Case Law Details
DCIT Vs Chandrakant L. Patel (ITAT Ahmedabad)
Conclusion: Since there was no valid transfer of land in question by assessee to the partnership firm of M/s. V Developers in the year under consideration giving rise to any capital gain and the transfer of the said land having validly taken place only in the previous year relevant to AY 2012-13 by assessee to M/s. V Developers, the capital gain arising from the said transfer was not chargeable to tax in the hands of the assessee for AY 2012-13 as duly declared by assessee in his return of income for AY 2012-13.
Held: Assessee had entered into a partnership firm in the name and style of M/s. V Developers with M/s B Odhavji Industrial Enterprises Pvt. Ltd. and the land was introduced by the assessee in the partnership firm as stock-in-trade for a value of Rs.22,41,00,000/-. Assessee accordingly agreed to offer the capital gain arising from the said transaction in his return of income for the AY 2012-13. Assessee submitted that the land in question was never converted as stock-in-trade and introduced as capital contribution in the firm of M/s. V Developers, also pointed out that the land in question was agricultural as of 18.03.2010, and no transfer of property or the land in question within the meaning of Section 2(47) in the previous year relevant to AY 2010-11 and there was no question of taxability of any capital gain. Assessee treated the value as the sale consideration and after deducting the cost of acquisition to the assessee amounting to Rs.17,76,06,000/- and stamp duty paid at the time of transfer of land in the name of the assessee amounting to Rs.1,04,78,760/-, made out a short term capital gain chargeable to tax in the hands of the assessee for the year under consideration at Rs.3,60,15,240/-. Addition to that extent on account of short-term capital gain was made by AO to the total income of the assessee in the assessment completed under Section 143(3). Assessee submitted that the said transfer was held to be null and void ab initio by the CIT(A) vide his impugned order on the ground that both the partners of the partnership firm were not agriculturists. It was held that there was no valid transfer of land in question by assessee to the partnership firm of M/s. V Developers in the year under consideration giving rise to any capital gain and the transfer of the said land having validly taken place only in the previous year relevant to AY 2012-13 by the assessee to M/s. Vallabh Developers, the capital gain arising from the said transfer was chargeable to tax in the hands of the assessee for AY 2012-13 as duly declared by the assessee in his return of income for AY 2012-13. Therefore, the impugned order of CIT(A) was justified fordeleting the addition of Rs.3,60,15,240/- made by AO on account of short term capital gain and dismissed the appeal of the Revenue.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is preferred by the Revenue against the order of learned Commissioner of Income-Tax (Appeals)-I, Ahmedabad (“CIT(A)” in short) dated 28.04.2014 and the solitary issue involved therein relates to the deletion by the learned CIT(A) of the addition of Rs. 3,60,15,240/- made by the Assessing Officer on account of Short Term Capital Gain.
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