Case Law Details
DCIT Vs Niketan Krishorchandra Patel (ITAT Ahmedabad)
The issue under consideration is that whether the assessee having business of land trading can show capital gains from arising out of transfer of land and claim exemption under section 54F?
As per the facts of the case, assessee has purchased a land and in the balance sheet, assessee shown that land as a fixed asset since 2007. Thereafter same was transferred during the course of hearing was acquired, developed and held exclusively by him as capital asset. Since this was a capital asset for more than 3 years. The resultant gain was offered for taxation under the head capital gain after claiming exemption u/s. 54F of the Act. But ld. A.O. is of the opinion that since assessee was doing business of land trading as well. Therefore, this land amounted to an adventure in nature of trade.
As per the CBDT Circular No. 4 of 2007 dated 15th June, 2007. Though this circular is in the context of holding of shares and securities as investment vis-à-vis stock in trade. The crux of what has been mentioned therein is applicable even in relation to holding of immovable properties. The CBDT emphasized that it is possible for a tax payer to have two portfolios, i.e., an investment portfolio comprising of securities which are to be treated as capital assets and trading portfolio comprising of stock-in-trade which are to be treated as trading assets. Where an assessee has two portfolios, the assessee may have income under both heads i.e., capital gains as well as business income. Since assessee was showing land in question as a fixed asset in his return of income.
Therefore, ITAT have a opinion that the land was a capital asset and ld. CIT(A) has rightly granted relief to the assessee by holding that assessee was eligible for long term capital gain. Therefore, appeal filed by the Revenue is dismissed.
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