SMT. SANGEETA NAYAR,NEW DELHI vs. THE ITO 1(2), BHOPAL

आदेश / O R D E R PER KUL BHARAT, J.M: Appeal by the assessee is directed against order of the

CIT(A)-1, Bhopal dated 29.2.2016 pertaining to the

assessment year 2011-12. The assessee has raised

following grounds of appeal:

3. Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A) who after considering the submissions, dismissed the appeal of the assessee. Now the assessee is in appeal before this Tribunal. Ground Nos.1 to 3 of this appeal are inter connected. Ld. Counsel for the assessee reiterated the submissions as made in the written submissions. For the sake of clarity, submissions of the assessee are reproduced as under:

4. He submitted that authorities below have failed to

appreciated the fact that assessee is not engaged into any

business of construction/sale/purchase of house property.

The revenue has not brought any material on record

suggesting that the assessee was engaged in any kind of

business. In fact, initially, the assessee wanted to

construct house for self-occupation and the construction

plan was duly filed for approval of local authority. But due

to change in circumstances and compelling needs, assessee

decided to dispose of the property. Owing to the fact that

no single buyer was available and also to fetch a better

price, the property was sold by constructing flats/units.

This act from no stretch of imagination can be treated as

adventure in nature of trade and commerce and provisions

of section 45(2) of the Income Tax Act, 1961 (hereinafter

called as ‘the Act’) have been wrongly invoked by the A.O.

Same cannot be applied under the facts of the present

case. In support of this, Ld. Counsel relied upon the case

laws as mentioned in the written submissions. Per contra,

Ld. D.R. vehemently opposed the submissions of the Ld.

Counsel for the assessee and supported the orders of the

authorities below. He submitted that even a single

transaction can be treated as adventure in the nature of

trade and commerce. He submitted that the facts and

circumstances surrounding the impugned transaction

clearly prove it being an act of adventure in the nature of

trade and commerce. However, Ld. A.R. in the rejoinder

submitted that if this yardstick is to be applied, then every

transaction would be treated as adventure in the nature of

trade and commerce. Ld. Counsel submitted that it was

purely for the purpose of getting better price of the capital

asset. He further contended that from the material placed

on record, the intention of the assessee can be very well

inferred that the assessee intended for self-use and

occupation of the property. But due to change in the

circumstances and compelling reason, the assessee had to

dispose it off. This does not mean that assessee was

engaged in the business.

materials available on record and gone through the orders

of the authorities below. The only issue germane to dispute

is whether the transaction in question is in the nature of

adventure in trade and commerce as treated by the A.O.

The case of the assessee is that she wanted to construct

house for self-occupation but due to change in the

circumstances, she had to dispose of the property as no

single buyer was available and in order to fetch higher

consideration, the property was constructed into flats and

sold to different individuals. It is averred the assessee is

not involved at any point of time in the business of building

construction, except this transaction, no such other

transaction is made previously or subsequently. Under

these undisputed facts, revenue was not justified to treat

the same as adventure in the nature of trade and

commerce. Whether a particular transaction is adventure

in the nature of trade and commerce is to be decided on

the principles laid down by various judicial

pronouncements, the Hon'ble M.P. High Court in the case

of CIT Vs. Suresh Chand Goyal 298 ITR 277 (MP) has

decided the issue that whether an agricultural land

converted to non-agricultural land sold after developing 40

plots was business activity or sale of capital asset. The

Hon'ble High Court after considering the various case laws

held as under:

6. The Ld. Counsel has also placed reliance on judgement of Hon'ble High Court of Punjab & Haryana rendered in the case of CIT Vs. Sushila Devi Jain (2003) 259 ITR 671, wherein the Hon'ble High Court has held as under: “2. We have heard the learned senior counsel for the department and find no ground to entertain the appeal. The Tribunal and the Commissioner (Appeals) have both rightly held that the sale of land by the assessee was not in the nature of business because there is no continuous activity. It is true that even a single venture could be regarded as a trade or business but there have to be circumstances which should give rise to such a conclusion. There are no such circumstances existing in the present case. What is necessary is to find out the intention of the assessee at the time of the purchase of land. In the case before us, the land was never purchased by her. She acquired the same on the basis of a will on the death of her husband. She sold the same in parcels because the huge area could not be sold in one go. Such an activity, in our opinion, cannot amount to trade or business within the meaning of the Act. Both the Commissioner and the Tribunal have followed the correct principles of law and no factual or legal error could be pointed out by the Department. In this view of the matter, we are of the opinion that no substantial question of law arises from the order of the Tribunal so as to warrant the entertainment of this appeal.” 7. In the written synopsis by the assessee, it is treated

that the income from sale of all the 9 flats was

Rs.39,62,290/- only. The figures at paper book page 5 are

undisputed by the revenue. The income of Rs.6 lakhs on

which registry was done during the year, even if taken as

per the computation of the assessing officer should be

Rs.26,66,597/-. The A.O. has come at the figure of

Rs.66,66,852/-. It is also stated that if the contention of

the A.O. that land was converted into stock entry is

adopted, the project would be complete only when the

possession was handed over. Completion contract method

is a well recognised method for computation of profit. It is

also stated that the authorities below assumed that

possession is invariably handed over at the time of the sale

deed. It is stated that the possession was handed over

subsequently. It is also stated that the calculation is based

on pure guess work. We find some merit in the contention

of the Ld. Counsel for the assessee in view of the

judgement of the jurisdictional High Court and the facts

placed before us, we deem it proper that the assessing

officer should give a specific finding with regard to the

contentions of the assessee after conducting proper

enquiry. The impugned order is set aside. The A.O. is

hereby directed to frame de-novo assessment. The grounds

raised in this appeal are allowed for statistical purposes.

allowed for statistical purposes.

Order was pronounced in the open court on 27 .11.2018.

Sd/- Sd/- (MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIALMEMBER

Indore; �दनांक Dated : 27/11/2018 VG/SPS

Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order

Assistant Registrar, Indore