Income Tax Officer (Ward ) 2, Margao V. M/S. Afonso Real Estate Developers, Margao

ITA 98/PAN/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72038 (ITAT-PANAJI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 14-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SONAL L SONKAVDE
• Assessee Lawyers: KRISHNA P KAMAT ITP
• Keywords: Capital asset; Business income; Maximum Marginal Rate; Cost of acquisition; Revised return
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 98/PNJ/2013 : (ASST. YEAR : 2007 - 08) INCOME TAX OFFICER, WARD - 2, MARGAO, GOA (APPELLANT) VS. M/S. AFONSO REAL ESTATE DEVELOPERS, NO. 14/4, GARDEN VIEW BUILDING, NEAR COLLECTORATE OFFICE, MARGAO, GOA (RESPONDENT) PAN : AANFA0957D CO NO. 23/PNJ/2013 (IN ITA NO. 98 /PNJ/2013) : (ASST. YEAR : 2007 - 08) M/S. AFONSO REAL ESTATE DEVELOPERS, NO. 14/4, GARDEN VIEW BUILDING, NEAR COLLECTORATE OFFICE, MARGAO, GOA (CROSS OBJECTOR) PAN : AANFA0957D VS. INCOME TAX OFFICER, WARD - 2, MARGAO, GOA (RESPONDENT) REVENUE BY : SMT. SONAL L. SONKAVDE , DR ASSESSEE BY : KRISHNA P. KAMAT , ITP DATE OF HEARING : 06/08/2013 DATE OF PRONOUNCEMENT : 23 /08/2013 O R D E R PER P.K. BANSAL : 1. THE APPEAL AS WELL AS THE CROSS OBJECTION HAS BEEN FILED AGAINST THE ORDER OF CIT(A) DT. 26.3.2013. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN ITS APPEAL : 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ORDER IS OPPOSED TO LAW AND FACT OF THE CASE. 2 ITA NO. 98/PNJ/2013 & CO NO. 23/PNJ/2013 (ASST. YEAR : 2007 - 08) 2. THE LD. CIT(A) HAS ERRED IN APPRECIATING THE ASSESSMENT MADE U/S.143(3) R.W.S. 147 IN ASSESSING THE INCOME AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS AS ASSESSED ORIGINALLY. 3. IT IS EVIDENT FROM THE PARTNERSHIP DEED AND SALE DEED THAT THE ASSESSEE FI RM IS A REAL ESTATE DEVELOPER, CARRYING ON BUSINESS IN REAL ESTATE BY SELLING AND DEVELOPING PROPERTIES. 4. THE CIT(A) FAILED TO APPRECIATE THAT WHEN A PERSON ACQUIRES WITH A VIEW TO SELLING IT LATER AFTER DEVELOPING THE SAME, HE IS CARRYING ON ACTIVITY RE SULTING IN PROFIT AND THE ACTIVITY CAN ONLY BE DESCRIBED AS A BUSINESS VENTURE IN VIEW OF THE DECISION OF RAJA J. RAMESWAR RAO VS. CIT(SC) 42 ITR 179. 5. THE CIT(A) FAILED TO APPRECIATE THAT LAND PURCHASED HAD POTENTIALLY OF BEING DEVELOPED INTO BUILDING S ITE - NO AGRICULTURAL OPERATIONS WERE CARRIED OUT ON LAND BY THE ASSESSEE - IT IS ADVENTURE IN THE NATURE OF TRADE IN VIEW OF DECISIONS OF BADRILAL BHOLARAM VS. CIT (MP) 139 ITR 207, CIT VS. B. NARASIMHA REDDY (KAR) 150 ITR 347 AND CIT VS. M. KRISHNA RAO ( AP) 120 ITR 101. 