K C SRINIVASA REDDY HUF,BANGALORE vs. DCIT, CENTRAL CIRCLE -2(2) , BANGALORE

ITA 2293/BANG/2025Status: DisposedITAT Bangalore29 September 2026AY 2017-184 pages
AI SummaryDismissed

What were the facts?

The assessee, Mahendra Naidu Karnam, filed an appeal against the order of the CIT(A)NFAC for Assessment Year 2020-21. The assessment was reopened under section 147 r.w.s. 144B of the Income Tax Act, 1961, following an order dated 20.03.2025. The assessee had initially declared a total income of Rs.12,72,910/-. The Assessing Officer (AO) noted significant financial transactions during FY 2019-20, including the purchase of immovable property for Rs.12,91,44,616/- and sale of immovable property for Rs.3,35,68,500/-. The AO observed that the assessee developed two buildings and sold 20 flats, treating this as an adventure in the nature of trade and taxing Rs.87,73,380/- under "income from business / profession". The CIT(A) dismissed the assessee's appeal.

What did the Tribunal hold?

The Tribunal held that the transactions constituted an adventure in the nature of trade and were taxable under the head 'business / profession'. The assessee purchased land on 03.03.2017 and 05.07.2017 and entered into a construction agreement on 10.11.2017 for 20 flats. The flats were sold during FY 2019-20. Although the assessee claimed the development was for investment purposes and sold due to financial constraints, the Tribunal found that the assessee commercially exploited the properties sequentially with the intention of developing and selling them. This sequential commercial exploitation indicated an intention to develop and sell, thus constituting an adventure in the nature of trade. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the assessee's grounds of appeal. The addition made by the AO was upheld.

What were the issues?

1. Whether the sale of constructed flats constitutes an adventure in the nature of trade, taxable under the head 'income from business / profession', or capital gains, as contended by the assessee, turning on the interpretation of 'adventure in the nature of trade' under section 2(13) and 'capital asset' under section 2(14) of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that the land was purchased as an investment, and the subsequent construction and sale of 20 flats should not be considered an adventure in the nature of trade. The assessee claimed it was not engaged in real estate business, and the properties were held as investments, not stock-in-trade. The assessee contended that the AO erroneously treated the gains as business income instead of capital gains. Revenue's Contention: The revenue argued that the AO rightly considered the sale of flats as an adventure in the nature of trade, as defined under section 2(13) of the Act, and that it could not be considered a capital asset under section 2(14).

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 139(1),Section 148,Section 143(2),Section 142(1),Section 133(6),Section 2(13),Section 2(14)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI BALAKRISHNAN S & SHRI KESHAV DUBEY

For Respondent: Shri. Pradeep S - Addl. CIT
Pronounced: 29.09.2026

PER SHRI BALAKRISHNAN S, ACCOUNTANT MEMBER:

This appeal is filed by the Assessee against the order of Ld. CIT(A)NFAC vide DIN: ITBA/NFAC/S/250/2025-26/1078808428(1) dated 23-Jul-2025 for the Assessment Year 2020-21, arising out of the Order passed under section 147 r.w.s. 144B of the Act, dated 20.03.2025. 2. The facts in brief are the assessee, an individual, filed the return of income under

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 147

All 48,773 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →