Bombay High Court
Pr. Commissioner Of Income Tax-19 vs M/S. Jogani And Dialani Land Developers ... on 26 February, 2019
Bench: Akil Kureshi, M.S.Sanklecha
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO.1720 OF 2016
The Pr. Commissioner of Income Tax-19 .. Appellant.
v/s.
M/s. Jogani & Dialani Land .. Respondent.
Mr. Ashok Kotangle with Mr. Prabhakar Ranshur, for the Appellant.
Mr. Jitendra Jain with Mr. Aamir Ali Shaikh and Ms. Nikia i/b. I. V.
Merchant & Co., for the Appellant.
CORAM: AKIL KURESHI &
M.S.SANKLECHA, JJ.
DATE : 26th FEBRUARY, 2019.
P.C:-
This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act), challenges the order dated 16 th December, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order dated 16th December, 2015 is in respect of Assessment Year 2008-09.
2 The Revenue urges the following question of law for our consideration:
" Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in treating the income received of Rs.69 crores assessable on sale of Non-agricultural land as Long Term Capital Gain instead of Business income ignoring the business aspirations of the assessee?"
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3 The Respondent is a partnership firm, engaged in the
business of building construction and land developers. In its return of income for subject Assessment Year, the Respondent declared its total income of Rs.62.85 Crores. During the course of scrutiny proceedings, the Assessing Officer noted that the Respondent had shown an amount of Rs.62.34 Crores as long term capital gains on account of sale of plot ad- measuring 2.10 lakh sq. mtrs. This land was a part of 2.60 lakh sq. mtrs. purchased by the Respondent in the year 1986 and the conveyance was made in the year 1989. A part of the purchased property had been developed by construction of buildings. The remaining portion of the property ad-measuring 2.10 lakhs sq. mtrs had been sold by the Respondent in the previous year relevant to Assessment Year for a total consideration of Rs.69 Crores and after deducting the expenditure, the Respondent had offered long term capital gains on the sale of land at Rs.62.34 Crores. However, the Assessing Officer was of the view that as the business of the Respondent-Assessee was construction, the 2.10 lakhs sq. mtrs. should be treated as its stock-in-trade and the income/gain arising on the same should be taxed under the head 'income from business' and not as capital gain in its Assessment Order dated 30th December, 2011.
4 Being aggrieved with the order dated 30th December, 2011, Respondent filed appeal to the Commissioner of Income Tax (Appeals) [CIT(A)]. In appeal, the CIT(A), on consideration of the entire record, found that:-
(i) Respondent had shown sufficient compliance with the CBDT Circular No.4 of 2007 dated 16th June, 2007 to justify that the 2.10 lakhs sq. mtrs. was held by it as an investment;
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(ii) The 2.10 lakhs sq. mtrs. was shown in its books of account as an
investment w.e.f. 1st April, 2000 and not as stock-in-trade;
(iii) The conversion of land as investment was accepted by the Revenue in the earlier Assessment Orders passed under Section 143(3) of the Act;
(iv) The Statement of purchasers of the land that the land purchased was agricultural land and they had obtained necessary permission to make it non-agricultural;
(v) The 2.10 lakhs sq. mtrs. of land was valued at cost year after year and not at cost or market price whichever is lower as applicable as stock-in-trade.
Therefore, on the aforesaid finding of fact, it allowed appeal of the Respondent.
5 The Revenue being aggrieved by the order of the CIT(A), filed an appeal to the Tribunal. The impugned order dated 16 th December, 2015 of the Tribunal confirmed the fact that, land was purchased in 1986 and since 2000, the land has shown in its books of account as investment. It further records that in the earlier Assessment Year i.e. A. Y.2008-09, an Inspector was deputed by the Assessing Officer to verify the correctness of the status of the land i.e. an investment or not. On inspection, the Inspector reported that no construction was carried out on 2.10 lakhs sq. mtrs. of land which was held as an investment. On the above facts, the Tribunal upheld the finding of fact by the CIT(A) to hold that 2.10 lakhs sq. mtrs of the land is an investment. In the above view, the impugned order dated 16th December, 2015 dismissed the Revenue's appeal.
6 Mr. Kotangle, learned Counsel in support of the appeal
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submits that, as the business of the Respondent is of construction, the purpose and object of holding land could only be for business purposes and not as investment. Therefore, any gain/profit earned by the Respondent on sale of land ought to be taxed under the head 'business income' and not as 'capital gains'.
7 We find that, both the CIT(A) as well as the Tribunal have come to a concurrent finding of fact on examination of the record, that 2.10 lakhs sq. mtrs of land has been held by the Respondent as investment. This, it found is evident from the books of account, balance sheet of the Appellant and the treatment given to it in its accounts. This finding of fact was further confirmed by the visit of the Inspector who was deputed by the Assessing Officer to verify the correctness of the Respondent's claim that the 2.10 lakhs sq. mtr of land was being held as an investment as no construction activity was carried out on the same. The submission made on behalf of the Appellant completely ignores the fact that, it is always open to an assessee to hold the same class of assets as investment and also as stock-in-trade. There is no bar in law for a person dealing in land to also have investment in land. Thus, there is no substance in the above submission.
8 The impugned order dated 16th December, 2015 of the Tribunal is essentially a finding of fact, which is not shown to be perverse in any manner. Therefore, the proposed question does not give rise to any substantial question of law. Thus, not entertained.
9 Accordingly, Appeal dismissed. No order as to costs.
(M.S.SANKLECHA,J.) (AKIL KURESHI,J.)
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