6. WITHOUT PREJUDICE TO THE ABOVE GROUNDS IT IS SEEN THAT THE CIT(A) HAS ERRED TO APPRECIATE THE FACT THAT THE LAND SOLD IN WITHIN 5 KMS FROM CUNCOLIM MUNICIPAL COUNCIL WHICH IS VERIFIABLE FROM THE MAP OF CUNCOLIM MUNICIPAL COUNCIL PUBLISH ED BY DIRECTOR OF CENSES OPERATIONS AND HENCE IT CANNOT BE TREATED AS AGRICULTURAL LAND AND EXEMPTED FROM PAYMENT OF CAPITAL GAIN TAXES. IN THE CROSS OBJECTION FILED BY THE ASSESSEE, THE ASSESSEE HA S SUPPORT ED THE ORDER OF CIT( A) BY TAKING VARIOUS GROUNDS AND THE ASSESSEES COUNSEL AT THE TIME OF HEARING SAID THAT ALL THESE GROUNDS ARE SUPPORTING TO THE ORDER OF CIT(A). THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE INCOME DERIVED BY THE ASSESSEE ON THE SALE OF THE AGRIC ULTURAL LAND IS A BUSINESS INCOME OR IS A CAPITAL GAIN. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CONSTITUTED BY PARTNERSHIP DEED DT. 29.7.1989 FOR THE PURPOSE OF CARRYING ON BUSINESS UNDER THE NAME AND STYLE OF M/S. AFO NSO REAL ESTATE DEVELOPERS FOR BUYING AND DEVELOPING PROPERTIES INTO PLOTS. THE ASSESSEE FIRM PURCHASED AGRICULTURAL LAND AT THE NATIVE PLACE OF THE PARTNERS I.E. AT CAVOLLOSIM WHICH WAS SOLD AFTER 3 YEARS ON AS IT IS WHERE IT IS BASIS. THE ASSESSEE CL AIMS THAT THE 3 ITA NO. 98/PNJ/2013 & CO NO. 23/PNJ/2013 (ASST. YEAR : 2007 - 08) ASSESSEE HAS NOT CARRIED OUT ANY REVENUE ACTIVITY IN REAL ESTATE TILL DATE. THE PROPERTY SO SOLD WAS NOT CONVERTED INTO NON - AGRICULTURAL NOR WAS ANY DEVELOPMENT WORK TAKEN UP. THE ASSESSEE FILED THE RETURN FOR THE IMPUGNED A.Y. 30.1.2008 DE CLARING INCOME OF RS.1,53,069/ - . THE ASSESSMENT U/S 143(3) WAS COMPLETED AFTER ADDING THEREON LONG TERM CAPITAL GAINS AMOUNTING TO RS.1,69,20,000/ - . IN THE ORIGINAL RETURN FILED, THE ASSESSEE HAS CLAIMED EXEMPTION FOR RS. 54 LACS STATING THAT THE AGRICUL TURAL PROPERTY IS BEYOND 8 KMS. FROM THE MUNICIPAL LIMITS. THE EXEMPTION FOR RS.5 0 LACS WAS CLAIMED U/S 54EC BEING INVESTMENT MADE IN REC BONDS ON 31.1.2007. EXEMPTION OF RS.65,20,000/ - WAS CLAIMED FOR INVESTMENT IN CAPITAL GAIN ACCOUNT SCHEME IN UNION B ANK OF INDIA MADE ON 24.7.2007. THE AO POINTED OUT THE ON THE BASIS OF THE MAP FURNISHED BY THE OFFICE OF TOWN & COUNTRY PLANNING, MARGAO WAS OF THE VIEW THAT THE PROPERTY FALLS WITHIN 8 KMS. FROM THE MUNICIPAL CORPORATION LIMITS. IT WAS ALSO NOTED THAT THE INVESTMENT IN REC BONDS WAS AFTER EXPIRY OF THE PRESCRIBED PERIOD OF 6 MONTHS. SIMILARLY, THE INVESTMENT IN CAPITAL GAIN FIXED DEPOSIT WAS AL SO AFTER THE EXPIRY OF 6 MONTHS. FINALLY, THE ASSESSEE FILED THE REVISED RETURN WITHDRAWING ALL THE EXEMPTIO NS AND CLAIMING THE PROPERTY SOLD AS NOT CAPITAL ASSET CLAIMING THAT THE DISTANCE OF THE PROPERTY FROM THE LIMITS OF MARGAO MUNICIPAL CORPORATION WAS 8.127 KMS. THE AO TOOK THE VIEW THAT THE REVISED RETURN COULD NOT BE CONSIDERED AS IT WAS BARRED BY SEC. 139(5). ULTIMATELY, THE AO MADE THE ADDITION OF RS.1,69,20,000/ - . SUBSEQUENTLY, THE NOTICE U/S 148 WAS ISSUED ON 26.8.2010 WITH THE APPROVAL OF THE ADDL. COMMISSIONER OF INCOME TAX AND THE CASE WAS RE - OPENED U/S 147. THE ASSESSMENT WAS COMPLETED U/S 14 3 (3) R/W SEC. 147 ON A TOTAL INCOME OF RS.1 , 70,73,609/ - BUT THE INCOME FROM SALE OF LAND WAS TREATED TO BE BUSINESS INCOME AND TAX WAS LEVIED AT THE MAXIMUM MARGINAL RATE. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AGAINST BOTH THE ORDERS PASSED U/S 143(3) AS WELL AS PASSED U/S 143(3) R/W SEC. 147 BY HOLDING AS UNDER : 4 ITA NO. 98/PNJ/2013 & CO NO. 23/PNJ/2013 (ASST. YEAR : 2007 - 08) 6. I HAVE GONE THROUGH BOTH THE ASSESSMENT ORDERS, AND THE SUBMISSIONS OF THE APPELLANT. IT CAN B E SEEN THAT BOTH THE ASSESSMENT ORDERS SUFFER FROM BASIC INFIRMITIES LIKE, WHEN THE A.O. ACCEPTS THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND, HOW THE SALE OF THE SAME CAN BE TREATED AS LONG - TERM CAPITAL GAIN. IF IT IS A LONG TERM CAPITAL GAIN, THEN T HE A.O. HAS NOT EVEN QUANTIFIED THE COST OF ACQUISITION AND NO INDEXED COST OF ACQUISITION HAS BEEN REDUCED FROM THE SALE CONSIDERATION TO ARRIVE AT THE LONG TERM CAPITAL GAIN, IF ANY. THE A.O. ALSO DID NOT SUBSTANTIATE AS TO HOW THE AGRICULTURAL LAND IN Q UESTION WAS WITHIN 8 KMS OF THE MUNICIPAL LIMITS, ON THE OTHER HAND, THE APPELLANT PROVED THAT THE SAID AGRICULTURAL PROPERTY WAS WELL BEYOND 8 KMS OF THE MUNICIPAL LIMITS. FINALLY, OPINION OF THE A.O. CHANGED AND HE DECIDED THAT THE GAIN OF THE ASSESSEE I S BUSINESS INCOME, BECAUSE, ITS NAME IS A REAL ESTATE DEVELOPER EVEN THOUGH THE APPELLANT HAS NEVER DONE ANY BUSINESS IN THE REAL ESTATE, THE AO ARBITRARILY TREATED THE LAND AS STOCK - IN - TRADE THOUGH DID NOT ASSIGN ANY VALUE TO THE SAME. 7. IN VIEW OF THE ABOVE MENTIONED INFIRMITIES IN THE ORDER AND THE FACTS OF THE CASE, IN MY OPINION, SINCE THE LAND IS AN AGRICULTURAL PROPERTY, SITUATED BEYOND 8 KMS, OF THE MUNICIPAL LIMITS, THE SALE CONSIDERATION CANNOT BE TAXED EITHER AS LONG TERM CAPITAL GAIN OR BUSINESS INCOME. THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITIONS MADE ON THIS ACCOUNT. IN THE RESULT, BOTH THE APPEALS OF THE APPELLANT IS ALLOWED. 2.1 THE LD. DR BEFORE US VEHEMENTLY CONTENDED THAT NO AGRICULTURAL ACTIVITY HAS BE EN CARRIED OUT BY THE ASSESSEE. THE ASSESSEE IS A PARTNERSHIP FIRM AND HAS BEEN CREATED FOR THE PURPOSE OF DEALING IN PROPERTIES. THE NATURE OF THE BUSINESS OF THE ASSESSEE IS TO PURCHASE, SELL AND DEVELOP THE PROPERTIES. THE LAND WAS PURCHASED IN 1989 AND EVEN NO AGRICULTURAL INCOME WAS EVER SHOWN BY THE ASSESSEE. THE LAND IS WITHIN 8 KMS. OF THE MUNICIPAL LIMITS. THE LAND IS HELD AS A BUSINESS ASSET AND, THEREFORE, INCOME RECEIVED BY THE ASSESSEE ON THE SALE OF THE LAND IS THE BUSINESS INCOME. RELIA NCE WAS PLACED ON THE DECISION OF HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF BADRILAL BHOLARAM VS. CIT, 139 ITR 207. SIMILARLY, RELIANCE WAS PLACED ON THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. B. NARASIMHA REDDY , 150 ITR 34 7. IT WAS CONTENDED THAT IN BOTH THE CASES THE LAND WAS NOT CULTIVATED AND THE 5 ITA NO. 98/PNJ/2013 & CO NO. 23/PNJ/2013 (ASST. YEAR : 2007 - 08) ASSESSEE WAS A BUSINESSMAN. THE LAND WAS PURCHASED AS AGRICULTURAL LAND. THE PROFIT ON THE SALE OF THE LAND WAS HELD TO BE BUSINESS INCOME. RELIANCE WAS ALSO PLACED ON THE D ECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAJA J. RAMESHWAR RAO VS. CIT, 42 ITR 179 (SC) IN WHICH IT WAS HELD THAT EVEN A SINGLE VENTURE MAY BE REGARDED AS IN THE NATURE OF TRADE OR BUSINESS. 2.2 THE LD. AR, ON THE OTHER HAND, CONTENDED THAT IT IS NOT DISPUTED THAT THE LAND WAS AN AGRICULTURAL LAND. NEITHER THE AO NOR THE CIT(A) HAS DISPUTED THIS FACT. OUR ATTENTION WAS DRAWN TO PG. 56 TO 58, 61 TO 63 AND 65 TO 67 FOR STRESSING THAT THE LAND WAS NOT SITUATED WITHIN 8 KMS. BUT WAS BEYOND 8 KMS. FROM THE MUNICIPAL LIMITS OF VILLAGE CAVOLLOSIM AND MARGAO CORPORATION. IT WAS CONTENDED THAT THE LAND WAS NOT HELD AS STOCK IN TRADE. THEREFORE, THE LAND WAS NOT A CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14). THE LAND WAS DULY CLASSIFIED AS AN AGRICULTURAL LAND IN THE REVENUE RECORDS AND THEREFORE, IT MUST BE ASSESSED AS SUCH. RELIANCE WAS PLACED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF ITO VS. FRANCIS JOSE VALADARES (ITA NOS. 148 & 149/PNJ/201 0). THUS, IT WAS CONTENDED THAT THE ORDER OF THE CIT(A) BE CONFIRMED. 2.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE HAVE ALSO GONE THROUGH THE ORDER OF THE TAX AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED BEFORE US. U/S 2(14), CAPITAL ASSET IS DEFINED AS EXCLUDING FROM ITS PURVIEW STOCK - IN - TRADE, CONSUMABLE STORES OR RAW MATERIALS HELD FOR THE PURPOSES OF BUSINESS OR PROFESSION OR EVEN AGRICULTURAL LAND IN INDIA , NOT BEING LAND SITUATE - ( A ) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS TH AN TEN THOUSAND [ ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR ] ; OR 6 ITA NO. 98/PNJ/2013 & CO NO. 23/PNJ/2013 (ASST. YEAR : 2007 - 08) ( B ) IN ANY AREA WITHIN SUCH DISTANCE, NOT BEING MORE THAN EIGHT KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM ( A ), AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBANISATION OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICATION IN THE OFFICIAL GAZETTE . IN CASE OF THE ASSESSEE, WE NOTED THAT THE REVENUE HAS FILED THE APPEAL ONLY IN RESPECT OF THE ORDER OF THE CIT(A) WHICH RELATES TO THE ORDER OF THE AO PASSED U/S 143(3) R/W SEC. 147. NO APPEAL HAS BEEN FILED IN RESPECT OF THE APPELLATE ORDER P ASSED WITH REFERENCE TO ORDER PASSED U/S 143(3). THEREFORE, THE ONLY ISSUE BEFORE US RELATES TO WHETHER THE INCOME RETURNED BY THE ASSESSEE ON THE SALE OF AGRICULTURAL LAND IS BUSINESS INCOME OR NOT. 2.3.1 WE HAVE GONE THROUGH THE DECISION OF THE HON'BLE SUPREME COURT AS RELIED BY THE LD. DR IN THE CASE OF OF RAJA J. RAMESHWAR RAO VS. CIT, 42 ITR 179 (SC) ( SUPRA ). IN THIS CASE, THE HON'BLE SUPREME COURT HAS HELD AS UNDER : EVEN A SINGLE VENTURE MAY BE REGARDED AS IN THE NATURE OF TRADE OR BUSINE SS. WHEN A PERSON ACQUIRES LAND WITH A VIEW TO SELLING IT LATER AFTER DEVELOPING IT, HE IS CARRYING ON AN ACTIVITY RESULTING IN PROFIT, AND THE ACTIVITY CAN ONLY BE DESCRIBED AS A BUSINESS VENTURE. WHERE THE PERSON GOES FURTHER AND DIVIDES THE LAND INTO PLOTS, DEVELOPS THE AREA TO MAKE IT MORE ATTRACTIVE AND SELLS THE LAND NOT AS A SINGLE UNIT AND AS HE BOUGHT IT, BUT IN PARCELS, HE IS DEALING WITH LAND AS HIS STOCK - IN - TRADE; HE IS CARRYING ON BUSINESS AND MAKING A PROFIT. IN THE CASE OF CIT VS. B. NARA SIMHA REDDY, 150 ITR 347 ( SUPRA ), THE HON'BLE KARNATAKA HIGH COURT HAS HELD AS UNDER : HELD, THAT THE ASSESSEE DID NOT PURCHASE THE LAND BY HIMSELF BUT PURCHASED THE SAME ALONGWITH HIS SON AS JOINT OWNERS. BOTH OF THEM WERE BUSINESSMEN AND NOT AGRICULTU RISTS. THE LAND PURCHASED WAS LOCATED IN AN URBAN AREA SURROUNDED BY BIG FACTORIES. IF THE IDEA OF THE ASSESSEE WAS TO MAKE AN INVESTMENT IN THE LAND, HE WOULD NOT HAVE ALLOWED IT TO REMAIN UNCULTIVATED AND FALLOW CONTINUOUSLY FOR FIVE YEARS. THE ASSESS EE OBTAINED PERMISSION FOR CONVERSION OF THE LAND TO NON - AGRICULTURAL PURPOSES AND FORMED A LAYOUT FOR 7 ITA NO. 98/PNJ/2013 & CO NO. 23/PNJ/2013 (ASST. YEAR : 2007 - 08) HOUSE SITES AND SOLD THE SITES TO WORKERS IN NEARBY FACTORIES. THESE EVENTS CLEARLY ESTABLISHED THAT THE ASSESSEE PURCHASED THE LAND WITH A VIEW TO SELL IT AS ATTRACTIVE HOUSING SITES AT A PROFIT. THEREFORE, THE TRANSACTION WAS AN ADVENTURE IN THE NATURE OF TRADE AND THE PROFIT REALISED FROM THE SALE WAS ASSESSABLE AS BUSINESS PROFITS. IN THE CASE OF BADRILAL BHOLARAM VS. CIT, 139 ITR 207 ( SUPRA ), THE HON'BLE MADHYA PRADESH HIGH COURT HAS HELD AS UNDER : HELD, (I) AFFIRMING THE DECISION OF THE TRIBUNAL, THAT IF THE LANDS HAD BEEN PURCHASED BY THE ASSESSEE BY WAY OF INVESTMENT, THE ASSESSEE WOULD HAVE TRIED EITHER TO CULTIVATE THE LAND OR TO BUILD ON IT , BUT THE ASSESSEE DID NEITHER. THEREFORE, THE TRANSACTIONS OF THE SALE OF THE LAND WAS AN ADVENTURE IN THE NATURE OF TRADE AND THE PROFIT RESULTING THEREFROM WAS ASSESSABLE AS BUSINESS INCOME. (II) SECTION 165 OF THE M.P. LAND REVENUE CODE DID NOT PROV IDE FOR ANY RESTRICTIONS ON THE TRANSFER OF AGRICULTURAL LANDS AND, THEREFORE, THE SALE OF THE AGRICULTURAL LAND AMOUNTED TO AN ADVENTURE IN THE NATURE OF TRADE. (III) UNDER SECTION 2(1)( A) OF THE I.T. ACT, 1961, THREE CONDITIONS ARE TO BE SATISFIED BEFORE AN INCOME CAN BE CLASSIFIED AS AGRICULTURAL INCOME. THEY ARE: (A) THE RENT OR REVENUE SHOULD BE DERIVED FROM THE LAND, (B) THE LAND SHOULD BE SITUATED IN INDIA, AND (C) THE LAND SHOULD BE USED FOR AGRICULTURAL PURPOSES. SINCE THE AFORESAID CONDITIONS WERE NOT SATISFIED BY THE ASSESSEE, THE PROFIT REALISED BY THE SALE OF LAND DID NOT RETAIN THE CHARACTER OF AGRICULTURAL INCOME AND HENCE WAS NOT EXEMPT FROM TAX. 2.3.2 WE HAVE ALSO GONE THROUGH THE PARTNERSHIP DEED AS PRODUCED BEFORE US. FROM THE PARTNERSHIP DEED IT IS APPARENT THAT THE PARTNERSHIP FIRM WAS FORMED ON 29.7.1989 WITH THE FOLLOWING OBJECTS : WHEREAS THE FIRST PARTY AND THE SECOND PARTY HAVE JOINED TOGETHER IN PARTNERSHIP TO CARRY ON BUSINESS UNDER THE NAME AND STYLE OF M/S. AFONSO REAL ESTATE DEVELOPERS FOR BUYING AND DEVELOPING THE PROPERTIES INTO PLOTS. CLAUSE ( 2 ) OF THE PARTNERSHIP DEED FURTHER STATES AS UNDER : 8 ITA NO. 98/PNJ/2013 & CO NO. 23/PNJ/2013 (ASST. YEAR : 2007 - 08) 2. THE BUSINESS OF THE PARTNERSHIP FIRM SHALL BE THA T OF BUYING AND DEVELOPING THE PROPERTIES INTO PLOTS INCLUDING CONSTRUCTION WORKS AND/OR ANY OTHER BUSINESS AS THE PARTIES HERETO MAY MUTUALLY AGREE UPON FROM TIME TO TIME. THE BUSINESS SHALL INCLUDE BUYING OR SELLING OF PROPERTIES SITUATED AT VARIOUS PLA CES IN GOA EITHER WHOLLY OR IN PLOTS. THIS PARTNERSHIP FIRM HAS BOUGHT AN AGRICULTURAL LAND, THERE IS NO DISPUTE AND THIS LAND WAS HELD BY THE ASSESSEE AS A BUSINESS ASSET. THE PARTNERSHIP IS FORMED ONLY FOR THE PURPOSE OF CARRYING ON BUSINESS. SEC. 4 OF THE PARTNERSHIP ACT DEFINES PARTNERSHIP , PARTNER, 'FIRM' AND 'FIRM - NAME AS UNDER : 'PARTNERSHIP' IS THE RELATION BETWEEN PERSONS WHO HAVE AGREED TO SHARE THE PROFITS OF A BUSINESS CARRIED ON BY ALL OR ANY OF THEM ACTING FOR ALL. PERSONS WHO HAVE ENTERED INTO PARTNERSHIP WITH ONE ANOTHER ARE CALLED INDIVIDUALLY, 'PARTNERS' AND COLLECTIVELY 'A FIRM', AND THE NAME UNDER WHICH THEIR BUSINESS IS CARRIE D ON IS CALLED THE 'FIRM - NAME'. FROM THE PARTNERSHIP DEED AS WELL AS SEC. 4 OF THE PARTNERSHIP A CT, IT IS APPARENT THAT THE LAND WAS HELD BY THE ASSESSEE FIRM FOR THE PURPOSE OF BUSINESS. THE LAND HAS BEEN SOLD BY THE ASSESSEE DURING THE COURSE OF CARRYING ON BUSINESS. NATURE OF THE BUSINESS OF THE ASSESSEE ALSO CLEARLY LAYS DOWN THAT THE ASSESSEE IS ENGAGED IN BUYING AND SELLING OF PROPERTIES. THE DECISION OF THIS TRIBUNAL IN THE CASE OF ITO VS. FRANCIS JOSE VALADARES (ITA NOS. 148 & 149/PNJ/2010) RELIED ON BY THE LD. AR IS NOT APPLICABLE AS THAT CASE PERTAINS TO INDIVIDUAL AND NOT PARTNERSHIP FIR M. THE INDIVIDUAL WAS NOT ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF PROPERTIES. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE ORDER OF AO HOLDING THAT THE INCOME DERIVED BY THE ASSESSEE ON PURCHASE AND SALE OF THE AGRICULTURAL LAND W ILL BE ASSESSED AS INCOME FROM BUSINESS. 9 ITA NO. 98/PNJ/2013 & CO NO. 23/PNJ/2013 (ASST. YEAR : 2007 - 08) 3. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED WHILE THE CROSS OBJECTION FILED BY THE ASSESSEE, BEING SUPPORTIVE TO THE ORDER OF CIT(A), STANDS DISMISSED. 4. ORDER PRONOUNCED IN THE OPEN COURT ON 23 /08/2013. SD/ - (D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 23 /08/ 2013 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA