The Tax Publishers2021 TaxPub(DT) 0186 (Ahd-Trib)

INCOME TAX ACT, 1961

Section 263

Where agricultural land was purchased by assessee in financial years 1995-96 and 1996-97 and the same was treated as fixed assets and assessee had sold the agricultural land as fixed asset in its balance sheet, further, without specifically controverting the relevant material and claim of the assessee, AO simply on the basis of memorandum of association had held that income derived from purchase and sale was a business income, therefore, ground of appeal of revenue was dismissed.

Revision under section 263 - Sale of agricultural land - CIT deleted the addition holding that AO was not justified to consider gain on sale of land as a business income -

Assessee derived income from capital gain and interest. It was further noticed that assessee had claimed long term capital gain exemption being profit on sale of agricultural land and long capital gain being profit on sale of agricultural land. It was noticed that the said profit on sale of agricultural land was derived from 15 transactions of sales during the year. CIT issued notice under section 263 and observed that selling of agricultural land was the business of assessee therefore income of assessee required to be treated as business income in respect of profit arising on sale of land and income from other sources in respect of interest income. It was further stated that no evidences was placed that the claim made by assessee was objectively examined or considered by AO. Therefore, it was held that assessment order was erroneous as it was passed without proper examination or inquiry of the claim made by the assessee. Held: On perusal of material it was observed that agricultural land was purchased by the assessee in financial year 1995-96 and 1996-97 and the same was treated as fixed assets. Correctness of facts was demonstrated from the audited accounts of the assessee for the financial year 2007-08 and from the findings of CIT(A) in the appellate order. Assessee has sold the agricultural land as fixed asset in its balance sheet. After perusal of the assessment order, it was observed that without specifically controverting the relevant material and claim of the assessee, AO simply on the basis of memorandum of association had held that income derived from purchase and sale was a business income. Therefore, ground of appeal of revenue was dismissed.

Relied:Sultan Brothers Pvt. Ltd. v. CIT 1964 TaxPub(DT) 259 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2008-09


INCOME TAX ACT, 1961

Section 263

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