FROM BUSINESS . THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSION OF THE ASSESSEE OBS ERVED THAT THE ASSESSEE HAS CONVERTED OWNERSHIP LAND INTO STOCK IN TRADE AND TR EATED THE INCOME, IF ANY, ARISING FROM SALE OF SUCH LAND UNDER REFERENCE UNDE R THE HEAD BUSINESS INCOME. THEREFORE, THE AO WAS INCORRECT IN ASSESS ING THE INCOME FROM SALE OF OWNERSHIP LAND UNDER THE HEAD INCOME FROM CAPITAL GAIN. INSOFAR AS EXPENSES CLAIMED AGAINST BUSINESS INCOME, EXCEPT LEGAL EXPEN SES RELATAING TO EKSALI LANDS OTHER EXPENSES ARE TO BE ALLOWED WHILE COMPUTING TH E TOTAL INCOME. WITH THESE OBSERVATIONS, THE CIT(A) PARTLY ALLOWED APPEA L FILED BY THE ASSESSEE. RELEVANT PORTION OF THE ORDER OF CIT(A) IS EXTRACTE D BELOW:- 4. I HAVE CONSIDERED THE FINDING OF THE A.O., RIVAL SUBMISSION OF THE APPELLANT AND BACKGROUND OF THE MATTER, CARE FULLY. I FIND THAT THE APPELLANT COMPANY HAS PASSED A BOARD RESOLUTION DATED 04.09.2009 FOR CONVERTING THE SAID OWNERSHIP LANDS INTO STOCK IN TRADE. THE VALUATION REPORT FOR THE MARKET VALUE FOR THIS PROPERTY HAS ALSO BEEN OBTAINED. THE SAID RESO LUTION HAS BEEN PASSED MUCH BEFORE THE ASSESSMENT ORDER FOR TH E YEAR 4 ITA NO. /MUM/201 2009-10 DATED 30.12.2011 AS ALSO THE ORDER OF CIT(A ) DATED 30.11.2012. NOTE NO.7 OF THE ACCOUNTS ALSO REFERS T O THE SAID CONVERSION OF THE LAND INTO STOCK IN TRADE AND IS R EPRODUCED BELOW FOR READY REFERENCE- 7. THE COMPANY OWNS LAND AT BHAYANDAR, GHODBUNDER A ND MIRA, WHICH ARE CLASSIFIED AS 'INVESTMENT IN IMMOVABLE PR OPERTIES. MOST OF THE LAND IS OCCUPIED BY TENANTS. LANDS WHER E THE TENANTS NAME HAS BEEN WRONGLY MENTIONED IN THE 'KABJEDAR'(OWNER) COLUMN AND THAT OF THE COMPANY IN THE OTHER RIGHTS COLUMN IN 7112 EXTRACTS HAVE BEEN CLASSIFIED AS 'EKSALI LANDS' AND WHEREVER THE COMPANY'S NAME APPEARS IN T HE 'KABJEDAR'(OWNER) COLUMN IN THE 7112 EXTRACT HAVE B EEN CLASSIFIED AS 'OWNERSHIP LANDS'. THE COMPANY IS CLAIMING OWNERSHIP OF THESE LANDS WH ICH IS BEING CONTESTED BEFORE THE APPROPRIATE AUTHORITIES/ COURT S. THE COMPANY HAS CONVERTED 'OWNERSHIP LANDS' HELD BY IT AT BHAYANDAR, GHODBUNDER AND MIRA, WHICH WAS HITHERTO HELD AS AN INVESTMENT, INTO STOCK-IN-TRADE W.E.F. 30.09.200 9. IN VIEW OF ACCOUNTING STANDARDS AS-2 AND AS-13, NO ENTRIES HAVE BEEN PASSED IN THE BOOKS OF ACCOUNTS TO GIVE EFFECT TO T HESE CHANGES. HOWEVER, THE PROFITS ARISING ON THE SALE OF THESE L ANDS WILL BE COMPUTED IN ACCORDANCE WITH SECTION 2(47)145(2) AN D SECTION 28 OF THE INCOME TAX ACT, 1961.' THE APPELLANT HAS ALSO DISCLOSED THE SAID'CONVERSIO N IN THE TAX AUDIT REPORT. IN ORDER TO FACILITATE THE SAID DEALINGS IN THE SAI D OWNERSHIP LAND, THE APPELLANTS HAVE ENTERED INTO A FACILITATI ON AGREEMENT DATED 26.10,2010 WITH A. R. BHAYANDAR. AS REGARDS T HE EXPENDITURE INCURRED BY THE APPELLANTS, THE A.O. HA S ACCEPTED THE GENUINENESS OF THIS EXPENDITURE AND HA S ALSO ALLOWED THE DEDUCTION TO THE EXTENT OF INCOME OFFER ED UNDER THE HEAD BUSINESS INCOME. THE DISALLOWANCE OF BALAN CE EXPENDITURE OF RS.88,14,268/- IS BASED ON THE STAND TAKEN FOR THE A.YR.2009-10 THAT IT IS DISPROPORTIONATE TO THE INC OME FROM DERIVATIVE 5 ITA NO. /MUM/201 TRANSACTIONS, SHARE TRADING, INTEREST, ETC. OFFERED TO TAX BY THE APPELLANTS. AFTER SETTING OFF THE SAID INCOME AGAIN ST THE EXPENSES INCURRED, THE A.O. HAS DISALLOWED THE EXPENDITURE / LOSS OF RS.88,14,2681-. I FIND THAT IN THE A.YR.2009-10, TH E THEN LD. CIT(A) HAS GIVEN A DETAILED FINDING AND REASONING THAT THE APPELLANT IS A DEALER IN OWNERSHIP LANDS AND TH EREFORE THE SAID OWNERSHIP LANDS CONSTITUTE STOCK IN TRADE OF T HE APPELLANTS. THE LD. CIT(A) HAS, THEREFORE, HELD THAT THE PROFIT ON SALE OF 'OWNERSHIP LAND' IS TO BE TAXED AS BUSINESS INCOME. CONSEQUENTLY, IT HAS BEEN HELD THAT ALL EXPENSES CLAIMED BY THE A PPELLANTS ARE TO BE ALLOWED EITHER AGAINST INCOME FROM DERIVATIVE TRANSACTIONS, SHARE TRADING, INTEREST AND SALE OF O WNERSHIP LANDS. THE RELEVANT PORTION OF THE CIT(A)'S ORDER R ELATING TO THIS ISSUE IS REPRODUCED BELOW: '6.2 ASSESSEE IS REGULARLY SELLING ITS PLOT OF LAND S, WHETHER THEY ARE OWNERSHIP LAND OR EKSALI LANDS. THIS ACTIVITY OF SE LLING OF LANDS IS VERY FREQUENT AND LEGAL AS WELL AS BROKERAGE EXPENS ES AND OTHER RELATED EXPENSES ARE INCURRED WITH REGARD TO SALE O F SUCH LANDS. THEREFORE, IT IS TO BE CONSIDERED WHETHER SUCH ACTI VITY IS A BUSINESS OF THE ASSESSEE OR IT IS MERELY RESULTING IN CAPITAL GAINS AS CLAIMED BY THE ASSESSEE. THE A.O. HAS ASSESSED THE CAPITAL GAINS/LOSS DECLAR ED BY THE ASSESSEE AS BUSINESS INCOME ON PROTECTIVE BASIS VID E PARA 9 OF THE ASSESSMENT ORDER, IN CASE OF OWNERSHIP LAND, ASSESSEE HAS TO EXECUTE CONVEYANCE DEED AND MAINTAIN ITS RIG HTS, THEREFORE, IT REQUIRES LEGAL CONSULTATION AND OTHER EXPENSES REGARDING OWNERSHIP LAND, WHEREAS, IN CASE OF EKSAL I LANDS, MERELY A NO OBJECTION CERTIFICATE IS GIVEN BY THE A SSESSEE AND CERTAIN LEGAL EXPENSES ARE INCURRED IN THIS REGARD. THEREFORE, I AGREE WITH THE A.O. THAT THE INCOME OF THE ASSESS EE FROM SALE OF LAND IS BUSINESS INCOME TO THE EXTENT IT RE LATES TO OWNERSHIP LANDS ONLY, BECAUSE THE OWNERSHIP LAND IS TREATED AS STOCK-INTRADE AND THE SAME IS SOLD IN THE FORM O F PLOTS VERY REGULARLY. WHEREAS, THE TRANSACTIONS REGARDING EKSALI LANDS ARE NOT IN THE NATURE OF BUSINESS, BECAUSE TH E ASSESSEE'S RIGHT IS A LIMITED RIGHT AND IT HAS ONLY TO ISSUE A NO OBJECTION CERTIFICATE, THEREFORE, EKSALI LAND CANNO T BE TREATED AT 6 ITA NO. /MUM/201 PAR WITH OWNERSHIP LANDS. THESE LIMITED RIGHTS IN EKSALI LAND CANNOT BE CONVERTED TO STOCK-IN-TRADE AND, THEREFOR E, INCOME FROM RELEASE OF INTEREST IN EKSALI LANDS IS ASSESSABLE AS CAPITAL GAINS ONLY AS OFFERED BY THE ASSESSEE. ACCO RDINGLY, ONLY LEGAL EXPENSES RELATING TO EKSALI LANDS ARE ALLOWED TO BE REDUCED FROM THE SALE CONSIDERATION OF EKSALI LANDS WHILE CALCULATING THE CAPITAL GAIN FROM RELEASE OF RIGHTS IN EKSALI LANDS. 6.3 WHILE COMPUTING INCOME FROM BUSINESS AND PROFES SION ON TRANSFER OF LAND BY THE ASSESSEE, A.O. HAS ALLOWED ALL EXPENSES CLAIMED BY THE ASSESSEE VIDE PARA 9 OF THE ASSESSME NT ORDER, BECAUSE THE COMPUTATION HAS BEEN STARTED FROM THE N ET PROFIT AS PER PROFIT AND LOSS ACCOUNT AND AUTOMATICALLY AL L EXPENSES CLAIMED BY THE ASSESSEE HAVE BEEN ALLOWED. IN VIEW OF THE ABOVE DECISIONS, ALL EXPENSES CLAIMED BY THE ASSESS EE ARE EITHER NECESSARY FOR MAINTAINING CORPORATE STATUS O R RELATE TO BUSINESS OF TRADING IN DERIVATIVES, OTHER SECURITIE S AND MONEY LENDING OR RELATES TO TRANSFER OF OWNERSHIP LAND OR RELATES TO RELEASE OF RIGHTS IN EKSALI LANDS. THERE IS NO DISP UTE ON THE NATURE AND GENUINELY OF THE EXPENDITURE AND, THEREF ORE, A.O. HAS ALLOWED ALL EXPENSES VIDE PARA 9 WHILE COMPUTIN G THE INCOME FROM BUSINESS AND PROFESSION. THEREFORE, IN VIEW OF THE ABOVE DISCUSSION AND DECISION, ALL EXPENSES CLAIMED BY THE ASSESSEE ARE ALLOWED AS BUSINESS EXPENSES EXCEPT A SMALL PART OUT OF LEGAL EXPENSES WHICH RELATES TO RELEASE OF R IGHTS OF EKSALI LANDS AND THE SAME IS ALLOWABLE WHILE COMPUTING CAP ITAL GAIN ON ACCOUNT OF RELEASE OF RIGHTS OF EKSALI LANDS. TH E LEGAL EXPENSES RELATING TO EKSALI LANDS WILL BE DECIDED B Y THE A.O. ON THE BASIS OF THE DETAILS PRODUCED BY THE ASSESSEE AT TH E TIME OF GIVING EFFECT TO THIS ORDER AND THE SAME WILL BE AL LOWED AGAINST, CAPITAL GAIN TO BE COMPUTED ON ACCOUNT OF RELEASE O F RIGHTS ON EKSALI LANDS BY THE ASSESSEE. 6.4 IN RESULT, IT IS HELD THAT INCOME FROM TRANSFER OF OWNERSHIP LANDS IS TO BE ASSESSED AS BUSINESS INCOME AND THER EFORE, ALL EXPENSES WHICH HAVE BEEN CLAIMED BY THE ASSESSEE OT HER THAN, PART OF THE LEGAL EXPENSES RELATING TO EKSALI LANDS ARE ALLOWED AS BUSINESS EXPENSES AGAINST TRADING IN DERIVATIVE AND OTHER SECURITIES BUSINESS, MONEY LENDING BUSINESS AND THE BUSINESS INCOME FROM TRANSFER OF OWNERSHIP LANDS. INTEREST I NCOME AND BALANCES WRITTEN BACK ARE ALSO TO BE ASSESSED AS BU SINESS INCOME 7 ITA NO. /MUM/201 AS DECLARED BY THE ASSESSEE. WHILE COMPUTING 'INCOM E FROM BUSINESS AND PROFESSION', THE ISSUE RELATING TO COS T OF LAND AND SALE PRICE MAY ARISE, BUT, WHEN THE INCOME FROM TRA NSFER OF OWNERSHIP LAND IS ASSESSED AS BUSINESS INCOME, THEN , THE ORIGINAL COST TO THE ASSESSEE OF SUCH LAND IS TO BE ALLOWED AS COST INSTEAD OF COST AS ON 01.04.1981 IN CASE OF CAPITAL GAINS AND NO INDEXATION IS ALLOWABLE TO THE ASSESSEE ON SUCH COS TS. ON CONVERSION OF LAND TO STOCK-IN-TRADE, IT RESULTS PA RTLY IN CAPITAL GAIN AND ON SALE AS BUSINESS INCOME, WHEREAS, IN TH E CASE OF THE ASSESSEE, INCREASE IN COST AT THE TIME OF CONVERSIO N TO STOCK-IN- TRADE WILL REDUCE THE INCOME FROM BUSINESS AND TO T HE SAME EXTENT CAPITAL GAIN WILL INCREASE, THEREFORE, INCRE ASE IN CAPITAL GAIN WILL BE SET-OFF BY THE DECREASE IN BUSINESS IN COME AND, THEREFORE, THERE WILL BE NO EFFECT ON THE TOTAL TAX ABLE INCOME. FURTHER; THE SALE PRICE AS DECLARED BY THE ASSESSEE IS TO BE ACCEPTED BECAUSE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE IN CASE OF BUSINESS INCOME IN VIEW OF THE SUBMISSIONS OF THE ASSESSEE AND DECISION RELIED BY THE ASSESSEE, PARTI CULARLY THE DECISION OF HON'BLE 1TAT IN THE CASE OF INDRALOK HO TELS PVT. LTD. V/S. ITO (32 SOT 419) (MUM) AND THE OTHER DECISIONS RELIED BY THE ASSESSEE.' 5. RESPECTFULLY FOLLOWING THE DECISION OF MY LEARNE D PREDECESSOR IN A.YR.2009-10 AND WITH A VIEW TO MAIN TAIN JUDICIAL CONSISTENCY, A.O. IS DIRECTED TO ACCEPT TH E CONVERSION OF OWNERSHIP LAND INTO STOCK-IN-TRADE AN D TREAT THE INCOME, IF ANY, ARISING FROM SALE OF SUCH LAND UNDE R REFERENCE, AS BUSINESS INCOME. CONSEQUENTLY, ALL EX PENSES CLAIMED BY THE APPELLANT, EXCEPT LEGAL EXPENSES REL ATABLE TO EKSALI LANDS ARE TO BE ALLOWED WHILE COMPUTING THE TOTAL I NCOME. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. THE LD.DR SUBMITTED THAT THE LD.CIT(A) WAS ERRED IN TRE ATING THE SALE CONSIDERATION RECEIVED ON SALE OF OWNERSHIP LAND UNDER THE HEAD BUSINESS INCOME AS THE ASSESSEE HAS OWNED THE OWNERSHIP LANDS FOR A LONG P ERIOD OF TIME AND IT HAD SHOWN IN THE BALANCE-SHEET AS INVESTMENTS. THE AR FURTHER SUBMITTED THAT THE 8 ITA NO. /MUM/201 LD.CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF EXPEND ITURE UNDER THE HEAD BUSINESS INCOME AS THERE IS HARDLY ANY ACTIVITY R ELATING TO DERIVATIVE AND FINANCE DURING THE PREVIOUS YEAR. THE CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE PROVISIONS OF SECTION 50C OF THE I.T. ACT, 1961 IS CODE BY ITSELF AND APPLICABLE ON SALE OF A CAPITAL ASSET IN COMPUTING THE LONG TERM CAPITAL GAINS. THE AO HAS BROUGHT OUT CLEAR FACTS TO THE EFFECT TH AT INCOME FROM SALE OF OWNERSHIP LAND IS RIGHTLY ASSESSABLE UNDER THE HEAD CAPITAL GAINS AND HIS ORDER SHOULD BE UPHELD. 5. ON THE OTHER HAND, THE LD.AR STRONGLY SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO.405/MUM/2013 DATED 20-01-2016, WHEREIN THE CO-ORDINATE BENCH HAS CATEGORICALLY HELD THAT INCOME FROM SALE OF OWNERSHIP LANDS IS TO BE ASSESS ED AS BUSINESS INCOME. THE CIT(A), AFTER CONSIDERING RELEVANT FACTS HAS RIGHTL Y DIRECTED THE AO TO ASSESS INCOME FROM SALE OF OWNERSHIP LANDS UNDER THE HEAD INCOME FROM BUSINESS AND HENCE, THE ORDER OF THE CIT(A) SHOULD BE UPHELD. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL AV AILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE LIMITED QUESTION CAME UP FOR OUR CONSIDERATION IS WHETHER ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE, SURPLUS FROM SALE OF OWNERSHIP LAND, WHICH A RE CONVERTED INTO STOCK IN 9 ITA NO. /MUM/201 TRADE U/S 45(2) OF THE INCOME-TAX ACT, 1961 IS ASSE SSABLE UNDER THE HEAD INCOME FROM BUSINESS OR INCOME FROM CAPITAL GAIN S. THE CO-ORDINATE BENCH HAS EXAMINED SIMILAR ISSUE IN ASSESSEES OWN CASE F OR THE ASSESSMENT YEAR 2009-10 IN ITA NO.1105/MUM/2013. THE ITAT, AFTER C ONSIDERING RELEVANT FACTS HAS HELD THAT INCOME FROM SALE OF OWNERSHIP LAND IS TO BE ASSESSED AS BUSINESS INCOME. INSOFAR AS ALLOWABILITY OF EXPENSES CLAIME D AGAINST BUSINESS INCOME AND APPLICABILITY OF PROVISIONS OF SECTION 50C ARE CONSEQUENTIAL IN NATURE WHICH CHALLENGES THE HEAD OF INCOME UNDER WHICH SURPLUS F ROM SALE OF LAND SHOULD BE ASSESSED. THE ITAT, AFTER CONSIDERING THE FACTS HA S HELD THAT THE LAND DEALINGS CONSTITUTE THE MAIN BUSINESS OF THE ASSESSEE AND TH AT THE NATURE OF EXPENSES ARE SUCH THAT IT IS APPARENT THAT THE ASSESSEE HAS BEEN EMPLOYING VARIOUS RESOURCES FOR MAINTAINING ITS RIGHT IN LAND FOR DIS POSING THE ASSETS THROUGH LAWYERS, BROKERS, EMPLOYEES, ETC. IN THIS FACTUAL MATRIX AS LAID OUT, WE CONCUR WITH THE ORDER OF LD.CIT(A) IN HOLDING THAT ALL EXP ENSES OTHER THAN PART OF THE LEGAL EXPENSES RELATING TO EKSALI LANDS ARE TO BE A LLOWED AGAINST BUSINESS INCOME. THE RELEVANT PORTION OF THE ORDER IS EXTRA CTED BELOW:- 6.3. 1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IT IS SEEN FROM THE ORDER OF ASSESSMENT THAT THE ASSESSEE HAD DECLA RED THE INCOME FROM SALE OF 'OWNERSHIP LANDS' AS CAPITAL GA INS/LOSS. THE AG WHILE COMPLETING THE ORDER OF ASSESSMENT., A T PARA 9 THEREOF HAS ALSO ASSESSED THE INCOME FROM SALE OF ' OWNERSHIP LANDS' AS BUSINESS INCOME ON A PROTECTIVE BASIS, WH ILE AT THE 10 ITA NO. /MUM/201 SAME TIME ACCEPTING THE SAME AS CAPITAL GAINS AS DE CLARED BY THE ASSESSEE IN THE RETURN OF INCOME. WE FIND TH AT ON APPEAL, THE LD. CIT(A) OBSERVING THAT SINCE THE ACTIVELY OF SALE OF 'OWNERSHIP LANDS' PLOTS WAS QUITE FREQUENT, THAT THE LAND WAS TREATED AS STOCK-IN-TRADE AND THE ASSESSEE HAD TO EXECUTE CONV EYANCE DEEDS AND MAINTAIN ITS RIGHTS AND IN THIS CONTEXT R EQUIRES LEGAL CONSULTATION AND OTHER EXPENSES TO BE INCURRE D; CONCURRED WITH THE VIEW OF THE AO THAT THE INCOME F ROM SALE OF 'OWNERSHIP LANDS' IS BUSINESS INCOME . EXCEPT FOR R AISING THE GROUND. THAT INCOME FROM SALE OF 'OWNERSHIP LANDS' SHOULD B E ASSESSED AS CAPITAL GAINS, SINCE THE ASSESSEE HAD DECLARED T HE SAME AS INCOME FROM CAPITAL GAINS, NO COGENT REASONS OR EVI DENCE HAS BEEN PUT FORTH BY THE LD. DR TO CONTROVERT THE FACTUAL F INDINGS OF THE LD. CIT(A) AND ALSO THOSE OF THE AO THAT THE INCOME FRO M SALE OF 'OWNERSHIP LANDS' IS TO BE ASSESSED AS BUSINESS INC OME. IN THE FICTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED AB OVE, WE CONCUR WITH THE FINDINGS AND REASONING OF THE LD. CIT(A) T HAT, IN VIEW OF THE FREQUENCY OF SALE OF 'OWNERSHIP LANDS'; THE FAC T THAT THE SAME WAS TREATED AS STOCK-IN-TRADE AND THE EXTENT OF EXP ENSES INVOLVED TO EXECUTE CONVEYANCE DEEDS, MAINTAIN ITS RIGHTS AN D LEGAL AND OTHER EXPENSES INCURRED IN THIS REGARD, WE UPHOLD T HE VIEW OF THE LD.CIT(A) THAT THE INCOME FROM SALE OF 'OWNERSHIP L ANDS' IS TO BE ASSESSED AS 'BUSINESS INCOME' . WE HOLD AND_DIACRDI NGLY. CONSEQUENTLY, GROUNDS AT SR. NO. 3(FD 5 ARE DISMIS SED, 6.3.2 IN RESPECT OF REVENUE'S AVERMENT THAT THE LD. CIT(A) HAS ERRED IS NOT APPRECIATING THAT THE PROVISIONS OF SE CTION 50C OF THE ACT WERE APPLICABLE ON SALE OF CAPITAL ASSETS FOR COMPU TING LTCG, WE FIND FROM A PERUSAL OF THE IMPUGNED ORDER THAT THE LD. CIT(A) HAS RENDERED NO SUCH FINDING. THE LD. CIT(A) HAS IN FACT HELD THAT THE PROVISIONS OF SECTION 50C OF THE ACT ARC NOT APPLIC ABLE IN THE CASE OF IN CASE BUSINESS INCOME IN VIEW OF THE DECISION OF INTER ALIA, INDRALOK HOTELS P. LTD.(32 SOT 419)(MUM). WE THEREF ORE REJECT GROUND NO.3 (B) RAISED BY REVENUE. 6.3.3. IN RESPECT OF REVENUES CLAIM IN GROUNDS NO.4 , THAT THE LD. CIT(A) ERRED IN CONCLUDING THAT THE AO HAS ALLOWED ALL THE EXPENSES CLAIMED BY THE ASSESSEE, AFTER AN APPRECIA TION OF THE DETAILS ON RECORD, WE CONCUR WITH THE OBSERVATI ON OF THE LD. CIT(A) THAT THE AO AT PARA 9 OF THE ORDER OF AS SESSMENT, 11 ITA NO. /MUM/201 WHILE ASSESSING THE TRANSFER OF 'OWNERSHIP LANDS' A S BUSINESS INCOME, HAS ALLOWED ALL EXPENSES CLAIMED BY THE ASS ESSEE IN REGARD TO TRANSFER OF LANDS. WE ALSO FIND THAT THE AO HAS OBSERVED THAT THE VARIOUS COMPONENTS OF INCOME AND EXPENSES IN RESPECT OF TRANSFER OF OWNERSHIP LANDS LEFT HIM WITH NO OTHER OPTION THAN TO CONCLUDE THAT LAND DEA LINGS CONSTITUTE THAT MAIN BUSINESS OF THE ASSESSEE AND T HAT THE NATURE OF EXPENSES ARE SUCH THAT IT IS APPARENT THA T THE ASSESSEE HAS BEEN EMPLOYING VARIOUS RESOURCES FOR M AINTAINING ITS RIGHTS IN LAND, FOR DISPOSING THE ASSETS THROUG H LAWYERS, BROKERS, EMPLOYEES, DIRECTORS ETC. IN THIS FACTUAL MATRIX AS LAID OUT ABOVE, WE CONCUR WITH THE ORDER OF THE LD. CIT(A) IN HOLDING THAT ALL EXPENSES, OTHER THAN THA T PART OF THE LEGAL EXPENSES, RELATING TO 'EKSALI LANDS' AND THOS E FOR MAINTAINING THE CORPORATE EXISTENCE OF ASSESSEE AND FOR THE ASSESSEE'S TRADING IN DERIVATIVES, OTHER SECURITIES AND MONEY LENDING, ARE TO BE ALLOWED AGAINST BUSINESS I NCOME FROM SALE OF OWNERSHIP LANDS'. WE CONSEQUENTLY DISM ISS GROUND NO: 4 RAISED BY THE ASSESSEE. 7. FACTS REMAIN UNCHANGED. THE REVENUE HAS FAILED TO BRING ON RECORD ANY EVIDENCE TO PROVE THE FINDINGS OF FACTS RECORDED BY THE CIT(A). THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO BEING CONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH IN ASS ESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10, WE DIRECT THE AO TO ASSESS INCOME FROM SALE OF OWNERSHIP LANDS UNDER THE HEAD INCOME FROM BUSINES S AND ALSO ALLOW EXPENSES CLAIMED AGAINST BUSINESS INCOME EXCEPT LEG AL EXPENSES INCURRED FOR EKSALI LANDS. INSOFAR AS APPLICABILITY OF PROVISIO NS OF SECTION 50C IS CONCERNED, ONCE INCOME IS ASSESSABLE UNDER THE HEAD INCOME FR OM BUSINESS, PROVISIONS OF SECTION 50C HAS NO APPLICATION AND HENCE THERE I S NO MERIT IN THE GROUND 12 ITA NO. /MUM/201 TAKEN BY THE REVENUE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH OCTOBER, 2017. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 08 TH OCTOBER, 2017 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI